Brussels Airlines' fleet renewal

[NCB]

Oh come one, the 737's will gradually leave SN, being replaced by A32S wich will come in at the moments the 737's leave. The 4 A319's that will come in S11 have nothing to do with the 737 replacement. A part of the RJ fleet will be (and stay) replaced by A319. Do you still don't see that this is they way it will be, just like it happened and is happening in the whole airline world with the LH group the best exemple. Most of the 50 seaters in the group are leaving or already left. Austrian is using bigger aircraft again and the result is clear, they made a small profit in the last quarter and that was a long time ago.

Do you really think SN is going to replace RJ's by A319's until they get a reall RJ replacement?? They aren't stupid, BAe would be glad to offer SN an extension of the lease contracts. So if SN is waiting for their real RJ replacement they would just extend the lease contracts for a part of the RJ fleet and not replacing it for a short time by A319's.

Nope, no chance. SN's B737 contracts run until 2013/2014, so they can't terminate them earlier.
So if they extended the 5 RJ85's, it would have been even worse. As to the A319's, I know one half of the strategy is to capture lowering leasing cost, for these are expected to rise by the time the 737's leave the fleet, but the other half of the strategy is still unclear. It could be that it's got to do with Club Med, but I don't have a clear picture yet, it could also be and I personally hope that that they could be starting flights to Africa with them.

[RoMax]

Nope, no chance. SN's B737 contracts run until 2013/2014, so they can't terminate them earlier.
So if they extended the 5 RJ85's, it would have been even worse. As to the A319's, I know one half of the strategy is to capture lowering leasing cost, for these are expected to rise by the time the 737's leave the fleet, but the other half of the strategy is still unclear. It could be that it's got to do with Club Med, but I don't have a clear picture yet, it could also be and I personally hope that that they could be starting flights to Africa with them.

Look, it's very easy. If SN don't need bigger aircraft on routes lik MXP, CPH, TXL,... they will not deploy bigger aircraft on them. What's that for a strategy, replacing RJ's with A319's because you have to replace your 737's over 3 years? 737 replacement is A32S wich will come at the moment the 737's leave. RJ's are being replaced on some of the current RJ routes, but you can find HAJ, BRS and NCL as RJ85 operated in the booking system from the moment A319's are taking over TXL, HAM,... and who knows, maybe SN wants to fly to BOD, LCY... with these RJ's wich will come free when the A319's replaces them. As SN said it, it's not sure if the RJ's will leave (and how many), or it will be part of the expansion to new routes. If they stay for expansion it doesn't make any sense that A319's will replace them on their current routes if these routes don't need bigger aircraft.
SN's intensions are to make profit, not to make it worser with operating bigger aicraft where they don't need them.

[NCB]

Thanks, Mr_Boeing, for providing actual data showing replacement of RJ fleet.

NCB: You say bigger aircraft do not work if you can't fill smaller ones...but why does it work at other airlines. Increasing loadfactor and increasing profitability despite operating bigger aircraft...
I still didn't find any exemple in real world wich shows your idea works. But there are many exemples wich prove that operating bigger aircraft works (off course not on every route and every flight).

I was also wondering, and it would be really nice if someone could explain in a clear manner how increasing the size of an aeroplane will increase profitability.

Many people on this thread are pretending that it is indeed

the case with airlines like Austrian. But nobody is explaining why. More fuel, more cabin crew, higher airport fees, same number of passengers, something must be wrong in the equation...

That is a common concern among many people, not just me and you, and it must be taken seriously.

Mr. Boeing is right that LH and OS took out their entire 50 seat fleet.
I can explain what the 50 seat problem was about.
On a 50 seater, at LH and OS yields, they needed to fill 45 seats to break even. 90% LF.

Embraer and Bombardier then came up with CRJ700, CRJ900, E170, E175, E190.
These aircraft have only a slightly higher operating cost but have 20 to 40 more seats they could sell for a profit. This means that the break even point moved to 50 seats on 70 seats aircraft and 60 seats on 90 seat aircraft. So the break-even moved down to a LF of 67-71%.
The CASM leap is significant.

So then, it was simple, at Cityline they merged the frequencies and replaced 45 CRJ100/200 by 15 E190/195.

Austrian was a more drastic scenario.
They replaced 13 CRJ200's by 4 Q400's. But they could afford to because they still have the Fokkers.

