U.S. carrier Allegiant Air will begin operating used Airbus A319s in the second quarter of 2013, giving the ultra-low-cost airline a third type – along with the McDonnell Douglas MD-80 and the Boeing 757 – for its fast-growing fleet.
Las Vegas-based Allegiant Air has agreed to lease nine used Airbus A319 jets – currently in service with UK low-cost airline easyJet – for eight years from GE Capital Aviation Services (GECAS).
In addition, Allegiant is taking 10 A319s from Philippines-based carrier Cebu Pacific Air, on a finance-lease basis which will see the U.S. airline ultimately owning the 10 aircraft. These aircraft will have “a high level of commonality to the easyJet fleet,” according to Allegiant Travel Company, Allegiant Air’s parent.
The GECAS aircraft will be from eight to 10 years old upon delivery to Allegiant, while the Cebu Pacific Air A319s will each be about seven years old on average.
Allegiant Air says it is also “actively evaluating additional transactions” for leasing or purchasing A319s. The company says there will be “350+ used aircraft available in the next 24 months”, with “large fleets of sister ships available”.
The carrier expects to receive its first A319 from GECAS in the fourth quarter of this year and one in the first quarter of 2013 and it plans to put these two aircraft into service in the second quarter of 2013. Additionally, the first A319 will arrive from Cebu Pacific Air in the first quarter of 2013 and this will also enter service in the second quarter.
Allegiant Air’s delivery schedule for used A319s then calls for it to receive another aircraft from Cebu Pacific in the second quarter of 2013, this A319 entering service in the third quarter of the year.
Two more A319s will follow from Cebu Pacific in the third quarter of 2013, entering service will Allegiant in the fourth quarter. Another three will arrive from Cebu Pacific in the fourth quarter of next year, joining Allegiant’s in-service fleet in the first quarter of 2014.
Cebu Pacific will deliver two more A319s to Allegiant Air in the first quarter of 2014, going into service in the second quarter of that year; and Allegiant will receive its last aircraft from the Philippines carrier in the second quarter of 2014, putting it into service in the third quarter.
In the third quarter of 2014, Allegiant will receive another former easyJet A319 from GECAS, for entry into service in the fourth quarter. Allegiant’s fourth GECAS aircraft will arrive in the fourth quarter of 2014, going into service in the first quarter of 2015.
A further GECAS A319 will be delivered in the first quarter of 2015, entering service in the second quarter; and the remaining four GECAS aircraft will go to Allegiant in the second quarter of 2015, going into service with the Las Vegas carrier in the third quarter of the year.
According to Allegiant, there is now an “excellent leasing market” for A319s, with aircraft values deteriorating due to airlines’ general desire to move up to the larger A320 or 737-800 and because the introduction of the Airbus A320neo family is now only three years away.
But while A319 resale values are deteriorating, many young A319s are on airlines’ and leasing companies’ books at fairly high values, creating an excellent environment for leasing at reasonable rental rates, according to Allegiant. This situation is very similar to that which pertained for the McDonnell Douglas MD-80 family in the 2001-2005 period, Allegiant says.
Allegiant Air also expects the A319 leasing market will include a “large number of sister ships”. This is a major positive for the U.S. carrier as it seeks to obtain the highest-possible levels of commonality among the used aircraft it leases or buys, to minimize conversion and operating costs.
However, the induction of A319s into its fleet and the strong expected availability of young A319s for leasing will not quickly result in Allegiant Air disposing of the bulk of its fleet of aging McDonnell Douglas MD-80s, of which it currently has 58 in service.
(This total includes two 130-seat MD-87s, which Allegiant Air does plan to retire as a result of the cost of upcoming major-maintenance checks and poor aircraft economics. One is to be retired in the first quarter of 2013 and the other in the second quarter.)
According to Allegiant Air, other than the two MD-87s, it has “no firm plans at this time to retire more MD-80s” from its main fleet and the carrier is still pushing ahead with its effort to increase the number of passenger seats in each MD-80 to 166. To date, Allegiant has converted 29 of its MD-80s to 166-seat configuration.
The airline says that, based on an average aircraft utilization of 8.9 hours a day, the cost per passenger to own or lease each Airbus A319 will be double that of its MD-80s, at $10 compared with $5.
However, other A319 costs – particularly fuel and maintenance – will be much lower than those of the MD-80. Overall, Allegiant Air expects each A319 to cost it on average $96 per passenger to operate, while each MD-80 costs the carrier $106 on average. Allegiant also stresses the fact that the young A319s it is acquiring will have “far superior reliability” than its aging MD-80s.
The carrier concedes that adding a third fleet type will make pilot transition and training “less efficient”, but adds that in the context of the low operating costs the A319 will offer Allegiant, its pilot training and transition costs will be “manageable”.
Additionally, adding the A319 to its fleet should allow Allegiant Air potentially also to add the longer-fuselage Airbus A320 and A321 very easily (perhaps eventually to replace its MD-80s), should sizable numbers of these popular aircraft become available at the low lease rates or purchase costs the used-aircraft specialist likes to pay. The Airbus common-cockpit concept means pilot transition among the three Airbus models is extremely quick and easy.
Allegiant Air has not yet revealed how many passengers it expects each A319 to carry, but the number may be slightly less than the 166 passengers for which each MD-80 is to be configured. However, Allegiant Air says “some marginal MD-80 flying can be very profitable with [the] A319”.
Additionally, the A319 offers far greater range than any MD-80 model: any A319 is capable of operating a U.S. transcontinental sector, but no long-fuselage MD-80 is.
The A319 also offers better short-field performance and improved performance from hot-and-high airports than does the MD-80, giving Allegiant Air access to airports it cannot currently serve with MD-80s. The A319 also generates much less external noise than the MD-80, particularly important for communities located near airports.
As a result, Allegiant Air should be able to open many new longer-distance routes with its A319s and overall the carrier expects to generate $1 million more net income a year with each A319 than it achieves with each MD-80.
Allegiant Air also owns six Boeing 757s, of which it currently has four in service, mainly on routes from the continental U.S. mainland to Hawaii. The carrier operates its 757s in single-class, 223-seat configuration.
The other two 757s, which are currently on lease to a UK airline, will join Allegiant’s fleet in the first quarter of 2013 and the carrier says there it “potential” for it to grow its Boeing 757 fleet further in the 2013-2015 period.