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CAPA TV | December 17, 2018

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New Generation Aircraft And The Reshaping Of Route Economics

CAPA
  • On November 19, 2018

New generation aircraft offer game-changing economics and range for LCCs and FSCs. In the narrowbody space, several LCCs are now operating new generation narrowbody aircraft on long haul routes and disrupting the dominance of the immunised JVs.

However, with the exception of Jetstar, Asian LCCs have not yet fully taken advantage of the range of new aircraft technology. Congested airports with slot constraints and a low yield environment may dissuade long haul low cost narrowbody operations in Asia.

But Asian FSCs have been more amenable to adopting the new aircraft technology and have introduced product innovations such as lie flat business seats to maintain their full service offering. Philippine Airlines is using A321neos on flights of up to eight hours, opening up new markets in Australia and India that were previously not viable and Air Astana plans to begin operating the A321neoLR on some of its existing Kazakhstan-East Asia routes in 2019, replacing 757s. Both carriers offer lie flat business seats.

Meanwhile new generation widebodies such as the 787 and A350 have changed the operating economics of competitive ultra long haul markets. Although there are still high costs and challenges associated with operating ultra long haul routes, the newer generation aircraft present a much more profitable proposition compared with original generation ultra long haul aircraft. This could also impact existing hubs and sixth freedom operators as onestops decline and new ultra long haul city pairs open up.

  • Will Asian LCCs follow European LCCs in using new generation narrowbody aircraft on long haul routes
  • Will lie flat business class seats on full service narrowbody operators become more mainstream?
  • Is there still a market for one-stop flights over long haul markets? Will sixth freedom operators suffer?
  • How much reliance is there on premium traffic to make ultra long haul routes sustainable?
  • Can fuel efficient ultra long haul aircraft overcome the inherent cost challenges of ultra long haul routes?
  • How will airlines manage and react to a possible projected downturn in passenger demand coinciding with the expected peak period for OEM deliveries?

Moderator: Cebu Pacific Air, Board Advisor, Garry Kingshott
Panel:

  • Bombardier Commercial Aircraft, Director – India & South Asia, Ajay Mehra
  • flyadeal, CEO, Con Korfiatis
  • Spring Airlines, President, Zhijie Wang

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