The problem with SN doing the same is
A. it can't merge 2 RJ85 flights into 1 A319 flight or 2 RJ85 flights into 1 CS100 flight, without seriously affecting its timetable and pax convenience because it has a small fleet of RJ's that aren't only operating short, thin routes but mainline routes.
B. the CASM leap between a cheap to lease RJ85/100 and a CS100 is not significant enough

So no Mr. Boeing, it doesn't work that easily.

Look, it's very easy. If SN don't need bigger aircraft on routes lik MXP, CPH, TXL,... they will not deploy bigger aircraft on them. What's that for a strategy, replacing RJ's with A319's because you have to replace your 737's over 3 years? 737 replacement is A32S wich will come at the moment the 737's leave

It depends. Now A319/A320's are abundant on the lease market and cheap, because of the crisis.
In 2013/2014, the leases could be 50% and even more expensive than now, and then the B737 replacement is going to be a very expensive deal. If SN takes long leases now, they can save several millions per year after 2013, for 5 or 8 more years paying 30% off the lease price that they would pay if they took it in 2013.

Example:
SN leases 4 A319 at 2.5 million (USD) per year each in 2011 for 9 years, total cost until 2020 is 90 million.
SN leases 4 A319 at 3.5 million per year each in 2013, for 7 years, total cost until 2020 is 98 million.
So by taking the lease in 2011, SN gets 2 years of lease free, plus saves 8 million dollars, or almost 1 million dollars per year. And since it can't get rid of the 737's before 2013, it gets rid of RJ85's.

But this is only half the picture. I think that you need more than this to justify SN's choice of temporarily replacing RJ85's by A319's and I think that we will have a clearer picture in a few months.


But to press on it again, SN can't do with the RJ85's what LH Cityline and Austrian Arrows did with their CRJ200's, because they can't merge frequencies into less frequencies and use bigger airplanes to operate them.

That's why I'm telling you guys for a long time now that it will be wrong to replace RJ85/100 by CS100 or by any aircraft larger than the RJ85/100 on a 1 to 1 basis, because it has low load factors.

If SN was flying at 90% load factors in several frequencies (Like Cityline was doing) I would have been the first to beg for larger aircraft and consolidation of frequencies.

Like I said, SN needs to get trip cost down first, then increase load factors and frequencies, and then again merge frequency and capacity by using larger aircraft like A320.

HOW MUCH LONGER DO YOU NEED TO HEAR THIS BEFORE YOU UNDERSTAND???

[NCB]

this is only partly true, 1 A319 rotation is a lot cheaper then 2 Q400, only check-in, cleaning, loading and catering will be cheaper.

This is one of the benefits of working with LH.

Check-in at outstations is done together with LH group airlines.
Cleaning, only a little more cost per seat.
Loading, same cost per seat because Q400 is easier to load than A319. Also, because the need for manpower resources will be evenly spread over the day when you have more frequencies, you can get a better deal than for a rotation of an A319 at rush hour where there is a peak demand for manpower.
Catering at BRU is LSG, a LH subsidiary. At outstations, you don't need catering for short-haul.
2 Q400's have 8 more seats than 1 A319.

So no, there will only be a very small difference.

But you're comparing the A319 with the Q400 too. What's wrong about that?
It's that SN will never replace its 26 Avro RJ's by 26 A319's or 52 Q400's.

[Polaris]

So no, there will only be a very small difference.

But you're comparing the A319 with the Q400 too. What's wrong about that?
It's that SN will never replace its 26 Avro RJ's by 26 A319's or 52 Q400's.

Oh please, it's obvious that SN will not replace the RJ's with Q400's. Why do you keep defending this option? I prefer to stick to the facts. Any idea when the first of the 'new' A319's will arrive in Brussels? Have they been identified yet?

[tolipanebas]

It would be really nice if someone could explain in a clear manner how increasing the size of an aeroplane will increase profitability.

Many people on this thread are pretending that it is indeed the case with airlines like Austrian. But nobody is explaining why. More fuel, more cabin crew, higher airport fees, same number of passengers, something must be wrong in the equation...

It's relatively simple, really: it's all about the LOWER CASM bigger planes come with.
A bigger plane indeed costs MORE to operate in absolute numbers, nobody is disputing that, but on a seat basis they will actually cost LESS to operate.

