AFM Issue 84 by AFM Magazine

The business and financing of airline operations

Interview: Cathay Pacific Fuel hedging Aircraft lease rates Interview: Changi Airport EADS-EFW on cargo growth

Asiaâ&#x20AC;&#x2122;s blossoming aviation industry Published by

May-June 2013 Issue 84 www.afm.aero

Foreword

Editor Mary-Anne Baldwin Mary-Anne@afm.aero +44 (0)208 831 7511 Contributors Oliver Clark, Peter Donaldson, Piers Evans, Chris Kjelgaard and Nick Rice. Advertising Manager Ellis Owen Ellis@afm.aero +44 (0)208 831 7519 Editorial Director Joe Bates joe@aviationmedia.aero Design Andrew Montgomery andy@afm.aero Elaine Harris elaine@aviationmedia.aero Website Jose Cuenca jose@aviationmedia.aero Published on behalf of UBM Aviation by Aviation Media Sovereign House 26-30 London Road Twickenham, TW1 3RW, UK Managing Director & Publisher Jonathan Lee Jonathan@aviationmedia.aero AFM IS A FULLY AUDITED MAGAZINE Website: www.afm.aero AIRLINE FLEET MANAGEMENT AFM does its best to use recycled products or those from renewable sources. (ISSN 1757-8833) Online: 1757-8841 (USPS 022-324) is published bi-monthly by UBM Aviation Publications Ltd and distributed in the USA by SPP, 95 Aberdeen Road, Emigsville PA. Periodicals postage paid at Emigsville, PA. POSTMASTER: send address changes to AIRLINE FLEET MANAGEMENT, c/o PO Box 437, Emigsville PA 17318.

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ecently, we heard about Lion Air’s ‘mega order’ for Airbus aircraft, which at 234 medium-haul aircraft still packs a punch, even if we’ve become accustomed to large orders. Together with its deal with Boeing, Indonesia’s Lion Air now has 469 aircraft on order, signalling its optimism for growth in the region. So, in this issue, we bow our heads to Asia by looking at just a few of the companies in the region. We interview Changi Airport about its achievements and about air traffic growth in the region, plus we talk to TeamSAI about the development of MRO in South-East Asia. We also speak to Cathay Pacific Group about how its fleet acquisition plans will help it turn last year’s dip in profits into profit growth. Looking more widely at fleet needs, we analyse lease rates for Boeing and Airbus aircraft, uncover fuel hedging trends and discuss the impact of the aircraft sector understanding on financing. Oh, and we also tell you about our visit to Pratt & Whitney’s engine testing facility, where we saw the PW100G in action. But all that would seem amiss if we didn’t also discuss the ups and downs at Boeing HQ. After three months of nail biting, the Federal Aviation Administration (FAA) has approved Boeing’s new battery system and Ethiopian Airlines operated the first 787 flight since 17 January. Welcome back! All 787’s are to be fitted with containment and venting systems for the main and auxiliary system batteries, and they will have their batteries and chargers replaced. The solution will add an extra 150lb (68kg) to the aircraft’s weight.

But, just as things were starting to look up, Boeing was slapped with another airworthiness directive (AD), this time on its 737 aircraft. It covers -600, -700, -700C, -800, -900 and -900ER aircraft that have completed 56,000 cycles. The issue regards pins in the aircraft’s tail. The FAA is concerned about “reports of an incorrect procedure used to apply the wear and corrosion protection surface coating.” It added: “We are issuing this AD to prevent premature failure of the attach pins, which could cause reduced structural integrity of the horizontal stabilizer to fuselage attachment, resulting in loss of control of the airplane.” The AD, which comes into effect on 20 May, will impact on 1,050 aircraft in the US alone and total costs have been predicted to reach $10.1m, or $9,627 per aircraft. Bad news for Boeing, but good news for MROs at least!

Don’t forget to follow us on Twitter if you’re reading this from ISTAT Asia, or want to keep up with news from the event.

Editor Mary-Anne Baldwin

Airline Fleet Management™ is a licensed trademark of UBM Aviation Publications Limited. All trademarks used under license from UBM Aviation Publications Limited.

This publication may not be reproduced or copied in whole or in part by any means without the express permission of UBM Aviation Publications limited.

The views expressed in each edition of Airline Fleet Management (AFM) are not necessarily the views of UBM Aviation Publications Limited, but of individual authors and contributors and UBM Aviation Publications Limited shall therefore not be liable for the contents of any articles included in this publication. AFM, part of UBM Aviation, has used its best efforts in collecting and preparing material for inclusion in AFM but can not and does not warrant that the information contained in this product is complete or accurate and does not assume and hereby disclaims, liability to any person for any loss or damage caused by errors or omissions in AFM whether such errors or omissions result from negligence, accident or any other cause.

afm • Issue 84 – May–June • www.afm.aero

The business and financing of airline operations

Interview: Cathay Pacific

AIRLINE FLEET MANAGEMENT

Fuel hedging Aircraft lease rates Interview: Changi Airport EADS-EFW on cargo growth

Asia’s blossoming aviation industry ISSUE 84 May–June 2013

Published by

May-June 2013 Issue 84 www.afm.aero

Issue 84 May - June

In this issue

03 08 16

Foreword

News round up

The latest on deals, mergers, appointments and more. Focus:

One to one: Cathay Pacific Group

22 26 32

Peter Donaldson speaks to Cathay Pacific Group about its struggles last year and how its fleet acquisition plans will turn it all around.

Trading, legal and finance

The ASU: Its impact on financing Mary-Anne Baldwin looks at how aviation finance is changing as a result of the aircraft sector understanding.

Lease rental trends Paul Leighton, MD of The Aircraft Value Analysis Company, examines changes in aircraft lease rentals.

Fleet Operations:

Winning fans: Pratt & Whitney is back

Chris Kjelgaard reports from P&W’s engine test facility near West Palm Beach, Florida.

afm • Issue 84 – May–June • www.afm.aero

CONTENTS

36 40

Fleet Operations:

Fuel costs: Hedge your bets Accurately forecasting fuel costs for the year ahead could keep any airline CFO up at night, but the right fuel hedging programme could be better than any cup of cocoa. Mike Corley, president of Mercatus Energy Advisors, gives his view.

On hold: EADS-EFW on cargo growth

46 52 54

Mary-Anne Baldwin speaks to EADS-EFW’s John Howey about the decline in air cargo and how the company plans to navigate through it.

Maintenance operations

Eastern promise: Examining South-East Asia’s MRO As Asia’s airlines flourish, Nick Rice talks to TeamSAI about South-East Asia’s growing role in MRO.

Logistics: The lynchpin of the aftermarket

40 46

Locatory.com examines the effect of import duties and procedures on the supply of aircraft spares.

AIRPORTS AND ROUTES

Soaring success: Changi airport

Singapore’s Changi Airport has a clear trajectory for growth. Sizable terminal expansion and a ‘deep’ alliance with its airline customers are just two of the weapons in its arsenal, as Peter Donaldson discusses.

DATA

Industry data Data including: market, list and lease rates for engines and aircraft; firm orders and deliveries; and reposession costs.

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NEWS

Lion Air places $24bn ‘mega’ order Indonesia’s Lion Air has placed an order for 234 medium-haul aircraft worth $24bn. The low-cost airline has ordered 109 A320 Neos, 65 A321 Neos and 60 A320 Ceos, making it one of Airbus’ most prized customers. Lion Air has said that it will use the aircraft to “meet growth requirements on its expanding domestic and regional route network”. Last year, Lion Air ordered 235 Boeing aircraft including 29 737-900 ERs, 201 737 MAXs and five 787-800s, taking combined orders during a 14-month period to 469 aircraft. Its orders suggest Lion Air is aiming for extreme growth however, the aircraft are medium-haul, meaning new routes will

not extend to Europe or other destinations far afield. This has led to some speculation that Rusdi Kirana, CEO of the Lion Air Group, plans to set up a leasing side-arm, something Kirana denied during an interview with Reuters. Speaking about possible over-ordering in the region, he said: “People who say that don’t understand the market in Asia.” He also hinted at his plans for the aircraft: “What will I do with them? I will set up new airlines in other countries in the Asia-Pacific region.” Lion Air has already discussed plans to start a domestic airline in Malaysia, which would rival AirAsia.

IAG orders 18 A350-1000s for BA International Airlines Group (IAG) has signed a memorandum of understanding (MoU) for 18 A350-1000s, with options for a further 18. The aircraft, worth an estimated $6bn at list prices, will be operated by British Airways (BA). IAG has also reached an agreement with Boeing to convert 18 options for the 787 into firm orders. These aircraft will be used to replace some of BA’s 747-400s and

there is an opportunity to operate a new range of destinations profitably. This will not only bring greater flexibility to our network but also more choice for our customer,” said Willie Walsh, IAG’s CEO. IAG and Airbus have also hinted at future orders for IAG’s Iberia, having agreed terms and secured delivery slots for orders reliant on Iberia’s profitability.

will be delivered between 2017 and 2021. This brings BA’s total orders for the 787 to 42. BA also ordered 12 A380s in 2007, the first of which will be delivered this summer. “The A350-1000 will bring many benefits to our fleet. Its size and range will be an excellent fit for our existing network and, with lower unit costs,

NEWS IN BRIEF LOT readies for privatisation The Polish government plans to change legislation so it can sell its flag-carrying airline, LOT. The government currently owns 93 per cent of the loss-making airline and under current law must remain the majority shareholder. However, it has approved draft legislation to change this. The government believes that offering a majority stake will generate more interest from investors. It also hopes the privatisation would allow LOT to better compete with other carriers. It has stipulated that LOT must retain its name and brand, along with a hub in Wasaw as LOT generates 45 per cent of the traffic at the airport.

Intrepid secures $100m PDP financing Intrepid Aviation has secured a $100m financing facility with Citi for the payment of eight new A330 to be delivered in 2014 and 2015. The revolving pre-delivery payment (PDP) financing is an extension of an existing agreement between Citi and the lessor, covering the PDP for two A330s. “Citi has been a key adviser and supporter of Intrepid’s growth strategy early on for both debt and equity funding. The facility will finance important cash flows of the business until the back end of our Airbus A330 forward order in 2015,” commented Olaf Sachau, Intrepid’s CFO.

Israel’s airlines strike over open skies Israeli airlines, including El Al, Arkia and Israir, have gone on strike over their government’s approval of an open skies agreement with the European Union (EU). Hundreds of passengers were stranded as a result of the walkout, however, the government has already given its backing of the policy, which would see more European airlines flying into and out of Israel. The government argues it would boost tourism and create more competition, thus lowering prices, but Israeli airlines fear it will cost them business.

afm • Issue 84 – May–June • www.afm.aero

NEWS

SIA to increase shares in Virgin Australia Singapore Airlines (SIA) is to take an additional 9.9 per cent stake in Virgin Australia, bringing its total share holding to 19.9 per cent. SIA will purchase 255.5 million shares from Virgin Group at 48 Australian cents per share for a total of A$122.6m ($126m). “Our partnership with Virgin Australia has been going from strength to strength, offering a wide range of consumer benefits,” said SIA’s CEO, Goh Choon Phong. “Increasing our stake in Virgin Australia is another example of Singapore Airlines’ deep commitment to the important Australian market. It also demonstrates our support for the on-going transformation of Virgin Australia, which has created a more competitive aviation market in Australia.” SIA bought a 10 per cent stake in Virgin Australia in late 2012 and the two airlines entered into a long-term partnership in 2011, including codesharing, reciprocal frequent-flyer benefits and co-ordinated schedules. The latest purchase is subject to approval from Australia’s Foreign Investment Review Board .

AMR lowers quarterly losses AMR Corporation, the parent company of American Airlines, has reported a 1Q net loss of $341m, yet it was significantly down from the loss of $1.7bn it posted the same time last year. Net profit for the quarter was $8m, up $256m year-on-year, although this excludes this year’s re-organisation costs and special items. Also excluding special items, the quarter’s operating profit was $125m, up $203m. The carrier, which is under bankruptcy protection, had its highest first quarter revenue at $6.1bn. Total operating costs were reduced by 1.3 per cent, affected by a 16.7 per cent drop in labour costs, but a 1.6 per cent hike in fuel costs. “We have made great progress in building the new American,” said Tom Horton, AMR’s CEO. “And the momentum is building. We have raised revenues and built a competitive cost structure and sound foundation for the future. We’re investing in hundreds of new aircraft and industryleading products and have renewed our iconic American brand. Looking forward, our pending merger with our partners at US Airways positions American to be the world’s leading airline. With great work by everyone on the American team, the new American is taking flight.”

Jamaica signs bilateral with Kuwait Jamaica has signed a bilateral investment treaty (BIT) with Kuwait in a bid to make Jamaica one of the world’s top four logistics centres. The BIT will “seek to provide fundamental protection for Kuwaiti investments in Jamaica”, it said in a statement. The agreement was signed between Anthony Hylton, Jamaican Minister of Industry, Investment and Commerce, and Kuwaiti Minister of Finance, His Excellency Mustafa Al-Shemali. Hylton will visit Dubai to discuss aviation logistics, hoping to secure partnerships with sovereign wealth funds and other private sector investors. He will also visit potential financiers and investors in Kuwait and Abu Dhabi for similar reasons.

Weigh more, pay more, says Samoa Samoa Air has become the first airline to charge customers by their weight. On booking a ticket, each passenger is asked to enter their approximate weight, plus the weight of their luggage. The figures are to be verified with another weigh-in at the airport. It costs less for children to fly, although more for pregnant women. However, a Samoa Air spokesperson said: “Remember that with the extra weight that the mother may be carrying, she will also be designated more seat space within the aircraft – ensuring a more comfortable flight.” The argument makes sense in business terms (as airlines incur cost by weight, not by seat) but has caused controversy among the public, some of whom have deemed it discriminatory. Samoa is known for its obesity and the airline for its small aircraft. However, it is unlikely that the US, which is also known for its obesity, will follow suit due to greater competition and demand for customer service.

Budget travel up, says IATA Economy passenger numbers grew by 3.7 per cent in February this year, according to the International Air Transportation Association (IATA). However, IATA said there was a ‘downward bias’ on the results due to seasonal factors and last year being a leap year. Considering this, the result could be as much as 5.7 per cent growth. “The seasonally adjusted growth trend in international air travel showed some improvement month-on-month. Although this could be volatility, a pick-up in the growth trend would be consistent with improvements in business confidence.” “Emerging regions show solid growth and leading indicators suggest stronger demand for business travel ahead,” IATA said.

Daimler sells remaining shares in EADS Daimler has made a historic sale of its remaining 7.5 per cent stake in EADS, exiting the aviation industry after almost 13 years. Germany’s car manufacturer and owner of Mercedes-Benz sold 61.1 million shares at €2.2bn ($2.9bn), of which EADS bought €600m worth. Daimler said it would use the proceeds to strengthen its core business of making cars. The German company last year sold another 7.5 per cent in EADS, parent of Airbus. EADS said it intends to close similar purchases of its own shares “subject to market conditions”, subject to the board of directors.

afm • Issue 84 – May–June • www.afm.aero

News

THY signs for 212 new aircraft Turkish Airlines (THY) has placed orders for 212 aircraft, including 117 Airbus aircraft and 95 Boeing narrowbodies. The deal with Airbus is “the largest aircraft order in Turkish civil aviation history”, according to Hamdi Topçu, its chairman of the board. The order includes 53 A321 Neos, 25 A321s, and four A320 Neos, plus options for an additional 35 A321 Neos, which are to be delivered by 2015. The new aircraft will bring THY’s fleet to 375 aircraft. “Today, we are signing an agreement with Airbus which will enable Turkish Airlines to reach its aims for the year 2023, the centenary of the foundation of our Republic,” Topçu said when the companies signed on 17 April. The deal with Boeing is worth up to $9.4bn, including options, and includes 20 737-800 NGs, 40 of the same aircraft with Max engines, plus 10 737-900 Max aircraft. Options are for an additional 25 737-800 Max aircraft. THY recently launched services to Aqaba in Jordan, Colombo in Sri Lanka and has added non-stop flights between Houston and Istanbul. The airline, which is half government-owned, has not disclosed how it will finance the orders.

Porter’s CS100 order side-steps Toronto island airport’s rules Porter Airlines has placed a controversial conditional agreement for up to 30 CS100s – aircraft that are too large to fly from its small waterfront airport in Toronto, Canada. Porter has signed a conditional deal for 12 CS100s and options for a further 18, worth a combined $2.08bn. It has also taken purchase rights on six Q400s, taking the total to $2.29bn. The agreement with Bombardier reflects Porter’s desire to add new routes to Vancouver, Los Angeles and Miami – making it a new competitor of Air Canada and WestJet. But the plan depends upon backing from the city of Toronto, its port authority and the federal government. Together, they currently hold a tripartite agreement that limits Billy Bishop Toronto City Airport’s operations to that of turboprops, such as the Q400 that Porter currently flies, due to noise restrictions. The airport would also have to expand its main runway by 168m at each end in order to accommodate the new CS100s, and supply Porter with additional landing and takeoff slots. Yet Porter seems confident and its CEO, Robert Deluce, has publicly stated that he hopes the agreement may be set within just six months, and that he doesn’t have a back-up plan should this one be rejected. However, the CS100s aren’t due to be delivered until 2016.

IAG to take over Vueling International Airlines Group (IAG) is to buy Spanish low-cost airline, Vueling, after a long wait for the airline. IAG, which owns British Airways and Iberia, already holds 48.85 per cent of Vueling. It will increase its share to 90.51 per cent after 83 per cent of the remaining shareholders accepted IAG’s offer of €9.25 ($12) per share. “The board considered that the price per share IAG offered was fair. But more importantly, we said that the full integration of Vueling into the IAG structure offers significant strategic opportunities for future growth and development,” Vueling’s chairman, Josep Pique, commented. “I am convinced that Vueling will maintain the dynamism, innovative spirit and competitiveness that are the foundation of its success. Those attributes, along with a reinforced presence in IAG, will allow us to continue to grow and consolidate our position as a unique player in European commercial aviation.” The deal will cost IAG a total of €123.5m ($160.8m). Vueling will operate as a separate entity with its CEO, Alex Cruz reporting to IAG CEO, Willie Walsh.

NEWS IN BRIEF Allegiant and Global Eagle team up Two leaders in in-flight entertainment and connectivity (IFEC),Allegiant Systems and Global Eagle Entertainment, are to work together. Global Eagle’s subsidiaries will use Allegiant’s FlyDesk mobile software platform for cockpit and cabin procedures to strengthen its integrated buy-on-board cabin initiatives. Global Eagle Entertainment recently took over Row 44, which provides Wi-Fi and IFE and also Advanced In-flight Alliance (AIA), which delivers in-flight audio, video and games. “We are excited to see how the combination of mobile operations, IFE and communications will improve airlines’ operational processes,” said Allegiant Systems’ CEO, Andrew Kemmetmueller.

DOT delays control tower closures The US Department of Transportation’s (DOT) Federal Aviation Administration (FAA) will delay the closure of 149 air traffic control towers, in the hope they will gain funding from airports and other stakeholders. The FAA announced it would stop funding the towers due to a $637m budget cut under sequestration. A phased, four-week closure was scheduled to begin on 7 April however, closure has now been delayed until 15 June. Approximately 50 airport authorities and other stakeholders have said they may join the FAA’s programme to fund the towers through non-federal means.

AirAsia India wins investment approval AirAsia has won approval for it to invest in its proposed subsidiary, AirAsia India. India’s Foreign Investment Promotion Board (FIPB) has backed AirAsia’s 49 per cent investment in the new airline, which would be co-owned by the Tata Group and Arun Bathia of Telestra Tradeplace. The partners are the first to take advantage of India’s Foreign Direct Investment (FDI) rules, which allow foreign companies to invest in India’s airlines. AirAsia India must now gain an operating licence from India’s Directorate General of Civil Aviation before it can start services.

afm • Issue 84 – May–June • www.afm.aero

Routes News The world air service development magazine and website

Oliver Clark Routes News magazine oliver.clark@routes-news.com www.routes-news.com

NEWS: Routes News

Wizz to axe half its Rome Fiumicino routes

izz Air is to pull four of its eight routes from Rome’s Fiumicino Airport on 7 May in response to what it calls “unreasonable” airport charges levied at the gateway. The budget carrier plans to move its routes to Gdansk, Poland and Cluj-Napoca, Timișoara and Târgu Mureș in Romania to Rome’s alternative airport, Ciampino, which is a base for Ryanair. “Our Rome routes to Gdansk, Cluj-Napoca, Timișoara and Târgu Mureș, carry over 140,000 passengers per year on very low fares.

One airport’s loss is another airport’s gain,” said Daniel de Carvalho, corporate communications manager at Wizz Air. The airline will also launch a third route from Tuzla in Bosnia and Herzegovina, where it is already poised to fly to Malmö in Sweden and Basel in Switzerland. “The Bosnia and Herzegovina Directorate of Civil Aviation and the Government of Federation of Bosnia and Herzegovina have shown vision by not taxing vwisitors and travellers to stimulate air traffic and to benefit consumers and the economy,” said de Carvalho.

Other Routes News Air France launches KL route Air France launched a thrice-weekly service from Paris to Kuala Lumpur (KL) on 22 April, becoming only the fourth carrier to operate services between Europe and the Malaysian capital. The night-flight service, which was announced last year, is operated with a 777-200, equipped with 246 seats in three classes. The new service complements KLM’s existing 14 weekly frequencies from Amsterdam. In total it will give the carriers almost 3,000 weekly seats to KL each week. The new route puts Air France in competition with Malaysia Airlines, which operates daily flights to KL from Paris, London and Frankfurt. Turkish Airlines also operates a service from Istanbul.

“The strong economic ties between Malaysia and France, the high growth rate in this region of the world as well as its tourist attraction make KL a choice destination for increasing Air France and KLM’s presence in South-East Asia,” said Alexandre de Juniac, the new chairman and CEO of Air France.

Dniproavia announces new Moscow service Ukrainian airline, Dniproavia, will resume its service to Moscow Domodedovo starting 22 April. The carrier will fly a daily Dnepropetrovsk–Moscow route, operated by an E145 in a two-class configuration. It began operating the route in 2004 but ended services in 2009.

In June and then September, it will also introduce new daily services to Poland’s Lvov and the Ukraine’s Sevastopol respectively. The destinations are currently not served from Moscow.

Lufthansa to put A380 on Frankfurt–Shanghai From 26 September, Lufthansa will fly the A380 five times a week on its daily Frankfurt–Shanghai service. It will continue to operate a 747-400 on the service on Mondays and Wednesdays. Lufthansa will continue to fly a second Frankfurt–Shanghai link using an A340-600, offering twice-daily flights on the route. Lufthansa will operate A380s on summer services to Beijing, Houston, Johannesburg, San Francisco, Singapore and Tokyo.

afm afm •• Issue Issue84 84––May–June May–June••www.afm.aero www.afm.aero

NEWS: People

On the

move Aircastle chooses new CCO Aircastle has named Michael Kriedberg as its new chief commercial officer (CCO). Kriedberg will be responsible for directing the company’s investment, lease placement and asset sales activities. He will report to the company’s CEO, Ron Wainshal. The new CCO will join Aircastle in late April 2013 and will be based at its headquarters in Stamford, Connecticut. He has previously worked for GECAS.

SAA announces Kalawe as CEO South African Airways (SAA) has confirmed that Monwabisi Kalawe will take over as its CEO. Kalawe – who was MD of a contract food services company, the Compass Group – replaces Nico Bezuidenhout. Kalawe also worked for six years at Airports Company South Africa (ACSA), where he was general manager of Cape Town International Airport. Bezuidenhout was SAA’s acting CEO during a period of turmoil. He is also head of SAA’s low-cost carrier Mango. Bezuidenhout took the helm at SAA after acting CEO Vuyisile Kona was suspended in February over unspecified allegations. SAA hopes Kalawe will lead a turnaround after the carrier plunged

ZAR1.36bn ($147m) into the red for the year ending March 2012.

New CEO for Air Uganda Air Uganda has named Cornwell Muleya as its new CEO. Muleya joins Air Uganda from the Kenyan aircraft leasing business, ALS, where he was CEO. Muleya, who has worked as a CEO and CFO for several African airlines, including Air Mauritius, Air Botswana, Air Tanzania and Zambezi Airlines. He replaces Kayle Haywood, its former CEO, who has since moved to Fastjet.

InterVISTAS hires new VP, network planning Aviation consultancy, InterVISTAS, has hired ex-Continental Airlines’ network planner, Buddy Anslinger, as its new VP of airline network strategy. Over 20 years, Anslinger held a number of positions at Continental and Continental Express Airlines, including airport services, alliances, government affairs, scheduling, and network planning. In 2009, he left the airline to join marketing and data collection firm e-Rewards as VP of marketing and business development.

afm • Issue 84 – May–June • www.afm.aero

Vauramo to head Finnair Finnair has appointed Pekka Vauramo as its CEO, effective from June 1. He is currently chief operating officer of the MacGregor Business Area of Cargotec, where he has worked since 2007. Prior to that, he worked at Swedish mining and construction company, Sandvik.

ADAC appoints former Heathrow chief Former London Heathrow chief executive, Tony Douglas, has been appointed as CEO of Abu Dhabi Airports Company (ADAC). Douglas, formerly CEO at Abu Dhabi Ports Company (ADPC), will lead one of the most ambitious airport expansion schemes in the world. The multi-billion dollar Midfield Terminal project will boost airport capacity to 40 million passengers a year. Ali Majed Al Mansoori, chairman of ADAC, said: “Tony joins ADAC at a critical stage in the company’s journey to deliver an iconic air hub for Abu Dhabi. “I am confident that his leadership will take ADAC beyond this vast infrastructure project and on towards meeting our ambitious goal of becoming the world’s leading airports group.”

FOCUS: Cathay Pacific Group

One to one: Cathay Pacific Group Peter Donaldson speaks to Cathay Pacific Group about its struggles last year and how its fleet acquisition plans will turn it all around.

he Cathay Pacific Group had a mixed 2012. It gained an impressive haul of awards but also took a precipitous drop in profits. Plaudits for the Hong Kong-based carrier last year included three awards for its business class service, one for its international lounges, plus an award for ‘best airline in the world’ from the Business Traveller China. Yet its profits for the year took something of a hammering thanks to stubbornly high fuel prices, continued weakness in the air cargo market and a reduction in passenger yield as companies economised on business travel. The group’s profits were down from HK$5.5bn ($709m) in 2011 to HK$916m ($118m) in 2012, an eye-watering drop of 83.3 per cent. Even though Cathay Pacific and its subsidiary, Dragonair,

made a modest operating profit of HK$158m ($21m) (compared with more than HK$4bn in 2011), a HK$268m ($35m) tax bill turned this into a HK$110m ($14m) loss. Only the HK$1.03bn ($132m) profit from subsidiaries and associates kept the year’s figures in the black, according to finance director Martin Murray. However, within its HK$110m loss was HK$750m ($97m) in non-recurring items, meaning next year is set to be more prosperous. “We have a long-term strategy to deal with these challenges,” the company tells AFM. “Last year we had a massive focus on product improvement; new award-winning business class and premium economy, but also new premium lounges in Hong Kong and many other soft touches. For 2013, our focus has shifted to even greater connectivity and fleet investment; we have already

afm • Issue 84 – May–June • www.afm.aero

FOCUS: Cathay Pacific Group

made great progress with this, thanks to the addition of our fifth daily flight to London Heathrow, which launches at the end of June 2013, and a number of new destinations.” “We remain committed to maintaining the integrity of the network and this was reflected in the continuation of upgrading our fleets throughout 2012,” says chairman, Christopher Pratt. “In an increasingly competitive environment, it is crucial to maintain and develop passenger loyalty by providing high-quality products and services.” The principal cost-saving measures it initiated include reductions in passenger and cargo capacity, deployment of its more fuel-efficient aircraft on long-haul flights and the accelerated retirement of its old 747-400s. The company also froze the hiring of non-essential ground staff, is offering voluntary unpaid leave to cabin crew and is cutting its costs regarding IT and marketing. Ironically, it has also cancelled all non-essential business travel in a move that mirrors one of the issues it faces itself.

Fleeting opportunity To pilot itself through the economic dip, the group modified its aircraft acquisition plans, increasing capacity and flexibility while also adding fuel efficiency. It has required some deft juggling. As of 31 December 2012, its operational fleet stood at 173 aircraft – consisting of 150 passenger and 23 freighter aircraft.

“We continued to upgrade the Cathay Pacific and Dragonair fleets in 2012, taking delivery of new aircraft which improve our operating economics and reduce our environmental impact,” the company says, keen to highlight its recent investments. “We received 19 new aircraft in 2012: four A320-200s, six A330-300s, five 777-300ERs and four 747-8F freighters.” At the end of December, the cargo fleet consisted of 26 747 freighters in four variants: eight 747-800Fs and six each of the -400F, -400ERF and -400BCF. The company also reduced its fleet of 747-400 converted freighters (BCF). In 2012, it withdrew four from service, retired another and sold the third of four 747-400 BCFs going to Air China Cargo, its cargo joint venture with Air China. It also withdrew a 747-400 BCF this year and sold another last March. In addition, Cathay sealed a complex deal with Boeing that will put more fuel efficiency into its cargo fleet. It explains: “Last month, we entered into agreements in relation to our freighter fleet, which are part of a package of transactions between Boeing, Air China Cargo and Air China. “The transactions involve the group purchasing three 747-800 freighters, cancelling orders for eight 777-200 freighters, acquiring options to purchase five 777-200 freighters and selling four 747-400 converted freighters. Air China Cargo will acquire eight 777-200 freighters and sell seven 747-400

afm • Issue 84 – May–June • www.afm.aero

FOCUS: Cathay Pacific Group

Cathay has won a number of awards for its business class service.

converted freighters, while Air China will purchase a number of other aircraft.” This fleet re-configuration is responsible for the group’s non-recurring costs, which Murray says included “$250m written off by scrapping one BCF. The two aircraft that went to Air China add another $140m. We had a $50m impairment on the BCFs that went out in the Boeing deal.” He added that the group’s depreciation accelerated to just over $200m, but it wrote off about $80m by purchasing carbon emissions credits. Cathay had 85 aircraft on order as of 13 March this year. The airline began 2012 with 93 on order. Further commitments in the first half of the year increased that by eight, but nine deliveries brought it back to 92 units by the end of June. The group took delivery of 10 aircraft in the second half of the year, exactly balancing the order for the A350-1000s it placed in August. By 13 March, following the delivery of an A330-300 and a 777-300ER and the deal with Boeing, its order backlog reached 85. “We are investing heavily in our fleet this year; we are ordering the next generation of A350 (22 of the -900 and 26 of the -1000 series). This is an important strategic development for us as these planes are going to be the most fuel-efficient and environmentally friendly ever made. It makes a strong statement about where we see ourselves in the future.” The delivery schedule for these aircraft stretches to 2020. There are 17 deliveries planned for this year, including five 747-800 freighters, four A330-300 and eight 777-300ER passenger aircraft. In 2014, there are five A330-300s and seven 777300ERs on the roster, with another three and five of these types respectively, all set for delivery in 2015.

The next two years are all about the A350-900, with 12 due in 2016 and 10 in 2017. Deliveries of its bigger sister, the A350-1000, are taking over until the end of the decade, with six scheduled for 2018, 10 in 2019 and the same number in 2020. “Because of their high operating costs, we have accelerated the retirement of our older, less fuel-efficient 747-400 passenger aircraft, and we plan to take delivery of these new aircraft as planned, to maintain this.” Ironically, available seat kilometres (ASK) are expected to contract by a modest 1.5 per cent over 2013 owing to changes in the passenger fleet. Yet, available tonne kilometres (ATK) for cargo is projected to grow during the year by around 2.6 per cent.

Airline outlays “The cost of fuel remains the biggest challenge, particularly for an airline such as ours where long-haul operations form a significant part of our total operations,” says Pratt. “Managing the risk associated with fuel prices is one of our key objectives.” The group has an active fuel-hedging programme, which insures the airline against fuel price volatility and achieves a sustainable fuel price, supplemented by fuel surcharges for cost recovery. Excluding the effect of hedging, the group’s fuel costs increased by 0.8 per cent over 2011. Fuel accounted for 41.1 per cent of its total operating costs, a reduction of 0.4 of a percentage point from the previous year. Fuel prices came down in May and June, so the company took the opportunity to hedge again in order to mitigate the impact of future increases. Cutbacks in corporate travel have hit the company’s revenue in terms of first and business class bookings, so a lot rides on the new business class cabin and premium economy class, which has been going well since its launch in 2012. By the end of 2013, the long-haul fleet will contain 87 aircraft featuring

afm • Issue 84 – May–June • www.afm.aero

FOCUS: Cathay Pacific Group

premium economy, while all 30 777-300ERs and 20 long-haul A330-300s have had the new business class installed. “To be voted ‘World’s Best Business Class’ in the annual Skytrax World Airline Awards programme was a great privilege,” a spokesperson for the company says. “It becomes even more meaningful as our new business class is a genuine collaboration between our customers and our own team. The customers know best. This is why, in designing the business class product, we talked to our customers, listened to their feedback and then incorporated those features with the optimal balance of productivity, comfort and privacy.”

Route to profit The group also invested in its route structure in 2012, trimming in some areas and adding in others. Cathay Pacific Airways reduced frequencies on long-haul routes to Europe and North America, but in March it inaugurated new regional flights to Taipei, Kuala Lumpur, Penang, Bangkok, Nagoya and Singapore.

New services to China’s Haikou and India’s Kolkata came in October and November respectively, while October also saw increased frequencies to Phnom Penh in Cambodia and Kota Kinabalu in Malaysia. January 2013 saw the start of new flights to China’s Zengzhou and Wenzhou, Myanmar’s Yangon another to Vietnam’s Da Nang beginning in March. Cargo services also saw a shift of emphasis towards Asian destinations during 2012. Freighter frequencies to Europe and North America were reduced and the service to Zaragoza, Spain, was suspended in November. Meanwhile, a new service was added to China’s Zhengzhou in March. In May, a new service to Hyderabad, India, was introduced, while the frequency to India’s Bengaluru went up from two to three flights per week. Finally, the airline added a new service to Colombo, Sri Lanka in December.

It increased the frequencies between Chennai and Hong Kong from four flights a week to daily in September, and between Ho Chi Minh City and Hong Kong from 14 to 16 flights per week in October. A new flight to Hyderabad in India, four times a week, started in October.

These measures appear to be having a positive effect. The company’s latest traffic figures demonstrate that Cathay Pacific and Dragonair carried a total of 2,340,029 passengers in February – an increase of 10.5 per cent compared with the same month last year. The passenger load factor climbed by 6.3 percentage points to 80.8 per cent, while capacity, measured in ASKs, dropped by 6.1 per cent.

In 2012, Dragonair – which is Cathay’s international subsidiary, based in Hong Kong – also added flights to Ningbo and Qingdao in China, and Okinawa in Japan. It switched to larger aircraft for some services on its Chinese Xiamen, Guangzhou and Kunming routes. The airline also resumed services to Xi’an and Guilin in China, and Taichung in Taiwan. In May, it added new flights to Jeju in South Korea and Clark in the Philippines, plus to Chiang Mai, Thailand, in July.

“We believe we have taken the right measures to deal with current challenges and will take whatever further measures are necessary should the business environment not improve,” says Pratt. “Our focus will remain on protecting the business and managing short-term difficulties, while remaining committed to our long-term strategy. Our financial position remains strong and we will continue to invest in the future.”

afm • Issue 84 – May–June • www.afm.aero

The business and financing of airline operations

The state of aircraft

America

Welcoming the A340 P2F programme ISTAT report: News from the event IBA track aircraft values and lease rates Will UK APD stifle growth?

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TLF: ASU

The ASU: Its impact on financing Mary-Anne Baldwin looks at how aviation finance is changing as a result of the aircraft sector understanding.

he aircraft sector understanding (ASU) has been updated to make export credit agency (ECA) financing more expensive, easing the strain on government coffers and creating a more level playing field with commercial markets. But will there be enough new financing to meet the demands of the industry? Cheap ECA financing acted as a life raft at a time when airlines could not afford to buy aircraft themselves. But let too many people on a raft and it will sink. Many carriers that were able to use equity or secure capital market financing opted for

ECA financing as a cheaper alternative. It not only created too much strain, but also kept other financiers (which are now slowly looking to increase their business in the market) at bay. Minimum premium rates for ECA financing have been increased to better match commercial debt. According to law firm Dentons, in many cases these rates have doubled. This will support commercial financiers, which have typically found it harder to compete against cheap export credit. It will also reduce the effect of the home market rule, which blocks airlines based in the US and Europe (the homes of Boeing

afm • Issue 84 – May–June • www.afm.aero

TLF: ASU How does the new ASU compare with the old? The new ASU has established a simplified system, which covers all aircraft types with the same terms and conditions. There are new interest rates for direct lending, with a maximum repayment term of 12 years and each repayment made on a quarterly basis. Rates reflect the airline’s risk rating (which is reviewed annually) and fluctuations in the commercial market (reviewed quarterly). This means ECA finance is a better reflection of commercial finance. Airlines with a credit rating of AAA to BBB- can now receive up to only 80 per cent of their financing needs. Other airlines can receive up to 85 per cent.

applied to financing organised before 2007. These rights expired early this year, meaning the ASU is now in full flow. Before the ASU was in place, airlines rushed to buy aircraft at cheaper rates. As a result, there is now likely to be a momentary dip in aircraft purchases but greater demand for operating leases and new forms of financing. Indeed, more expensive ECA financing will encourage other financiers to enter the market and should create space for more inventive forms of support, such as Japanese operating leases (JOL) and new offerings from the debt capital market.

CIT’s president, Jeff Knittel, talks to press at the Farnborough Airshow on the announcement of an order for 10 A330s.

and Airbus respectively) from receiving ECA finance. Now that money is more expensive, those outside Europe and the US will have less competitive advantage.

The results are in Not only has ECA financing become costlier, it is harder to come by. Airlines have been independently given a risk rating (from AAA to C), which is based on its senior unsecured credit rating. The rating is revised each year, but can also be changed during the year if an airline’s finances change significantly. Those in the top tier (AAA to BBB-) can only receive up to 80 per cent financing, the others a maximum of 85 per cent. First signed on 25 February 2011, some elements of the rule fell under ‘grandfathering’ rights, which meant the old rules still

“A combination of the global financial crisis and increasing bank regulation is making traditional bank financing increasingly difficult to obtain,” explained Kenneth Gray, consultant at Norton Rose, in its fourth annual transport survey, The Way Ahead. “So we are increasingly looking at alternative sources of finance – capital markets, shadow banks, manufacturers.” According to Norton Rose, shareholders or equity has been the primary source of funding within aviation since 2010. Government support has slowly dropped since then, yet export credit increased from 2010 until now. The law firm added that bank debt has been the second greatest source of funding since 2009, despite dipping in 2011. Deals supported by capital markets and bonds likewise dipped “quite significantly” in 2011, “but have otherwise remained as one of the leading sources of aviation finance since 2009”. The use of private equity has fluctuated and is currently ranked fourth in terms of those most used.

afm • Issue 84 – May–June • www.afm.aero

TLF: ASU

“In the past year, we have seen an increasing reliance on the US capital markets to fund aircraft deliveries and, given what appears to be a continued tightening of the bank debt markets, we look for that trend to continue,” Sean Corrigan, partner at law firm Fulbright & Jaworski, said in Norton Rose’s report. “Last year saw the first US EETC [enhanced equipment trust certificate] offering by a foreign airline in many years and we expect that to be a model pursued by other such airlines, particularly as [The] Cape Town [Treaty] becomes more widely implemented.”

New finance Of those considering new sources and methods of financing, Norton Rose found that 25 per cent are considering structured finance; 24 per cent long-term leasing; 16 per cent are looking for new private equity investment; whereas export credit is now attractive to just 13 per cent of the aviation industry. The once-rich well of European bank financiers dried up as they stepped away from risky and capital-heavy investments. These banks are both still cautious and significantly hindered by the European debt crisis. However, according to

PricewaterhouseCoopers (PwC), interest in aircraft financing has already picked up, particularly within Asia. This includes sovereign wealth fund (SWF)-backed sources in China, Singapore and the UAE. “This is unsurprising given their access to US dollar funding, longer-term investment horizon and appetite for deploying larger amounts of capital efficiently,” PwC said in its recent report, Aviation Finance. However, according to Norton Rose, sovereign wealth funds, Islamic finance and hedge funds historically play only a small part in aviation funding and have risen only five per cent since 2010. According to PwC, demand for JOLs is at an ‘all time high’, which itself is a barometer of demand for aircraft financing. Recent cases have included Lufthansa and Air France, which both used it for A380s in 2Q 2012. More specifically, it noted the Doric II Emirates financing vehicle and German bond backed by a new aircraft mortgage first used by Nord LB in July 2012.

afm • Issue 84 – May–June • www.afm.aero

TLF: ASU PwC noted further developments in Asia, namely Sumitomo Mitsui’s buyout of RBS Aviation; Mitsubishi’s purchase of the aircraft lessor Jackson Square Aviation; and Development Bank of Japan’s acquisition of 60 per cent of TES, formerly owned by DVB Bank. Of course, these changes are not due to the ASU but reflect wider growth and strength within Asia.

Lease of life During the International Society of Transport Aircraft Trading (ISTAT) Americas conference, in March, Robert Morin, VP of transport at the Export-Import (Ex-Im) Bank, said airlines have gone “cold turkey” on Ex-Im Bank financing, adding that some airlines that had been offered it had turned it down. He believes total Ex-Im financing will be lower this year at $12.2bn and will also be lower on a percentage basis. However, he added that it is hard to predict the number of Ex-Im-backed deals, as this is heavily dependent on lessors, which may choose not to take any Ex-Im financing at all. During the conference, Superjet’s VP of business development for North America, John Buckley, admitted that ECA financing is “really very important” for the manufacturer. However, Chet Fuller, commercial SVP of Bombardier, said the objective of all four main aircraft manufacturers (Boeing, Airbus, Bombardier and Embraer) is to reduce their reliance on ECA financing. According to John Leahy, chief operating officer of customers at Airbus, his company only financed one per cent of its aircraft last year; 25 per cent were financed by ECAs, 17 per cent were acquired through sale and leasebacks and 57 per cent were bought with cash and debt. Within that, lessors financed 40 per cent of Airbus’ aircraft orders last year, which is a ‘key’ change for the market, said Leahy. “We congratulate them all.” Similarly, Boeing Capital Corporation’s (BCC) VP of aircraft financial services, Tim Myers, said lessors financed 38 per cent of its aircraft last year, most of which were sale and leasebacks. He sees it as a very important part of BCC’s business. “Only 20 per cent of our aircraft were financed by export credit agencies last year,” said Embraer’s chief commercial officer, John Slattery, which is the lowest of all aircraft manufacturers. “I believe there is a direct correlation between overdependence on ECA financing and long-term residual values,” Slattery warned. “Forty-eight per cent of our aircraft last year were financed by lessors, and that’s a combination of direct sales to lessors and sale and leasebacks. The reason why that’s important as a metric is that lessors care about residual values… they are therefore the smart money… So it’s a great testament to the investment rate capabilities of the EJets.”

ISTAT poll: In a poll of the ISTAT audience, most of which are key figures in the industry, the majority of people (35 per cent) believed commercial banks will fund $15–20bn in aircraft financing during 2013. The majority (32 per cent) believed there will be $12–15bn worth of issuances in the bond market and 47 per cent believed there will also be $12–15bn of guaranteed loans during the same period. The majority of pollers (31 per cent) believed two non-US airlines will issue EETCs in the bond market during 2013, 21 per cent thought just one would and 18 per cent said three. During the same discussion, Deutsche Bank’s global head of aviation finance, Patrick Kaufer, said the performance of the EETC brought lots of investors back to the market, adding “a EETC is clearly a fantastic product” if you can get it at the right price.

Lessors will play a more important role in aircraft acquisition than ever before. It is widely predicted that lessors will soon command 40 per cent of the aircraft acquisition market, reflecting the growing trend for operating leases. Leasing allows airlines to bridge any gaps in the delivery schedules of their owned aircraft, it frees up financing and allows airlines to obtain aircraft for short periods, such as to cover busy summer months or the trial of a new route. According to CIT’s president of transport finance, Jeffrey Knittel, the leasing market is so healthy that airlines are now competing against each other to lease an aircraft, rather than lessors competing to do business with an airline, as has typically been the case. Speaking during a recent press meeting, Knittel noted how much the lessor industry has grown since he started in it 30 years ago, which he says shows that leasing is a “good place to put your money”. “Long-line assets are now en vogue with investors,” Knittel said, but he added that the “lessor community has become much more fragmented”, with companies specialising on particular aircraft types, such as widebodies or E190s. Knittel believes lessors are vital, not just to manufacturers, but to airlines, many of which cannot secure enough financing to cover their fleet needs. Indeed, he believes lessors have been crucial to the survival of many start-up airlines and argued: “The number of airlines created by lessors is substantial.” No doubt, their importance will only increase as we settle into the next, more expensive, stage of ECA financing.

afm • Issue 84 – May–June • www.afm.aero

TLF: Lease rates

Lease rental trends Paul Leighton, MD of The Aircraft Value Analysis Company, examines changes in aircraft lease rentals.

perating lessors are achieving double-digit margins, proving that this type of lease is attractive. Indeed, the market for operating leases continues to expand not only in terms of the number of aircraft leased, but also regarding the proportion of the world’s fleet and arrival of new entrants.

But, although operating leases are attractive, lessors appreciate that rates change. At the end of 2010, lease rentals were starting to rise from their lows in 2008 and 2009, but such increases (apart from some widebodies) lost momentum. In the five years since the last cyclic peak (3Q 2007), lease rentals have fallen by more than 25 per cent for in-production

afm • Issue 84 – May–June • www.afm.aero

TLF: Lease rates narrowbody aircraft – and to an even greater degree for older aircraft that have fallen out of favour with operators.

Asia’s demand for the A320

Yet during what was the industry’s worst recession for 30 years, lessors were still able to retain margins of 15 to 20 per cent. However, these margins have more recently been eroded by new deals at lower rates. Indeed, the fragile economy suggests that low interest rates will feature for some years, meaning lessors are fixing their rentals at low levels.

The A320’s operator base has been expanding even further in recent years owing to the growth of Asian carriers. This market requires lessors to be more relationship-orientated, but as the Asian operator base matures, the risks associated with leasing to some countries in the Indian sub-continent have become more apparent. As a result, lessors are less enthusiastic to engage in significant discounts.

However, the cost of borrowing has also fallen, meaning larger lessors are able to secure finance at more reasonable prices. Meanwhile, operators have found it harder to secure financing and there are many for whom leasing is the only means of acquiring aircraft. This means lessors are no longer dependent on just a few large operators but have a wider market consisting of much smaller airlines.

While repossession remains relatively rare, there are considerable costs involved when a lessee defaults. At the very least, the lessor will need to refurbish the cabin and repaint the aircraft. While the three-month security deposit will go some way towards covering these costs, lessors will need to reflect such a risk in the lease rental.

Lease renewals This is good for lessors. However, unlike previous downturns, lessors have had fewer requests to extend leases. Indeed, as leases expire, lessors are less able to place those aircraft at the same rates. Yet, existing customers are also less able to re-negotiate existing agreements because lessors are able to lease their aircraft elsewhere, even if they have to reduce the rates for subsequent lessees. The exception for this is the 767-300ER, for which a number of operators have sought lease extensions at levels that remain attractive to lessors – namely because of problems with the 787 and the fact it has been out of operation. The lack of lease renewals (and cheaper rates for subsequent lessees) has undermined revenues. Indeed, if all aircraft currently owned by lessors were to be re-leased to other operators at current market rates, lessors would inevitably report much lower profits. The majority of premium-grade leases will continue to erode during the course of the next year. But, lease rentals for older aircraft are likely to experience a sizeable recovery owing to the shorter lease terms held by less financially secure operators. Lease rentals for most in-production aircraft have generally stopped falling, indeed some widebody lessors have been able to maintain or increase rates. For example, demand for the A330-300 continues, despite the development of the A350. New A330-300s can secure rates of more than $850,000, although there is much less appetite for those built in the 1990s. Similarly, there is a shortage of 777-300ERs and, while sale and leasebacks dominate the market, lessors with 777300ERs are able to secure significant rates.

Within the narrowbody market, demand for the 737-800 is still strong – in fact the strongest for any narrowbody at this time – but lease rates have already fallen, establishing a trend rather than a temporary departure. Lease rates of nearly $400,000 per month are now a feature of the past. The sustained reduction of interest rates, plus a competitive environment among lessors, lower lease rentals for the A320 and the availability of older 737-800s have made it necessary for lessors to lower rates. Used A320s, particularly older builds, are more readily available at rentals that are significantly lower than those for the 737-800. This has had an adverse impact on the latter. The 737-800 has been in production for nearly 15 years, meaning some have already been leased several times, and the specification of those early 737-800s differs significantly from those produced today. This has led to greater availability of used 737-800s and, combined with rising production rates for new aircraft, lease rates have dipped. Yet, the 737-800 remains the most popular of narrowbodies for investors. However, demand, popularity, lease rentals and market values for the aircraft type all peaked before there was need for a replacement. Lease rentals for the 737-800 fell by some 15 per cent during the last 18 months, with the oldest being the most vulnerable to changes in market conditions. Lease rentals are now steady but the downward trend will re-occur with the rise of 737NG production rates. Even with the forecasted decline in lease rentals, the 737-800NG will remain the most desirable of assets for the next few years. The aircraft type has made money for its investors, lessors and operators. However, as the 737 MAX nears entry into service, allegiances will switch and both praise and prices for the 737-800 will fall at a faster rate.

afm • Issue 84 – May–June • www.afm.aero

TLF: Lease rates

Falling A320 rates Conversely, lease rentals for the newer A320 are staging something of a recovery. As a result of the A320 Neo and the availability of used units, lease rentals for the A320 have been under severe pressure, but the trend is now being reversed as lessors gain the upper hand. The notable decline in rentals for newer A320s – which during 2011 had sometimes been above $350,000 per month before falling to below $300,000 per month – was a consequence of factors regarding both specific aircraft and wider industry influences. The fall in A320 rentals between 2011 and late 2012 was partly due to the delivery of approximately 3,250 A320s over a 25-year period. Such a long production cycle has had an effect on lease rentals for both new and used A320s. The A320 has been in production for such a long time and it has been such a good vehicle of the operating lease that those delivered in the first years of the programme have been leased a number of times since. As appetite for operating leases increased, lessors sold A320s – with leases attached – to new lessors or those seeking to expand their existing portfolios. This further increased competition for the aircraft. Less experienced lessors with older A320s in poorer condition, may also have placed aircraft at lower rates, which became the starting point for operators leasing newer aircraft from established lessors.

A320s delivered today are sometimes mistakenly believed to be similar to those produced 20 (or more) years ago. Consequently, lessees had been unwilling to pay a premium to lease a younger aircraft, believing it was similar to one built a decade before. It is now widely recognised that A320s produced in the last 10 years are very different from those built in the 1980s and 1990s. The specifications of younger A320s (the systems, engines, structure and avionics) have been improved, giving greater reliability and less maintenance. Also, older aircraft can be five per cent less fuel-efficient just because of wear and tear and additional drag caused by minor repairs.

The old versus the new While lessees still pay less for older A320s, (perhaps less than $70,000 per month) the premium for newer aircraft has been re-established such that rates for new A320s are likely to once again approximate $300,000 per month, excluding maintenance reserves. Yet, demand for the aircraft will remain. A strong market for air travel will see new A320s create more capacity while in weaker market conditions, the new aircraft will be used to replace existing aircraft. Indeed, in a weak market, lessors are forced to make new aircraft attractive, offering discounted rates to encourage lessees to switch. While this was partially in evidence in late 2011 and during 2012, (hence lower rentals for the A320) the market has since improved. Lessors are now placing aircraft on the basis of growth rather than replacement. And while the market for

afm • Issue 84 – May–June • www.afm.aero

TLF: Lease rates

Changing lease ownership During off-peak periods of the year, operators needing capacity can also secure wet leases or short-term leases from carriers with temporary surplus capacity. This creates competition between lessors needing to place aircraft on longer terms. While there have been notable changes in operating lease ownership during recent years, some stability has now emerged. With less opportunity to take advantage of low pricing, private equity companies are less enthusiastic about aircraft leasing. Instead of seeking to form or expand leasing companies, the trend has been to sell existing portfolios. This has seen lessors become more focused on rentals, particularly as investors.

leased A320s used to favour the lessee, it now increasingly favours the lessor. A number of A320s have already been scrapped at relatively low prices; this has highlighted the need to be realistic about the values of ageing aircraft. Additionally, the A320’s asset life has been under considerable scrutiny during the last year. If, as many believe, the asset life is now shorter, lease rentals for the first and second leases should compensate for it. A320 values have suffered as a result of restricted finance and a need for greater equity. Lessors have perhaps needed to realise that the lease therefore needs to generate a greater portion of the profit. Indeed, because of the Neo and

Max, there is greater need for lessors to generate the majority of their profit from leases, not residual values. Meanwhile, operators have had to recognise that the benefits of the newer A320s will be reflected in the lease rentals. Similarly, disadvantages to operating the older aircraft should be reflected in lower rentals. Lower rentals for older A320s are also a reflection of the greater level of availability. Lessors have built cost contingencies into their A320 lease rentals to cover the uncertainty of residual values, but in seeking higher lease rentals for newer A320s, lessors also build in higher acquisition costs. Also, with an extensive backlog and lack of delivery slots for both the existing A320 Ceo and future A320 Neo, it is likely lessors will have to pay more to buy these aircraft. High pricing is more pronounced for orders that were placed some years ago – before the recession – but are only now being delivered. The rate of escalation continues to increase delivery prices, even if the original base price was relatively low. Yet, lessors are also able to secure higher rates for the A320 because of a lack of delivery slots. Airlines need to respond to relatively short-term demand patterns, so waiting years for a delivery slot is not an option. With airlines so dependent on cash flow, capacity needs to be acquired quickly, meaning they are willing to pay more to lease A320s. When comparing lease rentals for different aircraft types, interest rates are of particular relevance and recent low interest rates have made accurate comparisons for like-forlike rates more difficult. However, it seems clear that rates for older A320s will continue to face problems. The extent and duration of those problems will rest in the delivery of, and demand for, the A320 Neo.

afm • Issue 84 – May–June • www.afm.aero

FLEET OPS: Pratt & Whitney

Winning fans: Pratt & Whitney is back As its new PW1000G family of geared-turbofan engines continues to grow, Pratt & Whitney is capturing a large share of the market for powering single-aisle jets. Chris Kjelgaard reports from P&W’s engine test facility near West Palm Beach, Florida.

iles out in the steamy humidity of the Florida Everglades, in a 6,500-acre tract of assiduously protected wetland, several jet-engine test stands perch incongruously next to alligator-infested swamps.

Since 1958, this has been Pratt & Whitney’s (P&W) main centre for outdoor ground testing. Here, near West Palm Beach, P&W secretly tested the J58 turbojet engines for Lockheed’s SR-71 Blackbird Mach 3-plus spy aircraft, and engines for many of NASA’s rocket launchers.

In mid-April this year – reflecting P&W’s biggest development effort in the current decade – three test stands were occupied by PurePower PW1000G geared turbofan (GTF) engines. One of the three was from the recently certificated PW1500G family, created for the CSeries. The PW1524G tested in April was undergoing a series of structural and fan flutter tests before the PW1521G-powered CS100 makes its first flight in May. The PW1500Gs are offered in three versions – 19,000lb, 21,000lb or 24,000lb take-off thrust – although each has a 73-inch fan diameter.

afm • Issue 84 – May–June • www.afm.aero

FLEET OPS: Pratt & Whitney

PW1100G on the test stand at West Palm Beach, with reporters present.

The A320 Neo engine The other two PW1000G engines being tested were PW1100G-JMs, each with an 81-inch fan diameter. The PW1100G-JM is offered as one of two engine choices (along with CFM International’s LEAP-1A) for the A320 Neo family. By mid-April, P&W had completed its first 125-hour ground test for the PW1100G programme and the engine was to be imminently shipped to Mirabel in Quebec, where P&W bases the two 747 SPs it uses to flight-test new engine types.

After a five-week installation period, the first PW1100G was on target to begin six weeks of flight tests starting in the latter half of May. The second PW1100G being tested at West Palm Beach and was already 20 hours into crosswind tests, along with performance testing of its fan and low-pressure compressor. A third PW1100G was at P&W’s facility in northern Manitoba and was five hours into a programme of endurance testing, including ensuring the engine would be able – when

afm • Issue 84 – May–June • www.afm.aero

FLEET OPS: Pratt & Whitney accelerating after prolonged idling – to endure the shedding of large amounts of ice accumulated on its fan blades. During a recent press event at the West Palm Beach test bed, P&W fired up the first PW1100G to full 33,000lb take-off thrust, as reporters stood less than 70 yards away from the engine’s exhaust. It was to prove just how quiet the engine was. According to Bob Saia, P&W’s VP commercial development programmes, the PW1100G and its siblings are about 50 per cent quieter on take-off than any current commercial-turbofan engine and at full thrust, the noise from the PW1100G is under 80 decibels. This particular statistic is particularly important, says Saia. Almost every airport in the world will allow an aircraft operating at below 85 decibels to run around the clock, meaning it avoids any night-time operating curfews. P&W is now working with airline customers to obtain agreements to operate PW1000G-powered aircraft outside normal operating hours at noise-sensitive airports such as London Heathrow and Amsterdam Schiphol.

Todd Kallman, president of P&W Commercial Engines, says this sales performance is similar to that for the IAE V2500 versus the CFM56-5B on the existing A321. (The CFM56-5B has outsold the V2500 on the A320 and A319.) Kallman says the reason for P&W’s success on the A321 is that the company optimised both the V2500 and PW1100G at higher take-off thrust levels than those for which the CFM56-5B and LEAP-1A are optimised. So the P&W engines offer better range and take-off performance on the A321, which some see as the natural successor to the 757. The V2500’s success on the A320 family persuaded P&W to buy Rolls-Royce’s share in the IAE joint venture. P&W realised it would be at a disadvantage against CFM on the popular A320 Neo if it could not use the tried-and-tested route to market that IAE represented. “We bought the Rolls-Royce share so we would have the same incumbency as the CFM56,” says Jon Beatty, president and CEO of IAE. Beatty says that, while the A320 Neo engine will remain known as the PW1100G-JM, its type certificate is owned by IAE. Additionally, P&W’s entire A320-family sales and support

P&W is now working with airline customers to obtain agreements to operate PW1000G-powered aircraft outside normal operating hours Capturing the market The manufacturer has positioned the PurePower PW1000G GTF to re-capture a large share of the massive propulsion market for single-aisle aircraft, which P&W lost when it failed to offer a viable successor to its highly successful JT8D engine family. Instead, the CFM56, developed in the 1970s, went on to become the most successful commercial turbofan engine in history. Although P&W developed the high-selling V2500 for the A320 family and the PW2000 for the 757, the company now appears to have lost Boeing’s single-aisle engine business for the foreseeable future. Yet the PW1000G has already been selected for five single-aisle aircraft programmes and to date has (provisionally) sold some 3,550 engines to 39 customers (even though many A320 Neo-family customers have not yet made their engine choices). David Hess, P&W’s president, notes that the PW1100G is particularly dominant on the A321 Neo, where to date it has achieved about a three-to-one sales ratio against the LEAP-1A.

effort is now conducted by a unified ‘campaign team’, which can conduct sales efforts involving both the A320 current engine option (A320 Ceo) family and the A320 Neo. So successful has this approach been that eight of P&W’s first 12 customers for the A320 Neo have involved existing V2500 customers, Beatty says.

The PW1200G In addition to certifying the PW1500G, P&W has accumulated many flight-test hours with the PW1200G for the Mitsubishi Regional Jet (MRJ). The engine is offered in three versions (from 13,000lb to 17,000lb thrust) and has a 56-inch fan diameter. However, P&W has deliberately trodden water on certification, says Saia because, just as the first flight-test of the PW1200G took place in May 2012, MRJ announced an 18-month programme delay. This gave P&W more time to develop the PW1200G, so the company decided not to proceed with certification of the smaller engine until it had completed PW1500G certification. This allowed the PW1200G to benefit from the company’s

afm • Issue 84 – May–June • www.afm.aero

FLEET OPS: Pratt & Whitney

Bob Saia, VP commercial programme development, P&W.

experience with the PW1500G, making the certification testing programme more efficient. “It’s just the smart way of being able to run a programme,” says Saia. Rounding out P&W’s existing family of PW1000G engines are the PW1400G (for Russia’s Irkut MS-21 160-to-200-seat jet, which is planned to enter service in 2017), and the PW1700G and PW1900G (recently chosen by Embraer to power the re-engined, upgraded and slightly enlarged family of EJets it is developing for entry into service early in 2018).

Future prospects Saia confirms that the PW1400G will require the same thrust range as the PW1100G. Similarly, the PW1700G will need the same thrust range as the PW1200G, and the PW1900G the same as the PW1500G. Accordingly, (other than their pylon installations and plumbing of hydraulic lines, wiring and other external features) these engines will be the same as their counterparts on the Airbus, MRJ and Bombardier aircraft. Possibly the PW1000G’s most notable success to date has been Embraer’s decision to select P&W’s geared turbofan for its upgraded, re-engined EJet family, rather than choosing General Electric’s proposed new NG34. All existing EJets – and all CRJs – are powered by versions of the high-selling GE CF34 engine. Saia believes Embraer chose the PW1000G for two reasons. “We had data and we could show hardware,” he says. By the end of 2012, P&W had accumulated more than 4,000 hours

of ground- and flight-testing with the PW1500G, PW1200G and PW1100G. Secondly, “From the programme schedule perspective, we were the lowest risk – the PW1000G wasn’t a paper engine.” There are no technological barriers preventing P&W from developing its turbofan concept into a larger engine, whether for a single-aisle or a widebody aircraft, says Dr Alan Epstein, P&W’s VP technology and environment. Epstein says the geared-turbofan architecture and P&W’s robust gearbox design (which used sister company Sikorsky’s vast experience with large helicopter gearboxes) will make scaling the geared turbofan into a 100,000lb-thrust engine absolutely feasible. “There’s nothing to keep you from scaling,” he states. That said, Saia believes P&W has its hands full with the PW1000G for the next five or six years. It will invest $35–$50m a year into improving materials and studying higher bypass ratios (up to around 15:1, from today’s 12:1 for the PW1100G and PW1500G) and new nacelle concepts. Realistically, this means any new engine is a project for the ‘next decade’. So while Saia admits that P&W is conducting studies on future aircraft with Airbus and Boeing, he says both the A350 XWB and the 777X will enter service “too early” for P&W to offer a geared-turbofan for either. In the overarching single-aisle market, however, P&W is definitely back.

afm • Issue 84 – May–June • www.afm.aero

FLEET OPS: Fuel costs

afm • Issue 84 – May–June • www.afm.aero

FLEET OPS: Fuel costs

uel prices can have a signiﬁcant impact on an airline’s bottom line, not least when the state of the capital markets has left many airlines strapped for cash. If jet fuel costs are not actively managed, an airline could not only exceed its forecasted budget, but could also reduce its proﬁt or increase its loss. A long list of factors affect jet fuel prices, however, economic conditions, crude and jet fuel inventories, currency values and market perception are the primary ones. But airlines do not need to be subjected to fuel price volatility should they choose to hedge. Hedging allows airlines to mitigate their exposure to the ups and downs of fuel prices, thus stabilising their fuel costs. At the time of writing, Brent crude oil futures were trading at close to $110 per barrel (bbl) while jet fuel in Rotterdam, Singapore and US Gulf Coast (the three most actively traded jet fuel markets) were trading near $125 bbl. Where will crude oil and jet fuel prices trade three or six months from now? That is anyone’s guess – which is why it is wise for airlines to develop robust fuel hedging programmes. The fluctuating prices of crude oil and jet fuel can present large financial risks, which can impact an airline’s bottom

line by 25 to 40 per cent its of overall operating costs. This is the primary reason many airlines hedge their exposure to jet fuel prices. Another reason, which often does not receive the consideration it deserves, is price competition. Given intensive competition in the airline industry, a proper fuel-hedging programme can create a significant competitive advantage.

Spot versus hedged Fuel hedging reduces an airline’s exposure to volatile fuel prices by transferring the risk to companies with opposite risk profiles or to traders that are willing to accept the airline’s price risk in exchange for the opportunity to make a profit. In essence, fuel hedging involves establishing a position that is equal and opposite to the company’s exposure in the spot, or ‘cash’, market. Fuel hedging works because jet fuel prices in the spot market and financial derivatives on jet fuel (and to a lesser extent, crude oil) have a strong correlation with their respective counterparts. While the price difference between jet fuel in the spot market may differ from the price of a financial derivative on jet fuel or crude oil, the risk of such a price difference (which is known as

Given intensive competition in the airline industry, a proper fuel-hedging programme can create a significant competitive advantage

afm • Issue 84 – May–June • www.afm.aero

FLEET OPS: Fuel costs Popularity of hedging instruments

Future 3.23% Forwards (physical) 3.23% Swaps 38.71% Call options 29.03% Costless collars 12.90% Three-way collars 12.90%

‘basis’) is generally much less than the risk presented if an airline chooses not to hedge its exposure to volatile jet fuel prices. Despite the belief of some, hedging is not a means for an airline to gamble on the price of fuel. In fact, it is quite the opposite. Airlines should only engage in fuel hedging to reduce the probability that the company will be negatively affected by volatile fuel prices. Gambling on fuel prices, also known as speculating, took place within a large number of airlines between 2007 and 2009 and it often produced results that were far worse than had the airline done nothing at all. Of course, fuel hedging is not for every airline. However, to dismiss it, the airline should be confident of its ability to pass any increased costs to its customers, that prices are going to remain stable or decline, or that it is comfortable about paying a higher price for fuel if prices do rise. According to a survey carried out by Mercatus, 82 per cent of airlines said they had opted to hedge against fuel costs. However, 50 per cent had hedged less than 40 per cent of their total fuel costs, meaning they are still very much exposed to spot market prices.

Average duration of hedge term

0–6 months 7–12 months 13–18 months 19–24 months

38.46% 30.77% 23.08% 7.69%

What an airline should consider So how can an airline develop and implement a proper fuel-hedging programme? Before it can begin to develop a strategy, it will need to analyse its historical and anticipated fuel consumption. Is the business growing? Will it expand in the near future? Do its competitors hedge their fuel price risk? All these questions, as well as numerous others, deserve serious attention from your executive management team so that you can determine how best to hedge your fuel price risk. Of those polled by Mercatus, most airlines (52 per cent) chose to hedge so that they can protect against short-term fuel price increases; 32 per cent wanted to mitigate cash flow volatility; and 16 per cent wanted to protect against long-term fuel price increases. The survey also found that the majority of airlines (38.5 per cent) had hedged for a period of up to six months. While airlines typically take hedges on a short-term basis, this figure reflects a trend for airlines to counteract current volatility with shorter tenors, giving them more control of their spending. Jet fuel swaps are the most commonly used hedging instrument in the airline industry. These are contracts in which an airline and another party (often a bank or major oil

afm • Issue 84 – May–June • www.afm.aero

FLEET OPS: Fuel costs Average percentage of fuel hedged for a 12-month duration

0–20% of fuel 21–40% of fuel 41–60% of fuel 61–80% of fuel 81–100% of fuel

7% 43% 29% 14% 7%

company) agree to exchange periodic payments based on the spot market price of jet fuel in a given market. In the most common type of jet fuel swap, an airline agrees to pay a fixed price for jet fuel for a specific period of time, often one month. This payment is made to a counterparty, which in turn agrees to pay a floating price that references the spot market, futures contract or price published by an independent publication. As an example, in Western Europe, most jet fuel swaps are based on the spot market price of jet fuel in Rotterdam, as published by Platts or Argus. The choice of which benchmark to use will vary with each company. It also depends on a number of factors, such as the airline’s tolerance for risk and where it consumes most fuel. Call options, either on jet fuel or crude oil, are the second most commonly used hedging instrument in the airline industry. A call option gives the holder the right (but not the obligation) to buy a specified amount of fuel (or as is more often the case, the financial equivalent of the specified volume of fuel) at a set price within a set time, in exchange for paying an upfront premium. Call options and put options bring other variables to the mix. In simple terms, a call option is essentially an

Mercatus asked airlines what they would do to improve their fuel hedging programme

36 22 17 13 9 per cent

Would prefer to use hedging strategies that better reflect the company’s risk tolerance

per cent

Said a more regular and consistent approach would work better

per cent

Believed they needed better processes to execute their objectives

per cent

Were content with their hedging schemes

Said they would like to better monetise their hedge positions

insurance contract, which pays out if fuel prices rise above the ‘strike price’, i.e. the contracted price. Much like an insurance contract, the airline pays an upfront premium for the call option, regardless of whether or not the airline receives a payout from the option. In addition to swaps and call options, there are numerous other strategies that allow airlines to mitigate their exposure to fuel price volatility. But by developing and implementing a proper jet fuel hedging programme, airlines can not only mitigate their exposure to fuel prices, they can also forecast their future fuel costs and potentially obtain a competitive advantage.

afm • Issue 84 – May–June • www.afm.aero

FLEET OPS: Cargo XXX

Stand

XXX

On hold: EADS-EFW on cargo growth Mary-Anne Baldwin speaks to EADS-EFW’s John Howey about the decline in air cargo and how the company plans to navigate through it.

lthough John Howey, director of sales for aircraft conversions at EADS-EFW, predicts some recovery in air freight this year, he is much less confident that demand will return to historic levels and predicts that there will be an excess of capacity for some time to come. “You read everyday about 747 conversions being stored in the desert, even recently one or two 747-800s. There’s a couple of factory-produced 747-400s that have never even entered service and are still stored. For the first time ever, we have excess capacity for the A300-600, with some stored. All of that needs to come back before you can

have new capacity. So I don’t see a rebound in freighter values in 2013, and frankly probably not in 2014 either,” Howey forecasts. In an industry where so many are ‘bullish’ or ‘cautiously optimistic’ about growth, Howey’s frankness is refreshing. “It depends on fuel prices, it depends on the economy and it depends on this shift to ocean [freight] that we’re seeing as well. But I think it’s optimistic to say that air freight will come back to the levels that it has been in the past 10 to 20 years,” he admits. Another factor affecting cargo, he explains, is the belly capacity in passenger aircraft. According to Howey,

afm • Issue 84 – May–June • www.afm.aero

FLEET FLEET OPS: OPS: Cargo XXX programme, which covers both versions of the A330-300 and A330-200. In February, ST Aerospace announced that it had bought a 35 per cent stake in EADS-EFW, making the two companies partners on the development of the A330 conversion programme. Howey explains that the share sale is “partly the payment for them doing the STC [supplemental type certificate]. There is a cash element as well, but the biggest part is this cross-shareholding.” EADS-EFW will carry out the A330 conversion, customer support and sales. But EADS-EFW has also won additional MRO work with the deal. As part of the agreement, EADS-EFW will provide a location for all of ST Aerospace’s European MRO. “With our history of having designed and worked with P2F conversions, we have a pretty big engineering facility, we have about a hundred engineers and we are an EASA [European Aviation Safety Agency] design and production organisation, so we can pull all of those things together.” At the moment, EADS-EFW provides maintenance for the A310, A320 family, and A330. In the second quarter, it will start offering capabilities for the A380 wing fix in Dresden. “We will be one of the small number of MROs with A380 capability and a facility for that,” says Howey. So to protect itself from the dip in air cargo, the company will do much more third-party MRO, such as with ST Aerospace. “We have at least one line given over full time to maintenance and in a couple of year’s time the P2F business will come back to complement that,” he explains. “In the past we haven’t been so diversified, but common sense says it’s better to be like that.”

Time to convert Once the A330 programme is up and running, Howey predicts that an A330 P2F will take 80 working days. This will decrease to 70 days once the programme is in full swing. But he warns: “For every conversion programme you have a learning curve so the first few perhaps take longer. The prototype will take a year.” the total number of passenger A330s and 777s delivered last year have the same combined belly capacity as about 45 A300 freighters. “I get irritated when people say that kind of capacity doesn’t change the dynamic of your business. Of course it does.”

Broadened horizons It’s because of these factors that EADS-EFW is diversifying. The company is known for designing cabin changes. Additionally, half of its revenue comes from producing flat panels for all Airbus aircraft. Now it’s looking at implementing those cabin designs and is ramping up its MRO capabilities. Yet, it is still expanding its passenger to freighter (P2F) services with its new A330 conversion

Ramp up will take about 18 months, says Howey, after which the company will carry out around 10 to 15 conversions a year. He explains that one of the things to have changed in the market is waiting times. In the past, operators would foresee a need for a freighter in six to 10 months’ time and would request a conversion. “Since the demand shock in 2010, that’s long-term planning. People aren’t prepared to take a commitment for an aircraft in six or 10 months now, they want it next week. We used to have a short-term solution. Now at best for most people it’s a medium-term solution.”

afm • Issue 84 – May–June • www.afm.aero

FLEET OPS: Cargo xxx

Howey cannot predict the number of customers for the A330 P2F programme – which, as he says, depends on whether they require a large number of conversions, or only a few – but he does hint where they might come from. He explains that the A330-300 is “more or less a blown-up A300-600” – an aircraft EADS-EFW already had on its conversion programme. The A330-300 offers about 30 per cent more payload and 30 per cent more volume but with trip costs of around three or four per cent lower than the A300-600.

years from now it will be a widebody market and we definitely see the A330 working there.” The A330-200 will open up a little bit of a different market, says Howey. It has about 30 per cent more payload than the A300-600 but it is about 10 per cent bigger in volume. “That means the design density is much higher so we would expect the A330-200 to be more successful in general freight markets,” the sales director says.

“So, if you look at where the A300-600 has been most successful, that’s where you would look at for the A330-300 as well. That tends to be in the integrated fleets, so we have DHL, which is a very big customer today. We hope that in the future they would want to do A330 conversions.

“There are obviously several airlines in the Middle East we’re talking to about that, and in Turkey as well. One of the ones in the Middle East is Qatar. Everybody knows that we’re talking to them and we’re very hopeful to get something done there. There are many other small to medium cargo airlines that fly the A300-600 today. Those are the kind of places we look at for the A330-200. So there are plenty of prospects out there, albeit in a very difficult market.”

“We’re always very busily engaged with FedEx, talking with them readily about potential future aircraft projects. In the short-term, they will take some 767s. We still definitely believe that in the longer term there is a role for the A330 there.”

The company hopes to make specific customer announcements in the next few months with the first delivery in 2016.

Death of the A300-600 P2F He also sees emerging economies such as China and Latin America as markets for the programme. While noting that China is currently a narrowbody market, he says: “Several

The A330 P2F programme is a natural progression from the A300-600 P2F, which EADS-EFW first delivered in July 2011. According to Howey, although the A300-600

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FLEET OPS: Cargo xxx

remained strong throughout a series of industry dips, the market for it is now dead. “Even through 2001, the downturn in 2005 and again in 2008 to 2009, we never had a single A300-600 parked for operational reasons. When you saw new freighters being flown to the desert, not a single one was a A300-600. There were two parked because of bankruptcy but never because of demand reasons. That’s changed in this downturn and now we have a significant number of A300-600s and A310s parked. For us, that more or less kills the programme in the end.” Indeed, he says two things can ‘kill’ a programme: a lack of feedstock, or previous conversions entering the secondhand market to compete against new conversions. “Both of those are starting to happen to us now. So, for us the A300600 market is more or less gone,” he admits. But, says Howey, the beauty of the A330 conversion programme is that the A330 is still being produced. “The A330 is such a great passenger aircraft that it is still being produced now. So with these aircraft being produced for at least another five years, that takes us to 2018. Then 20 years after that will be 2038, so we could still be converting into the 2030s. We should be.” He says that the market is already seeing some softness in A330 values, particularly for the A330-200, because the trend is for airlines to choose larger aircraft, such as the

A330-300s. “That’s partly driving our decision to convert the A330-200 first. We have total confidence that Airbus will deliver the A350 on time and that will help us as most of the people who ordered the A350 are A330 operators, so that will free up aircraft by definition.” “Used aircraft prices falling are not helping us much today. Obviously, if you look at the A330 in a couple of years from now, that’s a different dynamic. And much like the 767 values – which have been heavily impacted by what happened to the 787 and the delays to that programme – so the A350 will to some extent determine when the A330 residuals get low enough. “My personal opinion is that the 767 missed the opportunity for conversion in big numbers. Because the 787 was so delayed, the value and desirability of the aircraft stayed so high.” But Howey refuses to end the conversation on a downbeat note. He explains that although the market won’t return fully, there will always be demand for air cargo. The trick is to adapt to it as EADS-EFW is doing. “It’s an interesting time for air cargo because there are a lot of things going on that have the potential to fundamentally change the basics of the business. We don’t know how that is going to shape up. But one thing we all agree on is that you’ll always need freighters.”

afm • Issue 84 – May–June • www.afm.aero

MRO: South-East Asia

Eastern promise: Examining South-East Asia’s MRO As Asia’s airlines flourish, Nick Rice talks to TeamSAI about South-East Asia’s growing role in MRO.

he world’s global fleet is rising dramatically and more aircraft means more maintenance. As South-East Asia experiences a marked increase in both demand and capability, the region’s maintenance, repair and overhaul (MRO) industry is preparing to meet the challenges. In pre-colonial times, South-East Asia was a vibrant and powerful player in world trade and today, it is again comparatively healthy. The region is widely predicted to record pre-crisis economic growth of over five per cent within the next few years.

Covering approximately 4,500,000 km2 and with a population of over 600 million, the 10 economies of the Association of South-East Asian Nations (ASEAN) represent an exotic and extraordinarily diverse range of cultures and industries. The

constituent countries of ASEAN can be divided into the two sub-regions of mainland and maritime. Mainland members include: Cambodia, Laos, Myanmar, Thailand, Vietnam and Malaysia. Maritime members include Brunei, Indonesia, the Philippines and Singapore. The MRO industry is evolving in all of these ASEAN nations and the traditional reliance on military business has shifted to commercial interests, especially as low-cost carriers (LCCs), with their cheap fares and new routes, expand aggressively in the region. One example of this rapid growth is Indonesia’s Lion Air. In March this year, the co-founder of the privately held LCC, Rusdi Kirana, placed a record-breaking order for 234 A320s. And this was just one year after a massive order of 235 aircraft. The pan-Asian carrier is posing serious competition to the Malaysian carrier, AirAsia – South-East Asia’s

afm • Issue 84 – May–June • www.afm.aero

MRO: South-East Asia OEMs In order to manage all this growth, many MRO businesses have formed joint ventures with Western companies, including original equipment manufacturers (OEMs) and airlines. There are now more than 80 MRO entities in South-East Asia, with Singapore being the most popular destination for MRO operations. These MRO businesses need to ensure their strategies and business models are robust enough to absorb the new volumes of work in order to maintain a competitive standing. TeamSAI, an aviation and business innovation consulting firm, has observed the fostering of alliances between MRO companies and OEMs to ensure capacity and to meet demand. Director, David Hygate, says: “Each generation of aircraft brings with it the promise of enhanced reliability. We see major checks on modern aircraft at eight to 12 years rather than four to six years for the older types – and this will doubtless get even better for the 787 and A350. But although the number of aircraft is growing, this does not directly mean an increase in MRO events.” He continues: “The opportunities to profit from this, however, are rather limited unless you are allied with one of the OEMs, as most new engine orders are accompanied by long-term service agreements with these companies. Alliances with General Electric, Pratt & Whitney, Snecma or Rolls-Royce are the key to this market, unless you can ally with one of the major airline-related shops that can still leverage their buying power to extract work from the engine primes.” Engine OEMs have long held an interest in the aftermarket of their products, incorporating life-cycle repairs and replacement parts into product revenues. As fuel efficiency is the driving factor in the development of new technologies, airframes and components, OEMs are now following the example of engine OEMs and seeing the chance to recoup investment via a stake in an MRO service. biggest budget airline. LCCs have blossomed across the region and now hold 52 per cent of seat capacity in South-East Asia. As the economy continues to grow and the middle class expands, a growing segment of the population has a rising disposable income and a new-found ability to travel. To meet the demand, airlines are ordering new aircraft in unprecedented numbers and Asia’s carriers in particular are racking up a substantial order backlog. The MRO industry wants to serve that market and is rallying itself for the task. As competitive economic relationships and collaborations between South-East Asian countries strengthen, air transport will continue to boost the region’s above-average GDP growth projection of 4.8 per cent annually over the next 10 years. Overall, air travel to, from and within South-East Asia is projected to grow at an average annual rate of 6.5 per cent over the next 20 years, while traffic within South-East Asia is expected to grow by 7.6 per cent per year.

As Hygate describes: “For component makers the attraction lies in controlling parts supply, as parts comprise the bulk of their MRO costs – certainly for engines but also for many types of component. The appeal to the aircraft makers is less easy to see, given that materials are only about 20 per cent of MRO expense, but they may see opportunity in being able to offer a comprehensive ‘cradle to grave’ service for their products.” Hygate advises: “Independent MRO shops need to either focus on the older programmes (with the obvious consequences for long-term viability) or forge partnerships with the OEMs. There are several examples of this in Singapore and this trend is set to continue.” With the growing power of the OEMs and the increasing prevalence of long-term support agreements (usually signed at the same time as the sale of the original equipment) independent MROs risk being marginalised and therefore must look to consolidate and create new business strategies.

afm • Issue 84 – May–June • www.afm.aero

MRO: South-East Asia

Lufthansa Technik Philippines’ mechanics perform a cabin underfloor inspection of a stripped aircraft interior.

MRO expansion To balance the increasing power of OEMs, several established MRO companies are investing in significant expansion, such as ST Aerospace. This Singapore-based MRO has been in business for 38 years and has moved from military contracts to commercial business, which now comprises 70 per cent of an average $1.4bn annual revenue. Not only does ST Aerospace intend to increase capabilities in China and Central and North America, but it is also looking to diversify and enter the business aviation sector in Singapore at the $60m Seletar Aerospace Park (SAP). ST Aerospace has 30 widebody and 31 narrowbody bays worldwide, with nine widebody and 11 narrowbody bays in Singapore alone. President of the company, Chang Cheow Teck, has said that profits in MRO will be limited this year because of airline consolidation, but he counts on “world-class processes and people” to ensure a strong place in the market. Lufthansa Technik Philippines is also a dominant firm in the field and has recently finished the construction of its third and largest hangar, capable of work on the A380. The company has already

started an A380 cabin modification project and is now seeking certifications to perform C-checks. Indonesia’s GMF AeroAsia – Garuda Indonesia’s maintenance arm – is also looking to ensure it attracts as much as it can of the $2bn that local airlines are forecast to spend on maintenance during the next two years. It is building two additional hangars, operational this year, which will be able to cater for 16 narrowbodies, with a docking platform for the heavy maintenance of 737 and A320 aircraft. GMF AeroAsia is also working with other MROs to strengthen its position. One question arising from the increase in aircraft orders and growing backlog of deliveries is the ability of local MROs to service the rising volume of work. Despite the expansion of major MROs, could demand ever overtake MRO resources? Could resources ever be so stretched that MROs have heightened control of the airline industry? Considering the possibility, Chris Doan, chairman and CEO of TeamSAI says: “Excessive demand will probably not be the

afm • Issue 84 – May–June • www.afm.aero

MRO: South-East Asia

Lufthansa Technik Philippines five-bay hangar facility.

cause of MRO domination and control but there is the distinct possibility that the OEMs – particularly the engine makers – might achieve overwhelming mastery of the market. Over 80 per cent of LEAP and GTF orders are sold with long-term maintenance contracts and over 90 per cent of Rolls-Royce Trent engines come with TotalCare, so these segments may fall under the control of the manufacturers. But because of the total capacity available worldwide, there is little chance of the regional providers dictating to the airlines.” The MROs in South-East Asia will have to work carefully alongside OEMs to capitalise on global growth forecasts, which see the MRO market share shifting distinctly towards the East. Regarding how South-East Asia’s MRO market may look in the next decade, Hygate says: “Today, the MRO market for jet airliners is worth around $54bn. In 10 year’s time, TeamSAI predicts this will reach almost $73bn, with engines the largest and fastest-growing segment. Training will become more important as the appetite for new staff grows and technology will probably be deployed in the form of distance learning and computer simulations. Organisations that recognise the value of training and are prepared to invest in this resource should cope best.”

Labour Recruitment and technical training is a global challenge but South-East Asia is addressing the issue actively. There are currently 2,200 engineers and mechanics in the region but this needs at least to double by 2015. Accordingly, many providers are working together to create facilities. The Mil-Com Aerospace Group joined with Aerospace Engineering Services Company in 2012 to found a training centre in Hanoi, Vietnam. Similarly, Rolls-Royce will have a

training centre in the SAP aviation park in Singapore, offering more than 400 different modules and training up to 4,000 people a year. Airlines are also establishing in-house training schools. To vouchsafe long-term growth, Thai Airways intends to invest $780,000 in a pilot and ground crew training school. Aviation training company, CAE, and budget carrier, Cebu Pacific, have begun construction of an aviation-training centre at the Clark Freeport Zone in the Philippines. The Philippine Academy for Aviation Training is set to open later this year and will have the capacity to train more than 2,500 pilots annually. An essential factor following its construction will be the subsequent retention of the newly trained personnel. As Hygate states: “Qualified mechanics and licensed engineers can work anywhere and will tend to go where the pay and conditions are best. South-East Asia has the pool of young talent but faces a struggle to hold on to it. Many airlines and MROs are setting up their own training facilities – the challenge will be to keep the graduates of these organisations in the region.” But given its continued GDP growth and the burgeoning middle-class, there is a good chance the labour pool will not leave the region. Indeed, labour rates in South-East Asia are expected to increase and should reach parity with the West within the next seven years. South-East Asia’s aviation industry is also set to benefit from a new open skies policy in 2015, which should further bolster its success. Increased flexibility, route coverage and profitability – all results of the policy – will enhance growth and help the ASEAN aviation industry to cement its place in global market.

afm • Issue 84 – May–June • www.afm.aero

MRO: Logistics

Logistics: The lynchpin of the aftermarket Locatory.com examines the effect of import duties and procedures on the supply of aircraft spares.

ast December, media headlines across the world were dominated by the news that two men on American soil had attempted to contravene the US trade embargo by supplying Iran’s civil aviation sector with spare parts for aircraft and helicopters.

The smuggling was foiled before it came to fruition and the culprits were sentenced earlier this month. Meanwhile, however, Iran’s civil aviation industry continues to suffer a lack of spare parts. This is taking its toll not only on operations, but also the country’s air safety.

Duties and delays The circumstances present a rather extreme example of what happens when the movement of aviation spare parts and components is constrained – yet logistical problems in the aftermarket have a wider effect. Indeed, whether it is through crippling duties on imported parts, bureaucratic delays in customs clearance, a deficiency of on-hand suppliers or the inability to service outreach locations, logistics are an ongoing issue for the effective management of an airline’s supply chain.

An aircraft on the ground (AOG) can cost an airline as much as €120,000 ($157,000) per hour. This can be particularly frustrating when parts are delayed over bureaucratic matters. Inconsistencies and complacency, such as with the air waybill or commercial invoice, routinely result in needless delays in customs. According to Zilvinas Sadauskas, CEO of Locatory.com: “Extensive customs formalities are often the norm when doing business in the emerging markets. Without prior knowledge or experience, airlines can be faced with more than they bargained for when parts are stuck in customs going nowhere. In countries like Russia, where the standard timeframe for customs processing once took as long as 10 days, airlines sought alternative measures to manage their supply stocks. Things are getting better in the logistics sector, of course, with concessions for eased transfer of aircraft parts and components. But again, taking Russia as an example, companies should plan a minimum of three days for customs handling, even with everything in order.”

Customs and taxes Even with streamlined approaches to procurement and delivery in the aftermarket, customs delays are a persistent hurdle. Without a local customs broker, air operators seeking to send or acquire parts from abroad may often find themselves embroiled in week-long delays over issues regarding documents.

However, customs stoppages are not the only variable to consider. Sadauskas adds: “Countries that continue to apply regressive import duties on top of value added taxes for aircraft spares are doing their air industry a tremendous disservice. EU member states, the US and a host of other nations have long sought

afm • Issue 84 – May–June • www.afm.aero

MRO: Logistics

a zero-rate tariff as a measure of support for their airline industries.”

the question of what purpose a customs duty serves when it leaves local maintenance providers at such a profound disadvantage.

However, many countries persist in upholding various barriers to the free trade of aircraft and aircraft parts. Until recently, Nigeria was one of them. Prior to revoking the 20 per cent customs duty applied to incoming aircraft and spares last year, the nation’s airlines were losing some $4m each year to government coffers. Faced with mounting levels of expenditure, airlines struggled to keep their head above water and the industry stagnated – this was further reinforced by the spate of airline bankruptcies in the country over recent years.

Adding a further dimension, Sadauskas suggests that infrastructural bottlenecks present a perpetual problem for aviation logistics. When facilities and traffic are concentrated in just a few gateway airports – as is the case in India – it creates problems with overcapacity and the inner-state movement of parts. Negligible maintenance facilities at secondary airports mean that further strain is placed on key airports to provide ramp access demanded by air operators.

Nigeria’s airlines sought alternative arrangements for the supply of their spare parts. “A number of Nigerian carriers were commissioning MRO companies abroad to service and replace parts on their fleet – thus bypassing the import duties applied to uninstalled parts,” says Sadauskas. As such, a key variable in annulling the tax was to improve efficiency and reduce capital flight on maintenance by at least 60 per cent. However, it begs

“Aviation logistics continues to remain highly fragmented. With scattered aftermarket hotspots, airlines – particularly those in emerging markets – struggle to keep their airtime high and delays down. Even with access to enhanced supply chain solutions, achieving reasonable response times to parts or service orders requires initiative from both industry traders and local regulatory bodies,” says Sadauskas.

afm • Issue 84 – May–June • www.afm.aero

AIRPORTS & ROUTES: Changi

Soaring success: Changi airport Singapore’s Changi Airport has a clear trajectory for growth. Sizeable terminal expansion and a ‘deep’ alliance with its airline customers are just two of the weapons in its arsenal, as Peter Donaldson discusses.

acing growing competition from other hubs, such as Hong Kong and Dubai, Changi Airport Group (CAG) is planning major investments in its capacity to handle aircraft, passengers and cargo, while providing short-term support for struggling cargo carriers. When CAG announced in March that it was extending financial support to its air cargo partners, it was a practical demonstration of CEO, Lee Seow Hiang’s belief that the airport’s fortunes are ‘deeply’ intertwined with those of the airlines. The company puts the value of its support, which is part of the Changi Airport Growth Initiative, at more than S$17m ($14m) over the next 12 months. It is an extension of a S$15m ($12m) package that the group put in place more than a year ago. “Our partners in the cargo sector continue to face strong headwinds from the global economic weakness. We hope, with this support package, to alleviate their situation,” says Lee.

“We are not sure how long this downturn would last, but we stand ready to continue to help our partners in need,” Changi’s EVP for airport management, Tan Lye Teck, tells AFM. “The exact form and manner may vary, but we are committed to working closely with our partners. Our approach is that when they succeed, we do too.” Some cargo segments have shown growth, including perishables, live animals and pharmaceuticals, while traffic to and from Africa and Oceania has also increased. However, freight figures for the first two months of 2013 support Lee’s prediction of headwinds, as the tonnage handled at Changi declined by five per cent to 267,000 tonnes. Preparing for a recovery in cargo traffic, the airport and its partners continued to invest in the Changi Airfreight Centre. Also, FedEx opened its South Pacific Regional Hub within Changi’s Air Cargo Express Hub. The airport’s ability to support

afm • Issue 84 – May–June • www.afm.aero

AIRPORTS & ROUTES: Changi explains. “The growth of middle and higher income segments in Asia-Pacific will continue to fuel higher demand for air travel. “Having said this, the near-term global economic outlook remains cloudy. Changi Airport’s performance will depend largely on how economies, especially in Asia, adjust. But while there will be cycles and fluctuations upwards and downwards in traffic volumes, we believe strongly in the long-term upward trajectory of air traffic growth in the Asia-Pacific. We are confident that our strong partnership with our stakeholders will help see the airport through the challenges that lie ahead.” Passenger movements of 4.92 million during December reinforce this picture, representing growth of 8.6 per cent over passenger footfall in December 2011. Traffic between Singapore and Europe grew by 7.5 per cent in 2012, which is a good performance in the face of weak eurozone economies. Growth within the Asia-Pacific region, however, was significantly stronger. Traffic to and from South Asia was up by 12.4 per cent, North-East Asia by 9.9 per cent, South-East Asia by 9.7 per cent and South-West Pacific by 9.4 per cent. As in other regions, low-cost carriers (LCCs) are driving growth in Asia, often establishing links with cities that might not support full service operations. Today, 10 of the 155 direct city links from Changi are operated only by LCCs, which flew around 28 per cent of Changi’s passengers last year.

Committed to investment In February, CAG gave the world the first detailed look at the plans for the S$600m ($485m) fourth terminal (T4) at Changi. The plans call for Changi’s T4 to add capacity for 16 million extra passenger movements each year, bringing the airport’s total capacity to 85 million (when planned expansion of Terminal 1’s (T1) capacity of three million is taken into account). Changi Airport’s T3 departure desk.

cargo carriers while investing in facilities for them was underpinned by strong passenger growth, it says.

Strong passenger growth “Despite a sluggish global economy and an uncertain outlook for air travel, Changi Airport handled 51.2 million passengers in 2012,” says Tan Lye Teck. “To us, it was significant that we managed to surpass the 50 million passenger movement mark only two years after the 40 million milestone was reached. Traffic growth at Changi Airport in its 31-year history has averaged about six per cent each year. The stronger growth in the past three years has been due to a solid recovery in air travel demand following the global financial crisis of 2008.” Changi’s strongest traffic growth during 2012 was on routes to North-East Asia, South-East Asia and South-West Pacific. “We believe that the Asia-Pacific region will remain a robust aviation market, anchored by the large economies of China, India and Indonesia. Apart from the fact that China and India have populations of over a billion each, the countries in South-East Asia have a combined population of over 600 million,” Tan

With a gross floor area of around 160,000 m2, T4 is to be a two-storey structure 25 metres high on the site of the budget terminal, which closed in September. The design is intended to suit both regional full service airlines and LCCs, enabling quick turnarounds with both narrowbody and widebody aircraft. “When the budget terminal was being built, back in 2005, the concept of LCCs was still new to the region,” comments Tan. “The pace of growth undertaken by the LCC segment in Asia has indeed surprised many in the industry. Since then, experience has shown that not all LCCs prefer to operate from a budget terminal. Indeed, at Changi, a number of them opted to operate out of our main terminals,” he explains. “As for passengers, our research also indicates a high level of preference among passengers for a quality airport experience, even though they may be travelling on LCCs. Yes, certain full-service airlines may want a suite of differentiated service offerings, while some LCCs focus more on things like quick aircraft turnarounds. “In planning our Terminal 4, we do have to take all these possibilities into account. But there are many commonalities too

afm • Issue 84 – May–June • www.afm.aero

AIRPORTS & ROUTES: Changi – all airlines seek operational ease, cost-efficiency and high reliability of airport facilities. Given that the gap between some FSCs [full-service carriers] and LCCs may narrow over time and hybrid models may emerge, it would also make sense for the terminal to be designed with greater flexibility in mind,” Tan says. T4 will not be a budget terminal-equivalent replacement, he tells AFM, as the concept is to offer a passenger experience like that provided by Terminals 1, 2 and 3 with a wide choice of amenities, retail and food and drink outlets. While primarily designed for narrowbody aircraft, the new terminal will also be able to handle a smaller number of widebodies to cater for carriers with mixed operations. “As Terminal 4 is only expected to become operational around 2017, the decision on the airlines to be relocated at our fourth terminal would only be taken at a later stage, taking into consideration the expected growth plans of various airlines and their business models.”

More runway capacity “Along with the measures announced by the Civil Aviation Authority of Singapore to improve runway capacity, our infrastructure investments over the next four to five years lay the groundwork for us to continue delivering a great Changi experience and attracting more airlines,” Lee concludes. Changi’s existing third runway is very likely to be prepared for civilian use before 2020. The airport should get more runway capacity before then, according to transport minister, Josephine Teo. Teo chairs the Changi 2036 Steering Committee, instituted last year, whose remit is to develop a ‘holistic’ long-term expansion plan. Speaking to Parliament in March, she said that the existing runways could handle more than they do today. Teo cited a study commissioned by the UK air navigation service provider, NATS, concluding that Changi’s two current runways can accommodate about 430,000 movements annually, a third more than last year’s record 324,000. She said that by implementing runway optimisation and other measures, such as moving some aircraft to Seletar Airport. “We expect the increased capacity of our two runways to be sufficient to cater to Changi Airport’s growth until around the end of this decade. Thereafter, a third runway will be needed for Changi to continue to grow. “Exactly how soon we will need a third runway at Changi for civilian use depends on various factors, including air traffic growth and the aircraft mix operating at the airport. For example, airlines may up-gauge narrowbody aircraft to widebody aircraft to carry more passengers, rather than applying for new departure and landing slots. “Nonetheless, the committee has decided that Changi’s Runway 3, currently used by the Republic of Singapore Air Force, should be readied for civilian co-use as early as possible and we estimate this to be before the end of this decade.” Teo said that she expects timelines for the works and the implementation of a three-runway system to be announced in the second half of 2013.

afm • Issue 84 – May–June • www.afm.aero

AIRPORTS & ROUTES: Changi “In terms of air traffic management,” says Tan, “CAAS is preparing its systems and processes to handle traffic on three runways in the future. CAG and CAAS are also working out a system for airport collaborative decision-making to facilitate efficient ground support and smooth aircraft movements on the ground. The aim is to achieve better information flow among all parties involved – ATM [air traffic management], airport, airlines, pilots and ground handlers – and a more seamless flow of flight movements from ground to air and from air to ground.” Beyond the expansion of T1 and the building of T4, Changi is expected to need yet more passenger terminal capacity in the long-term. This is predicated on a compound annual growth rate of five per cent up to the end of the decade, and three to four per cent in the next one. “At these growth rates, we expect to need additional terminal capacity by the mid-2020s,” said Teo. “To position Changi for the longer term, we should plan for expansion of its passenger terminal capacity.” Competition with other Asian hubs is also motivating expansion at Changi, which is stinging from the loss of Qantas’ European business to Dubai. In February, Dubai opened the world’s first A380-only concourse with 20 contact stands and 15 million annual passenger capacity. Teo cited this connectivity as a driver behind Qantas’ decision to tie-up with Emirates from March and to re-route its Europe-bound traffic via the hub. “While Dubai has grown its air links and is now connected to many more cities than Changi, we continue to have an edge in connectivity within the region, including to countries like China, India and Indonesia. Changi Airport must take the competition seriously and work hard to retain superior air connectivity,” she said. “We need room to grow our connectivity with many more emerging cities. This will also support airlines’ future growth plans and anchor them here.” The Changi 2036 Steering Committee has been working for a year on a conceptual plan for the 1,080-hectare site at Changi East, which lies between runway 2 and runway 3, where there is space for a passenger mega-terminal, freight, logistics and MRO hubs. The ability to grow a large airport on a small island is likely to cause envy in other countries, the UK in particular. It results from a far-sighted strategic decision by Singapore’s leadership in the late 1970s to build Changi at the eastern tip of Singapore island, minimising the environmental impact on nearby residents, Tan tells AFM. “This enabled Changi to handle the growth in air traffic without running into the environmental issues, such as those faced at major airports elsewhere,” he says. “The story would have been very different had the government decided to keep the international airport at the old Paya Lebar Airport! Having said that, as Singaporeans become more environmentally conscious, CAG seeks to proactively engage our stakeholders. For example, CAG has a visit programme for school-children and incorporates viewing galleries in our terminals – which are open to members of the public. This helps us educate them on the business of the airport, developing rapport and building advocates for Changi Airport.” afm • Issue 84 – May–June • www.afm.aero

INDUSTRY DATA: Deals

Industry data

59 64

Aircraft deals Firm orders

65 66

List prices and lease rates Engine data Data supplied by IBA’s JetData. www.ibagroup.com

Aircraft deals

MSN Model L38728 37250 38728 40143 39613 38938 39055 39330 33228 38403 39196 39303 39428 36635 37249 38939 39089 41092 36120 38882 38941 36892 39615 37255 39724 29573 38942 39090 40144 38940 37251 38037 38883 33074 33075 38399 41258 31165 36122 40989 29574 39197 39614 36973 33229 36998 40781 40788 39368 40145 42148 40943 39110 38944 0991 31167 37257 41302 37256 39021 32836

737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-900ER

Event Destroyed Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service Entry into service

Current Owner Avolon Aerospace Jetairfly Lion Air Malaysia Airlines GOL Airlines China Southern Airlines BOC Aviation BBAM American Airlines Xiamen Airlines Hainan Airlines Shanghai Airlines AWAS Southwest Airlines Thomson Airways China Southern Airlines Westjet Air China GECAS Copa Airlines China Southern Airlines Southwest Airlines GOL Airlines Thomson Airways China Eastern Airlines American Airlines China Southern Airlines Westjet Malaysia Airlines China Southern Airlines Thomson Airways GECAS Shandong Airlines Royal Air Maroc Royal Air Maroc Xiamen Airlines SAS Scandinavian Airlines American Airlines Air Berlin Turkish Airlines American Airlines Hainan Airlines GOL Airlines Southwest Airlines American Airlines Southwest Airlines Copa Airlines Copa Airlines Qantas Malaysia Airlines Transavia Airlines Jetairfly Shandong Airlines China Southern Airlines Turkish Airlines American Airlines Thomson Airways China Southern Airlines Thomson Airways Norwegian Air Shuttle United Airlines

Current Operator Malindo Air Jetairfly Lion Air Malaysia Airlines GOL Airlines China Southern Airlines BOC Aviation Shandong Airlines American Airlines Xiamen Airlines Hainan Airlines Shanghai Airlines Spicejet Southwest Airlines Thomson Airways China Southern Airlines Westjet Air China Transavia France Copa Airlines China Southern Airlines Southwest Airlines GOL Airlines Thomson Airways China Eastern Airlines American Airlines China Southern Airlines Westjet Malaysia Airlines China Southern Airlines Thomson Airways SAS Scandinavian Airlines Shandong Airlines Royal Air Maroc Royal Air Maroc Xiamen Airlines SAS Scandinavian Airlines American Airlines Air Berlin Turkish Airlines American Airlines Hainan Airlines GOL Airlines Southwest Airlines American Airlines Southwest Airlines Copa Airlines Copa Airlines Qantas Malaysia Airlines Transavia Airlines Jetairfly Shandong Airlines China Southern Airlines Turkish Airlines American Airlines Thomson Airways China Southern Airlines Thomson Airways Norwegian Air Shuttle United Airlines

Date 19/02/2013 19/02/2013 19/02/2013 19/02/2013 21/02/2013 22/02/2013 22/02/2013 25/02/2013 26/02/2013 26/02/2013 26/02/2013 26/02/2013 26/02/2013 27/02/2013 27/02/2013 27/02/2013 27/02/2013 27/02/2013 28/02/2013 28/02/2013 01/03/2013 04/03/2013 04/03/2013 06/03/2013 06/03/2013 07/03/2013 07/03/2013 07/03/2013 07/03/2013 08/03/2013 11/03/2013 12/03/2013 12/03/2013 13/03/2013 13/03/2013 13/03/2013 13/03/2013 14/03/2013 15/03/2013 18/03/2013 19/03/2013 20/03/2013 22/03/2013 26/03/2013 28/03/2013 28/03/2013 28/03/2013 03/04/2013 04/04/2013 04/04/2013 04/04/2013 08/04/2013 09/04/2013 10/04/20134 10/04/2013 11/04/2013 11/04/2013 13/04/2013 15/04/2013 03/05/2013 21/02/2013

Source: IBA.

afm • Issue 84 – May–June • www.afm.aero

INDUSTRY DATA: Deals Data supplied by IBA’s JetData. www.ibagroup.com

Aircraft deals MSN Model 36600 38687 40986 38729 35205 37099 41734 37102 38688 38890 37831 37832 35808 37562 37654 37566 37863 41994 37869 26608 40902 31546 35604 39237 33522 41681 41680 41998 41086 41778 41522 41432 39689 38678 41087 41523 37640 35611 5389 5366 5535 5439 5489 5479 5492 5476 5486 5488 5496 5482 5487 5502 5505 5508 5493 5499 5511 5378 5410 5419 5494 5498 5497 5503 5510 5514 5483 5507 5526 5515 5515 5520 5536 5539 5541 5524 5501 5518 5517 5544 5512 5530 5521 5522 5527 5556 5547 5525 5551 5553 5565

Event

737-900ER Entry into service 737-900ER Entry into service 737-900ER Entry into service 737-900ER Entry into service 737-900ER Entry into service 737-900ER Entry into service 737-900ER Entry into service 737-900ER Entry into service 737-900ER Entry into service 737-900ER BBJ Entry into service 747-8 Entry into service 747-8 Entry into service 747-8F Entry into service 747-8F Entry into service 747-8F Entry into service 747-8F Entry into service 767-300ER Entry into service 767-300ER Entry into service 767-300ER Entry into service 767-300ER Entry into service 777-200ER Entry into service 777-300ER Entry into service 777-300ER Entry into service 777-300ER Entry into service 777-300ER Entry into service 777-300ER Entry into service 777-300ER Entry into service 777-300ER Entry into service 777-300ER Entry into service 777-300ER Entry into service 777-300ER Entry into service 777-300ER Entry into service 777-300ER Entry into service 777-300ER Entry into service 777-300ER Entry into service 777-300ER Entry into service 777-F Entry into service 777-F Entry into service A319-100 Entry into service A319-100 Entry into service A319-100 Entry into service A319-100 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service A320-200 Entry into service

Current Owner

Current Operator

United Airlines Malindo Air Turkish Airlines Malindo Air Alaska Airlines United Airlines Alaska Airlines United Airlines Lion Air Dallah Al-Baraka Lufthansa Lufthansa Cargolux Airlines Saudi Arabian Airlines Korean Air Lines Atlas Air United Parcel Service LAN Airlines United Parcel Service Pegasus Aviation ANA All Nippon Airways American Airlines Emirates Cathay Pacific Airways American Airlines Aeroflot Russian Airlines Aeroflot Russian Airlines Korean Air Lines Emirates Qatar Airways BOC Aviation Cathay Pacific Airways Etihad Airways Air China Emirates BOC Aviation Korean Air Lines Emirates Sichuan Airlines Air Namibia Germanwings China Eastern Airlines AWAS BOC Aviation Jetstar Japan IndiGo Iberia Volaris Tiger Airways AWAS Lufthansa Air Arabia AirAsia Air Lease Corporation LAN Airlines Jetstar Japan SMBC Aviation Capital Spring Airlines ICBC Air China Libyan Airlines CEBU Pacific Air Lufthansa Air Lease Corporation Volaris Hong Kong Airlines LAN Airlines IndiGo The Cit Group Inc AerVenture AerVenture Jetstar Japan AWAS Wizz Air Ukraine GECAS Air Lease Corporation Iberia Express Swiss International Airlines Spirit Airlines Hong Kong Airlines Starflyer BOC Aviation Shenzhen Airlines Niki Aviation Capital Group SMBC Aviation Capital AirAsia Japan Lufthansa GECAS SMBC Aviation Capital Aeroflot Russian Airlines

United Airlines Malindo Air Turkish Airlines Malindo Air Alaska Airlines United Airlines Alaska Airlines United Airlines Lion Air Dallah Al-Baraka Lufthansa Lufthansa Cargolux Airlines Saudi Arabian Airlines Korean Air Lines Atlas Air United Parcel Service LAN Airlines United Parcel Service Business Air ANA All Nippon Airways American Airlines Emirates Cathay Pacific Airways American Airlines Aeroflot Russian Airlines Aeroflot Russian Airlines Korean Air Lines Emirates Qatar Airways Thai Airways International Cathay Pacific Airways Etihad Airways Air China Emirates Thai Airways International Korean Air Lines Emirates Sichuan Airlines Air Namibia Germanwings China Eastern Airlines Jetstar Airways Vueling Jetstar Japan IndiGo Iberia Volaris Tiger Airways Jetstar Asia Lufthansa Air Arabia AirAsia China Eastern Airlines LAN Airlines Jetstar Japan Citilink Indonesia Spring Airlines China Southern Airlines Air China Libyan Airlines CEBU Pacific Air Lufthansa China Southern Airlines Volaris Hong Kong Airlines LAN Airlines IndiGo Monarch Airlines Virgin America Virgin America Jetstar Japan Aeroflot Russian Airlines Wizz Air Ukraine Citilink Indonesia China Eastern Airlines Iberia Express Swiss International Airlines Spirit Airlines Hong Kong Airlines Starflyer Vueling Shenzhen Airlines Niki China Eastern Airlines Citilink Indonesia AirAsia Japan Lufthansa Citilink Indonesia THAI Smile Aeroflot Russian Airlines

Date 11/03/2013 14/03/2013 14/03/2013 19/03/2013 25/03/2013 26/03/2013 27/03/2013 08/04/2013 15/04/2013 15/02/2013 13/03/2013 27/03/2013 08/03/2013 25/03/2013 28/03/2013 02/04/2013 15/02/2013 25/02/2013 29/03/2013 11/04/2013 29/03/2013 19/02/2013 19/02/2013 19/02/2013 20/02/2013 23/02/2013 25/02/2013 28/02/2013 01/03/2013 01/03/2013 07/03/2013 19/03/2013 20/03/2013 22/03/2013 26/03/2013 09/04/2013 25/02/2013 28/03/2013 03/03/2013 07/03/2013 28/03/2013 29/03/2013 15/02/2013 19/02/2013 20/02/2013 21/02/2013 21/02/2013 21/02/2013 21/02/2013 25/02/2013 27/02/2013 27/02/2013 27/02/2013 27/02/2013 28/02/2013 28/02/2013 28/02/2013 01/03/2013 01/03/2013 01/03/2013 01/03/2013 06/03/2013 07/03/2013 08/03/2013 13/03/2013 13/03/2013 14/03/2013 14/03/2013 14/03/2013 15/03/2013 15/03/2013 15/03/2013 15/03/2013 15/03/2013 18/03/2013 19/03/2013 20/03/2013 20/03/2013 21/03/2013 21/03/2013 22/03/2013 23/03/2013 26/03/2013 26/03/2013 26/03/2013 26/03/2013 27/03/2013 28/03/2013 28/03/2013 29/03/2013 03/04/2013 Source: IBA.

afm • Issue 84 – May–June • www.afm.aero

INDUSTRY DATA: Deals Data supplied by IBA’s JetData. www.ibagroup.com

Aircraft deals MSN Model 5533 5559 5531 5540 5542 5570 5537 5572 5552 5475 5485 5481 5490 5500 5509 5469 5495 5504 5513 5523 5528 5534 1389 1393 1394 1396 1400 1399 1404 1386 1380 996 1388 1385 1387 1381 1391 1382 1392 1395 1398 1397 1401 1403 120 122 114 1072 1073 1076 1042 19030 10334 4433 4434 4432 17000347 17000348 19000603 95026 2374 28660 27469 27910 25740 25164 30714 39055 39330 39428 36120 32920 28226 33833 33834 30421 38037 30194 29250 28387 36596 34690 24199 35233 27476 41522 41523 1786 2465 647 660

Event

Current Owner

A320-200 Entry into service Aviation Capital Group A320-200 Entry into service Air Lease Corporation A320-200 Entry into service SilkAir A320-200 Entry into service GECAS A320-200 Entry into service easyJet A320-200 Entry into service Iberia A320-200 Entry into service IndiGo A320-200 Entry into service SMBC Aviation Capital A320-200 Entry into service GoAir A321-200 Entry into service US Airways A321-200 Entry into service Aviation Capital Group A321-200 Entry into service China Eastern Airlines A321-200 Entry into service Turkish Airlines A321-200 Entry into service ICBC A321-200 Entry into service Saudi Arabian Airlines A321-200 Entry into service Vietnam Airlines A321-200 Entry into service VALC A321-200 Entry into service US Airways A321-200 Entry into service US Airways A321-200 Entry into service Aviation Capital Group A321-200 Entry into service TAM Linhas Aéreas A321-200 Entry into service China Southern Airlines A330-200 Entry into service Hawaiian Airlines A330-200 Entry into service Korean Air Lines A330-200 Entry into service Air Pacific A330-200 Entry into service Air China A330-200 Entry into service Avianca A330-200 Entry into service Hawaiian Airlines A330-200 Entry into service Hawaiian Airlines A330-200F Entry into service BOC Aviation A330-200F Entry into service TAMPA Cargo A330-200MRTT Entry into service Royal Saudi Air Force A330-300 Entry into service Malaysia Airlines A330-300 Entry into service Iberia A330-300 Entry into service Cathay Pacific Airways A330-300 Entry into service KLM Royal Dutch Airlines A330-300 Entry into service GECAS A330-300 Entry into service Singapore Airlines A330-300 Entry into service China Southern Airlines A330-300 Entry into service Malaysia Airlines A330-300 Entry into service Hong Kong Airlines A330-300 Entry into service Air Lease Corporation A330-300 Entry into service Singapore Airlines A330-300 Entry into service Swiss International Airlines A380-800 Entry into service China Southern Airlines A380-800 Entry into service Thai Airways International A380-800 Entry into service Malaysia Airlines ATR72-600 Entry into service AZUL Linhas Aereas ATR72-600 Entry into service Skywest Airlines ATR72-600 Entry into service AZUL Linhas Aereas ATR72-600 Entry into service Intersky CRJ1000 Entry into service Garuda Indonesia CRJ700 Entry into service Ibex Airlines DHC8-400Q Entry into service Jazz Air DHC8-400Q Entry into service Jazz Air DHC8-400Q Entry into service Jazz Air Embraer 175 Entry into service Alitalia Embraer 175 Entry into service Alitalia Embraer 190 Entry into service BOC Aviation SSJ 100 Entry into service Lao Central Airlines A320-200 Operated by Lessee ILFC (Leased to Aer Lingus) 737-300 Operating lease Aviation Capital Group 737-300 Operating lease Aersale 737-300 Operating lease Aersale 737-400 Operating lease ILFC 737-400 Operating lease ILFC 737-700 Operating lease ILFC 737-800 Operating lease BOC Aviation 737-800 Operating lease BBAM 737-800 Operating lease AWAS 737-800 Operating lease GECAS 737-800 Operating lease Air Lease Corporation 737-800 Operating lease ILFC 737-800 Operating lease MacQuarie Airfinance 737-800 Operating lease Macquarie Airfinance 737-800 Operating lease Macquarie Airfinance 737-800 Operating lease GECAS 737-800 Operating lease SASOF II Aviation Ireland 737-800 Operating lease Travel Service Airlines 737-800 Operating lease MCAP 737-800 Operating lease GOL Airlines 737-800 Operating lease Sumisho Aircraft Asset Management 747-400BCF Operating lease The Boeing Company 747-400ERF Operating lease Aircastle 767-300ER Operating lease AWAS 777-300ER Operating lease BOC Aviation 777-300ER Operating lease BOC Aviation A319-100 Operating lease The Cit Group Inc A319-100 Operating lease GECAS A319-100 Operating lease ILFC A319-100 Operating lease ILFC

Current Operator Vueling S7 Siberia Airlines SilkAir Peach Aviation easyJet Iberia IndiGo Aeroflot Russian Airlines GoAir US Airways EVA Airways China Eastern Airlines Turkish Airlines Asiana Airlines Saudi Arabian Airlines Vietnam Airlines Vietnam Airlines US Airways US Airways Air Macau TAM Linhas Aéreas China Southern Airlines Hawaiian Airlines Korean Air Lines Air Pacific Air China Avianca Hawaiian Airlines Hawaiian Airlines Qatar Airways Cargo TAMPA Cargo Royal Saudi Air Force Malaysia Airlines Iberia Cathay Pacific Airways KLM Royal Dutch Airlines Jet Airways Singapore Airlines China Southern Airlines Malaysia Airlines Hong Kong Airlines Sichuan Airlines Singapore Airlines Swiss International Airlines China Southern Airlines Thai Airways International Malaysia Airlines AZUL Linhas Aereas Skywest Airlines AZUL Linhas Aereas Intersky Garuda Indonesia Ibex Airlines Jazz Air Jazz Air Jazz Air Alitalia Alitalia Jetairfly Lao Central Airlines Virgin Atlantic Airways Viva Aerobus Air Indus Indus Shaheen Air Shaheen Air Regent Airways Jet Airways Shandong Airlines Spicejet Transavia France Corendon Airlines UT Air Ukraine Travel Service El Al Israel Airlines Jet2 SAS Scandinavian Airlines Eastar Jet Jet2 Transaero Airlines Transavia Airlines Thomson Airways Evergreen International Airlines Eithad Airways Air Do Thai Airways International Thai Airways International Frontier Airlines Rossiya Airlines First Nation Airways First Nation Airways

Date 05/04/2013 05/04/2013 06/04/2013 09/04/2013 09/04/2013 09/04/2013 10/04/2013 10/04/2013 11/04/2013 19/02/2013 22/02/2013 26/02/2013 06/03/2013 14/03/2013 19/03/2013 20/03/2013 25/03/2013 25/03/2013 25/03/2013 27/03/2013 27/03/2013 03/04/2013 25/02/2013 08/03/2013 16/03/2013 19/03/2013 22/03/2013 10/04/2013 12/04/2013 16/03/2013 23/03/2013 15/02/2013 15/02/2013 19/02/2013 25/02/2013 27/02/2013 01/03/2013 08/03/2013 12/03/2013 18/03/2013 22/03/2013 28/03/2013 09/04/2013 15/04/2013 28/02/2013 22/03/2013 28/03/2013 20/02/2013 02/03/2013 15/03/2013 05/04/2013 05/03/2013 27/02/2013 15/02/2013 22/02/2013 08/03/2013 22/03/2013 22/03/2013 26/02/2013 15/02/2013 05/04/2013 04/03/2013 26/03/2013 26/03/2013 18/03/2013 26/03/2013 04/03/2013 22/02/2013 25/02/2013 26/02/2013 28/02/2013 01/03/2013 04/03/2013 04/03/2013 04/03/2013 08/03/2013 12/03/2013 01/04/2013 04/04/2013 05/04/2013 06/04/2013 12/04/2013 11/03/2013 01/03/2013 11/03/2013 07/03/2013 09/04/2013 15/02/2013 18/02/2013 25/02/2013 25/02/2013

Source: IBA.

afm • Issue 84 – May–June • www.afm.aero

INDUSTRY DATA: Deals Data supplied by IBA’s JetData. www.ibagroup.com

Aircraft deals MSN Model 1778 2497 2879 2723 2698 2913 949 2436 3054 2001 5489 1983 3189 5479 314 373 407 1286 2804 1368 5482 5508 2990 5511 5410 1615 1497 2027 1504 5503 1372 2009 5526 5536 3044 1210 5541 2349 5524 5530 5527 5556 5551 5553 1922 3071 1171 5533 5540 5566 5572 5485 1843 5500 5495 5523 296 348 398 822 925 1386 127 1391 1397 202 210 416 559 1004 337 758 761 1068 17000293 17000109 19000603 1450713 1450269 1450385 1450294 35138 37160 37748 35137 30880 37743 37745 35132 28379

A319-100 A319-100 A319-100 A319-100 A319-100 A319-100 A319-100 A319-100 A319-100 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A320-200 A321-200 A321-200 A321-200 A321-200 A321-200 A330-200 A330-200 A330-200 A330-200 A330-200 A330-200F A330-300 A330-300 A330-300 A340-300 A340-300 A340-600 ATR42-500 ATR42-600 ATR72-200 ATR72-500 ATR72-500 ATR72-600 Embraer 170 Embraer 175 Embraer 190 ERJ-135 ERJ-145 ERJ-145 ERJ-145 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800 737-800

Event Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Returned Returned Returned Returned Returned Returned Returned Returned Returned

Current Owner

Current Operator

The Cit Group Inc GECAS GECAS ILFC ILFC GECAS AerCap SMBC Aviation Capital SMBC Aviation Capital GECAS AWAS GECAS Summit Aero Engine BOC Aviation Volito Aviation Jetran International Airfinancial Management GECAS MacQuarie Airfinance Aviation Capital Group AWAS Air Lease Corporation GECAS SMBC Aviation Capital ICBC GECAS ILFC ILFC MacQuarie Airfinance Air Lease Corporation GECAS MacQuarie Airfinance The Cit Group Inc AWAS The Cit Group Inc GECAS GECAS ILFC Air Lease Corporation BOC Aviation Aviation Capital Group SMBC Aviation Capital GECAS SMBC Aviation Capital BOC Aviation The Cit Group Inc GECAS Aviation Capital Group GECAS BOC Aviation SMBC Aviation Capital Aviation Capital Group Aviation Capital Group ICBC VALC Aviation Capital Group ILFC ILFC Aviation Capital Group ILFC Air Lease Corporation BOC Aviation Apollo Aviation Group GECAS Air Lease Corporation NBB Leasing Co Ltd Air France Virgin Atlantic Airways Phoenix Aircraft Leasing Nordic Aviation Capital Falcon Air Express KF Turbo Leasing Nordic Aviation Capital Nordic Aviation Capital ECC Leasing Co Ltd Air Canada BOC Aviation Republic Airways/skyworld Aviation GECAS GECAS Regional RBS Aviation Capital Macquarie Airfinance MCAP RBS Aviation Capital RBS Aviation Capital RBS Aviation Capital RBS Aviation Capital Orix Aviation Transavia Airlines

Frontier Airlines Rossiya Airlines Rossiya Airlines Spirit Airlines Spirit Airlines Rossiya Airlines TAME Sky Airline Aer Lingus Aer Lingus Jetstar Airways Aer Lingus Ural Airlines Vueling U Airlines Thai Regional Airline Aviatrans K Air Asia Freebords Airlines TAME Jetstar Asia China Eastern Airlines SAS Scandinavian Airlines Citilink Indonesia China Southern Airlines Frontier Airlines Shaheen Air Shaheen Air Austrian Airlines China Southern Airlines Vueling Austrian Airlines Monarch Airlines Aeroflot Russian Airlines Rossiya Airlines Vueling Citilink Indonesia Ural Airlines China Eastern Airlines Vueling China Eastern Airlines Citilink Indonesia Citilink Indonesia THAI Smile Skywest Airlines Royal Brunei Vueling Vueling Peach Aviation Jetstar Aeroflot Russian Airlines EVA Airways Nordwind Airlines Asiana Airlines Vietnam Airlines Air Macau Hi Fly Syphax Airlines Thomas Cook Airlines Air Berlin KLM Royal Dutch Airlines Qatar Airways Cargo Hi Fly Jet Airways Sichuan Airlines Hi Fly Air Madagascar Hi Fly Indonesia Air Transport Seacons Trading Dutch Antilles Express Nok Air Airliner Smooth aviation Air Costa Sky Regional Airlines Jetairfly JetGo Australia Trans States Airlines ALS Mocambique Expressco Thomson Airways Transavia Airlines Air Berlin Thomson Airways Izair Izair Izair Thomson Airways Transavia Airlines

Date 25/02/2013 25/02/2013 28/02/2013 01/03/2013 22/03/2013 23/03/2013 26/03/2013 26/03/2013 26/03/2013 15/02/2013 15/02/2013 18/02/2013 18/02/2013 19/02/2013 25/02/2013 25/02/2013 25/02/2013 25/02/2013 25/02/2013 26/02/2013 26/02/2013 27/02/2013 28/02/2013 28/02/2013 01/03/2013 03/03/2013 05/03/2013 06/03/2013 08/03/2013 08/03/2013 11/03/2013 11/03/2013 14/03/2013 15/03/2013 17/03/2013 18/03/2013 18/03/2013 19/03/2013 19/03/2013 23/03/2013 26/03/2013 26/03/2013 28/03/2013 29/03/2013 01/04/2013 01/04/2013 05/04/2013 05/04/2013 09/04/2013 10/04/2013 10/04/2013 22/02/2013 25/02/2013 14/03/2013 25/03/2013 27/03/2013 04/03/2013 26/03/2013 26/03/2013 26/03/2013 12/04/2013 16/03/2013 01/03/2013 01/03/2013 28/03/2013 25/02/2013 19/03/2013 01/04/2013 04/03/2013 22/02/2013 10/04/2013 25/02/2013 04/03/2013 15/02/2013 01/04/2013 01/04/2013 26/02/2013 25/03/2013 02/03/2013 14/03/2013 08/04/2013 18/03/2013 21/03/2013 22/03/2013 27/03/2013 01/04/2013 01/04/2013 01/04/2013 03/04/2013 09/04/2013 Source: IBA.

afm • Issue 84 – May–June • www.afm.aero

INDUSTRY DATA: Deals Data supplied by IBA’s JetData. www.ibagroup.com

Aircraft deals MSN Model 2142 313 38728 39613 33228 36635 36892 29573 33229 31165 36998 41432 2289 2300 2360 5492 5499 5358 5372 389 392 5520 5517 3218 5477 1389 1400 1404 17000347 17000348 28105 55097 26444 28105 40996 28194 25068 24606 24337 27606 5464 110 643 559 352 761 712 1450358 11545 49552 53489 55092 55093 55094 55095 55096 31165 33228 37092 40287 28554 34710 35831 533 237 38728 35074 35131 3509 2843 2897 1694 4907 4543 1736 1540 3055 4735 4568 115 3758 2045 17 135 30293 24318 4305 807

