AFM Issue 85 by AFM Magazine

The business and financing of airline operations

Interviews with: BMI Regional CEO, Cathal Oâ&#x20AC;&#x2122;Connell Embraer CEO, Paulo Cesar Silva ERA director general, Simon McNamara ATR CEO, Filippo Bagnato

Regional aviation: The vital signs are strong Published by

July-August 2013 Issue 85 www.afm.aero

Foreword

Editor Mary-Anne Baldwin Mary-Anne@afm.aero +44 (0)208 831 7511 Contributors Peter Donaldson, Piers Evans, Chris Kjelgaard, Martin Rivers, Martin Roebuck and Daniella Horwitz. 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 Website Jose Cuenca jose@aviationmedia.aero Published on behalf of MRO Network 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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nless you’ve been hiding under a rock, you’ll already know that the Paris Air Show was a great success and reflected strong supply and demand across the industry. In keeping with Boeing and Airbus’ one-upmanship, we’ve compiled a complete breakdown of their orders during the show (and for the record, Airbus beat Boeing by 466 to 422). We’ve also charted the engine orders taken by Pratt & Whitney, Rolls-Royce and CFM. Plus we look at Boeing’s 787-10 programme, which it announced at the show after clocking up a run of orders. But most interesting this year was the success of regional aircraft manufacturers – which is why we’ve dedicated this issue to regional aviation. In this edition, we speak to Paulo Cesar Silva, CEO of Embraer Commercial Aviation about the company’s next generation of EJets, the EJet E2 family, which it announced during the air show. Silva explains the innovations behind the programme and the benefits it can bring to the customer. We also speak to ATR’s CEO, Filippo Bagnato, about the record number of orders it took during the show. A number of these came from lessors, which is a new market for ATR and Bagnato explains its relevance. It was a quiet show for Bombardier, which continues to struggle for orders, nor did we hear much from Sukhoi on the SuperJet 100, COMAC on the C919 or Mitsubishi on the MRJ. However, deliveries of these aircraft are still far off. Even Bombardier is confident it will bring its firm order backlog from 177 to 300 by the time the CSeries enters service next year.

With all these regional manufacturers about, it’s clear there’ll be some stiff competition, but it’s also clear that regional aviation is a growing industry, particularly in emerging markets such as Latin America and Asia. Indeed, on page 48, we look at how regional aircraft have allowed airlines to expand small markets, open new routes and connect small destinations in a way larger aircraft can’t. Also in this issue are interviews with BMI Regional’s CEO, Cathal O’Connell, and director general of the European Regions Airline Association (ERA), Stephen McNamara. So, whether you’re heavily rooted in the regional aviation industry, or you’d just like to keep up to date on what’s happening, this issue lets you keep your finger on the pulse of regional aviation.

Editor Mary-Anne Baldwin

The views expressed in each edition of Airline Fleet Management (AFM) are not necessarily the views of MRO Network, but of individual authors and contributors and MRO Network 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 85 – July–August • www.afm.aero

The business and financing of airline operations

Interviews with:

AIRLINE FLEET MANAGEMENT

BMI Regional CEO, Cathal O’Connell Embraer CEO, Paulo Cesar Silva ERA director general, Simon McNamara ATR CEO, Filippo Bagnato

Regional aviation: The vital signs are strong ISSUE 85 July– August 2013

Published by

July-August 2013 Issue 85 www.afm.aero

Issue 85 July - August

In this issue

03 10 22 28

Foreword

NEWS ROUND UP

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

One to one: CEO, BMI Regional

Martin Rivers talks to Cathal O’Connell, CEO of BMI Regional, about how the airline has emerged from BMI ownership.

One to one: ERA’s Simon McNamara

32 38

ERA’s director general, Simon McNamara, talks to Martin Roebuck about the impact of the ETS, SES, competition and delay fines.

TRADING, LEGAL AND FINANCE

Lease is more: ATR’s growing market Mary-Anne Baldwin speaks to ATR’s CEO, Filippo

Bagnato, about its growing number of lessor customers.

The E2: Embraer’s next generation of EJets Paulo Cesar Silva, president and CEO of Embraer Commercial Aviation, talks to Mary-Anne Baldwin about its next generation of EJets, the E2 programme.

afm • Issue 85 – July–August • www.afm.aero

CONTENTS

FLEET OPERATIONS:

Pulling in the premiums

48 52

Daniella Horwitz looks at what the premium passenger wants and what airlines are doing to meet that need.

AIRPORTS AND ROUTES

The role of aircraft in regional route development

Peter Donaldson looks at how next generation aircraft are pushing regional route development.

Ground handling: Learning to share

Yannick Beunardeau, head of airport IT, sales and marketing at Amadeus, examines the need for airlines and airports to share data more effectively.

MAINTENANCE OPERATIONS

Spare change: Regional aircraft parts

Chris Kjelgaard finds that aircraft age, lower life cycles and harsh climates are just some of the reasons why regional carriers manage the supply of spare parts differently.

DATA

Industry data Data including: Aircraft deals and orders; aircraft list prices and lease rates; engine market values and lease rates.