For easy understanding, let's image you have added for instance 30% more seats by introducing bigger planes for only 20% more costs, then this is giving you a cost reduction of almost 8% per seat, meaning (oversimplified) you can either make 8% more profit, reduce prices by about 8% without loosing money from doing so, or any combination of both.

The only thing you need to keep an eye on is that you can actually fill the extra seats you've added (which BTW doesn't mean you must have a 100% loadfactor today: it only means you need to sell the exta 30 seats added) otherwise you only increase costs indeed, but have a look at the destinations which SN is planning on doing it on: these are the trunck routes of their network where demand is very high and/or they can steel pax away from others: TXL, MXP, CPH, GVA etc...

Obviously they will not be doing this on a thin route where they are the only operator as there is no stretch in those markets. Those markets will remain for regional jets: TRN, LYS, etc...

Fairly easy if you understand the system, but some simply don't want to admit to it because they fail to see how you can fill 30 additional seats when you currently can't even fill all of the current 90 seats! However, a clever combination of lowering some ticket prices while offering more comfort from the larger planes and very importanly also having a good network structure and alliance partners will bring you these extra pax, often through connecting flows.

It's also why NCB fails to understand it: he's naively seeing SN as a point-to-point non-allied airline who needs to win over its own pax! As Eurojet has explained only yesterday, aliances are highly important to corporate customers these days, so better to think of SN as operating a small part of a global STAR network heavily interwoven with Lufthansa's European network and it suddenly makes sense, just as it did at both LX and OS.

With SN being under LH's umbrella in due time, LH may just as well send its pax from HAM or TXL to OPO or TLS through BRU as through FRA really and there may even be incentives for them to prefer BRU over their own hubs for certain routes and/or certain pax: e.g. lower taxes or shorter trip times...

[NCB]

It would be really nice if someone could explain in a clear manner how increasing the size of an aeroplane will increase profitability.

Many people on this thread are pretending that it is indeed the case with airlines like Austrian. But nobody is explaining why. More fuel, more cabin crew, higher airport fees, same number of passengers, something must be wrong in the equation...

It's relatively simple, really: it's all about the LOWER CASM bigger planes come with.
A bigger plane indeed costs MORE to operate in absolute numbers, nobody is disputing that, but on a seat basis they will actually cost LESS to operate.

For easy understanding, let's image you have added for instance 30% more seats by introducing bigger planes for only 20% more costs, then this is giving you a cost reduction of almost 8% per seat, meaning (oversimplified) you can either make 8% more profit, reduce prices by about 8% without loosing money from doing so, or any combination of both.

The only thing you need to keep an eye on is that you can actually fill the extra seats you've added (which BTW doesn't mean you must have a 100% loadfactor today: it only means you need to sell the exta 30 seats added) otherwise you only increase costs indeed, but have a look at the destinations which SN is planning on doing it on: these are the trunck routes of their network where demand is very high and/or they can steel pax away from others: TXL, MXP, CPH, GVA etc...

Obviously they will not be doing this on a thin route where they are the only operator as there is no stretch in those markets. Those markets will remain for regional jets: TRN, LYS, etc...

Fairly easy if you understand the system, but some simply don't want to admit to it because they fail to see how you can fill 30 additional seats when you currently can't even fill all of the current 90 seats! However, a clever combination of lowering some ticket prices while offering more comfort from the larger planes and very importanly also having a good network structure and alliance partners will bring you these extra pax, often through connecting flows.

Mr. Tolipanebas, thank you for clarifying your reasoning, so I can point out where you are missing several significant elements.

I will use your example for illustration.
You add 30 seats or 30% of capacity and your CASM reduces by 8%. Fair.
The problem is, as you say, that you need to sell these additional seats.

But here comes the big hole in your reasoning:

meaning (oversimplified) 1. you can either make 8% more profit, 2. reduce prices by about 8% without loosing money from doing so, or any combination of both

1.You can only make 8% more profit on that flight if you fill those additional seats AT THE SAME YIELDS, AT THE SAME FARES. But if it's impossible to sell an additional 30 seats on the Avro RJ today at the same yields, it will be impossible tomorrow on the CS100 or A319 or even on an A380. 99% of pax don't care if it's an Avro or Airbus or CS100 and the Avro RJ's are also part of SN and Star Alliance.

