Fleet strategy

Any company that uses capital equipment is faced with the inevitability that one day the equipment will have to be replaced. Capital investment is a fact of business life whether the company is making cars, selling weekend tours to Obudu ranch resort or, indeed, flying passengers around the world.

The trick with capital investment is to buy the right equipment to match the company’s market strategy, and for the  Nigerian airlines that means planning a fleet of aircraft that will tag and translate their overall strategy as a serious player in one of the region’s most competitive market.

Compounding fleet strategy is the different number of aircraft/route combinations that must be juggled in a way that enables an airline to realize their financial and operational projections, maintain or increase market share and keep their competitors at bay.
Further complexity is added by the range of aircraft on offer; each one promises advantages in some areas, and disadvantages in others.For the strategists, the primary job is to match the best aircraft to the airline’s existing routes and expansion which is rarely cut-and-dried affair.

The universal factors in fleet planning are traffic demand, competition, distance, comfort, performance and payload, which of course vary widely between international and domestic routes and the requirements of individual routes and the airline’s strategy are generally what drive fleet planning.

There is no perfect aircraft for any route, certainly because an aircraft manufacturer has to decide which set of compromises to design toward. Take for instance, the average stage length around the world is actually getting shorter and so is more range a good thing or a bad thing? Only the airline can answer that.

In the recovery years after 2001-2004 world-wide slump; Boeing forecasted that passengers wanted safe, reliable aircraft that could fly point-to-point in the shortest time, and in their response was to announce the project that would become the B787 dream liner.
By contrast, Airbus predicted that passenger numbers would increase beyond the capacity of existing airports, and that the answer would be larger aircraft that could land more passengers per landing slot. They started work on the A380, which has proven an economic winner right out of the box.

In the mix you can add the emergence of long-range twin-engine aircraft like the B777, A330 and A350, thanks to the introduction of the extended twin-engine operations (ETOPS) rules that enable long-distance flights over water. The damage done to this traditional market of the B747 is blatant: with only a mild order of passenger versions of the 747-8 on an indication we may be seeing the end of

The Nigerian market is dominated by the requirements of the top six routes mainly Lagos, Abuja, Port-Harcourt, Enugu, Kano, Calabar, Benin  which are all in the main stream economic and political routes, and the airlines need to plan to optimize these routes, which means that using the same aircraft on routes outside this six destinations becomes a compromise.

The main question for all the airline operators is to determine which routes to run jets, and which routes to run turbo-props because the primary indicator is operating cost Vs payload availability as well as performances of the two. Again you can’t really compare the regional jets with turbo-props generally because each has its own distinct characteristic and have to be assessed within the total route system of each carrier.

For example, a very short segment like Benin-Lagos or Lagos- Ibadan may not necessarily work out so well for jets, but suits turbo-props better but jets may be more preferable in the Nigerian scenario for passenger’s compromise and not necessary for the economic viability.

There are other dynamics on short-haul routes as well, because if the airport “hassle factor” becomes too great, passengers will migrate to surface modes such as driving. To a certain extent, fleet strategy has long been a black science, while the airlines are understandably tight-lipped about their plans lest the competition gazump them when they’re not looking, forcing the industry to do a lot of speculating about who will be operating what, where and when.

Nowadays there is another player in the game that is having a bigger say in fleet planning; – public expectation. Until now, fleet strategists have expended most of their energy on capacity, flight times, fuel loads, ease of maintenance and efficiency, but now they have to begin to consider CO2 emissions& carbon tax, fossil fuel consumption and noise.

The A350 was born to address some of these issues, and it has not been without many suitors; and certainly the recent Dubai Air Show gave it all. For Airbus it may simply be a matter of timing; the big airlines having been seduced by the allure of the B787,

however, if the Dream liner doesn’t come to the party soon, the A350 might start to look more attractive.
There is a lot at stake in fleet planning; few other industries outlay capital investment on the level that airlines do. Not surprisingly, product differentiation is employed as a method of trying to get one over the opposition and just as I saidat the beginning, it’s all a compromise

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