The accordion fleet business model

[Gilles Hudicourt]

Does anyone know of any other airlines in the World other than Sunwing and Canjet that have such high fluctuations in the number of aircraft in their fleets and pilots on their rosters between one season and another of the same year ?

These two airlines more than double in size from the summer to the winter, Sunwing nearly tripled.

Any there any other such cases anywhere in the World or do we have the only government and the only Civil Aviation in the world that are permissive anough to allow such a business model ?

[OPEC6-Heavy]

Gilles,

The obvious answer is, both are 100% reliant on Southern destination as opposed to Europe and Southern. The TS models requires less expansion and contraction because of this dual seasonality, but still relies on reductions in the winter months. It's simply survival, if both companies failed to reduce and expand the way they currently do it would not be a survivable winter holiday business 12 months a year. As this article explains, some companies deal with it in different ways, like parking 80 B-737's during the slow season or increasing contract or wet lease pilots during peak periods. And who is government to dictate what kind of business model an airline should have? Anyhow interesting article, I didn't realize the amount of capacity controls companies are implementing with massive fluctuations.

The concept of demand seasonality is well understood in the airline industry: Business passengers travel almost any time except school holidays and Christmas; leisure passengers tend to travel when it’s sunny.
Therefore airlines, especially in Europe, generally earn their profits in summer when demand, yields (and capacity constraints) are highest. In the past, when fuel was much cheaper, airline economics were dominated by fixed costs – aircraft ownership, salaries, and the perceived wisdom that aircraft should be kept flying even in winter, even if loads and yields were significantly lower, as this helped to reduce unit cost per Available Seat Kilometre (at least on paper).
However, with fuel now accounting for 40-50% of costs, more airlines are flying significantly less in winter. Although flying less pushes up the unit cost of the flying that does take place, the idea is that unit revenues will go up by a higher percentage as there will be fewer empty seats during the off-peak period as reduced capacity should lead to higher average fares and better load factors.
Ryanair’s 80 ‘parked’ planes
Last winter’s high-profile, much-repeated statement that Ryanair would be ‘parking 80 aircraft’ highlighted this new way of thinking. Heavily reliant on leisure traffic, and with no such thing as low-cost fuel, Ryanair stood to gain more than most from the decision to keep a significant proportion of its fleet grounded for several months. But how much have other European carriers been doing the same sort of thing in recent years?
Not so long ago, Ryanair’s monthly ASKs (Available Seat Kilometres) were little different in winter from what they were in summer. However, the difference in monthly ASKs for Ryanair between January 2012 and July 2011 (both of which have 31 days) was a massive 38%. In other words, Ryanair flew almost 40% less in winter than in the peak summer season.Analysis of how Europe’s leading LCCs compare reveals some interesting results. What may come as a surprise is that Ryanair’s 38% reduction in capacity is not that much higher than easyJet’s 34%, and actually less than Vueling’s 44% and germanwings’ 48%. Pegasus is something of an anomaly here. It was growing so fast in 2010 that, even allowing for winter cutbacks it still saw an increase in ASKs in January 2011 over July 2010. All airlines, with the exception of germanwings, cut capacity more last winter than they did the previous year, suggesting they are gaining increasing confidence in this approach to maximising results on an annual basis.
The most extreme case among Europe’s LCCs is possibly Jet2.com which cut capacity by a massive 83% between July 2011 and January 2012. With its fleet of older 737s and 757s (average age 22 years versus Ryanair’s four years) Jet2.com’s ownership costs are low, as are Allegiant’s in the US which uses a fleet of MD80s (average age 22). Monarch is another airline which uses older aircraft (average 15 years) and has drastic seasonality shift – a 62% capacity reduction between July 2011 and January 2012.

[bmc]

Seasonal demand fluctuations have been a challnge for airlines for decades. Not to long ago, Star Alliance were looking at acquiring B777's that could be operated by member airlines when seasonal demand warrented additional lift. There are airlines that send some of there aircraft to other airlines in the low season on wet leases. Air Malta sends one or two machines to South America every winter to a charter operator.