2.You can also reduce fares by 8% and fill the additional seats, but you can do the same without buying a larger aircraft when your European fleet is flying at less than 60% of its capacity.

So either way what you can't do with the Avro, you can't do with a larger airplane.

Then there are other problems.

-Selling more tickets at lower price involves higher overhead cost.
-SN can't fill additional 30 seats unless it reduces fares and yields by at least 25% because with a fare reduction of 8% you don't open up to a market of 30% more customers.
-SN is operating in a very challenging market at BRU, dominated by leisure, little or no large corporations.
-SN needs to compete head to head with Ryanair and Easyjet but it must be done right. What is SN going to do against these billion euro companies with larger aircraft operating out of an expensive airport?

Obviously they will not be doing this on a thin route where they are the only operator as there is no stretch in those markets. Those markets will remain for regional jets: TRN, LYS, etc...

So you want SN to have 3 types in the fleet? A320/CS100/RJ?
SN need 2 types: A319/A320 and a versatile aircraft that can operate thin routes profitably but also complement A319/A320 on trunk routes to operate the lower demand flights and add frequencies.
That is not what the CS100 is. The E190/CRJ900 will also have a tough time fulfilling that role and the E170/CRJ700's CASM is not convincing at all.

So it's true that SN needs to operate A319/A320 on the large capital to capital routes, but it needs another type of aircraft that can operate thin routes that are too light to operate on RJ's but also to nearby routes like Manchester where frequency is way more important than saving 8% on CASM.

And by the way, you can't talk bad about the Q400 if you have ever been on one. Most people who fly the Q400 love it. The Q400 CASM is about the same as the A319 CASM and way better than the Avro RJ and CS100 and E190 CASM, while having less seats.

Read the following and board a Dash 8 Q400 before dismissing it as an "inferior airplane".
http://www.airliners.net/aviation-forum ... in/4652853

[RoMax]

So it's true that SN needs to operate A319/A320 on the large capital to capital routes, but it needs another type of aircraft that can operate thin routes that are too light to operate on RJ's but also to nearby routes like Manchester where frequency is way more important than saving 8% on CASM.

SN will operate A32S in the future to routes like MAD, NCE, BCN, LIS... (routes that are now operated by A319/B737), but also important routes like GVA, CPH, MXP, VIE... (the routes wich will get some RJ replaced by A319 in S11). For the remaining routes like MAN, TRN, VCE, BUD... SN needs something like the Avro's or a bit smaller for some (new) routes.

If these routes wich need a real regional aircraft should be close to BRU (Germany, GB, North-France...) you can go for these Q400's. Just like the LH group (Augsburg, Austrian Arrows) has Q400's for their SHORT regional routes. But the problem with SN is that they have destinations wich can't sustain A32S wich are further away. I'm thinking about BUD, OSL... For such routes you can't use a Q400, for several reasons, whatever Bombardier tries to tell you. You DON'T want to fly on a Q400 for a two hour flight or something like that, and as it is a turboprop many longer RJ operated routes can take quite some time in a Q400.
BTW, yes I've flown in a brand new Q400NG. And yes it is a nice turboprop, but it was only a 45min flight, and that was a nice flight. But more than 1 hour in a Q400, no thanks!

So SN needs a Regional jet. The E170/E195 seems a good combination for SN, but these E-jets is not the newest generation of regional aircraft. The CS100 is good as the bigger one, but I think SN can use some smaller (70-80 seaters)aircraft for some routes and maybe new routes like Bordeaux, LCY?,... MRJ? only available after 2014, SSJ? LH is looking at the SSJ, so I don't exclude this one. We'll see. But Q400 no. If SN would only have short routes who need a 70 seater, I would say yes to the Q400. But not for SN's network. They only case I would see Q400's at SN is a combination of Q400, CS100 and A32S. But than again, can BUD, OSL, BMA...use a CS100 or would they need something smaller, as I don't see a Q400 flying to these destinations.

[SN1203]

1.You can only make 8% more profit on that flight if you fill those additional seats AT THE SAME YIELDS, AT THE SAME FARES. But if it's impossible to sell an additional 30 seats on the Avro RJ today at the same yields, it will be impossible tomorrow on the CS100 or A319 or even on an A380.

