THE Odyssey’s Odyssey – Another Attempt At All Biz Class Transatlantic Profits

20 December 2011

One of the unidentified customers for Bombardier’s CSeries aircraft has been revealed by Reuters to be a new UK based start-up called Odyssey Airways. The airline’s scope however is unique – provide all Business class transatlantic services out of London City airport. If we go along the orders record, this is the ‘European buyer’ which bought 10 CSeries CS100 aircraft back in June at the 2011 Paris Air Show.

This puts the new airline in direct competition with British Airways’ Airbus A318 all Business Class out of London City (LCY). How well can they compete?


1. AIRCRAFT COMPARISON

British Airways uses the Airbus A318 aircraft for its LCY – New York operation. For this analysis, we will assume that Odyssey will use the CS100ER variant for this mission, and also assume that the aircraft meets its performance targets. British Airways uses the A318 Weight Variant 004, the details of which has been used here.

Characteristic A318 CS100ER
Typical pax load 107 110
Engine PW6000 or CFM56* PW1000G
Thrust 23,300lb 23,300lb
Range 3,200NM/ 5,950km 2,950NM/ 5,463km
Takeoff Field Length 4,446ft./ 1,355m^^ 4,905ft. / 1,509m
Landing Field Length 4,446ft./ 1,355m^^ 4,430ft./ 1,350m
Fuselage Length 103ft. 2in. / 31.44m 114ft. 6in. / 34.9m
Cabin Width 12ft. 1in. / 3.70m 10ft. 1in. / 3.06m
MTOW 145,505lb 128,200lb
MLW 126,766lb 111,500lb
Max. Payload 34,573lb 32,100lb



Key: Maximum Landing Weight (MLW):

Maximum weight for landing as limited by aircraft strength and airworthiness requirements.

Maximum Takeoff Weight (MTOW):

Maximum weight for takeoff as limited by aircraft strength and airworthiness requirements.

* – BA uses CFM56 engines

^^ – Airbus does not make public available the runway values for this model. Figures are the best available.


One advantage that the A318 has is its Steep Approach capability. However, Bombardier is likely to work towards achieving this specification in order to satisfy, and to increase, its small customer base.

The CS100 is about 11ft. longer than the A318 and hence will be able to accommodate two more seat rows than the latter. This should mean that the CS100 will be able to seat 40 passengers in a 4 abreast seating configuration. This translates to a 25% extra passenger load at almost 14% lower MTOW. With this, the CS100 will have a considerable fuel burn advantage. The modern technologies and the PW1100 GTF engines used on the CSeries is expected to bring considerable cost savings, thus providing the CS100 with a lucrative operating cost advantage over the A318. Interestingly, Odyssey will still have an operating cost advantage even if it opts to a less dense seating configuration with even more comfort.

A challenge to the operation would be the limited runway length at London City airport. A solution to this would be a stop at Shannon, like British Airways does, thus also providing the passengers the ability to pre-clear their immigration into the United States. However, a unique selling point for Odyssey, as reported, would be to have to be able to operate nonstop. Unless on a day with significant headwinds, the CS100ER would likely be able to make the journey from LCY to NYC nonstop, although perhaps taking a slight payload hit.

The modern interior and the cabin comfort of CSeries is likely to attract more passengers to Odyssey too.

Odyssey wins here by a significant margin – if CSeries meets its performance targets.


2. COMMERCIAL COMPARISON

British Airways is entering the mission with a strong network which helps it feed the service. BA’s advantage is further strengthened with its frequent flier base. The new start-up Odyssey will have neither, which could be quite challenging. However, if Odyssey drives a strong marketing campaign, with the right pricing strategy, building a loyal customer base will not be very hard. An added advantage would be the fact that the route is likely to have a very high share of O&D traffic due to LCY’s convenient location in London’s financial district.

Nevertheless, one of the best moves that the new start-up could make is to sign some interline agreements with select carriers which could provide it with sufficient feed to begin with.


CONCLUSION

Some analysts seem to argue that Odyssey too will end up being another Eos or Maxjet – both of which were all Business class carriers that eventually went bankrupt. However, Odyssey’s case would be different given that it will operate narrow-body aircraft (all of the previous airlines used wide-body aircraft or at least the larger narrow-body Boeing 757s) and operate on a very lucrative business route that has already proven quite successful for BA. And Odyssey will only need to fill 40 seats, at maximum – while achieving a potentially high yield.

The best option for Odyssey would be not to be limited to a sole LCY – North America operation and to use some of its aircraft to serve key business points in Europe. This fleet could be configured with a more denser configuration, that would still be more comfortable than the average European Business Class – in order to attract a premium. By crafting a well connected and convenient schedule, the airline would be able to develop just the right kind of feed that it needs.

Having a premium suite of services that would still not increase the costs, the airline will be able to carve a successful niche for itself built on sustainable profitability.

This appears to be a good business case, if well executed and has a very high potential to become successful – if done in the right way. It however is no way to ‘get-rich-quick’ and the shareholder patience will be needed to ensure that the airline builds a sustainable future for itself. Specially in an age where short haul is more dominated by Low Cost Carriers day by day, this appears to be a very attractive and interesting idea to work upon. But the success of this operation could only be achieved IF Odyssey follows the correct path. And that is a big IF, given the impending European currency crisis and the fact that this airline might never take to the skies at all – as it is an airline that is not yet confirmed to exist. Nevertheless, if somebody decides to try this concept, it would be one very interesting project to watch and would have a very good chance of becoming a success.

Further reading : British Airways A318 Operation – http://airlineindustryreview.com/a-steep-approach-an-in-depth-look-at-british-airways-a318-new-york-service

-See more at: http://www.flightglobal.com/blogs/the-networker/2011/12/the-the-odysseys-odyssey-another-attempt-at-all-biz-class-transatlantic-profits/#sthash.8yE3pneJ.dpuf

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