Star Alliance started a web based databse for its members about 5-6 years ago, where airlines could list aircraft they were interested in farming out and what date range they were available.

Nobody does this on a global basis. Brokers are often used to help shop aircraft for short term leases. There are all kinds of jets available for short term lease for these purposes.

[Panama Jack]

And who is government to dictate what kind of business model an airline should have? Anyhow interesting article, I didn't realize the amount of capacity controls companies are implementing with massive fluctuations.

+1

In a Regulated world, maybe. But deregulation started decades ago.

[Gilles Hudicourt]

Let me ask my question again. Is there any airline in the World. other than Canjet and Sunwing, whose fleets grow by 150 to 200% from one season to another according to demand. Does this business model exists anywhere else is the question.

[bmc]

Let me ask my question again. Is there any airline in the World. other than Canjet and Sunwing, whose fleets grow by 150 to 200% from one season to another according to demand. Does this business model exists anywhere else is the question.

It probably does. Seasonal fluctuations affect most airlines n the north and southern hemispheres. Considering there are 235 IATA member airlines, and over 700 airlines that have two character airline codes, which are only assigned if you operate a scheduled service and need/want to file your schedules with the Offical Airline Guide (OAG) and Innovata, the two schedule distribution companies that send airline schedules to all global distribution systems (GDS), which all travel agencies use.

There are lots of crafty airline operations out there. I doubt Canjet and Sunwing are totally unique. Air Malta has 10 jets in their fleet. They send two machines to South America each year. Back in the days of Nordair, we had ten jets and brought in two leased machines each winter. Sure, the 150-200% is extreme. But given the size of the industry, it may very well happen elsewhere.

[Gilles Hudicourt]

it may very well happen elsewhere.

I also agree that with the billions of galaxies out there, there may very well be life elsewhere than on Earth. But none has been found yet.

Unlike the galaxies, there are just a few hundred airlines and it should be possible to find out if any other airline on Earth has this same business model. Sending 2 aircraft overseas out of a fleet of 10 is not the same business model. There is the Czech Travel Service, which, with a fleet of just 16 B-737, sent 9 aircraft and crews to Canada to Sunwing, but their fleet didn't really "decrease". They just sent their aircraft and crews to Canada on wet-leases. Four of these were real wet-leases on paper, the other five were "dry-leases" on paper, but since a proportional number of pilots were sent top Canada along with the five dry-lease, for all effect and purposes, it was like a wet-lease.

Sunwing on the other hand, had 10 aircraft full time on the Canadian register and had 150 full time pilots. They imported 19 short term leases and the crews to man those 19 short term leases for 3 to 6 months. Then they send all these aircraft and crews home again. That, along with what Canjet does, seems unique to me.

[bmc]

No need to be snarky. Yes there are billions of galaxies and trillions of ants. Most of them on my farm.

I get the sense from your response that you are not, in fact looking for other examples that compare to Sunwing.

Let's just agree that there are none so that you can continue with your tirade.

[Gilles Hudicourt]

No need to be snarky. Yes there are billions of galaxies and trillions of ants. Most of them on my farm.

I get the sense from your response that you are not, in fact looking for other examples that compare to Sunwing.

Let's just agree that there are none so that you can continue with your tirade.

I was not being snarky and I apologize if I came across that way.




But to compare airlines that swap a couple aircraft to one that goes from 6 in the summer to 29 in the winter (a 400% increase if one counts the wet leases that go to Europe in the summer) is not what I was looking for.
You also replied that with all the airlines in the world, that there MUST be some that do the same. That sounds like a reasonable assumption, just like that there MUST be life on another planet is also a reasonable assumption to which I adhere.

But unlike the planets, there is a finite number of airlines, and if any of them have a business model that ressembles what Sunwing and Canjet do in Canada I should be able to find out which one does. I sincerly would not only like to learn about it but also to learn about HOW they do it in their country and compare it to how it's done in Canada.

Is Canada the only country where such a business model exists ?

