Taking delivery of a new aircraft type can be exciting for executives at any airline.
But for Hawaiian Airlines, the Airbus A321neos set to enter the fleet next year may be downright transformative, say executives.
They describe A321neos as being so uniquely perfect for many of Hawaiian's routes that Airbus might as well have custom-made the type based on Hawaiian's specifications.
The aircraft, they say, will give Hawaiian a cost edge over competitors, enable it to enter more US markets and free widebodies for deployment to new, far-flung destinations.
"Fortunately, somebody built the perfect aircraft for rounding out our aircraft portfolio fleet," Hawaiian's vice-president of financial planning and analysis Noel Villamil said during the company's investor day on 5 December.
"The A321neo… provides a meaningful differential in aircraft range and capacity such that it opens up a new path for our business plan," he adds. "We expect to enjoy a long-term competitive advantage on the West Coast markets we serve with this aircraft."
Currently Hawaiian operates three aircraft types. It has 18 Boeing 717s deployed on short-hop intra-island routes, eight 767s that operate a number of transoceanic flights and 23 Airbus A330s, which carry the weight of Hawaiian's long-haul network, according to the airline's most recent financial filings.
But in 2017 Hawaiian expects to take delivery of the first of 18 new Airbus A321neos, which executives have said will primarily operate flights to the US mainland from Hawaiian Island airports other than the primary gateway of Honolulu.
The carrier expects to have all 18 A321neos in the fleet by 2020, and it will outfit them with 189 seats, according to company documents. Meanwhile, Hawaiian plans to retire all its 767s by 2018, it has said.
Executives spent significant time during the 5 December investors' meeting explaining the carrier's reasons for choosing the A321neos and describing the aircraft's expected benefits.
Villamil says Hawaiian's network is unique from nearly any other carrier in the world because it operates three distinct types of routes.
Those include very short-haul intra-island flights, medium-haul flights to the US West Coast and ultra-long-haul flights to New York City and several transpacific destinations.
Before the A321neo became available, A330s and 767s were the only viable types to serve those 6h to 7h medium-haul US routes, Villamil says.
"Until now, the CASM penalty associated with down-gauging didn't really make sense for us to diverge from our relatively more efficient widebody hub operation," Villamil says.
Alaska Airlines, American Airlines, United Airlines and Virgin America do fly A320-family aircraft and 737s to Hawaii from the US West Coast, but those narrowbodies also operate a host of other routes throughout those carriers' networks, Villamil says.
In other words, the mission of an Alaska 737 – even one flying to Hawaii – is very different from the transoceanic-specific mission of a Hawaiian narrowbody, he says.
Its needs being so specific, Hawaiian sought to identify the single best narrowbody for the job. It needed a high-capacity aircraft with range to reach the US West Coast and ability to operate out of "more challenging neighbour island airports," Villamil says.
"We have a single mission in mind with this aircraft. There will only be one aircraft with a specific combination of attributes to make it the best performer," he says. "Those two criteria converged neatly and unambiguously at the A321neo."
Using A330s and 767s, it operates on 17 of 20 "large" markets between the US mainland and Hawaii, the carrier's vice-president of revenue management and schedule planning Brent Overbeek said on 5 December.
Hawaiian defines large markets as those with at least 200 passengers daily, each way, Overbeek says.
Those routes primarily connect Honolulu to cities like Las Vegas, Los Angeles, Phoenix, Portland, San Diego, San Francisco, San Jose and Seattle, the company says.
However, Hawaiian serves only three of 24 "mid-size" markets (defined as those with 100 to 200 daily, one-way passengers) between Hawaii and the mainland, Overbeek says.
These mid-size markets include many routes from secondary Hawaii airports (like Kona, Lihue and Maui) to the main US West Coast cities.
"This is really what the A321 opens up," Overbeek says, noting that A321neos can reach half of those mid-size markets. "There is a real growth opportunity for us."
Not only can the A321neo serve those markets, but the aircraft's operating performance will push down Hawaiian's unit costs while driving unit revenue higher, according to Villamil.
To the US mainland, A321neos will have lower unit costs than 737-800s, 737 Max 8s, 737 Max 9s and current generation A320s and A321s, according to Hawaiian.
The A321neo's trip cost will be lower than that of current generation A320s, but higher than that of 737 family aircraft, Hawaiian's investor materials show.
The A321neo is a "category killer" that will "permanently reset our base margins to a higher level", Villamil says.
The company is already enjoying strong financial performance, reporting a third quarter net profit of $102 million, up 46% year on year.
In addition to opening new West Coast routes to Hawaiian, A321neos will free A330s to operate more ultra-long-haul routes, on which those widebodies are most efficient, executives say.
The company this year started retrofitting the cabins of those aircraft to have more premium economy seats and lie-flat business class seats, changes Hawaiian says will make the aircraft more competitive on very long routes.
The A321 is "a linchpin that will complete a portfolio that is designed to serve Hawaii from all angles with maximum efficiency," Villamil says. "What we are doing over the next couple of years will yield benefits that will build into the next decade and beyond."
Hawaiian has not named specific markets where it plans to expand, but the investor presentation identifies several long-haul markets where such "growth opportunities" exist.
Those include Chengdu, Guangzhou, Hong Kong and Shanghai in Greater China, as well as Bangkok, Ho Chi Minh City, Melbourne and Singapore.
The presentation also names Boston, Philadelphia and Washington, DC in the USA, and Toronto and Montreal in Canada.
Source: Cirium Dashboard