This is actually where YOU are making a mistake: the smaller capacity of an Avro RJ results in a different revenue management strategy compared to an Airbus A32S. If you have 82 or 97 seats at your disposal, only a small percentage of the saleable capacity will be attributed to the cheap fares as an airline is obliged to start selling higher fares almost instantly to protect revenues (resulting in a lot of spill of the price oriented passengers towards mainly low cost airlines or scheduled airlines operating larger aircraft on routes in competition with SN). The higher CASK of an Avro RJ compared to an A319 or A320 results quickly in a breakeven loadfactor of 100% or more if you apply an offensive yield strategy (certainly on longer sectors where the cost is killing the Avro).

With 130-170 seats at your disposal, you can be way more agressive for the early bookers to generate volume (increasing your market share), as the lower seatcost of an A32S allows you to be more agressive. It does not only help you to protect your market share today, but also your future market shares as more seats will result in more passengers on board of your metal at a lower average yield (leading to less spill to other carriers, which in turn might lead to competing airlines stopping growth/reducing their presence at Brussels or to make it more difficult for new airlines to open direct flights from Brussels).

Welcome to the reality of a network carrier...

[NCB]

If these routes wich need a real regional aircraft should be close to BRU (Germany, GB, North-France...) you can go for these Q400's. Just like the LH group (Augsburg, Austrian Arrows) has Q400's for their SHORT regional routes. But the problem with SN is that they have destinations wich can't sustain A32S wich are further away. I'm thinking about BUD, OSL... For such routes you can't use a Q400, for several reasons, whatever Bombardier tries to tell you. You DON'T want to fly on a Q400 for a two hour flight or something like that, and as it is a turboprop many longer RJ operated routes can take quite some time in a Q400.

I see your point, but this is how I think:

SN's core is in markets within 2 hours from BRU and other markets like BUD and OSL are collateral and seldom profitable. So I prefer sending 5 Q400's to not so important markets like Hungary, Romania and finland and be super profitable to markets within 1000 kilometers from BRU; rather than to send 20 E170's to MAN, HAM, GVA and NCE only to give pax flying to 5 unprofitable far thin routes 30 minutes of saving on their schedule.
Pax flying to OSL and BUD are also pax looking for the cheapest ticket, not 30 minutes of time savings. You can give them that with a Q400, with a E170/CRJ700 it's going to be alot more difficult.

A 3 type fleet for short-haul is excluded. It must be 2 types.

2 hour Q400 range from BRU (1000km great circle range):

[fretn]

NCB,

When will you stop playing the armchair ceo of Brussels Airlines!
You & us all know that they won't order the Q400 for several reasons, then why keep on hammering on it? Do you have any kind of compulsive behaviour that commands you to spread the news about the "magnificent Q400". I don't want to sound rude, but you always come up with the same & it's boring, it will never happen & doesn't contribute anything to the thread. Please, stop with proposing this idea.

[tolipanebas]

This is actually where YOU are making a mistake, NCB: the smaller capacity of an Avro RJ results in a different revenue management strategy compared to an Airbus A32S. If you have 82 or 97 seats at your disposal, only a small percentage of the saleable capacity will be attributed to the cheap fares as an airline is obliged to start selling higher fares almost instantly to protect revenues (resulting in a lot of spill of the price oriented passengers towards mainly low cost airlines or scheduled airlines operating larger aircraft on routes in competition with SN). The higher CASK of an Avro RJ compared to an A319 or A320 results quickly in a breakeven loadfactor of 100% or more if you apply an offensive yield strategy!

Very well said, and all fairly logical, I should say!?!

If SN wants to capture a viable piece of the market on a certain route, they need to offer competitive fares all throughout the booking period, meaning from X months in advance up to 1 hour in advance really, otherwise bookings will dry up once their ticket prices start to diverge too much from that of the competitor(s)! An allegedly 'better product' can only make up so much, you know?

As we all know, ticket fares follow a curve which goes up as you near the departure date, yet, the airline operating the much bigger plane can keep the slope of its curve shallower for much longer, whereas the one operating the much smaller plane will have to let it go up far quicker or he'd be fully sold out with low fare tickets only!

With 130-170 seats at your disposal, you can be way more agressive for the early bookers to generate volume (increasing your market share), as the lower seatcost of an A32S allows you to be more agressive. It does not only help you to protect your market share today, but also your future market shares.