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NEWS

Boeing launches 787-10 programme Boeing launched its 787-10 Dreamliner programme at this year’s Paris Air Show having secured a number of orders for the programme. Boeing has taken commitments for 102 of the aircraft from five customers across Europe, Asia and North America. They include Air Lease Corporation (ALC), which announced a memorandum of understanding (MoU) for three 787-9 and 30 787-10X Dreamliners. ALC chairman and CEO, Steven Udvar-Hazy, commented: “Both of these airplanes possess the characteristics our airline customers desire by providing the ideal size, capabilities and economical operating costs for their medium, to long-haul markets. We believe the performance characteristics of the 787-10X will build on the 787 family’s success in the marketplace.” ALC expects to begin taking 787-10X deliveries in 2019. Similarly, leasing company GECAS committed to 10 of the aircraft during the show. International Airlines Group (IAG) has ordered 12, subject to shareholder approval, Singapore Airlines 30 and United Airlines 20 of the aircraft.

The new 787-10 will fly up to 7,000nm (12,964km), seating between 300 and 330 passengers. The second member of the family, the 787-9, is in final assembly in Everett, Washington, and is set to make its first flight later this year. “The 787-10 Dreamliner will be the most efficient jetliner in history. The airplane’s operating economics are unmatched, and it has all the incredible passenger-pleasing features that set the 787 family apart as truly special,” said Boeing Commercial Airplanes’ president and CEO, Ray Conner. “The 787-10 is 25 per cent more efficient than airplanes of its size today and more than 10 per cent better than anything being offered by the competition for the future.” Design of the 787-10 has already started and will include the 787 family’s large, dimmable windows; cleaner air; higher humidity; lower cabin altitude; bigger stowage bins; LED lighting; and a smoother ride. Final assembly and flight-testing for the 787-10 are set to begin in 2017, with first delivery targeted for 2018.

NEWS IN BRIEF EC lifts ban on Philippine Airlines The European Commission (EC) has lifted the ban on Philippine Airlines from operating within European Skies. The re-introduction comes as the EC updates its EU air safety list for the 21st time. The International Civil Aviation Organization (ICAO) banned the airline in March 2010 due to safety concerns following an audit in 2009. Siim Kallas, commission VP for transport, said: “The EU air safety list was created for the protection of European skies and citizens, but it can also serve as a wake-up call to countries

and airlines in need to get their safety house back in order.” He added that Philippine Airlines had shown “real commitment and capacity to implement international safety standards in a sustainable manner”. BA raises $927m in its first EETC British Airways (BA) has raised $927m in its first enhanced equipment trust certificate (EETC). The money will be used to pay for 14 new aircraft, including six Dreamliners. Law firm Milbank, Tweed, Hadley & McCloy represented Citibank as lead structuring agent for a group of international

banks, which backed the offering. James Cameron, who led Milbank’s team, commented: “This is a ground-breaking transaction, which shows how the capital markets can be made available to airlines globally. The deal used English law to access the capital markets in a way that was previously only available to domestic US airlines.” So far this year, Milbank has underwritten offerings of $820m and $100m under two separate EETCs by US Airways; it also underwrote a $445m EETC by Hawaiian Airlines and was an initial purchaser for a $715m EETC offering by Air Canada.

afm • Issue 85 – July–August • www.afm.aero

NEWS

Hawaiian highlights demand for the EETC

Hawaiian Airlines has become the latest airline to offer enhanced equipment trust certificates (EETC), adding to the growing number of airlines choosing this form of financing. Scott Topping, the airline’s CFO, explained that the $445m offering “opens a significant new source of future capital for Hawaiian”. The fixed interest rates are 3.9 per cent per annum for the class A certificates and 4.95 per cent per annum for the class B certificates. Topping says these are “the lowest ever achieved by an airline via a public EETC offering without an insurance wrap”. The proceeds will be used to buy six A330-200 aircraft, which are being used to secure the finance. Hawaiian’s announcement adds to a run of four major EETCs announced within the last three months, proving its growing popularity. On 23 May, US Airways announced that it had finalised $100m of financing in class C EETCs. The offering is in addition to the class A and B EETCs, which the airline closed in December last year. US Airways will use the latest proceeds to cover the cost of two Airbus aircraft, which it currently owns, plus a further nine yet to be delivered. During the International Society of Transport Aircraft Trading (ISTAT) event in Tokyo, Patrick Kaufer, head of transport secured financing at Deutsche Bank, explained that the performance of the EETC has brought a lot of investors back to the market. He added that, given the right prices, “a EETC is clearly a fantastic product”. During the announcement, Air Canada’s CEO, Calin Rovinescu, said he was “pleased with the offering’s reception”. He added: “Our participation in this market is an important development for us as it represents new opportunities for future aircraft financings at internationally competitive levels.”

What’s the full damage of the 787 fire?

