In 2013 we launched an initiative around the A340 and its economics and the viability of the same under a low cost structure for those airlines that either have the aircraft already or wish to purchase an aircraft at low cost for exceptional economics. Rolls Royce then agreed at our A340 day in London last year to keep engine MRO costs at a 2-for-1 price basis, further improving the economics. The experience of NAS with its A340 services and the business model of Allegiant with its MD aircraft fleet both point to a strong business case for an A340 at prevailing purchase prices. In 2014 A340s have started changing hands and now there is a chance that many will get to see how an airline can benefit by running the aircraft under a full low cost structure in much the same way as Allegiant when Lufthansa gets its 14 A340 aircraft fleet ready for low cost services with “Jump”.
Lufthansa has had its fair share of labour problems of late with strikes and the Air France chaos of the past two weeks over its plans to start a low cost arm have meant that Lufthansa has had to be creative in how it structures operations. Lufthansa is looking at renting the A340s to PrivateAir in Switzerland and then wet leasing them back, thus the crew are third party and the Lufthansa pilots cannot strike and no labour approvals are required. There is no question that this business model could be something that many other flag carriers across the globe would do well to investigate. In the case of the Lufthansa plans, Swiss pilots will not be the most cost efficient that is for sure, but what if other companies were able to offer these services out of areas where crew costs would be far reduced? It is a business model that would suit the likes of Air France, Lufthansa and other very large airlines that require a low cost arm in order to compete in the 21st Century. Air France it seems has no choice but to follow the Lufthansa lead. Wet leasing specialists everywhere should be looking hard and fast at how they can best place themselves to benefit from flag and legacy carriers trying to launch low cost arms without a fight with their staff unions.