MetroAir recently announced the retirement of its three leased 737-700s. As of writing this, one of them has already been returned to its lessor, with the other two to follow soon.
This has of course raised questions; why get rid of a next-generation aircraft while we still operate the much older 737-200s? Is MetroAir losing money? Is it shrinking?
A little background is needed.
We acquired the three birds last year after some strong months of business. We wanted a single-aisle aircraft that was efficient and could cross the continent with ease. Our 762s were cheap, but are somewhat less reliable, and generally too big for high-yield routes save for some of the thickest. They work well getting larger numbers of low-yield passengers to their holiday destinations in Mexico, Puerto Rico and Hawaii. However the 737-700s generally suit a different market; as such we placed them on our prime business routes, initially just out of Detroit. The remaining aircraft are currently flying across the continent as well as between Detroit and business centres such as New York and Washington DC.
So why get rid of them?
The 73Gs were acquired on dry-leases; that is, we acquired the aircraft on a longer-term basis, got them painted in our scheme and supplied the crew ourselves. The monthly lease rates were rather expensive; unlike the 737-200s which we paid for in full when they entered service (at approx. $1.5m apiece), we have to shell out for the 73Gs on a monthly basis. This was a necessary squeeze on profit margins before the A319s began to arrive as the aircraft’s higher performance enabled service on routes we couldn’t have operated successfully with our other fleet types.
The thinking behind the A319 choice over the 737-700 for major expansion has been explained in detail before. One of the negative outcomes of our choice of A319 is that operating the 73Gs is no longer as profitable as flying the same routes with the A319. The maintenance procedures, tooling and expertise required for the 73G as an “odd-one-out” in the fleet made it that way. Operating them also meant lower flexibility of flight crew, reducing operational efficiency.
In short, the reasons are rather clear. The A319 has comparable or marginally better commercial and operational performance. It is also cheaper to acquire in the long run with finance repayments being lower than the monthly lease costs of the 73G. The commonality benefits of operating 3 A319s instead of the 3 73Gs further reduce the cost of operations.
That leaves one other question. Why hold on to the 732As? Simple. No monthly repayments, therefore providing a low-risk aircraft with which to probe new routes and markets, specifically these days on the West Coast. Until they really start falling apart, you’ll be seeing them in our renowned Metro green.