The jury will be out for some time on what caused the fire on Ethiopian Airline’s 787 on 12 July; meanwhile, questions are mounting regarding its impact. Certainly, the aircraft will be on the ground for quite some time, draining Ethiopian of the money it would otherwise earn from operating it. What comes next is a thorough investigation into the cause and Boeing’s decision whether to (put very basically) patch up the aircraft, or replace a section. This in turn, raises many questions about the ways in which these new composite materials are repaired, and the cost involved. The fire occurred at Heathrow Airport on Ethiopian’s )787, ET-AOP (L/N44) at around 4pm GMT. The aircraft had been parked at a remote stand for many hours, which suggests the outbreak may have been due to human error, such as leaving a circuit on, although any such ideas are, at this point, pure speculation. Immediate thoughts turned to the aircraft’s former battery issues, but it was quickly confirmed not to be the cause. Indeed, the aircraft was singed on the top rear fuselage, close to the tail. This suggests the fire broke out in the aircraft’s aft fuselage near the rear galley and crew rest areas, which is distinctly separate from the location of the batteries. All 787 aircraft were grounded for over three months due to a fault with their lithium-ion batteries. In June, United Airlines noted a problem with its brake indicator and oil filter and, in the same month, Japan Airlines reported a fault with its anti-icing system. The damage spread beyond the aircraft themselves – to Boeing and the 787 programme, and to the airlines that own or have ordered them. However, numerous carriers have been quick to support Boeing, ensuring that they still plan to take delivery of their Dreamliners. For example, Virgin Atlantic publicly confirmed its commitment and said in a statement: “We are confident that Boeing and the relevant authorities are working hard to ensure that the appropriate action is being taken.”

afm • Issue 85 – July–August • www.afm.aero

News

Japanese aircraft financing set to return

Heathrow reveals third runway plans Heathrow Airport has submitted three expansion proposals, each of which would be cheaper, quicker and less disruptive than building a new hub airport, it says. In its report to the Airports Commission, Heathrow proposes adding a third runway in the north, north west or south west. It would complete expansion between 2025 and 2029 at a cost of £14-18bn ($21-27bn). This compares with Mayor of London, Boris Johnson’s plan to build a new airport on the Thames Estuary, costing £65bn ($99bn), including a new train line transporting passengers from London Waterloo in 26 minutes. Johnson supports plans to close Heathrow, moving all operations to the Thames Estuary and using the existing hub to provide space for homes and businesses for 25,000 people. On 15 July, he submitted three options for a fourrunway airport, two at the Thames Estuary and one involving growth at Stansted. Each of Heathrow’s options would raise capacity from 480,000 to 740,000 flights a year, equating to 130 million passengers. Colin Matthews, Heathrow’s chief executive, said: “It is clear that the best solution for

taxpayers, passengers and business is to build on the strength we already have at Heathrow.” Of the three options, the north west site would open in 2026, costing £17bn ($25bn) and providing capacity for 740,000 flights, or 130 million passengers. The south west site would take four more years to construct, opening in 2029. It would cost £18bn ($27bn) and provide the same capacity as the north west site but would have less impact on local residents and properties. At £14bn ($21bn), opening in 2025, the north option is the quickest and cheapest, but would have the most impact on the local community. Of the three options unveiled, Matthews said the airport favoured an expansion to either the south west or north west on practical grounds. “But we are not the right people to make social judgements,” he added. He warned that the airport is already missing out on 20 long-haul destinations through lack of spare capacity. “We’ve been debating the issue for 40 years and we’ve taken no action,” he said. “Surely it’s time to take a decision. Frankfurt, Paris and Amsterdam aren’t waiting.”

Japanese financing has been an important source of funding for flag carriers, and it is now opening up to low-cost carriers (LCCs). While one-third of KLM’s fleet has been financed by Japanese investors, LCCs have typically been unable to benefit from the tax benefits of JOLCOs (Japanese operating leases with call options) as Japanese financiers considered them high risk until they had proved their long-term stability. It seems that enough time has passed. Japanese financiers are showing more interest in LCCs, with Ryanair and easyJet leading the way with JOLCOs as far back as 2007. Speaking at the International Society of Transport Aircraft Trading (ISTAT) Asia in May, Vincent Hodder, SVP of operations at Jetstar Japan, commented: “This change in mindset is a real positive for the LCC community going forwards.” But the widening of Japanese financing is not limited to LCCs. During Boeing Capital Corporation’s financiers event held in Tokyo in April, the company’s VP for Asia, Greater China and India, Foster Arata, noted that, back in the 1980s, Japan was at the ‘forefront’ of aircraft finance, and that its involvement is returning. “This year, we expect Japan to finance more than 10 per cent of Boeing deliveries, not only in the country but across the globe. Japan is in an excellent position to prosper from aircraft investment, thanks to its access to capital and low-cost funding, and a solid understanding of the associated strategies involved in financing and leasing.”

NEWS IN BRIEF AirAsia sells AirAsia Japan AirAsia has withdrawn its ownership of AirAsia Japan, ending its two-year joint venture with co-owner, ANA Holdings. AirAsia will sell its 49 per cent stake, a minority shareholding, to ANA, which will then become the sole owner. ANA is paying ¥2.45bn ($25.1m) for the long-haul low-cost airline. AirAsia Japan will continue to trade under the same name until 31 October, 2013, and will continue to operate all flights without interruption. “Issues stemmed from a fundamental difference of opinion between its shareholders on how the business should be managed, from cost management to

where the domestic business operations should be based,” AirAsia explained in a statement. Fly Leasing to raise $160m in IPO Fly Leasing plans to raise up to $160m by selling an undisclosed number of its shares. The global jet lessor will sell common American depositary shares (ADS) under an initial public offering (IPO), the proceeds of which will be used to buy aircraft. Fly will also grant the underwriters the option to purchase up to an additional $24m of its ADS’. Morgan Stanley, Citigroup, Deutsche Bank Securities and RBC Capital Markets are acting as book-running managers.

