Originally Posted by
Lincoln Osiris
True, however the bean counters will have to figure out if the lower fuel burn rate will actually save the company money with regards to our A319's. Adding a new fleet type is no cheap thing so it would have to be quite a large order of CS's or E-Jets to outweigh those costs. This is why Southwest never got into them and why Jetblue is rumored to be looking at dumping their E-Jets.
Good points. Keep in mind that the bean counters are looking at two things: financing costs and operating costs. The financing costs include purchase price (or leasing rate) per unit. The operating costs include factors like fuel efficiency and sector length, etc. If the operating costs of the CSeries and E2 are 20-30% better than the standard (non-NEO) A319 and A320, then the bean counters need to negotiate a volume deal that will bring the financing costs PER UNIT closer to the price of a conforming used A320 or A319 - both of which are being sought worldwide by airlines like Allegiant, United and numerous Chinese airlines. And we are not even considering factors like passenger ergonomics or long-term value of the airframe (depreciation). In this case, both financing and operating costs need to be considered.
With regard to integrating a new fleet type and the associated costs, obviously there will be costs. That has to be weighed and compared to the benefits associated with improved efficiency (CASM) and the ability to better match capacity to demand. If your CASM is reduced, they should help offset integration costs which can be spread over time.
The article about adding “smaller” jets was interesting. Think about it, if Spirit can offer nonstop flights on thinner routes with no or little direct competition (eg PHX to PBI or PVD to OAK), yields can increase (less direct competition = better pricing ability). With increased fuel efficiency, breakeven load factor goes down. If you are competing with SWA, F9, JB and the legacies (using their cheaper Skywest, Mesa, Republic and Compass E175 feed) on the typical trunk routes, the potential yield is constrained. So, in the search for better yields, revenue and profit growth should come from exploiting new routes with required demand and limited direct competition. Typical trunk routes (ORD-LAX or ORD-LGA) are important, but potential profit with so much seat capacity and competition can be more difficult to achieve.
Your point regarding JetBlue and their experience with the E190 is relevant. The E190 can definitely better match seat supply with demand on routes that would be unprofitable for an A320 (eg JFK-SYR or BOS-RDU). That is partly because JB is competing with so many lower-cost feed/regional operators flying around the NE and Midatlantic for origin-and-destination traffic. But JB sees value in feeding its big JFK and BOS hubs and it doesn’t outsource to regionals - it needs the feed and the A320 isn’t suited for certain routes. Unfortunately, the E190 has had a higher CASM than expected and numerous maintenance issues. Additionally, unlike the new CSeries and E2, the older E190 is range constrained - you won’t see JB flying them west of DFW. Meanwhile, a new CS100 or CS300 can fly both short range shuttle flights or thinner transcon flights (eg PVD-SAN). SWISS operates their CS100s and 300s on both 30-minute shuttle hops and 5-hour flights. Here’s a good look at SWISS’s smaller, 110-120 seat CS100:
https://blog.swiss.com/en/2017/04/pilots-view-of-the-swiss-bombardier-cs-100/
Not surprisingly, JB is also closely reviewing both the CSeries and E2 as potential E190 replacements. Air Canada has also had similar issues with their E190s and it has been trying to dump them for years - AC will replace them with 45+ new CS300s starting in 2019.