Saturday, September 14, 2013

How to restructure PIA

PIA this year have floated a tender 3 times already for the dry lease of 10 narrow bodied A320/A321 or B738s but on all 3 occasions, it has been messed up through some form of outside interference.

Their B747 fleet after completion of Hajj 2013 operations shall be permanently grounded where as their A310s are now configured in a 227 seater all Y class cabin only. FRA and AMS have already been suspended with LBA next in line. I will not be surprised if both CPH and OSL too follow suit and mainland Europe is just left wit MXP and CDG which is operated 3 times per week using a B777 as ISB-MXP-CDG-ISB.

The A321-200 is the ideal replacement aircraft for the A310 for them to be used on the high density PAK-Middle East routes. This aircraft type can also be used to replace the A310 on their BKK-HKG services as the A321 can easily perform the 4.5 hour flight from PAK to BKK nonstop in both directions without a payload problem. The only route where it might face a hurdle is the 2 weekly ISB-PEK-NRT flight as PEK-ISB is a 6 hour 15 minute flight which can only be done with an A321-200 that has 1ACT (additional fuel tank) and not the standard model.

All being said though, it might not be a bad idea to completely shut down PIA write off the bad debts and start afresh with the B777s and ATRs being the only aircraft type of the current fleet being transferred over. The new PIA would have to get rid of the old dinosaurs of the current upper management team whose bad decisions have plagued this airline such the turn of the century. The long haul route network should focus only on UK, JFK, BKK and EY or EK via UAE and the Far East can be served via BKK with a code share with TG.

The core route network should encompass exploiting the higher yielding and higher volume PAK-Middle East market segment with A321s and B777s (mainly to JED/RUH and DXB only). The B777s configuration too needs to be changed to reflect reality i.e. having a J class cabin with 35 seats is fruitless for a non-premium branded airline like PK. It should maximum have 24 J class seats (all flat beds) on board its B772 and B773 fleet. The B773s though should have a 3-4-3 configuration in Y class (but not the B772 as they will be used on the longer flights primarily) in order to have great economies of scale especially on the higher volume PAK-Saudi flights + ISB/LHE-LHR/MAN.

JFK needs to be routed via SNN i.e. PAK-SNN-JFK-PAK so that the pax can clear U.S. immigration/customs easily at SNN and not have to endure the horror at JFK.

The restructured fleet of the new airline would look like this:

6 ATR 42-500s (from current fleet) seating 50 pax

4 B777-200ERs
2 B777-200LRs

*both of the above would be from the current fleet and should be able to seat 320 passengers (24J + 296Y)

6 B777-300ERs (3 active and 5 are an additional order placed over a year ago but I dont feel a need for there to be 8 in the fleet so 2 would be canceled)
*these shall be transferred from the existing fleet and should be configured to seat 434 passengers (24J + 410Y with a 3-4-3 arrangement) which in turn will be used on flights to RUH, JED, DXB and MAN exclusively !

12 A321-200s (with 1ACT preferably) seating 186 pax (12J + 174Y)

5 A319s seating 122 pax (8J + 114Y)

Total desired fleet strength is 35 aircraft which is ideal !

The 6 B77Ws I would use in the following manner:

1 aircraft for 4 weekly LHE-JED + 3 weekly LHE-RUH
1 aircraft for 4 weekly ISB-RUH + 3 weekly ISB-JED
1 aircraft for daily KHI-JED-KHI-DAC-KHI same plane service
1 aircraft for daily ISB-MAN
1 aircraft for 4 weekly LHE-MAN + 3 weekly ISB-BHX
1 aircraft for daily ISB-DXB + daily LHE-DXB

The 2 B77Ls would exclusively perform:

1 aircraft for 3 weekly KHI-LHE-YYZ-LHE-KHI
1 aircraft for 4 weekly KHI-LHE-SNN-JFK-LHE-KHI

The 4 B772ERs would perform:

1 SPARE aircraft to cover for the B77Ls and B77W
1 for daily PEW-DXB + 4 weekly PEW-RUH
1 for 3 weekly KHI-LHR + 4 weekly ISB-LHR
1 for 3 weekly LHE-LHR + half aircraft spare as cover

The 12 A321s would perform:

1 aircraft for 4 daily KHI-LHE-KHI
1 aircraft for 4 daily KHI-ISB-KHI
1 aircraft for double daily KHI-PEW-LHE-PEW-KHI
1 aircraft for 6 weekly PEW-AUH + 3 weekly PEW-DMM + 3 weekly PEW-JED
1 aircraft for 4 weekly LHE-KWI + 3 weekly LHE-DMM
1 aircraft for daily LHE-MCT + daily LHE-BKK
1 aircraft for daily KHI-BKK-KUL (to be timed the same as LHE-BKK so that pax from both KHI + LHE can connect via BKK to KUL hence making BKK a small scissors hub)
1 aircraft for double daily KHI-DXB + daily KHI-MCT
1 aircraft for daily ISB-AUH + daily LHE-AUH
1 aircraft for 3 weekly ISB-DMM + 4 weekly ISB-MCT
0.5 aircraft for daily LHE-DOH
1.5 aircraft as SPARE back up in case of AOG/maintenance for A321s and A319s

The 5 A319s would perform:

1 aircraft for daily KHI-MUX-DXB-MUX-KHI + daily KHI-UET
1 aircraft for daily KHI-SKT-DXB-SKT-KHI + 3 weekly KHI-DEL
1 aircraft for 3 weekly KHI-MED + 4 weekly KHI-BOM + 4 weekly KHI-DMM
1 aircraft for daily ISB-UET + double daily ISB-PEW + 5 weekly ISB-BKK (which would connect to BKK-KUL) +
1 aircraft for an additional daily flight each from KHI to LHE and ISB respectively + half an aircraft to act as SPARE back up

The above plan may not bring PIA back into profit mode, but it shall definitely bring a level of commercial efficiency, respectability, lower losses, higher yields and higher revenues versus the current cauldron that it is stuck in !

21AUG edition

Cathay Pacific
has officially announced that it shall be launching 2 new routes i.e. one medium haul and one long haul to further expand its global network catering to markets that are in particular seeing ever growing demand from mainland China. The new medium haul route announced is MLE-Male in the Maldives which shall be launched effective 27OCT13 operated 4 times per week nonstop using an A333. MLE over the past year has seen over 200,000 tourists arriving from mainland China alone and the market demand for this destination is also rapidly growing from South Korea, Hong Kong and Japan alike. CX's MLE announcement of MLE comes on the back of its main HKG based competitor i.e. Hong Kong Airlines also announcing that its own MLE services have been reinstated 4 times per week since July.

With regards to the new long haul route, CX announced EWR-Newark in USA which shall be flown on a daily basis nonstop using a 2 class configured Boeing 777-300ER. In turn, this will make CX service the New York area market with 5 daily flights i.e. daily EWR + daily HKG-YVR-JFK + 3 daily HKG-JFK nonstop all operated with B773ERs. CX also revealed some other long haul capacity changes to its network for the upcoming IATA W13 season of which the main highlights are as follows:

CDG - frequencies reduced from double daily to 11 weekly i.e. daily B773ER + 4 weekly A343
FRA - capacity reduced from daily B744 to daily B773ER
JNB - capacity reduced from daily B744 to 3 weekly B773ER + 4 weekly B744s

Air Canada has officially announced that it has adjusted its original order with Boeing for 37 Boeing 787-800s to be divided between both the -800 and the more popular larger -900 models. The new breakdown is 22 B789s + 15 B788s. The B789s provide the airline with the right capacity to perfectly replace its A333s on European services as well as replace the B763ER in the future on certain YVR-Asia flights. The attractive economics of this aircraft type also give the option to AC in allowing it to open new long haul routes from Canada that do not require the additional capacity of the B773ER such as Montreal-Beijing and Montreal-Casablanca in particular.   