Virgin Australia acquires majority stake in Tigerair Virgin Australia has finalised its purchase of a 60 per cent stake in Tigerair Australia, signalling Virgin Australia’s return to the low-cost sector. The low-cost airline is now a subsidiary of Virgin. Just days prior to the acquisition, the low-cost airline re-branded from Tiger Airways to its new name and dropped its previous brand image of a pouncing tiger. Tigerair has struggled having never hit a profit and having been grounded for six months in 2011 due to safety concerns. Virgin Australia CEO, John Borghetti, will head the newly acquired low-cost arm.

afm • Issue 85 – July–August • www.afm.aero

Routes News The world air service development magazine and website

Lucy Siebert Routes News magazine lucy.siebert@routes-news.com www.routes-news.com

NEWS: Routes News

Canada and China liberalise air links

anada has struck a new bilateral air deal with China, permitting flights between the two locations and opening up new destinations. The number of flights allowed rises from 66 to 76 a week. Codesharing is also now permitted between more destinations. Restrictions on codesharing with airlines from third countries are also eased. Other amendments to the Canada-China Air Transport Agreement, which was last altered in 2011, increase the number of destination points in each country’s territories and make it easier for

airlines in China to fly passengers or cargo to third countries in connection with services to Canada. Air Canada’s VP, Ben Smith, welcomed the changes to the bilateral agreement, saying: “These changes will also support our international expansion, which we intend to accelerate. This summer Air Canada has already added a total of seven weekly return flights to Beijing from Toronto and Vancouver, raising the number of Air Canada return flights to Beijing and Shanghai to 35 per week.”

Other Routes News Wizz to fly to Tel Aviv from Lithuania, Poland and Romania Wizz Air will start new routes this winter linking Tel Aviv with Vilnius, Katowice and Cluj-Napoca. Wizz Air currently flies to Tel Aviv from Budapest and Bucharest. Flights to Vilnius (VNO) and ClujNapoca (CLK) begin in late October. Katowice (KTW) joins Wizz’s route map in late November. Wizz will fly twice-weekly to Vilnius and Cluj-Napoca and three times a week to Katowice. Daniel de Carvalho, corporate communications manager, said Vilnius, Katowice and Cluj-Napoca are popular destinations for Israeli tourists. Israel ratified a Common Aviation Area (CAA) agreement with Europe in April, opening up flights to the country from across the EU.

Emirates to fly to Kiev Emirates will debut in Ukraine with daily services to Kiev’s Kyiv Boryspil International Airport (KBP) from January 16. Flights from Dubai (DXB) by A340-500 will serve Ukraine’s agribusiness, heavy machinery industries, technology and tourism, said Hubert Frach, Emirates’ divisional senior VP Commercial Operations West. “Kiev will be our 35th passenger route in Europe and Emirates’ customers in the Ukraine will be able to fly non-stop to our Dubai hub and conveniently connect onwards to destinations in the Indian Ocean Islands and Asia, in addition to our extensive Australian network, courtesy of our partnership with Qantas,” he said. “We expect Dubai to be a popular choice for our customers in the Ukraine, facilitating new business opportunities as well as offering leisure travellers world-class accommodation and entertainment options.”

Philippine Airlines eyes European destinations Philippine Airlines may start flying to European destinations as soon as September. This comes after the EU removed Philippine Airlines and Venezuela’s state-owned carrier Conviasa from its blacklist, which stopped it from flying into EU skies due to safety concerns. However, all other airlines from the Philippines remain on the blacklist. Philippine Airlines president, Ramon Ang, said: “This welcome development signals the westward expansion of our international route network.” He said the airline had not served Europe for more than 15 years. He added that the airline had aspirations to fly to London, Paris, Frankfurt, Amsterdam, Rome and Madrid, which could start as soon as this winter schedule.

afm afm •• Issue Issue 85 85 –– July–August July–August ••www.afm.aero www.afm.aero

NEWS: People

On the

move Borghetti to chair Tigerair

Flybe appoints Hammad as CEO

Virgin Australia’s CEO, John Borghetti, has been appointed chairman of Tigerair following completion of the Tiger Australia and Virgin Australia joint venture. Under the agreement, which was originally announced in October last year, Virgin Australia has acquired 60 per cent of Tiger Airways Australia, which was re-branded Tigerair Australia from Tiger Airways Holdings Limited. Tigerair CEO, Koay Peng Yen, promised the deal would lead to a “stronger” airline.

Saad Hammad will head Flybe from 1 August as the carrier splits the roles of chairman and CEO. Jim French, currently both CEO and chairman, will become non-executive chairman as Hammad takes up his new role. Hammad moves from the Gores Group, a private equity firm, where he is currently a managing director. He earlier worked at Flybe as chief commercial officer from October 2005 to April 2009 and is credited with helping to build the airline’s European network. From May 2011 until October 2012 he was a non-executive director at airberlin.

Brisbane expands airline relations team Brisbane Airport Corporation (BAC) has created two new roles within its Aviation Business Development team. Ben James has been appointed aviation business development manager international and Maaike van der Windt has been appointed aviation business development manager Australasia. They will each report to Andrew Brodie who, from August 1, will head up the team in the new position of general manager, airline and commercial businesses. Brodie takes up the aviation business development reins from Cam Macphee, who is retiring. Brodie said splitting the Aviation Business Development team with the two new roles would allow it to focus equally on domestic and international airlines.

