Himawari Airlines long term development planning – international

International Market

The airline start international routes at very early stage and have very well revenue. From the handover of Japan National Airways, the company received 2 Boeing 707 and 3 McDonnell Douglas DC-10 aircraft. At the same time, the company put massive new aircraft into it’s routes and finally replaced all JNA aircraft within 3 years. Himawari Airlines selected Airbus families as their main role aircraft in order to have lesser operation cost and fuel burn and well fleet commonality. But the aircraft offered lesser seat compare with Boeing 747 and 777 under premium seat configuration house policy.

International market are divided by continent.

Asia

Asia international routes are most challenging part to the company. As there have not much pax demand as much as european countries and America. But competitors could not avoid. On the routes to Asia big cities, flights with under-break even load factor are normal. The company started China short haul routes a year after Himawari Airlines established. The early starting time avoided direct competition, also insisting “one more stop after destination” policy are keys to lead success of those route. Moreover, marketing are necessary.

For other East Asia big cities like Taipei and Seoul, the company can co-ordinate prices with Blueskies alliance members, therefore load factor are always grantee . For other Asia big hub cities, the company decided to use Airbus 330 aircraft to complete those routes after the plane finished long haul flights. That can maximize plane usage and decrease pressure to having new planes as the production line has already core lock for years. For big airports of China, due to agreement with PRC government, the company will only put Airbus A321 aircraft to Beijing and Shanghai routes. Also, this is a key point to stable load factors. This operation will be “duplicated” on Hong Kong, Macau, Guangzhou, Shenzhen and Kaohsiung routes to ROC. This plan will be verified  once Airbus published their A321-200.

In addition, the company will order more Airbus A320 to fulfill other Asia cities and countries like Nepal and India. These potential market cannot be ignored and neglected.

The company should will also increase Airbus A330 with H33 config to serve Maldives and Sri Lanka Routes.

Europe

Europe routes have massive demand and lesser competition at all. Beside well-known cities, the company intended to operate new flights to other European airports that have well demand too. Our focus point will be put on to Germany. Dusseldorf, Berlin, Munich, etc. will be next developing target. Although competitors like JapanLines may opened such kind of routes, however excellent services provided by Himawari Airlines can attract passengers to board. If JapanLines used smaller planes to occupied those routes, “up-graded 777” will be used in order to have more luxury cabin to serve passengers. Besides these, all european routes should be flying with Airbus A330. Airbus A340 will not be recommended at all because of it’s fuel efficient. As the comapny offered all brand new Airbus planes at early times, these airbus will not suitable to fly starting from year 2012-2015. Therefore, replacement is a must. For this issue, Boeing and Airbus offered their latest product Airbus A350 and Boeing 787 aircraft. After some comparison, Airbus 350 and Boeing 787 are also suitable for European routes. Different from the long maintained policy, both Airbus 350 and Boeing 787 will be put onto European routes. A350 will replace the position of A330, and Boeing 787 will put onto second string European airports due to seat number.  Unfortunately, due to design modification of A350 XWB. Airbus can only provide first A350-900 at late 2013 and early 2014. At that point, our first lot of A330 already unflyable, so the company may need to put Boeing 787 first into second string European airports first to move out newer A330 on those route and put them into first battlefield in Europe. Also, Boeing intend to have lesser seat on 787 because they believe people will seat on a more small plane and travel directly to destinations rather than board a big aircraft and travel from hub to hub, therefore we would put focus on this point..

US

US routes are one of the key parts of Himawari Airlines. From the very beginning, American routes were running by Airbus A340-300 because of it’s range and capacity. Although Airbus A340-300 mainly served US east coast route that can gain well profit, but fleet commonality is a problem due to French CFM engines. Therefore the company will arrange Airbus A330 aircraft on west coast route as possible. Moreover, due to huge C and F demand on the route to SFO and LAX, Boeing 777-300 will be introduced to serves these two routes. We estimated at least 50 of 77W will be needed in long term, and these aircraft will serve east coast also Caribbean sea routes from 2004/5/6 – 2019. Then, all flights to US will operate by Boeing 777.

Australia

Situation of Australia market is complicated. Although passengers demand are able to fill a Boeing 747. But under multi competition, only these markets can only use aircraft like Airbus A330-200 or Boeing 787-8 to serve. Therefore Australia market are recommended to treat them as aux routes of Airbus 340-200 on scheduling. When Airbus 340-200 being replaced, the only way is to switch back to Airbus A330 before Boeing 787-8 in service.

Africa

The company has launched Safari Jet service from year 1996. Because of range limitation, these routes can only put Airbus A340-200. After Boeing launched next generation 777 products, these route proposed to use 777-200LR to replace all CFM engine Airbus. But 77L aircraft are flying with high operation cost and low seat capacity. Therefore higher operation cost were expected. The only way to slove this problem is to replace 77L with Boeing 787-8.

South America

Same as Carribean Sea and Africa routes, range limitations are only excluded on Airbus 340-200 aircraft in early stage. Although 77L aircraft flying with higher operation cost, but the plane can also reduce all technical stop and changing those flights to non stop flights. In high fuel prices stage, lesser unprofiable technical stop can save up much more sending. The planes also contribtuing to the company on the fleet commnality issues. As the distance from Tokyo to South america had already over 8000nm, neither Airbus A350 and Boeing 787 can reach. So 777-200LR service will remain. Extend lease and purchasing the remaining 77L must be conducted after year 2011.

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