DALLAS – Aircraft are the most important and valuable assets of an airline. Of course, no carrier is able to make a profit without flying aircraft, so the convenient and efficient use that companies make of their fleets is one of the most crucial factors that determine whether a carrier will or will not survive in the long term in the worldwide air travel market.
The complex art of aircraft utilization has been studied by carriers since the beginning of commercial aviation, where departments develop amazing strategies to gain the highest profit possible for their respective airlines.
We’ll discuss some of the techniques and methodologies that all types of airlines implement to best utilize their aircraft.
Low-cost carriers like Wizz Air (W6), Southwest Airlines (WN), and Ryanair (FR) are some of the most admirable and thriving aviation businesses ever designed.
The current success of LCCs around the world is mainly made up of enormous cost reductions supported by the tricky world of economies of scale and passenger psychology, but also due to their large number of routes and airplanes.
Ryanair’s fleet is composed of 270 Boeing 737 family aircraft and it is distributed around more than 80 hubs in Europe, where some of them even need only one aircraft based at the airport.
The true hack for profitability, however, is the high rate of aircraft utilization per day. In the case of FR, the airline uses its airplanes for 9.1 hours on average every day.
This means that every one of the 270 aircraft performs an average of three or four flights per day, which leads to more seats offered and higher profit.
Low Time Turn Arounds
On the other hand, there is a common phrase in aviation that “airplanes only make money in the air.” This is partially true, as technically, every minute an aircraft remains on the ground, the airline needs to pay for airport parking and ground handling costs during their turnarounds.
Because of this, FR operates almost continuously, with breaks of as little as 15 to 20 minutes between flights. This is less than half of what any premium airline would need to dedicate to perform aircraft reconditioning for the next leg.
However, in these 20 minutes of the turnaround of the Boeing 737, FR is able to distribute the work among its employees. For example, part of the cabin crew might check the boarding passengers’ tickets while the other cleans and prepares the airplane cabin for the next flight.
New Aircraft And High Fuel Efficiency
With the high utilization of aircraft by low-cost carriers, there is a big issue these airlines need to consider in order to maintain the correct safety of their aircraft, and it is related to an aircraft’s flight cycle.
The life of an aircraft does not entirely depend on the flight on its back, but it has more to do with the number of flights it makes. Every time the cabin is pressurized for a new flight, fatigue cracks appear on the fuselage that may cause serious problems for the operational safety of the aircraft, once it reaches a limit imposed by the manufacturer.
Additionally, even though a low-cost carrier saves lots of money by eliminating ground costs, the fuel burn costs on the other hand add up every hour the airplane is in the air.
To deal with these two problems, WN, FR, and more, invest in new aircraft periodically every decade, as they come with new technology that reduces fatigue effects and the amount of fuel burned per flight.
That’s why low-cost carriers present the youngest fleets in the entire commercial aviation market: 11.8 years for WN, 5.3 for W6, and 3.3 for IndiGo (6E). However, this is not always the case.
Allegiant and the Low-Class LCCs
Allegiant Air (G4) is the perfect example of a completely different approach to low-cost travel. Its way of functioning for the past decades was the opposite of any other LCC, and it consisted of reducing costs not by the high use of brand-new aircraft, but by the low use of old aircraft.
It may seem strange at first, but airplanes tend to devaluate very quickly, losing up to half of their value in the first 7 years of operations. This lets carriers such as Allegiant purchase them at rock-bottom prices, without the pressure of needing to use them so much in order to make them profitable.
The old MD-80 fleet Allegiant has been using until retirement, in 2018, had an average age of 27 years and its rate of daily utilization never surpassed 7 hours, which suited the route network of the carrier and reduced the need for making maintenance works, directly related to aircraft use.
This economic model is not common today, and G4 is drifting away from this type of operational structure. However, it will surely be remembered as a pioneering approach to low-cost travel that has a considerable margin of profitability.
Moving away from LCCs, it is time to talk about a very particular section of the aviation market where only a few air carriers have remained untouched. We are talking about ACMI airlines or wet-lease companies.