Sultan to head Emirates SkyCargo Nabil Sultan is taking over from the retiring Ram Menen as divisional senior vice president, cargo, at Emirates. Sultan, who moves from senior VP for revenue optimisation and distribution, has worked at Emirates since joining its IT department in 1990. “I’m excited by the opportunity to further develop and expand the cargo division, building on the success it has achieved to date,” said Sultan. Sultan joined the company’s management training programme with the commercial department in 1992. Between 1995 and 2008, he worked in management and leadership roles,

afm • Issue 85 – July–August • www.afm.aero

including: senior VP for commercial operations West Asia and India Ocean; senior VP for commercial operations Gulf, Middle East and Iran; and senior VP commercial operations for Europe.

Cawley to step down as Ryanair’s COO Michael Cawley, Ryanair’s deputy CEO and COO, will leave the roles at the end of March 2014. After 17 years at Ryanair, Cawley will leave his executive positions early next year to pursue other business interests, said the airline. Cawley, who is responsible for commercial strategy, route development and airport relationships, is expected to join Ryanair’s board in a non-executive capacity on May 1, 2014. Michael O’Leary, the low-cost carrier’s CEO, thanked Cawley for his contribution to Ryanair over the last 17 years. “I am pleased that he has given us such a long notice period so that he can assist his successor over a substantive handover period,” he said. “We wish Michael every success for the future, and are pleased that we will continue to have access to his experience as a non-executive board member once he steps down from his full-time executive role in March next year.”

Interview: Cathay

AIRLINE FLEET MANAGEMENT

The business and financing of airline operations

Pacific

Fuel hedging Aircraft lease rates Interview: Changi

Airport

EADS-EFW on cargo

The business and financing of airline operations

Interview: ALTA

Assessing Onethe to one: order Amentum books CEO Financing Freighter the mega conversion orders Interview: Guide ACG to CEO operating leases

Interview: Aeromexico How to monetise IFE Keeping your aircraft

records

MRO edition: Cargo review Engines,

Lessors guide to repossession

growth

IT and Latin America

New world, new hope: Aviation in the Americas

Green thinking : Recycling and the ETS

Asia’s blossom ing aviation industry Published by

2013

May-June 2013 Issue 84 www.afm.aero

ISSUE 83 March–April

ISSUE 84 May–June

The business and financing of airline operations

March-April 2013 Issue 83 www.afm.aero

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November-December 2012 Issue 81 www.afm.aero

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Airline Fleet Management THE ONLY PUBLICATION WITH THIS COMBINATION OF (AFM) BONUS DISTRIBUTION: The business and financing of airline operations. The only global publication dedicated to aircraft owners, operators and lessors.

Issue 86 of AFM, our engine special, will contain: 44 Engine maintenance 44 Airline loyalty programmes 44 Engine maintenance 44 Commercial bank lending 44 Engine leasing

• • • •

• •

ISTAT EUROPE (BARCELONA), AIRLINE E&M: ASIA PACIFIC (SINGAPORE), LATIN AMERICA & CARIBBEAN ENGINEERING & MRO SUMMIT, AIRLINE E&M: NORTH AMERICA CO-LOCATED WITH AIRCRAFT & ENGINE LEASE MANAGEMENT AMERICAS, (MONTREAL), WORLD ROUTES (LAS VEGAS), INTER-AIRPORT (MUNICH)

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PAS NEWS

Paris Air Show report P&W tops engine orders at air show

ratt & Whitney (P&W) topped the bill for engine orders at this year’s Paris Air Show, (PAS). The manufacturer announced orders for more than 1,000 engines, including options, while CFM took orders for 660. At the time of writing and with the deals announced during PAS, P&W had more than 4,500 orders and commitments from more than 40 customers. The company also boasted maintaining its position as the most popular choice to power the A320 Neo with over 50 per cent of the aircraft’s customers ordering the PW1100G-JM engine, which took its first test flight in May.

P&W’s president, David Hess, commented: “2013 has been a tremendous year for the PurePower engine and we’re very pleased with the amount of confidence customers are showing in it.” CFM’s orders during the show reached $15bn at list prices, including service agreements. Its annual orders at the time of writing stood at 1,654, including installed, militaryand spare engines. Rolls-Royce announced orders and agreements worth almost $5bn for engines and services, including orders for the Trent XWB, which took its maiden flight on the A350 XWB shortly before PAS. United Airlines, Air France-KLM and SriLankan Airlines each took major orders for the Trent XWB during the air show.

