COC and DOC Part V

This is the next part in a series of blog posts related to COC and DOC - the last one can be found here. As I referred to Allegiant in that last post I will continue with that particular airline here.
Yesterday Allegiant announced that they will introduce the A319 into their fleet. The company presentation includes an interesting comparison of COC and DOC costs per passenger between the MD80 and the
1. Block fuel per hour: Allegiant says that block fuel per hour is 25% less for the A319. With PIANO I was able to validate that. I calculated a 859nm mission (average stage length according to the June 2012 traffic report) for both aircraft with 90% load factor of 165 (MD-80) and 156 (A319): Result: 13,781 lbs for the MD-83 and 10,419 lbs for the A319 or a difference of 24.3%. Taking straight the $ numbers from the presentation leads to higher numbers though: the A319 for example would burn (156pax*90%*6.7lbs/gal*$41/3.25$/gal) = 11,833lbs - The difference can be attributed to the fact that you cannot always fly the optimal route from one airport to another, increased taxi times and things like that.

2. Maintenance per block hour: taking the last numbers from MIT's Airline Data Project Jetblue's A320 fleet has maintenance costs of $491 per block hour, Allegiant's fleet resulted in $677 per block hour or 38%  more. The A319 should be a little bit less costly to maintain than the A320, so the claimed 40% difference should be reasonable.

3. Ownership Costs: now is really gets interesting. Allegiant claims $10 per passenger in ownership costs for the A319. Now 8.9hrs per day means that the aircraft can make 4 trips per day (a 859nm mission lasts a little more than 2 hours). With 90% load factor based on 156 seats this is $10*4*0.9*156 =  $5616 per day or $168,480 per month. Aviaton Week quotes the IBA Commercial Director Owen Geach in saying that lease rates for the A319 have fallen to rates as low as $150,000 per month for 10 year old aircraft. The aircraft that are going to Allegiant will be about seven years old, so the rate seems reasonable. Scott Hamilton cites a lessor who quoted even lower lease rates.

Apparently Allegiant is looking at the A320 for the future - for now the leasing rates are still too high for the business model from Allegiant. But the nearer the EIS of the A320neo will come, the more will lease rates for older A320 (and B737-800 as well) will fall - it is just a question to what degree and when the lease rates will be low enough for Allegiant. Rising fuel prices would justify higher lease rates to pay off, lower fuel prices, as forecasted by Adam Pilarski from AVITAS ($40/crude oil in 2018) would extend the life of the MD-80 fleet - we might as well still see DC-9's in Delta colours then...

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