Yesterday, I received a comment on a recent post about using turboprops that offered a challenge.  They wrote:

”

Gregory, here’s a thought experiment for you. You want to set up an airline in a third world country and you need to start with 3 aircraft. There are 3 major cities within a 200m radius and a populous capital 650m away. The major trunk routes are from the capital to 2 of the three cities. The climate is hot and humid.

Bearing in mind the cost of leasing and ops should be minimised, what equipment would you use and why?”

First, let it roll through your mind for a bit. 

Yeah, it’s a tougher question than it looks, isn’t it?

But here is my stab at it.  The reader doesn’t offer too many details and that’s OK because what they do offer really sets the stage for the challenge.  I can make some assumptions but I cannot make many because they conditions do constrain one a bit more than it appears.

It’s tempting to start right off the bat and just pick a Wonderful Aircraft and be done.  But those hot and humid conditions kind of throw one for a loop because that means not just *any* aircraft that seems wonderful.  Jet engines need to cool a bit before another take-off, for instance.  Take a look at the challenges airlines have had operating NextGen 737s in Hawaii.  Turboprops might seem rational but it’s a third world country and you’re hosed if a turboprop goes tech in a remote city that you only have a few station personnel at. 

This will also be about frequency on the two trunk routes but routes between the non-capital cities aren’t necessarily high frequency and may not need large equipment for every flight.

And then there is money.  You can get lots of funding in a third world country but the cost of capital is higher and that has to be reflected in your decision matrix.  Just because you might be able to get brand spanking new 737-800s doesn’t mean you should.

But starting with three old aircraft, even 737-300s, might pose problems since that third world country might be a bit far away from spares. 

Let’s begin with what it isn’t going to be.  It won’t be 2 different types.  It’s tempting but 2 different types in a third world country where I can’t subcontract maintenance is untenable.

It won’t be a Q400 or ATR-72.  Love the aircraft but they are a bit more fragile than jets and getting new aircraft immediately is challenging since the production rates are fairly low. 

It won’t be a used 737 or Airbus A320.  They’re available but those that are available will require leases that, if I succeed, will be difficult to break.  Furthermore, used aircraft of that type will be requiring major maintenance sooner than I want as I try to build my airline.

It won’t be a new 737 or A320 either.  Very high costs to buy or lease make it a poor choice and I may not be able to fill enough seats on non-trunk routes to make money. 

It won’t be a new or used ERJ-140 or CRJ-200 aircraft.  Too expensive to operate for the seats they offer and those, too, a touch more fragile than one really wants.  They’re cheap to buy but those used aircraft have been heavily used and abused.  I don’t need problems cancelling flights.

The CSeries almost feels right but I don’t want to be a launch customer or near launch customer for those.  They’ll have bugs to work out and their dispatch rate is unknown for some time.  The efficiency and operational costs potential does feel right, however. 

I think what I need is an aircraft family that I can right size to my routes.  I need my pilots to be qualified to fly all the types.  I need  maintenance to be lowered by good parts commonality.  A reliable dispatch rate is important as well.  I need to be able to punish the aircraft to a degree and I need them to be resistant to the challenges of a hot humid environment and ground handling by less than perfect people. 

But I need something efficient on seat mile costs because I’m in a third world country and I won’t be charging business class fares.  I also need growth potential and the possibility of getting additional aircraft in a reasonable amount of time.  I also want someone who is incentivized to help me finance or lease these aircraft. 

I want an Embraer.  Actually, what I want is the Emraer E-170/190 family.  The cost of these aircraft falls right between the turboprops and the mainline jets.  They have proven reliability now but engines new enough to offer competitive operating costs.  If I expand, I can buy smaller and larger aircraft to fit my disparate routes but the size differences aren’t so great that I can’t substitute aircraft for each other in a pinch.

They’re made in Brazil by a company that does know something about hot and humid.  The range is a touch overkill for the requirements but that means I can carry a very dense load.  Perhaps even as much as an all coach 29″ seat pitch density for as many as 80 seats on a E-170.  I can get as much as 120 seats on an E-195 at that pitch and that provides me a good spread in seat quantities for my future needs.

Take off performance is good for small airports and I can compete with 737/A320 aircraft on seat mile costs (more or less) for those route lengths.  I can turn my aircraft as fast as anyone if not faster and get higher utilization than most.  If I need to lease, the residual values are good enough to make it an attractive prospect for leasing companies for the next several years.  If I want to buy, I have a good chance at excellent financing courtesy of Brazil who wants to promote their shining aerospace company.

I think I’m buying one of these two combinations:

• (3) E-190s with maximum possible seat density but with the least available range.
• (2) E-175s and (1) E-195, again with the maximum possible seat density but with the least available range.

That would give me a capacity of about 342 seats with option one and 298 seats with option 2.  If I have to take what I can get, I want option 2.  If I can get what I want, I go with option 1.

Congratulations AF, on my first night free in more than 4 weeks, you got me to sit down at a computer and think some more.   Thanks for the challenge, it was fun!

Filed under: Airline Fleets by ajax
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