The summer is rapidly approaching and the majority of airlines have already launched their summer season programmes with hundreds of new routes on their updated schedules. However, tighter schedules mean every second costs for airlines, particularly for the European carries. With the mechanical malfunction to be ruled out from the list of extraordinary circumstances, airlines operating to/from European airports are likely to face even higher financial risks should they experience an aircraft-on-ground situation during the summer season 2013.
In October 2012 the Court of Justice of the European Union ruled that all passengers who reach their destination with a three hours’ long delay or more are eligible for compensation from airlines, excluding situations caused by extraordinary circumstances. However, the ruling also clarified that technical problems shall not be considered as such.
‘When an aircraft cannot proceed with the take off due to a technical malfunction, it is said that the airline encounters an Aircraft-on-Ground situation, otherwise known as an AOG. The cost of a single AOG case for a narrow-body aircraft, such as Boeing 737 or Airbus A320, is at least 20-30 thousand dollars per day. This includes the acquisition and express delivery of new parts, which may be overpriced by 100% or more due to time-sensitivity of the case; the provision of food and beverages, accommodation as well as other non-monetary compensation means other for the waiting passengers; arrangements for a spare aircraft should the rectification of the revealed defects take more time than expected, etc. The costs for a wide body aircraft such as Boeing 747 are even greater, left alone the A380 giant which, if AOG-ed, brings losses worth of 980,000 USD per day,’ comments Zilvinas Sadauskas, the CEO of Locatory.com.
With regard to the newest ruling, passengers who are travelling from/to or within the EU, are entitled to a €250-€600 compensation. Considering Boeing 737-800 seat capacity and the fact that most aircraft tend to be fully loaded during High Peak summer seasons, this potentially implies a minimum of €42,000 in additional costs for airlines in AOG situations causing delays of 3 hours or more.
‘The majority of airlines send their aircraft for technical repairs and overhaul during the winter. Some of them, like Ryanair, ground some of their aircraft during low seasons. But during the summer season every aircraft runs a significantly higher risk of an AOG situation as airlines are seeking to achieve the maximum performance of their fleet while transporting dozens of millions of passengers to their vacation destinations. Moreover, an AOG situation is not only a financial concern, as it can potentially have detrimental effects on the airline’s image. It is natural that even an hour-long delay may ruin one’s entire holiday should a connecting flight be missed. Considering the aforementioned, airlines ought to seek for more prompt means of parts supply. Particularly when it comes to the search of local suppliers in remote destinations,’ share Z. Sadauskas.
While life-guards on a beach are looking after your passengers, Locatory.com is looking after your aircraft. Find out our latest video ‘AOG Watch’ via: