Fuel Price effect on 50 seater jet and its viability

[Autothrust Blue]

If you don't like RJ's, then keep your scope clause!

tl:dr: "Thanks for the RJs."

 

[SlumTodd_Millionaire]

I'm speaking hypotheticaly, but you bring up a good point. Mesa was supposedly launch customer for the CRJ and most (all?) are still not paid off. That was the whole point of the go! debacle -- flying in Hawaii was supposed to lose less money than parking them.

Airplanes rarely get paid off, because it usually doesn't make financial sense to do so. Hell, NWA had a great scheme going. They leased the RJs from GECAS, then subleased them to Pinnacle at a higher interest rate than they were paying.

 

[PhilosopherPilot]

And the economy tanked too.

Don't feel too bad for yourself. You stayed employed while some of us were forced into finishing school.

Finishing school was good for you.

 

[scooter2525]

Your perspective is limited to the last few years, so you consider $60/bbl oil to be low. It's not. When the CRJs were first rolling out and starting to find a market in short-haul and long, thin markets, oil was at $15/bbl. Pre-bankruptcy, the majors were starting to panic when oil hit $30/bbl. It's only in the post-bankruptcy world, after the airlines have completely restructured and shed pension obligations, that $60/bbl oil is profitable on even the small narrowbody fleets. It still isn't profitable on the small RJs. A 76 seat RJ may be breaking even or barely churning out a tiny profit on the best routes at these prices, and a 90 seater is doing okay. But a 50 seater is a still a dog. Oil really needs to be below $30/bbl with a reasonable crack spread in order to make the 50 seaters attractive. In other words, it'll never happen again.

Im okay with $15 bbl

 

[ppragman]

How many 50 seaters are still flying out there? Who's got em? AWAC...?

 

[Baronman]

How many 50 seaters are still flying out there? Who's got em? AWAC...?

There are actually many 50 seat RJs out there. Their death was highly exaggerated.

ExpressJet has over 200 ERJs and 80CRJ200s.
Eagle(Envoy) has over 100ERJs.
Skywest has over 100CRJ 200s.
Transtates and PSA both have em too.

 

[Autothrust Blue]

There are actually many 50 seat RJs out there. Their death was highly exaggerated.

ExpressJet has over 200 ERJs and 80CRJ200s.
Eagle(Envoy) has over 100ERJs.
Skywest has over 100CRJ 200s.
Transtates and PSA both have em too.

Last I heard we were actually picking up some -200s. Fuel is only one part of the picture, operating-cost-wise. And something will be replacing (not 1 to 1, but you get the idea) the Brasilia.

 

[ppragman]

There are actually many 50 seat RJs out there. Their death was highly exaggerated.

ExpressJet has over 200 ERJs and 80CRJ200s.
Eagle(Envoy) has over 100ERJs.
Skywest has over 100CRJ 200s.
Transtates and PSA both have em too.

If they weren't making money with the things I suspect these companies would have beer-canned them long ago then. Companies don't just lose money for fun, they would have bought new machines much quicker if they'd been losing a lot of money, or they'd be out of business.

 

[SlumTodd_Millionaire]

If they weren't making money with the things I suspect these companies would have beer-canned them long ago then. Companies don't just lose money for fun, they would have bought new machines much quicker if they'd been losing a lot of money, or they'd be out of business.

You can't "beer-can" something for which you have a lease obligation. Running them at a loss is usually less of a loss than having them sit still while continuing to make lease payments.

 

[Autothrust Blue]

You can't "beer-can" something for which you have a lease obligation. Running them at a loss is usually less of a loss than having them sit still while continuing to make lease payments.

Strange as it may seem, it's not unprofitable for us to run ours, last I looked. Shocking, isn't it?

 

[etflies]

Strange as it may seem, it's not unprofitable for us to run ours, last I looked. Shocking, isn't it?

When I was in the school house during transition, we were told the lease rates were something like one third of what they used to be because nobody wants them anymore, so they're dirt cheap to pick up out of the desert and operate.

 

[SlumTodd_Millionaire]

Strange as it may seem, it's not unprofitable for us to run ours, last I looked. Shocking, isn't it?

And your source of information is what exactly? I ain't buyin' it.

 

[falconvalley]

When I did a paper on the price of gasoline, the price of a barrel of oil was around $40. We were freaking out then! When the RJs really got going in concept it was between $15-25. I believe that a temporary dip into the teens for oil was arguably what motivated the industry to start flying 50 seat jets. And it was more of a market idea that became possible because of how cheap oil had become, in my opinion. At one point, there were approximately 1,300 50 seaters flying around.

 

[bucksmith]

Interesting addition to the conversation...

http://www.telegraph.co.uk/finance/...in-shale-price-showdown-as-crude-crashes.html

 

[PropDriver]

Strange as it may seem, it's not unprofitable for us to run ours, last I looked. Shocking, isn't it?

Skywest might make profits on the 200s but that doesn't mean United and Delta make profits on them

 

[cactusjuba]

Skywest might make profits on the 200s but that doesn't mean United and Delta make profits on them

True, but they fly many 200s at risk, i.e. not fee for departure.

 

[Autothrust Blue]

Skywest might make profits on the 200s but that doesn't mean United and Delta make profits on them

I do not at present work for Delta Air Lines, Inc. or United Airlines.

 

[SlumTodd_Millionaire]

I do not at present work for Delta Air Lines, Inc. or United Airlines.

If the mainline partner can't make money with it, then it's a useless airframe.

 

[Autothrust Blue]

If the mainline partner can't make money with it, then it's a useless airframe.

The words "at risk" mean that we are responsible to make money on it, not them.

We do.

 

[SlumTodd_Millionaire]

The words "at risk" mean that we are responsible to make money on it, not them.

We do.

I'm well aware of the concept of at-risk flying. First, I don't believe it's profitable. Second, it's a tiny portion of your overall revenue. Skypest would not exist were it not for FFD flying. Therefore, no profit for mainline, useless airframe.