Engine orders at PAS Engine supplier

Customer

Aircraft to power

Engine

Rolls-Royce Rolls-Royce Rolls-Royce Rolls-Royce Rolls-Royce Rolls-Royce Rolls-Royce CFM CFM CFM CFM CFM CFM CFM CFM CFM CFM Pratt & Whitney Pratt & Whitney Pratt & Whitney Pratt & Whitney Pratt & Whitney Pratt & Whitney Pratt & Whitney

Air Lease Corporation SriLankan Airlines Air France-KLM Oman Air Transaero United Airlines Philippine Airlines AirAsia TUI Travel Turkish CIT Group ILFC BOC Aviation AirAsia LATAM BOC Aviation Hainan Skywest Air Lease Corp Norwegian Air Shuttle ILFC ILFC LATAM Aviation Capital Group

Four 787-9 Six A330-300 25 A350 Three A330 Four 787 10 A350 XWB-1000 20 A330 64 A320 neo 60 737 MAX 50 737 MAX 30 737 MAX 20 A320 neo 10 A320 neo 36 A320 ceo 30 A320 /1 ceo 10 A320 ceo 15-yr per flight hr agreement 100 firm + 100 options EJets 30 A320/1 50 A320 neo 30 A320 neo 100 EJets 42 A320 neo 12 A320 neo

Trent 1000 Trent 700 & Trent XWB Trent XWB Trent 700 Trent 1000 & Trent 800 Trent XWB Trent 700 LEAP-1A LEAP-1B LEAP-1B LEAP-1B / LEAP-1A CFM56-5B CFM56-5B CFM56-5B 42 CFM56-5B engines / PW1100G-JM PW1100G-JM PW1100G-JM PW1900G PW1100G-JM PW1100G-JM

Not included in CFM’s total value noted above are two previously announced orders finalised at the show: • Qantas/JetStar: LEAP-1A for 78 A320 neos • Ryanair: CFM56-7B for 175 Next-Generation 737s

afm • Issue 85 – July–August • www.afm.aero

PAS NEWS

Airbus beats Boeing at PAS

irbus narrowly pipped Boeing to the post in the race for orders at the Paris Air Show (PAS), selling 466 aircraft worth $68.7bn at list prices. In fact, Airbus is so close to its annual target of 800 (having sold 758 aircraft at the time of writing) that John Leahy, COO, customers boasted he will go fishing instead of pushing sales. He added that Airbus is very close to filling its order book for the A320 ceo and that demand is so high for all aircraft types that current delivery slots (for small orders) are as far ahead as 2020. Boeing racked up 422 sales, including some last-minute orders for 20 737 NGs and 20 737 MAX aircraft, placed by unidentified customers. However, including TUI Travel’s order for 60 737 MAX aircraft, which was first announced on 31 May, just before the air show, Boeing’s total climbs to 482, beating Airbus. So, despite the thunderstorms and monsoon rain, which attacked the crowds at this year’s show, the event was a clear success. The run of orders reflected both a healthy expectation for growth in the industry and the confidence that there will be finance there to support it. And the good news did not stop there. The 787-8 Dreamliner flew for the first time at the show, and we saw both the A350 and A380 take to the skies above Paris. Even better, Boeing launched its 787-10 programme with 102 orders and announced that it will bring forward the 737 MAX’s entry into service (EIS) by six months, to 3Q 2017. Joe Ozimek, Boeing’s VP of marketing, said the programme had exceeded 1,400 orders, adding: “We’re going to do very well with orders this year and see others in the pipeline.” According to Boeing, the new 787-10 will cover more than 90 per cent of the world’s twin-aisle routes and will seat between 300 and 330 passengers. Design for the 787-10 has already started and Boeing has targeted an EIS of 2018. Charlie Miller, VP of international communications, said its customers had “strongly endorsed” the family of aircraft with “outstanding orders”. But Boeing was less vocal on the 777X programme. When asked why it had not launched the programme, Ray Conner, CEO of Boeing commercial airplanes, replied: “Hey, I’m with you, we just need to sell it first.” He explained that Boeing had held discussions with potential customers in order to define the aircraft’s configuration and design and will now discuss sales. He added that only when sales are high enough will Boeing’s board agree to launch. Later, Airbus’ Leahy seemingly took pleasure telling the press: “I think they’re flailing around trying to decide what to do.” He argued that what the customer needs is a clean sheet aircraft, not a derivative. He added: “This is a paper airplane if ever we saw one... A very heavy paper airplane.” Leahy argued that both the weight and thrust of the aircraft design have increased and that Boeing had added seats in order to lower the seat cost, but that airlines had not asked for it. Of course he was more optimistic about his own programmes and, although not making any promises, he did mention that customers have already asked for a stretched A380.

Airbus orders at PAS A320 44 EasyJet commitment for 100 A320 neo and 35 A320 ceo 44 Lufthansa firm order for 100 A320 44 HKAC commitment for 50 A320 44 Spirit commitment for 20 A320 44 Syphax commitment for three A320 neo A350 44 Air France-KLM firm order for 25 A350-900 44 SIA firm order for 20 A350-900 44 United Airlines firm order for 10 A350-1000 44 SriLankan Airlines commitment for four A350-900 A330 44 SriLankan Airlines commitment for six A330-300 A380 44 Doric firm order for 20 A380

Boeing orders at PAS 737 44 Skymark Airlines commitment for four 737 MAX 44 CIT Aerospace firm order for 30 737 MAX 8 44 Ryanair firm order for 175 737-800 44 Oman Air firm order for five 737-900ER 44 Travel Service commitment for three 737 MAX 8 44 Unidentified customer(s) firm orders for 20 737 and 20 737 MAX 787 44 GE Capital Aviation Services (GECAS) commitment for 10 787-10 44 Air Lease Corporation (ALC) commitment for 30 787-10 and 3 787-9 44 IAG / British Airways commitment for 12 787-10 44 Singapore Airlines firm order for 30 787-10 44 United Airlines firm order for 20 787-10 777 44 Qatar Airways firm order for 2 777-300ER and a commitment for 7 777-300ER 44 Korean Air commitment for six 777-300ER Freighters 44 Korean Air commitment for five 747-8 Intercontinental

afm • Issue 85 – July–August • www.afm.aero

PAS NEWS

Ryanair’s Michael O’Leary with Ray Conner, CEO Boeing Commercial Airplanes, at the announcement for 175 737-800s at Paris.

Ryanair’s O’Leary hints at long-haul

ichael O’Leary, household name and CEO of Ireland’s budget airline, Ryanair, joined the crowds of aviation enthusiasts at the Paris Air Show (PAS) for the first time to announce the airline’s order for 175 737-800 aircraft. The deal, which was long awaited, is an obvious blow for Airbus. The budget airline had been in drawn-out talks with both manufacturers with the aim of pitting their bids against each other and securing a cut-price deal. “Don’t tell anyone but we’re paying slightly higher prices on this order than on the last one,” the CEO said. “I would have bought more NGs but he [Ray Conner, CEO commercial airplanes, Boeing] put the price up.” Still, O’Leary assured that Ryanair “will continue to be a Boeing customer”. He said his team are also considering an order for Boeing’s MAX aircraft and that a decision will be made before the end of the year. He added that, together with Boeing, he has been looking at ways to build extra seats into the 737 and MAX aircraft, noting that the ‘sweet spot’ for low-cost travel is 199 or 200 seats. In his usual jovial style, O’Leary quipped that he had even considered removing both the toilets and the cockpit. Indeed, O’Leary praised the airline for ‘re-educating’ people on the way to fly short-haul. “We don’t need to widen doors because as a low-cost airline we only carry slim people,” he mocked. But with less flippancy, he admitted: “We continuously torture people who want to check in bags for one-hour flights.” While flattering Boeing, which has so far sourced Ryanair’s entire fleet of aircraft, O’Leary explained that the decision between the MAX and the Neo is down to seats, adding that Boeing can fit an extra nine seats on its aircraft. He argued against Boeing’s Conner that the MAX offers better engine performance, adding: “We are giving serious consideration to the Neo... No airline can afford to ignore it.”

The famous budget airline boss showed his loyalty to Boeing, claiming the manufacturer played a pivotal role in building Ryanair. “What was once a Mickey Mouse airline has become Europe’s leading airline – I don’t think Boeing gets enough credit for that.” However, he also disclosed that the airline is still in “active dialogue” with COMAC, which manufactures the C919 aircraft. He argued that it will be good to have three aircraft suppliers competing for orders, hinting at the prospect of securing discounted prices. “The bold competition keeps everyone on their toes.” Ryanair will use the aircraft in its latest order to replace 75 aircraft and to build its fleet by a further 100 aircraft in a plan that should grow the airline by 25 per cent within five years. Indeed, the boss said Ryanair plans to grow from its current 80 million passengers to over 100 million passengers during those next five years. O’Leary also disclosed that the airline ‘hopes’ to fly long-haul routes but said that, should it do so, the services would be operated under a different brand. He highlighted that successful low-cost operators – such as easyJet, WestJet and itself – have stuck to the same strategy of short-haul flights, quick turnaround times and a fleet with a single aircraft-type, hinting that Ryanair would start a new long-haul airline subsidiary. “We would love to do a transatlantic low-fare airline,” said O’Leary, but added that the opportunity is not yet there. He said the operation would require a 200-seat long-haul aircraft with the ability to match, or near, Ryanair’s 25-minute turnaround time. In particular, O’Leary discussed a desire to expand into Russia, a region which rival easyJet recently started a service to. However, he urged that the country join the European Union’s Open Skies policy and rebuked “regulatory crap”, such as visas, which hampers travel growth. Despite this, the CEO predicted “something small from Ireland to Russia in the next five years”.

afm • Issue 85 – July–August • www.afm.aero

FOCUS: BMI Regional

One to one: CEO, BMI Regional Martin Rivers talks to Cathal O’Connell, CEO of BMI Regional, about how the airline has emerged from BMI ownership.

hen International Airlines Group (IAG) acquired rival British carrier, BMI, in 2012, its CEO, Willie Walsh, was unequivocal that he had no interest in retaining its two lossmaking subsidiaries. That meant the end of the road for bmibaby, the airline’s troubled low-cost unit. But BMI Regional lived on after an £8m ($12.2m) buyout by Sector Aviation Holdings, an Aberdeen-based consortium funded by aviation entrepreneurs Stephen and Peter Bond.

expansion by the sixth-freedom Gulf carriers has driven much of the re-alignment in Europe. However, in tandem with these new market opportunities, two major challenges have emerged for regional carriers. First, the worsening economics of 50-seater aircraft is placing pressure on small airlines to source larger units, which may be incompatible with their niche markets. Second, the scramble to sign partnerships with medium- and long-haul operators has left some regional airlines out in the cold.