Image how dire the situation would be if we'd be fighting with Q400s against a high density A319!

Q400s as backbone of the SN network would lead to us being wiped away by U2 in the blink of an eye!



NCB, on several occasions you've given the impression that you think you first need to sell ALL of the capacity of the RJ and then also a large portion of the extra seats of the A319 to cover the costs of such an upgrade!?! Let me tell you that is completely WRONG.
If an A319 costs 20% more to operate than an AVRO RJ, then you need to make up those 20% and since the plane offers you around 30% more seats, it means you just need to sell 2/3 of the capacity delta (at unchanged yields), or let's say all of the capacity delta (at lower yields).
You definitely don't need to start off with a fully packed RJ at all to make it work!

Besides, there are other ways to make the capacity delta than through attracting additional pax onto your scheduled flights, you know? Having your planes operate charters during weekends is a great way to do so, especially as fully packed charters not only make up for the capacity delta which I was talking about earlier, but will generally also make up the full ballance between a 'regular' 65% loadfactor and a 100% loadfactor on the RJ portion of the A319 cabin! Now, do I need to drop the name of Club Med in this context, or can you connect the dots yourself, for once?

Trying to understand the fundamentals of a network carrier is quite a difference to knowing how to operate 50-seating turboprops on ad hoc charters and point-to-point niche routes, isn't it?

[DeltaWiskey]

First of all I want to ask everybody to provide (reliable) sources when it comes down to CASM, % and more numbers. It really has no point of discussing any longer with self invented numbers, everybody can prove they're right with statistics.

That said, I think the CSeries will be a very good and efficient aircraft, certainly the later built ones.*
But I also think for a 'small' company like SN, you can't have a fleet of CSeries complementing A32s, it is either the CSeries or the A32S, not both of them. IIRC, the A319 has just about the came capacity as the CS300.

So I can see a future NB fleet at SN consisting of A32S/CSeries, and a fleet of ERJ170/190 (or MRJ if they can wait that long) as the smaller RJs.

I don't think SN has ever looked seriously into the Q400 as it just not the right plane for their of kind operations. And the gap between the Q400 and the A32S will also be very large.

* The 787 and A380 also become a lot more efficient after the 50th built aircraft or so. Remember the first 10 (or so) A380s are also more than 6t overweight, from what I have heard and seen the A380 will really be efficient from nr ±80 or so. There is not much difference between the first 787 and a late built A330.

[NCB]

Tolipanebas, make it clear. I don't understand what you want because you are giving arguments for the sake of opposing my arguments, instead of focusing on proposing your idea's.
What is the ideal future SN fleet for you? Give a lay-out of aircraft types and approximate numbers.

No you don't start off with a full Avro RJ.
You start off where SN is today.
-less than 60% load factors
-high operating costs
-low ownership costs
-good yields

and you ideally transition towards a fleet that has
-80% load factors
-low operating costs
-higher ownership costs but keep as low as possible
-same yields but through a better managed, sustainable product offering. IMO, it can be achieved through a cheaper economy class with options to add flexibility and hand luggage if you need to so you don't lose too much on B.Flex yields; balanced by more revenue from business class through the offering of the best business class in Europe.

The problem is, you can't do any of these with a larger aircraft, no matter how you manage your yields.

SN1203, SN is holding a very aggressive early booking sales campaign right now. 30 euro one way to all of Europe for January/February. This proves that it can be done with Avro RJ's as well.
The seat count doesn't matter. The problem with the Avro RJ is that costs are so high that yield management is pushing tin to avoid a domino effect on yields.

We will see but I know one thing for sure, SN's board will never ever replace the Avro's by a mix of A319 and CS100.

[tolipanebas]

You really hate that CS100 do you?

If you'd start reading from the very first page of this topic, you'd see I already gave a detailed analysis of what I think is the best combo for SN's medium haul fleet long time ago, including some interesting predictions on increasing the size of the planes which in the mean time have materialized...

About the sales campaign for January: You are aware this is the quietest month for corporate travellers, do you? SN knows from the past they won't be having a need for many lately booked high fare seats, hence they have decided to compete head on with the low cost carriers for longer than they normally do. A larger fleet of Airbusses will allow SN to do what they are doing for January almost year round, WITHOUT compromising their sales opportunities later on during the booking period, as a fleet of RJs (or smaller) would do!