These airlines work by offering their own services for airlines in need of aircraft for a short period of time. This may happen because of an AOG (Aircraft On Ground), a sudden rise in demand, or even special charter requests by non-aviation companies.
Some of the biggest ACMI operators, such as SmartLynx (6Y), Wamos Air (EB), and the HiFly Group, operate exclusively thanks to punctual requests by airlines, and not with regularly scheduled flights from a route network. Sometimes, especially during the European summer season and the Hajj Season, the Islamic period of peregrination to Mecca, wet-lease companies have their aircraft flying all day, seven times a week, all around the world.
For routes administrated by leisure companies such as TUI Group or Condor (DE), actually, it is more common for their passengers to fly on an ACMI-operated flight rather than on a TUI or Condor-owned plane. This is because the actual fleets of these aircraft are suited to be profitable during the lowest season, and only have to be expanded during the summer for a short period of time.
However, during low-demand seasons, ACMI aircraft may remain grounded for several weeks without being moved. Consequently, it is rare to see brand-new aircraft operating for ACMI airlines, as these would not be profitable for the companies while on the ground.
The average age of the fleet of the HiFly Group, for example, composed mainly of A330 and A340 aircraft, surpasses the mark of 18 years, only being saved by a very unique case of a modern Airbus A330neo delivery for the airline in 2019, registered as CS-TKY.
The Issue with South America
When a European or American airline drafts schedules for its transcontinental flights, there is always a region of the world that creates serious brainteasers due to its time zones: South America.
Most South American countries lie in time zones that differ by only one to three hours from New York’s. In comparison to Central European Time, there is only a four-hour difference.
This makes it notably difficult for airlines to schedule their flights. Their aircraft can’t fly back immediately due to the time of arrival at their respective hubs. They would also not match with the connecting banks of departures bound for the rest of North America and Europe.
As a result, the only choice for carriers is either to turn around their aircraft and fly back with inefficient schedules or leave their planes sitting around at the destination airports for eight to ten hours in order to fly back to their hubs just in time for the first banks of the day.
This is one of the reasons flights to South America tend to be quite expensive. However, some airlines have found methods to take advantage of the long parking times of their fleets at their destinations.
In 2017, American Airlines (AA) built a US$100m maintenance hangar in Sao Paulo-Guarulhos Airport (GRU) to perform maintenance on their long-haul aircraft before their departure times back to the United States. By doing this, not only do they make use of their grounded aircraft but also benefit from the low salaries of South American workers at the airport.
Regarding the South America-Europe flights, on the other hand, it is fairly typical for airlines to insert additional flights inside of Europe for the aircraft that need to wait for their far-in-time departure schedules.
LATAM Airlines (LA) used to apply this method by operating the daily LA704 flight from Santiago de Chile (SCL) to Madrid (MAD), which then continued onwards to Frankfurt (FRA) as LA705 in the afternoon with newly booked passengers, returning to Spain just before midnight in order to fly back to Chile during the night.
It is not common to see airlines flying passengers between two foreign nations with additional revenue. However, this right is usually granted to some airlines inside the “Five Freedoms Of The Air” treaty signed by the ICAO, which allows this under certain operational conditions.
Finally, we need to talk about Qantas (QF), as it performed a magnificent move regarding its flights between the United States and Australia. The Pacific carrier operated before the pandemic on three transoceanic routes from Sydney (SYD), Melbourne (MEL), and Brisbane (BNE) to Los Angeles (LAX) with three different aircraft.
Once one of the aircraft flew back passengers to Australia immediately, the second airplane operated an additional leg from Los Angeles to New York (JFK), while the third one stayed in LAX to perform maintenance A-Checks at their newly built A380-size hangar at the airport.
The Board Game of Commercial Aviation
It is always amazing to see how clever some airlines turn out to be when planning strategies to take advantage of their aircraft as much as possible.
They are, in the end, the most important part of their business, so it is crucial for air carriers to squeeze the highest amount of profit by not stopping ever using them for any purpose.
Airlines have been, are, and always will be the true players of the most difficult board game called “Commercial Aviation.”
Featured image: Ryan Scottini/Airways