number_6

How long is QF planning to keep it's fleet of (eventually 20) A380s? EK has just disclosed that it will keep each plane for 12 years after delivery, based on their route mix of 75% short-haul A380 flights (e.g. DXB-Europe) and 25% long-haul (e.g. DXB-SYD/US). While EK has 90 A380s on order, this will peak the fleet at about 80; apparently that maxes out the airport space at DXB (for tarmac parking and maintenance facilities).

Parking is a big problem for A380s. EK wanted to start a route to GRU, for example, but could not get tarmac space to park the A380 after arrival. I suppose this means QF won't be flying A380s to GRU anytime soon

JDiver

Ah, from the thread title I thought you meant something like





The life cycle of an aircraft most often is about how many cycles - takeoffs, pressurisation cycles and landings - and the maintenance (i.e. C checks, etc.) rather than years of service, so EK has revealed 12 years based on its percentages of long vs short/medium haul flights. AFAIK, at least as currently scheduled, QF should have considerably longer than that for the A380s if they pan out in other ways (fuel and maintenance economy, cost vs. revenue per seat mile, etc.) (If they start SYD-BNE or -MEL with A380s, I shall certainly withdraw my comments.)

Blackcloud

EK is no different than SQ, which tend to sell-leaseback after 10 years then keep the lease for 2 years.
QF due to depreciation rates would keep aircraft for 20 years, of course they have older aircraft still operating. Also with the A380, flying mostly long haul the number of cycles would be a lot less compared to the flying hours. As most analyst know QF also have a lower aircraft ultilisation rate due to these reasons, while airlines like EK and SQ really run their aircraft hard knowing they will not keep them over 12 years or so.

number_6

Balancing flight hours, cycles and crew requalification is a black art. AF operated their first A380 CDG-LHR for a month in order to get all pilots qualified on A380, for example ... undoubtedly a high cost in cycles.

How much do depreciation rates differ by country? I've heard claimed that SQ and EK have a great advantage in capital cost, in part due to accelerated depreciation on their planes plus favourable lease-back terms ... in effect hidden subsidies from their gov'ts though I don't think it has ever been challenged in the WTO. More intensive use of capital would seem to give an airline a huge competitive advantage. Yet QF seems to have been focused on extending the life of airframes (both 744s and 763s) in the past decade; perhaps in anticipation of the later equipment delivery delays.

Maybe the remaining A380s will be delivered to a new QF sub, in SIN or HKG, and not have Australian registration. Similarly for B787s. Is that the ultimate outcome of the new QF structure and strategy that we'll see in a few weeks?

Lonely Flyer

I suspect that QF lease most of their aircraft.

If so I understand that depreciation would not apply.

Blackcloud

No they do count if an asset is obtained via a finance lease, just that the depreciation is based on term of asset or if QF is to obtain the asset after lease then life of the asset.
Operating leases would not count, they do not appear on the balance sheet either.

ButFli

SQ gets very favourable depreciation rates on their planes. EK can't claim any depreciation because it pays no tax to claim it against. Even though their situations are the opposite of each other, the outcome is the same. It is highly advantageous for SQ and EQ to sell their aircraft when they are still quite young, before the resale value drops too much and maintenance costs increase.

QF could set up a subsiduary in Singapore and take advantage of the more favourable depreciation rates but it will never escape corporate tax.

But the cost of the lease would be part of the cost of doing business. QF wouldn't be paying tax on that money anyway.

number_6

Then you would suspect incorrectly. Per the QF annual report, almost all of the QF aircraft are owned though some have been sold and lease-back from a QF-shell company; while all of JQ aircraft are on operating lease. The latest order QF announced a in Feb as the "completion" of their fleet plan through 2013 was a mixture of purchase and lease, so even future orders are being bought for cash by QF in some cases. Lots of detail available in the investors section of qantas.com.au