Aircraft fleet deal helps ease leisure airline seasonal stresses

In a perfect world we would have level demand on routes across the year, but we all know that things are not that simple. For airlines this is a major complexity… how do you provide the additional capacity needed for peak periods but reduce it during the low season? Short term lease deals are the obvious option, but can prove extremely costly.

This is especially an issue for leisure carriers as seasonality is a much bigger issue in this area of the market, and the emergent low cost carrier sector is also increasingly discovering the effect of seasonality. This is not a new issue and airlines have been fighting for years to balance the peaks and troughs, but when you now have European airlines the scale of Ryanair with over 400 aircraft it becomes more of a challenge. The Irish carrier doesn’t just tweak, but significantly modifies its schedules between the summer and winter but still openly acknowledges that it has to park aircraft in the winter due to the lower demand.

The Blue Swan Daily analysis of OAG schedule data shows that in 2017 Ryanair is offering an average of just under 375,000 seats per day across its network. This number is exceeded throughout the summer season from April to October when the daily offer can reach as high as 420,000 seats (August), but falls significantly below the average throughout the winter months and falling as low as 310,000 seats in the quietest month (February).

CHART – There is more than a 110,000 seat per day difference between Ryanair’s biggest and smallest monthly network offerings in 2017Source: CAPA – Centre for Aviation and OAG

The answer to the seasonality issue is to find complementary markets. That is fine for long haul airlines as aircraft can for example be used in Europe in the summer and into Asia and the Caribbean in the winter. Legacy airlines generally prefer year-round operations for the deployment of aircraft assets, but even the likes of risk-averse airlines like Cathay Pacific Airways are now benefitting from seasonal flying – its seasonal Barcelona flight will actually migrate to a year round operation from Apr-2018, while a new Christchurch link expands its New Zealand offering between Dec-2017 and Feb-2018.

For leisure carriers the answer is cooperation. For many years aircraft have regularly transferred across the Atlantic between European and North American operators to balance seasonality, delivering a range of strange hybrid liveries with aircraft sometimes wearing the branding of both operators. This week Canada’s Transat AT and Thomas Cook Group Airlines have signed a seven-year agreement for the exchange of aircraft on a seasonal basis in a deal that will allow them to better plan their strategies for the longer-term without worrying about seasonality.

Under the terms of the agreement, Thomas Cook will make available every winter to Air Transat a number of narrow body Airbus A321s and will receive at least one wide-body Airbus A330-200 in return. This will enable both companies to manage and utilise their fleets more efficiently.

This is an excellent example of the different seasonality of two airlines and how this agreement is mutually beneficial for the companies. Air Transat uses a greater number of smaller aircraft in winter to serve its destinations in the Caribbean, Mexico and Florida, and larger aircraft in summer to serve the transatlantic market. In contrast, Thomas Cook uses smaller aircraft in summertime to fly to destinations around the Mediterranean Sea and larger widebody aircraft in the winter to fly to the long-haul destinations like Cuba and the Dominican Republic.

Christoph Debus, chief airline officer, Thomas Cook Group, notes the new partnership “provides additional growth opportunities” for the airline and will enable it to operate “additional long haul flights during winter “and “better balance the seasonal demand” for its short and medium haul aircraft, resulting in obvious cost efficiency and increased choice for customers.

For Transat the arrangement “marks a new step in the reconfiguration of our fleet,” says Jean-Marc Eustache, president and chief executive officer, adding the deal will it “to improve our flexible-fleet model, making it even more efficient.” It is currently transitioning its fleet solely to Airbus A330 widebodies and aircraft from the A320 family, such as the A321 so it will deliver a “more harmonised travel experience for our customers as well as lower operating costs,” he adds.