dhuey

Isn't it hard to get a fix on Emirates's financials? A lot of people in the industry, perhaps driven by envy, think the UAE is subsidizing the carrier, big time.

fly747first

Apparently, they have been audited many times by international agencies and they haven't found traces of government subsidies and Dubai doesn't have strong oil reserves like other places in the Middle East. However, Dubai does allow EK to achieve many cost savings.

eponymous_coward

I must have missed EK's entry into the West Coast-Hawaii market, as well as the large number of A380s US-based airlines operate, similar to EK. It couldn't possibly be the case that a scissors hub like DXB might support slightly different travel patterns than US markets do, could it?

Also: so, flown any AA/DL/UA 747s to Hawaii lately? Hmm, wonder why not?

fly747first

HA only flies widebodies from HNL to the mainland on a daily basis.

AA flies widebodies to Hawaii from select markets, and so do DL and UA.

As for 747s, AA has none, while DL only has 16 and UA has 24, but they fly them to markets that are better suited for this aircraft, although a few years ago DL was flying 747s from ATL to HNL.

fishy21

Yeah... I'm a little confused with the OP statement. UA flies 3 widebodies from SFO-HNL. So I'm not sure what he was trying to compare.

eponymous_coward

And UA flies narrowbodies as well to Hawaii. As does AA. As does DL. with few exceptions (UA out of SFO and occasionally AA out of LAX), the airlines flying widebodies only use them when a narrowbody won't make it.

The point is that small narrowbodies are quite viable for West Coast-Hawaii travel, regardless of what HA flies or doesn't fly, because we have years of data on this since ETOPS certification of the 737, and if passsngers actually paid premiums for widebodies on those routes, we'd see widebodies. Also, if you're flying a half-empty widebody or having to fill 200+ seats with trash yields, you're worse off than flying a narrowbody due to costs- extra FAs, extra fuel and so on. But hey, if HA thinks cutting their nose to spite their face is worth trashing yields... have at it, I suppose. Perhaps they'll enjoy bankruptcy again.

Comparing AS or HA with EK doesn't make sense; very different markets being serviced in both cases. Maybe when AS or HA starts flying A380s with showers and bling it will make sense. For that matter, I think VX will likely be fine if they dump HA and fly SFO/LAX-HNL once they have the planes for it...

(Seems only fair to try and bring the topic back to VX in the VX forum.)

fly747first

Didn't I just write that above in #19? I'm not sure why you are essentially repeating what I previously stated.

How do you know that HA's widebodies are flying half empty? I take these flights often and they are always full. And for the record, it is entirely possible for a half full plane to be more profitable than a full one, as you can easily fill a plane with cheap fares. Why do you think that airlines like SQ fly their huge A380s with a large portion of F and Y seats unsold? They know that if you have a J cabin filled with many full-fare J pax as well as many Y pax on full-fare tickets, you are golden. Obviously this wouldn't be the case of AS, HA, or VX but you get the point.

No one is comparing airlines like AS or HA to mighty EK, I mean, there simply is no comparison. The point is, however, that flying widebodies does make sense for some airlines and in some markets, the cargo is actually more profitable than the passengers... hence why airlines would opt to fly widebodies on markets where the passenger demand isn't that high.

fishy21

I think we all agree that a narrow body can be sustainable for Hawaii service, but I'm curious as to why you dislike widebodies or HA. HA was profitable in 2013, so they must be doing something right. Personally, I prefer wide bodies. I choose to fly to Hawaii with HA because they have better scheduling & because it was a WB... compared to a 737 with AS.

eponymous_coward

I'm not. Let's reference your original post:

"the obvious larger capacity which would enable HA to easily undercut AS at any given time since the A330s and B767s can carry almost twice as many passengers as B737s. "

Now, let's reference ALL of mine with some emphasis:

"if you're flying a half-empty widebody or having to fill 200+ seats with trash yields"

The assumption I make is this: if one is driving a competitor out of a market by dumping a whole bunch of capacity in a market, more than it really can sustain... that may or may not work. And the airline that has the lower costs (they only have to fill a 737 with trash yields instead of a 767 or A330, only have to fuel a 737, only have to staff a 737, only have to pay landing fees for a 737) might well have the advantage, because costs become a factor if you're deciding to play a game of capacity chicken ("let's both lose money for a while so I can drive you out of the market").

That is what I am saying.

Incidentally, do you think there's a lot of unfulfilled cargo demand on, say, SJC-OGG? SAN-KOA? PDX-LIH?

I don't, but the assumption that "oh, someone is flying widebodies, therefore the operator flying narrowbodies will be crushed like a grape" doesn't necessarily follow from someone flying widebodies. Which is why I think VX and AS will do fine. (For that matter, HA might well do fine, they have some advantages on the Hawaii end of things....but for a while both HA AND AQ served Hawaii/West Coast... and AQ flew narrowbodies.)

fly747first

First of all, do you realize that even things like basic food that would otherwise be relatively cheap on the mainland are actually extremely expensive in Hawaii because everything must be shipped there? Therefore, it does make sense for HA to operate primarily widebody aircraft with much greater cargo capacity. Nevertheless, as HA expands, the airline has acknowledged that some markets can better be served with A321 aircraft and hence why they are on order.

Secondly, regarding my previous comment "the obvious larger capacity which would enable HA to easily undercut AS at any given time since the A330s and B767s can carry almost twice as many passengers as B737s," I'm not sure that you understand Pricing and Revenue Management. A HA analyst who handles a flight operated by an A330 does indeed have, at any given time (well almost, except in cases where say there were only a few F seats left), the ability to undercut AS since the airline only operates smaller 737s and the analyst assigned to the A330 flight has many more seats to sell, but to optimize revenue, that doesn't mean that he(s) would always want to. For instance, given HA's nicer Y product (including free meals), it wouldn't be surprising that customers would be willing to pay a premium to fly HA. More specifically, say that AS analysts are willing to sell up to 60 seats in the lowest bucket for a given flight, and that the HA analyst is willing to put 70 in the lowest budget, again, by virtue of the higher capacity, the HA analyst still has the potential to end up with a higher overall yield. For example, the HA analyst may be able to get many more last minute bookings at substantially higher fares, not to mention that HA also has a much stronger F product than AS and actually sells it.

Bottom line, depending on the market, sometimes the cargo revenue surpasses that of the net and ancillary passenger revenue and you can still run a profitable flight even if it is operated by a widebody.

eponymous_coward

Right. We'll just ignore cost or demand, I guess.

By the by, neither HA nor AS are VX. This is the VX forum, right?

fly747first

Technically, the formula used to calculate airline yield does not take into account cost and generally, the science of Pricing and Revenue Management isn't concerned with cost. However, the forecasts that PRM analysts are responsible for (in terms of being met/achieved) is actually calculated by Finance and Network Planning which do take into account all costs, even repositioning costs.

I gave you a very explicit example in my previous post about dealing with demand from a Pricing and Revenue Management approach, which applies to AS, HA, VX, and any company whose inventory is perishable.

Hope this helps.

eponymous_coward

Right.

I'll leave the discussion with this.

http://finance.yahoo.com/q/ks?s=HA+Key+Statistics

http://finance.yahoo.com/q/ks?s=ALK+Key+Statistics

Note profit margin and operating margin.

Good luck to VX in getting its own margins in order.

dhuey

Sorry to interject, but does this thread have anything to do with the possibility that VX might start service to Hawaii?

audio-nut

Word on the street is that Hawaii will start in October 2015. They already are in negotiation for contracts with ground handling, catering, etc.