Re: Valsan 727 modifications

From:         ehahn@fairlite.mitre.org (Ed Hahn)
Organization: The MITRE Corporation, McLean, Va.
Date:         22 Mar 94 09:52:41 PST
References:   1 2
View raw article
  or MIME structure

In article <airliners.1994.1027@orchard.Chicago.COM> jdd@db.toronto.edu (John DiMarco) writes:

   Anybody care to comment on the financial implications of modifying older 727s
   rather than replacing them outright? 

----
Well, for one airline, the financial considerations they undertook
when considering retiring the B727-100 and -200 fleets hinged on three
things:

1) Windshear Detection Equipment retrofit (FAR 121.358)
2) Traffic Alert and Collision Avoidance System retrofit (FAR 121.356)
and
3) Stage III noise regulations (can't recall the exact FAR)

Nos. 1 & 2 were required on all airliners (more than 30 seats) by
December 30, 1993.  The ballpark cost of retrofit per aircraft for
Windshear is 40K(USD), and for TCAS is 150K+(USD).  

Number 3, Stage 3, is required in 1999.  Basically, to meet Stage 3
noise regulations, the current engines (JT8D-17s et al) must be
modified in some way, or be replaced.  This, of course, is VERY
expensive (hundreds of thousands to millions of USD).  Earlier posts
regarding the Valsan conversions have detailed what is involved here.

Offsetting the cost is the fact that the B727 can be a very useful
aircraft on some routes.  The airline that I am familiar with operated
125 B727-200s in 1992, and is slowly retiring the older aircraft so
that there will be about 67 of them left by 1997.  The main reason
they are hanging on to them are that they are VERY profitable on
Caribbean routes because:

1) Fairly good takeoff performance.
2) Good payload carrying capacity (-200A version), especially when you
consider that flying over the Caribbean requires HF radios and full
overwater crash survival equipment (rafts, etc).
3) Three engines, which is useful for avoiding some of the hassles of
trying to fly overwater with only two engines in a small aircraft
(i.e. MD80 class).

Therefore, this airline will continue to operate the B727-200 until
1999, when they will retire the remaining 67.  The costs of reengining
and aging aircraft modifications will make further service not cost
effective.  It should be noted that there was some concern at this
airline about which aircraft was going to replace it on these
profitable routes.  BTW, the airline retired the last of its -100s
before the end of 1993.  The reduced payload capacity of the -100 made
it not cost effective for TCAS/Windshear retrofit.

Note that this was the case for only one airline, and that the plan
was pretty firm at the time I left.  Furthermore, this airline was in
good financial shape, and has plenty of brand new aircraft on the
delivery schedule, so they weren't hurting for seats.

Just one point of view...
ed

////////   Ed Hahn | ehahn@mitre.org | (703) 883-5988   \\\\\\\\
The above comment reflects the opinions of the author, and does not
constitute endorsement or implied warranty by the MITRE Corporation.
Really, I wouldn't kid you about a thing like this.