[gonnabeapilot]

The example posted above of Ryanair parking 80 aircraft each winter seems to be a pretty good idea of an accordion fleet.... The article also referenced a large number of European Charter Airlines that now park large number of aircraft over the winter. (although I do wish the original poster had included a link so that we could all read more). So if your question is simply "are there other examples of accordion fleet airlines in the world?" then I would say yes and that a large number of them seem to reside in Europe. If your question is "are there other examples of accordion fleet airlines in the world that manage their fleets under identical circumstances as Sunwing and Canjet?" then I would probably say no as every market carries with it unique operating conditions and Sunwing and Canjet have come up with solutions that best suite the Canadian market.

[Gilles Hudicourt]

This is the article:

http://www.anna.aero/2012/07/04/groundi ... -airlines/

Ryanair has over 300 B-737s. So going from 223 to 303 not nearly as drastic as going from 6 to 29.

[OPEC6-Heavy]

Here you go,
I pasted 90% of the article.

http://www.anna.aero/2012/07/04/groundi ... -airlines/

[Dh8Classic]

Hmmmm....lets see. The original poster asks a question(most likely with an agenda) and doesn't like the unexpected answer. So a new question is asked in hope that there is no yes answer. If there is....will the question be changed again?

Canjet and Sunwing are providing a lot of opportunities for pilots who for whatever reason cannot get on with or are not interested in Transat. Good on them. Left seat opportunities abound.

I suspect that as these companies grow....their expansion percentages will decrease.

[Gorgons]

Ryanair has over 300 B-737s. So going from 223 to 303 not nearly as drastic as going from 6 to 29.

You have to love statistics... they are created to support the story you want to tell.

Your notion of drastic increase depends on view.

Yes 6 aircraft to 29 can be painted as a 383 % increase in size versus 223 to 303 which is merely a 36% increase.

383 % certainly sounds like a drastic increase, although I prefer dramatic increase.

What happens when you present your arguement as follows:

Airline X increased its fleet size by 23 aircraft over the winter and airline Y increased its fleet size by 80 aircraft... Now which one is the drastic increase in size?

Airline Y expanded 247% more than Airline X

[ea306]

Ryanair has over 300 B-737s. So going from 223 to 303 not nearly as drastic as going from 6 to 29.

You have to love statistics... they are created to support the story you want to tell.

Your notion of drastic increase depends on view.

Yes 6 aircraft to 29 can be painted as a 383 % increase in size versus 223 to 303 which is merely a 36% increase.

383 % certainly sounds like a drastic increase, although I prefer dramatic increase.

What happens when you present your arguement as follows:

Airline X increased its fleet size by 23 aircraft over the winter and airline Y increased its fleet size by 80 aircraft... Now which one is the drastic increase in size?

Airline Y expanded 247% more than Airline X

I love statistics!
Presented in a way that is most palatable for the intended audience.

An 80 aircraft increase is impressive no matter how you slice it!

[Gilles Hudicourt]

Hmmmm....lets see. The original poster asks a question(most likely with an agenda) and doesn't like the unexpected answer. So a new question is asked in hope that there is no yes answer. If there is....will the question be changed again?

Canjet and Sunwing are providing a lot of opportunities for pilots who for whatever reason cannot get on with or are not interested in Transat. Good on them. Left seat opportunities abound.

I suspect that as these companies grow....their expansion percentages will decrease.

A few of your previous posts:

Rumour has it that Skyregional will be getting the A320's.

The good news....no artificial language requirements.

Creating artificial language barriers is prejudice. And you benefitted from it. Sorry if that disturbs you but the harsh truth is sometimes disturbing.

Perhaps when there is a real shortage, they will take their second choice of what is felt to be important qualifications. And it may be important, but Sunwing sure offers some jobs these days for a wider audience

I get the general drift. I think everyone does. I will be honest with you. Whomever didn't hire you or didn't retain your Resume at AT did you a great service and did a great service to the company. Guys like you, for we do have a couple in-house, are always miserable and are not fun to fly with, and you would have no fun flying with a large proportion of your colleagues. Imagine having to stay locked up 12 hours in a cockpit with a guy whose mother tongue is ........ French ? Can you imagine the torture ? And it's not like you could just book off whenever it occurred, for it would happen pretty often.

So you are better off where you are and at least you can feel happy working with people you feel comfortable working with.

Now to come back to the subject of this thread, I would like to know if there are any other jet operators in the world which expand by 200% every year, and then contract back to their original size inside of 12 months?

If there is such a company, I would like to learn about it, to study how they do it as far as aircraft, crewing, licensing, etc to compare that operation to Sunwing and Canjet in Canada, because I do not like the way Sunwing and Canjet do it in Canada, and I would not like for Air Transat to begin doing the same.

That last sentence spells out my "agenda" in most clear terms. Nothing is hidden, or covert and this is not a trick posting of any sort. It's laid bare. So I do not think that readers here need you to explain and interpret this thread with your message of intolerance.

[aerosexual]

Sorry Gilles, but what is being said is true. You may not like how Sunwing operates, and yes there are things that certainly need to be addressed, namely, the ratio of foreign to Canadian pilots. However, many Canadian pilots have an issue with how Air Transat operates, namely in that it will not look at you unless you are French speaking. Sunwing may in fact be interpreting the rules for their benefit, and frankly that is a fight worth fighting. However, nobody dares to fight against Air Transat's discrimination against qualified non-French speaking Canadian pilots. What a shame.

I get the general drift. I think everyone does. I will be honest with you. Whomever didn't hire you or didn't retain your Resume at AT did you a great service and did a great service to the company. Guys like you, for we do have a couple in-house, are always miserable and are not fun to fly with, and you would have no fun flying with a large proportion of your colleagues. Imagine having to stay locked up 12 hours in a cockpit with a guy whose mother tongue is ........ French ? Can you imagine the torture ? And it's not like you could just book off whenever it occurred, for it would happen pretty often.

So you are better off where you are and at least you can feel happy working with people you feel comfortable working with.

Now to come back to the subject of this thread, I would like to know if there are any other jet operators in the world which expand by 200% every year, and then contract back to their original size inside of 12 months?

If there is such a company, I would like to learn about it, to study how they do it as far as aircraft, crewing, licensing, etc to compare that operation to Sunwing and Canjet in Canada, because I do not like the way Sunwing and Canjet do it in Canada, and I would not like for Air Transat to begin doing the same.

That last sentence spells out my "agenda" in most clear terms. Nothing is hidden, or covert and this is not a trick posting of any sort. It's laid bare. So I do not think that readers here need you to explain and interpret this thread with your message of intolerance.

[oh yeah baby]

By the way in % AT has more unilingual (english only) pilot that bilingual (english + french) at westjet. Please dont go there.

[OPEC6-Heavy]

Gilles,

because I do not like the way Sunwing and Canjet do it in Canada, and I would not like for Air Transat to begin doing the same.

Pretty stubborn if you ask me, even at the expense of long-term profitability and Jobs for all current and future Transat pilots? Sounds like a Kamikaze pilot who's had to much Sake.

oh yeah baby,

By the way in % AT has more unilingual (english only) pilot that bilingual (english + french) at westjet. Please dont go there.

This is just a guess, impossible to verify. But I agree language isn't part of this debate.

[Dh8Classic]

[I get the general drift. I think everyone does. I will be honest with you. Whomever didn't hire you or didn't retain your Resume at AT did you a great service and did a great service to the company. Guys like you, for we do have a couple in-house, are always miserable and are not fun to fly with, and you would have no fun flying with a large proportion of your colleagues. Imagine having to stay locked up 12 hours in a cockpit with a guy whose mother tongue is ........ French ? Can you imagine the torture ? And it's not like you could just book off whenever it occurred, for it would happen pretty often.

So you are better off where you are and at least you can feel happy working with people you feel comfortable working with.

Actually, where I work has a large number of people from around the world who have mother tongues that are not English. I know you like using the term intolerance when defending the artificial hiring barriers of your company which results in less qualified people being hired(or with spotty backgrounds as was famously revealed several years back and the heroic award-winning consequences of that decision) than would otherwise be case.

But anyways, fortunately in terms of language, Sunwing and Canjet hire based on the language required to do the job and Sunwing will continue to do so and so will WestJet and Rouge for the most part. And there will be big opportunities from most of these carriers in the near future charter market.