You really have no clue at all about revenue management at a network airline competing fearsly against low costs carriers, do you?

[DeltaWiskey]

...
B.Flex: 590 euro
...
If tomorrow your company can book a real comfortable business class seat with good pitch and recline, free internet and AVOD, in addition to a good wine, champagne, free lounge access and full flexibility, your company and other companies will consider paying 800 euro for that seat. Only 210 euro more over today’s B.Flex ticket for a totally different flying experience.

Something in you math just doesn't add up. No matter how you look at it, a business seat takes (at least) twice as much space as an economy seat. To get the same revenue you should double the fare.
If you/your airline sell business seats that take twice the space, and you ask only 30% more money, you are doing something wrong.
Just a hint, 2*€590 or 1*€800, what do you prefer?

As said before, (business) people don't take short haul flights anymore for the 'flight experience', only to get to their destination (preferably in a flexible/hassle free environment).

[euroflyer]

Indeed, as to taking C class when it is only EUR 100 more expensive than Y, you just don't want to do that, you get your compliance calling you next day. Hey, somethimes C-class can be cheaper than the most expensive Y, so that could be a green light, but still you'd better be well-documted and prepared.

Eventually, these days, when we trvel, we will fight much more to get decent hotels and are taking the risk to jump corporate policy on hotels than flights. I care much more about a good hotel in a safe area, well connected to where I need to be with a quiet room rather than a glass of cheap champagne and a chocolate on a short haul flights. I would rate on my trips the qulaity of hotels much higher than flights and my colleagues will agree. We'd rather come back saying we managed to sneak in a Hyatt rather than saying we flew back C class from Hamburg.

Interesting as well, fly once with us long-haul in C. Do you really think we get excited by the food, IFE, wines, etc ...? Any long-haul C-class meal and wine is worse than any meal I had in a good brasserie in Lux or Bru. Upon entering a long-haul C-class flight, we basically do one thing: switch off BB and phone and SLEEP (finally, no colleagues, no bosses, no clients, no wife and kids around...)... That is as far as all the "luxury buzz" in C class long-haul is about ...

Finally a post in this thread which I can fully agree upon

I travelled FRA-TXL-BRU-FRA this week, the first and third leg with LH, the middle leg with SN. Travel agency informed me several times that C-class would have been about 50 Euro cheaper than the Y-class flexible eco ticket I asked for. But I insisted on Y-class because it is corporate policy on short-haul flights. And what you certainly do not want is to be seen by one of your important customers, colleagues, suppliers, etcetera sitting in C-class. Because most of them have the same corporate policies and it would be the wrong signal and not good for your career ... I even know people who have turned down an upgrade in c-class for this reason on short-haul flights.

Some of the big German companies I deal with (DAX listed !) even today have in place a policy requiring employees to travel 2nd class in the train on business trips.

And indeed, I have "the pleasure" to go to REALLY decent restaurants anywhere in Europe one or two times a week with customers, colleagues, negotiation partners, etcetera. This is the case with most people flying a lot for business. Does anybody really think those kind of people are interested in the food served on airlines? It is never really "good", just less awful than with other airlines ...

[NCB]

If you/your airline sell business seats that take twice the space, and you ask only 30% more money, you are doing something wrong.
Just a hint, 2*€590 or 1*€800, what do you prefer?

No you did not understand.
I took the example of a flight to Madrid and I pretended to be a customer. As a customer, I said why should I buy a 800 euro business class seat when I get almost the same same service as economy class at 590 euro?

Now, I said that the economy/luxurious business class model would come with a different yield management model: slightly more expensive business class and cheaper economy class with more service but both more full.

So suppose that today we have an A319 with 132 seats and look at what the following example shows:
Suppose today's SN's aircraft is split 120seats/12 seats or 91%/9% between economy (B.light and B.flex) and business.
Load factors in economy is 58% at 150 euro average fare, in business 5% at 300 euro average. (one-way)
Total average revenue would be 70 pax at 150 euro plus 0,6 pax at 300 euro, equals 10500 euro.