Event

A320-200 Returned ATR72-200F Returned 737-800 Sale & leaseback 737-800 Sale & leaseback 737-800 Sale & leaseback 737-800 Sale & leaseback 737-800 Sale & leaseback 737-800 Sale & leaseback 737-800 Sale & leaseback 737-800 Sale & leaseback 737-800 Sale & leaseback 777-300ER Sale & leaseback A319-100 Sale & leaseback A319-100 Sale & leaseback A319-100 Sale & leaseback A320-200 Sale & leaseback A320-200 Sale & leaseback A320-200 Sale & leaseback A320-200 Sale & leaseback A320-200 Sale & leaseback A320-200 Sale & leaseback A320-200 Sale & leaseback A320-200 Sale & leaseback A320-200 Sale & leaseback A320-200 Sale & leaseback A330-200 Sale & leaseback A330-200 Sale & leaseback A330-200 Sale & leaseback Embraer 175 Sale & leaseback Embraer 175 Sale & leaseback 737-700 Scrapped 717-200 Sold off lease 737-400 Sold off lease 737-700 Sold off lease 737-800 Sold off lease 747-400 Sold off lease 747-400BCF Sold off lease 757-200 Sold off lease 767-300ER Sold off lease 777-200ER Sold off lease A320-200 Sold off lease A330-300 Sold off lease ATR42-500 Sold off lease ATR42-500 Sold off lease ATR72-200 Sold off lease ATR72-500 Sold off lease ATR72-500 Sold off lease ERJ-135 Sold off lease Fokker 70 Sold off lease MD-82 Sold off lease MD-90-30 Sold off lease 717-200 Sold with Lease 717-200 Sold with Lease 717-200 Sold with Lease 717-200 Sold with Lease 717-200 Sold with Lease 737-800 Sold with Lease 737-800 Sold with Lease 737-800 Sold with Lease 737-800 Sold with Lease 737-300 Sub-leased 737-800 Sub-leased 737-800 Sub-leased A320-200 Sub-leased ATR72-200 Sub-leased 737-800 Transferred 737-800 Transferred 737-800 Transferred A318-100 Transferred A319-100 Transferred A319-100 Transferred A320-200 Transferred A320-200 Transferred A320-200 Transferred A320-200 Transferred A320-200 Transferred A320-200 Transferred A320-200 Transferred A320-200 Transferred A320-200 Transferred A320-200 Transferred A321-200 Transferred A330-300 Transferred ATR42-300F Transferred 737-700 Wet-leased 767-300ER Wet-leased A320-200 Wet-leased A330-200 Wet-leased

Current Owner

Current Operator

ILFC Farnair Switzerland Avolon Aerospace AWAS Avolon Aerospace Aviation Capital Group Aviation Capital Group AerCap AerCap Avolon Aerospace Aviation Capital Group BBAM GOAL GOAL GOAL Hong Kong Aviation Capital Hong Kong Aviation Capital GECAS GECAS Deucalion Capital II Deucalion Capital II Hong Kong Aviation Capital GECAS Air Lease Corporation Orix Aviation Hong Kong Aviation Capital Jackson Square Hong Kong Aviation Capital Aldus Aviation Ltd Aldus Aviation Ltd Capstar Aviation Falko Regional Aircraft Malaysia Airlines Capstar Aviation MUL Aviaiton Capital Orient Thai Boeing Icelandair Aersale Nordwind Airlines Iraqi Airways Deucalion Capital II Afrijet Business Service Phoenix Aircraft Leasing Overland Airways Nordic Aviation Capital Pakistan Navy South African Airlink International Aviation Service Engage Aviation Delta Air Lines Falko Regional Aircraft Falko Regional Aircraft Falko Regional Aircraft Fly Leasing Ltd Falko Regional Aircraft Orix Aviation Orix Aviation Orix Aviation Orix Aviation GECAS STL Aircraft Co Ltd(Leased to Icelandair) RBS Aviation Capital(Leased to GOL Airlines) Fly Leasing Ltd Eurowings Avolon Aerospace Itochu Airlease Inc Thomson Airways Avianca Brasil Vueling Vueling Vueling GECAS BOC Aviation Vueling Vueling Avolon Aerospace GECAS Air Arabia Maroc Air France The Cit Group Inc Air Busan Dragonair Federal Express Aviation Capital Group EuroAtlantic The Cit Group Inc Etihad Airways

Air Malta Farnair Switzerland Lion Air GOL Transportes Aeros American Airlines Southwest Airlines Southwest Airlines American Airlines American Airlines American Airlines Southwest Airlines Cathay Pacific Airways easyJet easyJet easyJet Jetstar Japan Jetstar Japan Interjet Interjet Monarch Airlines Monarch Airlines Jetstar Japan Spirit Airlines Nasair Avianca Hawaiian Airlines Avianca Hawaiian Airlines Alitalia Alitalia Capstar Aviation QantasLink Malaysia Airlines Capstar Aviation MUL Aviaiton Capital Orient Thai Boeing Icelandair Aersale Nordwind Airlines Iraqi Airways Deucalion Capital II Afrijet Business Service Phoenix Aircraft Leasing Overland Airways Nordic Aviation Capital Pakistan Navy South African Airlink Alliance Air Engage Aviation Delta Air Lines Falko Regional Aircraft QantasLink QantasLink QantasLink QantasLink American Airlines American Airlines WestJet Ryanair PAL Principal Airlines Hainan Airlines Transavia Airlines Cronos Airlines Intersky Malindo Air Meridiana Fly Thomson Airways Avianca Brasil Vueling Vueling Vueling Philippine Airlines LAN Ecuador Vueling Vueling Air Berlin Orbest Air Arabia Maroc Air Corsica Orbest Air Busan Dragonair Federal Express Alrosa Mirny Air Enterprise LOT Polish Airlines Wow Air Air Seychelles

Date 05/03/2013 04/04/2013 19/02/2013 21/02/2013 26/02/2013 27/02/2013 04/03/2013 07/03/2013 11/03/2013 14/03/2013 28/03/2013 26/03/2013 22/02/2013 22/02/2013 22/02/2013 20/02/2013 28/02/2013 05/03/2013 05/03/2013 11/03/2013 11/03/2013 15/03/2013 21/03/2013 05/04/2013 09/04/2013 01/03/2013 22/03/2013 12/04/2013 22/03/2013 22/03/2013 15/02/2013 26/03/2013 04/03/2013 15/02/2013 01/03/2013 18/02/2013 15/03/2013 05/03/2013 25/02/2013 10/04/2013 07/03/2013 11/03/2013 01/03/2013 04/03/2013 16/02/2013 27/02/2013 04/03/2013 28/02/2013 15/02/2013 18/02/2013 25/02/2013 26/03/2013 26/03/2013 26/03/2013 26/03/2013 26/03/2013 15/03/2013 27/03/2013 09/04/2013 09/04/2013 25/02/2013 14/03/2013 03/04/2013 17/02/2013 01/04/2013 19/02/2013 26/03/2013 05/04/2013 26/02/2013 04/03/2013 20/03/2013 25/02/2013 01/03/2013 05/03/2013 08/03/2013 12/03/2013 19/03/2013 22/03/2013 27/03/2013 29/03/2013 05/04/2013 01/03/2013 25/02/2013 28/02/2013 11/03/2013 10/04/2013 14/03/2013 07/03/2013

Source: IBA.

afm • Issue 84 – May–June • www.afm.aero

AIRPORTS & INDUSTRY DATA: ROUTES: FirmAirport orders charges Data supplied by IBA’s JetData. www.ibagroup.com

Firm orders - From 15 February to 5 April 2013

Source: IBA’s JetData.

Data supplied by IBA’s JetData. www.ibagroup.com

Firm orders - From 15 February to 5 April 2013 Manufacturer Variant Customer

Order Date of Aircraft

Number

Engines

Airbus A320ceo Lion Air 18/03/2103 60 Airbus A321neo Lion Air 18/03/2103 65 Airbus A320neo Lion Air 18/03/2013 109 Airbus A321neo Hawaiian Airlines 25/03/2013 16 ATR 72-600 Malaysia Airlines 19/02/2013 20 Boeing 777-300ER Air Lease Corp 28/02/2013 10 Boeing 737-800 Qantas 28/02/2013 5 Boeing 737-800 GECAS 01/03/2013 4 Boeing 737-900ER United Airlines 01/03/2013 8 Boeing 737-800 Unidentified 28/03/2013 12 Boeing 737-800 All Nippon Airways 29/03/2013 4 Boeing 747-8F Cathay Pacific Airways 29/03/2013 3 Boeing 777F Unidentified 29/03/2013 8 Boeing 737-800 Sberbank 04/04/2013 12 Boeing 737 MAX 8 Turkish Airlines 09/04/2013 40 Boeing 737 MAX 9 Turkish Airlines 09/04/2013 10 Boeing 737-800 Turkish Airlines 09/04/2013 20 Bombardier Q400 Nordic Aviation 28/03/2013 4 Bombardier CS100 Porter Airlines 10/04/2013 12 Embraer E190 Aerolineas Argentinas’ 08/04/2013 2 424

GE GE CF CF CF CF GE GE

Source: IBA’s JetData.

afm • Issue 84 – May–June • www.afm.aero

AIRPORTS INDUSTRY & ROUTES:DATA: Airport List charges prices List prices and lease rates - April 2013

Data supplied by IBA’s JetData. www.ibagroup.com

Manufacturer Average Type Current Market Value Dry Lease Rate List Price % % Oldest Newest Change Oldest Newest Change Airbus - A300-600R $4.50m $11.00m 0% $0.070m $0.170m 0% Airbus - A310-200 $1.50m $2.00m 0% $0.050m $0.090m 0% Airbus - A310-300 $3.50m $8.40m 0% $0.070m $0.140m 0% Airbus $67.70m A318-100 $12.00m $25.00m 0% $0.120m $0.230m 0% Airbus $80.70m A319-100 $9.50m $35.00m 0% $0.110m $0.270m 0% Airbus $88.30m A320-200 $4.00m $40.50m 0% $0.065m $0.320m 0% Airbus - A321-100 $9.50m $17.00m 0% $0.090m $0.200m 0% Airbus $103.60m A321-200 $16.00m $48.00m 0% $0.165m $0.365m 0% Airbus $208.60m A330-200 $34.00m $87.00m 0% $0.350m $0.850m 0% Airbus $211.50m A330-200F $80.00m $91.00m 0% $0.750m $0.800m 0% Airbus $231.10m A330-300 $17.50m $100.00m 0% $0.180m $0.900m 0% Airbus - A340-200 $7.00m $15.00m -5% $0.150m $0.300m 0% Airbus - A340-300 $7.00m $43.00m -2% $0.150m $0.500m 0% Airbus - A340-500 $40.00m $80.00m 0% $0.440m $0.790m 0% Airbus - A340-600 $40.00m $90.00m 0% $0.480m $0.830m 0% Airbus $389.90m A380-800 $140.00m $205.00m 0% $1.350m $2.000m 0% Boeing - B717-200 $6.00m $10.00m 0% $0.075m $0.140m 0% Boeing - B737-300 $1.70m $5.50m 0% $0.040m $0.080m 0% Boeing - B737-400 $2.80m $6.50m 0% $0.050m $0.090m 0% Boeing - B737-500 $1.70m $4.80m 0% $0.040m $0.060m 0% Boeing - B737-600 $9.50m $16.00m 0% $0.090m $0.160m 0% Boeing $74.80m B737-700 $12.00m $34.50m 0% $0.135m $0.300m 0% Boeing $89.10m B737-800 $15.00m $46.00m 0% $0.190m $0.360m 0% Boeing - B737-900 $16.00m $24.00m 0% $0.150m $0.220m 0% Boeing $94.60m B737-900ER $30.00m $48.50m 0% $0.260m $0.390m 0% Boeing - B747-400 $11.50m $42.50m 0% $0.200m $0.480m 0% Boeing $352.00m B747-8F $162.00m $180.00m 0% $1.300m $1.500m 0% Boeing - B757-200 $5.50m $20.00m 0% $0.080m $0.220m 0% Boeing $160.20m B767-200ER $3.40m $16.00m 0% $0.090m $0.250m 0% Boeing $182.80m B767-300ER $9.50m $61.50m 0% $0.180m $0.480m 0% Boeing $185.40m B767-300F $28.00m $68.00m 0% $0.300m $0.580m 0% Boeing - B777-200 $22.00m $53.00m 0% $0.260m $0.420m 0% Boeing $258.80m B777-200ER $40.00m $118.00m 0% $0.450m $0.950m 0% Boeing $291.20m B777-200LR $80.00m $143.00m 0% $0.800m $1.250m 0% Boeing $295.70m B777F $130.00m $165.00m 0% $1.200m $1.400m 0% Boeing - B777-300 $43.00m $75.00m 0% $0.415m $0.650m 0% Boeing $315.00m B777-300ER $88.00m $162.00m 0% $0.850m $1.500m 0% Boeing $206.80m B787-8 $100.00m $113.00m 0% $0.900m $1.100m 0% Boeing McDonnell Douglas - MD-11 $10.00m $16.00m 0% $0.150m $0.230m 0% Boeing McDonnell Douglas - MD-81 $0.50m $1.00m 0% $0.025m $0.035m 0% Boeing McDonnell Douglas - MD-82 $0.50m $1.50m 0% $0.025m $0.045m 0% Boeing McDonnell Douglas - MD-83 $0.80m $1.90m 0% $0.035m $0.060m 0% Boeing McDonnell Douglas - MD-87 $1.00m $1.70m 0% $0.025m $0.040m 0% Boeing McDonnell Douglas - MD-88 $1.20m $2.40m 0% $0.035m $0.060m 0% Boeing McDonnell Douglas - MD-90 $4.50m $5.90m 0% $0.072m $0.100m 0% Bombardier (Canadair) - CRJ-100/200 $1.80m $5.90m 0% $0.035m $0.070m 0% Bombardier (Canadair) $37.30m CRJ-700/705 $9.60m $22.50m 0% $0.090m $0.210m 0% Bombardier (Canadair) $42.80m CRJ-900 $12.00m $25.00m 0% $0.120m $0.220m 0% Bombardier (Canadair) CRJ-1000 $23.00m $27.50m 0% $0.200m $0.250m 0% Bombardier - Q200 $4.50m $8.50m 0% $0.035m $0.080m 0% Bombardier - Q300 $5.30m $11.50m 0% $0.045m $0.120m 0% Bombardier $30.00m Q400 $9.50m $21.00m 0% $0.100m $0.200m 0% Embraer $21.58m ERJ-135ER $1.70m $5.00m 0% $0.030m $0.050m 0% Embraer $28.02m ERJ-145ER $3.00m $8.00m 0% $0.040m $0.080m 0% Embraer $38.66m E170 LR $14.00m $27.00m 0% $0.140m $0.230m 0% Embraer $41.61m E175 LR $17.00m $28.95m 0% $0.160m $0.250m 0% Embraer $46.08m E190 LR $20.00m $32.00m 0% $0.180m $0.280m 0% Embraer $48.67m E195 LR $22.00m $34.00m 0% $0.200m $0.300m 0% Fokker - Fokker 70 $2.50m $3.00m 0% $0.040m $0.070m 0% Fokker - Fokker 100 $2.30m $3.50m 0% $0.045m $0.090m 0% Sukhoi SSJ 100-95B $22.00m $24.00m 0% $0.177m $0.225m 0% Sukhoi SSJ 100-95LR $22.80m $24.70m 0% $0.182m $0.230m 0% ATR $18.10m ATR 42-500 $4.20m $15.00m 0% $0.060m $0.140m 0% ATR $18.90m ATR 72-500 $6.40m $19.30m 0% $0.080m $0.190m 0% ATR $21.90m ATR 42-600 - $15.66m 0% - $0.150m 0% ATR $22.70m ATR 72-600 - $20.00m 0% - $0.190m 0% Source: IBA’s IBA’s JetData. JetData. Source:

afm afm •• Issue Issue 84 84 –– May–June May–June •• www.afm.aero www.afm.aero

AIRPORTS & INDUSTRY DATA: ROUTES: Engine Airport datacharges Data supplied by IBA’s JetData. www.ibagroup.com

Engine data - April 2013

B737- B737- B737- A321- A319- A340- B737- B737- B737- B737- CRJ300 400 500 200 100 300 600 700 800 900ER 200

CRJ- E170/ E190/ A300- B767- MD-11 A330- B777- A320- MD-82 B747- A310- B757- Fokker A340- A330- B777- A380- ERJ- B717700 175 195 600R 300ER 200 300ER 200 400 300 200 100 600 300 200ER 800 145ER 200

Source: IBA’s JetData.

Data supplied by IBA’s JetData. www.ibagroup.com

Engine data - April 2013

standfirst

Type Engine Full-life mkt value Current half-life mkt value Mkt lease rate February 2013 February 2013 February 2013 B737-300 CFM56-3B1 $1.30m $0.60m $0.020m B737-400 CFM56-3B2 $1.90m $1.00m $0.022m B737-500 CFM56-3C1 $2.45m $1.45m $0.030m A321-200 CFM56-5B3/P $8.20m $6.00m $0.065m A319-100 CFM56-5B5/P $6.40m $4.40m $0.046m A340-300 CFM56-5C4/P $6.00m $4.20m $0.045m body B737-600 CFM56-7B22 $7.00m $4.80m $0.048m B737-700 CFM56-7B24 $7.60m $5.40m $0.057m B737-800 CFM56-7B26 $8.20m $6.00m $0.065m B737-900ER CFM56-7B27 $8.50m $6.40m $0.068m CRJ-200 CF34-3B1 $2.25m $1.25m $0.018m CRJ-700 CF34-8C5 $4.60m $3.21m $0.045m E170/175 CF34-8E5 $4.70m $3.32m $0.045m E190/195 CF34-10E6 $6.35m $4.95m $0.065m A300-600R CF6-80C2A5 $5.80m $3.20m $0.045m B767-300ER CF6-80C2B6F $7.50m $4.70m $0.054m MD-11 CF6-80C2D1F $5.80m $3.10m $0.045m A330-200 CF6-80E1A3 $14.80m $9.85m $0.120m B777-300ER GE90-115B $30.74m $22.95m $0.280m A320-200 V2527-A5 $7.75m $5.30m $0.060m MD-82 JT8D-217C $0.90m $0.50m $0.018m B747-400 PW4056 $7.20m $4.30m $0.055m A310-300 PW4152 $6.30m $3.40m $0.045m B757-200 RB211-535E4 $5.00m $2.90m $0.040m Fokker 100 Tay 650-15 $2.00m $1.40m $0.025m A340-600 Trent 556-61 $14.48m $8.60m $0.110m A330-300 Trent 772B-60 $14.58m $8.90m $0.120m B777-200ER Trent 895 $21.10m $13.90m $0.170m A380-800 Trent 970 $19.80m $13.80m $0.170m ERJ-145 ER AE3007-A1 $2.35m $1.35m $0.025m B717-200 BR715A $4.00m $2.50m $0.042m Source: IBA’s JetData.

afm • Issue 84 – May–June • www.afm.aero