That being said....I am a strong advocate of Anglophones speaking French and learning it in school at a much younger age than was taught to me and I encourage all parents to have their children speak both our official languages well. But discrimination is still discrimination.

Go WJ, AC, SW.

[Jean-Luc Monette]

I know you like using the term intolerance when defending the artificial hiring barriers of your company which results in less qualified people being hired(or with spotty backgrounds as was famously revealed several years back and the heroic award-winning consequences of that decision) than would otherwise be case.

Sorry but I can't find the word "intolerance" in Gilles' posts.... could you please help me find it?

[Dh8Classic]

I know you like using the term intolerance when defending the artificial hiring barriers of your company which results in less qualified people being hired(or with spotty backgrounds as was famously revealed several years back and the heroic award-winning consequences of that decision) than would otherwise be case.

Sorry but I can't find the word "intolerance" in Gilles' posts.... could you please help me find it?

Certainly mon ami. It is the very last word in his most recent post on this thread. I have underlined it for you. So many are discriminated against yet they are intolerant. And miserable too according to said poster.

That last sentence spells out my "agenda" in most clear terms. Nothing is hidden, or covert and this is not a trick posting of any sort. It's laid bare. So I do not think that readers here need you to explain and interpret this thread with your message of intolerance.

[bopain]

Sorry Gilles, but what is being said is true. You may not like how Sunwing operates, and yes there are things that certainly need to be addressed, namely, the ratio of foreign to Canadian pilots. However, many Canadian pilots have an issue with how Air Transat operates, namely in that it will not look at you unless you are French speaking. Sunwing may in fact be interpreting the rules for their benefit, and frankly that is a fight worth fighting. However, nobody dares to fight against Air Transat's discrimination against qualified non-French speaking Canadian pilots. What a shame.

In the big pile of resumes Air Transat's chief pilots can have on their desks, a lot of people are qualified for the job, if not everyone. Some better than others, but beside few exceptions, with Air Transat's training, the most majority can succeed. The point is not about skills, it's about the kind of people you want to hire, the personality, common interests. Some french people have probably been left behind because the hiring comitee didn't think these people would "fit" in their actual group of pilots. And so have english people. It's just a matter of who they will be able to stand for 15hours in a row in a confined flight deck. All companies do it, even WS, AC, SW,CJ.........

[Panama Jack]

Well. . . back to the topic at hand which is-- "The Accordion Fleet Business Model."

The following article is old news, but let's just take a look at it:
http://www.canadianbusiness.com/busines ... tinations/

It discusses Transat's plans to possibly hire temporary foreign pilots as part of their own "accordion fleet" business strategy. What is the justification?

“A return to profitability remains our primary goal, and operating costs, particularly air costs, are an essential factor in profitability for any tour operator,” stated CEO Jean-Marc Eustache.

Ah, finally some economic reason in what has become predominantly a battle of emotions. Unless, of course, you believe that Eustache is simply posturing for political purposes.

But I don’t think so. As I understand it, and nothing personal against the company or the people working there (some of whom are friends), but Transat's continued existence is at risk.

Benoit Poirier of Desjardins Capital Markets said the news “demonstrates the company’s effective execution of its cost-cutting initiatives.”

But the company said operating the narrow body planes will allow the company to stabilize jobs by reducing seasonal layoffs.

Besides getting that jet job as quick as possible and a nice new type rating sticker in the booklet, isn't that what most of us want? Namely, stabilized, permanent jobs at a profitable and sustainable employer? After the first few thousand hours of summer flying jobs, the Accordion Fleet Business Model sounds a lot more attractive than the Whipsaw Seasonal Jet Job.

The real interesting question, as I see it, is what the reaction will be when the first temporary foreign pilots show up at Air Transat- from ALPA, the Air Transat pilot group, and Gilles?

[Scuba_Steve]

If its done under a equal reciprocal agreement I don't think any of us could complain.....not saying some wont though

Since its questionable that a reciprocal agreement cn even work under present regulations it will be interesting to see how it would transpire....hopefully they can use CJ and other providers and avoid the TFWP quagmire....

Cheers