Happy New Year! I hope 2017 finds you well.
First, my apologies for my recent lack of blog plots. 2016 (and for that matter 2015) had been a very busy and taxing year. I needed a break to recharge, so I left all things aviation behind for the Christmas Holiday. Now the holiday season is over and people are back at work (or soon will be) so I thought I’d touch on something that I’m sure has been a pain point for a number of travellers – flight delays and cancellations.
Delays and cancellations are the bane of everyone in the airline industry value chain. From the passengers to the airport staff and even the airlines themselves, everyone hates a delay or, worse still, a cancellation. Delays, cancellations and their mitigation are such a key part of airline operations that they are possibly the one criteria measured by all operators in the world. On time performance (OTP) – measured as the percentage of your flights that depart on time or within 15 minutes of schedule – is tracked and targeted for improvement on an ongoing basis. OTP in the region of 98% is a normal target (98% meaning that for every 100 departures only 2 will be late).
Despite all the best intentions, the planning and contingencies put in place, the sad reality is that delays still happen to all airlines the world over. In some cases it’s due to forces beyond the airline’s control (like weather) in others it’s down to the aircrafts themselves. Even though they are meticulously designed, rigorously built and consistently maintained, at the end of the day aircrafts are machines and they will breakdown. These breakdowns often result in delays to the flights planned for those aircrafts but it doesn’t stop there. Since most airlines have a network that schedules flights to maximise the use of the aircraft, a delayed flight in the morning can very easily result in a delayed flight that evening.
The most straightforward way to prevent the delays due to mechanical issues is to keep extra aircraft to use as spares. Therein lies the ‘Spare Aircraft Dilemma‘ the airlines face. How many spare aircraft should you keep? How many narrowbodies and how many widebodies? Where on your route network do you position the aircraft? (Because planes don’t only become unavailable at your home base). Do you have the resources to maintain the spare aircraft in readiness to operate in addition to your operational fleet?
Beyond a certain number – which varies depending on the airline’s fleet size – additional spares become impractical. However, the fundamental challenge with spare aircraft is cost. Depending on the age of the aircraft, a narrowbody could cost you between $250K and $450K per month in ownership costs. A widebody could cost even up to $2M (for new, larger aircrafts like A380s or 747s). All of which occur before maintenance costs (which can be of the same order of magnitude as the ownership costs), storage and parking fees etc..
At it’s simplest, the Spare Aircraft Dilemma is a choice between i) Keeping enough spare aircraft to mitigate operational disruptions – which is financially costly and can even be damaging OR ii) Managing disruptions through the efficiency of your support teams – which can only reduce the delays and cancellations but not eliminate them. On one hand they risk their business’ health, on the other hand they risk their passenger’s time (and ultimately their goodwill).
Every airline has to make that choice for themselves. Most of the time they find a middle ground based on their financial position, their experience and their resources. Sometimes, unfortunately, they make the wrong choices. Other times, their circumstances mean the choice is made for them and they have to do the best they can with what they have. Given the reality of reduced revenue per passenger (from competition pricing etc.) and the continual pressure on cost reduction, it is likely that this will be a problem passengers and airlines will have to contend with for quite a while to come.
