AIRCRAFTAIRLINENEWSROUTE MANAGEMENT

San Jose Delivers More International Routes

Lufthansa Airbus A340-300 D-AIGS

San Jose International Airport (SJC) has been the poor cousin of San Francisco International Airport (SFO). This status is slowly changing to additional flight just announced with Lufthansa German Group (LH).

Frankfurt to San Jose Non-Stop

Scheduling

The initial schedule has Lufthansa flying this route five times weekly with no service on Tuesdays and Thursdays.

Lufthansa Frankfurt to San Jose
Lufthansa Frankfurt to San Jose to start on April 26, 2015. Source: Distance Data from Great Circle Mapper

The non-stop flight will have a travel time of approximately 12 hours. This is at least 25% faster than the best one-stop option with a transfer at Denver International Airport (DEN).

The new flight to San Jose means that many people travelling to the location will be looking for a Hotel Downtown San Jose once they arrive. Thankfully the city has many options for convenient locations. The additional flight will also hopefully fuel extra business and cash flow to the city, both in terms of tourism and business travel and in terms of the ability to traverse outwards on an international level.

Outbound arrival in San Jose City provides connection opportunities to the Western US/Canada and Hawaii. Inbound arrival in Frankfurt at 1135am (next day) provides many connections across Europe, Africa and Middle East.

LH Frankfurt to San Jose Connection
LH Frankfurt to San Jose Connection Opportunities

Configuration

The German airline will offer Business, Premium Economy and Economy classes on board this flight. It will also use its own Airbus A340-300 for this route initially but will switch over to its subsidiary Cityline by June 30, 2016 onwards.

Business Premium Economy Economy Total
LH Mainline Airbus A340-300 (April 26, 2016) 30 28 221 279
LH Cityline Airbus A340-300 (June 30, 2016) 18 19 261 298
Difference -40.00% -32.14% 18.10% 6.81%

This change will bring overall capacity per flight up by 6.81%. The gains all come from a 18.10% increase in Economy class with a over 30% decrease in premium economy and business inventory. The reason behind the gauge change is to factor in lower business travels during the Summer to the US west coast. This change will also contribute to a higher Available Seat Kilometer (ASK) figure.

ASK (LH Mainline) per flight = 279 * 5,703 miles * 1.6km / mile = 2,545,819.2 km

ASK (LH Cityline) per flight = 298 * 5,703 miles * 1.6km / mile = 2,719,190.4 km

However, the change in equipment will also impact the total potential revenue for the flight. Experience The Skies used Google Flight to search for the minimum price per class for travel between April 29 to May 6, 2016 (with a Saturday night stay) which resulted in the following prices:

Lowest Price Per Class of Service for April 29 to May 6, 2016
Lowest Price Per Class of Service for April 29 to May 6, 2016
Source: Google Flight (Information accurate as of publication)

Using that pricing as an example, the increase capacity actually will reduce total revenue by 33k. If cost and yield remain constant (cost will likely be reduced as Cityline has a lower cost based), this flight would need a higher load factor to achieve breakeven.

Business Premium Economy Economy Total
LH Mainline 121,740 64,512 198,900 385,152
LH Cityline 73,044 43,776 234,900 351,720
Difference -48,696 -20,736 36,000 -33,432

Other Airlines and Opportunities

Although British Airways (BA) became the first European airline to announce flights to Europe from San Jose (News – August 26, 2015), it will cede first flight time to Lufthansa by five days (April 29 vs May 4). It will, however, remain the only airline to offer first class service to Europe.

San Jose is home to many technology companies and has a large Asian population. For now, it only has two non-stop Asian flights – 1. All Nippon Airways (NH) to Tokyo Narita Airport (NRT) and 2. Hainan Airlines (HU) to Beijing Capital International Airport (PEK). Both airlines fly to San Jose with Boeing 787s.

Business case for other Asian routes include: EVA Airways (BR) to Taiwan Taoyuan International Airport (TPE) and Vietnam Airlines (VN) to Ho Chi Minh City Airport (SGN). The first option will feed traffic for high tech companies located in Taiwan. The latter would be to serve the biggest Vietnamese population outside of Vietnam.

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