Moderators: richierich, ua900, PanAm_DC10, hOMSaR
AirEnthusiast1 wrote:Personally, I choose Embraer. It’s labeled a “regional jet,” but still carries a high number of passengers, $30 Million less than 737 Max, and faster turn around time for more air productivity. I realize Airlines negotiate purchases prices, but why do Airlines choose Boeing? What am I not understanding?
What is the better aircraft and why for the reasons stated above?
Flighty wrote:Oh another thing about profit? Smaller aircraft are much easier to make profitable than larger aircraft. Yield almost always diminishes faster than CASM.
Plenty of markets would be super profitable (margin) with a CRJ-700, profitable with 737-800 and unprofitable on A330. Why do airlines like Delta and American and United keep old 767s in service long after you think they should be replaced by A330 or even A350-1000? Because they are more profitable. In part, because of aircraft cost. And in part because of low trip cost.
Which widebody makes more money in November carrying 160 passenger loads.. an old 767 or a new A350-1000? Small size pays you every day. Large size pays you ONLY when $$ customers fill those extra seats. The 767 will win quite often. Even on an annual profit $$ basis.
zeke wrote:An old 777 without the AIMS update is worthless as Honeywell will not provide support unless you were the existing customer.
Matt6461 wrote:Flighty wrote:Oh another thing about profit? Smaller aircraft are much easier to make profitable than larger aircraft. Yield almost always diminishes faster than CASM.
Plenty of markets would be super profitable (margin) with a CRJ-700, profitable with 737-800 and unprofitable on A330. Why do airlines like Delta and American and United keep old 767s in service long after you think they should be replaced by A330 or even A350-1000? Because they are more profitable. In part, because of aircraft cost. And in part because of low trip cost.
Which widebody makes more money in November carrying 160 passenger loads.. an old 767 or a new A350-1000? Small size pays you every day. Large size pays you ONLY when $$ customers fill those extra seats. The 767 will win quite often. Even on an annual profit $$ basis.
This is true unless and until the market sets the price at (or slightly above) marginal cost.
In your examples - widebody, mostly longhaul ops - we don't see a true competitive equilibrium approaching marginal costs. This is for many reasons, including the lack of market liberality in international flights.
The OP addresses shorthaul ops, however - a domain in which many markets behave much closer to a true competitive equilibrium. That very nearly holds perfectly for European and/or Southeast Asian ULCC ops, for example.
In this domain, where ticket prices are generally set by the lowest-cost operator, there's little opportunity to make a profit off of smaller planes with higher unit costs. This convergence on competitive equilibrium explains some of the narrowbody market's trend of up-gauging.
Returning to the OP, Southwest's U.S. domestic market is a little less liberal and a little more anti-competitive than European/SEAsian markets, but it's closer to them than the longhaul markets you describe.
We should hope that the long-term trend will be for longhaul LCC's and international liberalization to move markets to competitive equilibrium where bigger planes with lower unit costs and lower prices will dominate.
Flighty wrote:but I'm not sure you actually believe what I said either, that smaller, high-CASM aircraft can be profit optimal in a competitive market.
BoeingGuy wrote:So if an existing 777 customer sells AIMS-1 777s to another airline, Honeywell will no longer provide support?