Emirates has officially announced many changes to its IATA W13 schedule of which the main highlights are as follows:

AMS - frequencies increased from daily to double daily i.e. daily A380 + daily B772LR effective 02DEC
BKK - frequencies increased from 5 to 6 daily nonstop flights
SKT - new 4 weekly flights to be launched effective 05NOV using an A332
KBP - new daily nonstop flights using an A340-500 to be launched effective 16JAN14
BCN - effective 01FEB, capacity increased from daily B773ER to daily A380
MRU - effective 16DEC, capacity increased from double daily B773s to daily A380 + daily B773

Qatar Airways has officially revealed few capacity changes to its medium haul route network of which the main highlights are as follows:

NBO - frequencies increased from double daily to 18 weekly nonstop flights all operated with an A320 effective 01SEP13
DME - frequencies increased from 10 to 12 weekly nonstop flights using a mixture of A320s and A321s
JKT - frequencies increased from 11 weekly to double daily nonstop flights i.e. daily B773ER + 3 weekly A330s

Malaysia Airlines has officially announced that it will be increasing its presence in Austral-Asia during the upcoming IATA W13 season as the carrier looks to take advantage of the growing O&D + transfer traffic demand from these markets and focus its expansion primarily within a 7-8 hour flying radius of its main KUL hub. The main highlights are as follows:

JED - frequencies increased from 5 weekly to double daily nonstop flights effective 28JAN14 using a B772ER for all flights
MEL - frequencies increased from double daily to triple daily effective 21NOV i.e. double daily A333 + daily B772ER
BLR - frequencies increased from 10 to 11 weekly nonstop flights using a B738
DEL - frequencies increased from 12 weekly to double daily i.e. daily A333 + daily B738
AKL - frequencies increased from 6 weekly to daily nonstop flights using a B772ER
COK - new daily nonstop flights to be launched effective 27OCT13 using a B738

Turkish Airlines has officially announced that it will be launching new nonstop flights to BOS-Boston, USA effective 12MAY14. Flights shall be operated on a daily basis from IST using an A330-200 offering excellent connections in both directions to Middle East, Africa and Indian Subcontinent. TK will henceforth become the first airline from the Middle East region to operate into BOS. In addition to BOS, TK too revealed that it will be launching 2 new African destinations from 12DEC13 onwards i.e. Kano-Nigeria and N'Djamena which will be operated 4 times per week using a B737-800 in a triangular routing manner.

With regards to its fleet, TK confirmed that it has placed an order for 3 additional A333s + 5 additional B773ERs as the carrier is betting heavily for its long haul route network to grow rapidly over the next three years. Some of the A333s by 2015 will be replacing the A321s on selected flights to mainland European airports which have slot restrictions.

United Airlines has revealed that due to lower demand stemming from the U.S. forces pull out from Iraq in particular, it has seen reduced demand for its services to Kuwait and Bahrain in particular and as a result has decided to reduce its presence in these two markets from September onwards. Currently, UAL operates a daily IAD-KWI-BAH service using a B772ER. These shall be reduced to 4 times per week only using the same aircraft type.

Egypt Air has disclosed that it will be launching new services to CGK-Jakarta, Indonesia effective 02DEC13 as the carrier looks to take advantage of its CAI geographical hub location to tap into the growing Indonesia-Saudi Arabia and Europe bound market segments. GA revealed that the new flights shall be operated 4 times per week via Kuala Lumpur using an A330-200 and as a result of which the daily CAI-BKK-KUL service using an A333 shall terminate in BKK itself. Other changes for the W13 season revealed by MS are as follows:

BOM - frequencies increased from 4 to 5 weekly nonstop flights using a B738 (this is one of the world's longest B737 operated flights nonstop)
YYZ - frequencies reduced from 4 to 3 weekly nonstop flights using a B773ER