If tomorrow SN puts big seats for business class and goes from 32" pitch to 55" pitch like Virgin America, SN can fit 3 rows of this business class instead of the current 3 rows of business class and the first 2 rows of economy class. So 3 rows of real business class instead of 5 rows of economy seats.
The seat count on the A319 goes from 132 seats to 114 seats (102 economy + 12 business) and the economy class/business class split goes from 91%/9% to 90%/10% but with less seats.
So now imagine SN
-sells the economy class at 100 euro average fare and fills it to 85% load factor
-sells the business class at 400 euro average fare and fills it to 80% load factor

Revenue would be 87 pax at 100 euro plus 10 pax at 400 euro, equals 12700 euro vs. 10500 euro.
That results in 2200 euro more revenues thanks to
-lower yields and higher load factors in economy
-higher yields and higher load factors in business.

Several more financial advantages:
-At an average fare of 100 euro in economy, you steal alot of pax from Ryanair and Easyjet,
-Your cost for f&b remains the same because you remove meals from B.flex and give everyone in economy a free soft drink and snack instead.
-In business class you can offer tasty and stylish antipasti to handpick rather than full hot meals.
-Your ancillaries in economy go up because you can sell hot snacks, cocktails and perfumes to more people thanks to higher load factors. Even better if passengers can buy that with their credit card through the IFE system, like on Virgin America: http://www.virginamerica.com/inflight/w ... board.html

One more benefit is that because of the lower weight, the A319's range is extended by more than 1 hour through a combination of the ability to go full fuel and lower fuel burn by lower payload. You change a chip in the engine, add an auxiliary fuel tank, fill in the paperwork and you have an aircraft that can fly 12 of SN's current 18 African destinations.

Of course, these changes to service classes and yield strategies can be applied to any aircraft entering the fleet to replace the Avro RJ's as well be it the CS100 or Q400

Pax who can't fly C because of their corporate policies, can still fly Y and pay a supplement to add flexibility to their ticket. But since Y would be cheaper, these travellers will prefer choosing SN over other mainline airlines so they can spend more money on hotels and restaurants. So this is actually a perfect formula to attract more corporate travel from other mainline carriers.
The few C seats would be filled by another type of customer, typically the thousands of passengers that are flying C already today, and a few more that decide to make the transition because of the better product offered.
If you pull in all the C passengers flying other airlines to and from BRU and put them together into SN's C class by offering a superior product, you can fill 9-12 seats easily!

So what's the problem for the corporate travelers? Perhaps I should explain it to you in your language, it seems you guys have a real hard time understanding and interpreting what is written.

[LJ]

So suppose that today we have an A319 with 132 seats and look at what the following example shows:
Suppose today's SN's aircraft is split 120seats/12 seats or 91%/9% between economy (B.light and B.flex) and business.
Load factors in economy is 58% at 150 euro average fare, in business 5% at 300 euro average. (one-way)
Total average revenue would be 70 pax at 150 euro plus 0,6 pax at 300 euro, equals 10500 euro.

Here lies the root of your miscalculation. Loadfactors in Y will usually be much higher than in C. This means that if you have less seats in Y you may be oversold in Y, while you have ample of C class seats. As you can't move the curtain (as you have "real" C-class seats) you either have to upgrade pax, or turn down the pax. Anyway, the extra revenue from having a real C-class will be zero (and may result in lower revenue if you turn down pax). Just for example, I know that if KLM has regularly only two rows of C-Class, but the rows thereafter are completely full with Y class pax. Personally, apart from connecting pax I don't know any company which let its employees fly C-class on flights below 5 hours, hence why Y is so full these days.

[NCB]

Personally, apart from connecting pax I don't know any company which let its employees fly C-class on flights below 5 hours, hence why Y is so full these days.

I think that everyone is asking the wrong question.
The question is, who would pay for a C-class that isn't worth paying for?

Who would pay 300 euro to sit on this:


and who wouldn't pay it to enjoy a massage on this one:



People who have the means of flying C are the last people who will buy an economy class seat and service at a business class price. They will make the mistake once, never twice.
SN is flying at less than 60% load factors in Europe and there's people worrying about upgrading excess economy class passengers to business class. Seriously?
But if you insist, an upgrade costs nothing and is a great marketing gesture too. Additionally, it's only sporadic because if you always fill the economy class to 100%, it means that you are selling it too cheap.
That's why yield management at major airlines aim to fill aircraft to around 90% of capacity to achieve the best yield/load factor/cost relationship.