Times are a-changin’ The airline’s new CEO, Cathal O’Connell, is leading the charge to re-define BMI Regional in the absence of its former Star Alliance partners. In doing so, he is exploring new paradigms for Europe’s beleaguered regional airlines, whose smaller fleets have been hardest hit by the rampant fuel price hikes of the past decade. “The opportunities for regional carriers are changing,” O’Connell tells AFM. “We’re seeing in pretty much all European markets that the majors – the carriers that require feed traffic into their hubs – have been changing their strategies. There is a different dynamic evolving in the major carrier market.” He cites examples such as Lufthansa’s transferal of short-haul routes to low-cost carrier Germanwings, and SAS’s decision to divest Widerøe. In both cases, the network carriers “appear to be focusing on their long- and medium-haul businesses,” he says, which in turn creates new opportunities for regional airlines. As the major carriers streamline their operations and refine their focus, smaller operators can step in to provide hubs with still-vital regional links. “Regional carriers are positioned to deliver that feed, whether by replacing existing services or putting new direct services into new markets,” he affirms, adding that

O’Connell makes no bones about BMI Regional’s exposure to both pitfalls. The airline’s fleet of 14 ERJ-145s and four ERJ-135s – seating 49 and 37 passengers, respectively – is under review because of its high seat cost, although any changes will only come after meticulous studies. “We would look at 100-seater aircraft – that’s the market that we would see ourselves developing into over time,” he affirms. “But we need to make sure that we have clear justification. At the moment we’re understanding the economics that aircraft of that size would bring. “Whatever way we bring the business forward, it has to be done in a very carefully assessed and calculated way. I don’t want to take larger units just to be able to say we have larger units.”

Fleeting thoughts Asked whether 50-seater aircraft are becoming obsolete, O’Connell admits that smaller units are disproportionately exposed to fuel price rises. However, he says each market must be looked at individually. “The operating economics of the E145 and E135 work for us right now,” he explains, reiterating that BMI Regional’s business model does not involve competing directly with the low-cost carriers. “But yes, for longer-term network development, potentially a larger unit type would make life easier.”

afm • Issue 85 – July–August • www.afm.aero

FOCUS: BMI Regional

afm • Issue 85 – July–August • www.afm.aero

FOCUS: BMI Regional

He also draws attention to the “complications and higher costs” associated with switching to a mixed fleet, noting that the addition of one unfamiliar unit necessitates “a separate pool of pilots, a separate engineering strategy. It does introduce potential inefficiencies that you need to assess”. With 14 of the 18 units owned by the airline, and with no imminent orders on the horizon, BMI Regional’s strategy has been to diversify usage of the fleet beyond scheduled operations. The airline’s core focus remains linking secondary UK cities to major European hubs, but its transition to a fully independent carrier has been accompanied by a sharp rise in ad hoc and series charter operations. Noting that seven aircraft were returned from wet leases immediately after the closure of BMI in October 2012, O’Connell says he quickly decided to “de-risk” the fleet with non-traditional services. “BMI Regional had historically had a significant presence in the ad hoc charter market, but it had never been exploited to the point of developing it as a business unit. So we allocated some of the returning aircraft into the non-scheduled market,” he recalls. “In January 2013 alone we sold more charters than in all of 2012.” Sports teams account for a significant proportion of BMI Regional’s ad hoc charter clients, with the carrier transporting 16 of the 20 Premier League football teams during the latest season. It also recently dedicated one aircraft to a 12-week pop tour around Europe, as well as operating a thrice weekly service for a company engaged in oil exploration. Indeed, the energy market is a significant bulwark for BMI Regional, with former charters on the Aberdeen–Kristiansand

route evolving into a new scheduled service that begins this summer. The airline is also holding “advanced stage discussions” for a longer-term aircraft, crew, maintenance and insurance (ACMI) wet lease, while two aircraft are currently allocated on a corporate series charter. But scheduled operations remain the backbone of the business, and the limitations of operating a 50-seater fleet has forced O’Connell to engage in analysis of individual markets. Recalling the strategic overhaul that followed BMI Regional’s separation from the Star Alliance, he says the airline quickly recognised that certain routes “didn’t have a long-term future with us”. The domestic network had already been contracting for several years, and in its place O’Connell set about identifying new opportunities. “We evaluated with a lot of airports what their hit list of new routes would be,” he explained. “For our Bristol base, we identified the key companies that were travelling over London or Paris or Brussels or other hubs. We met with those companies, and we assessed their weekly travel needs. We had to identify which direct services would be supported by a significant number of local businesses.” The result was a series of route launches geared towards business traffic, but with some supporting leisure footfall. Bremen–Toulouse is one new connection frequented by Airbus employees. The route was announced within two weeks of previous operator OLT Express Germany’s collapse, O’Connell notes, adding: “It showed the industry how nimble we could be as an independent carrier.” Bristol–Frankfurt and Bristol–Milan also have strong aerospace demand, while Bristol–Munich is popular among automotive professionals.

afm • Issue 85 – July–August • www.afm.aero

FOCUS: BMI Regional

Balancing act This bottom-up approach to assessing markets underscores the complexity faced by regional carriers when crafting a niche. But efforts to identify commercially sustainable routes are further constrained by BMI Regional’s ongoing desire to rekindle its partnerships. “We are very well advanced right now in relation to re-establishing a number of the partnerships that existed under the previous ownership,” O’Connell says. “What we’re developing is a series of markets which deliver connectivity from regional UK cities into Europe and beyond – to provide the connectivity for feeding into hubs – but we’re providing that on routes which are self-sustaining with point-to-point traffic.” In effect, BMI Regional is engaged in a balancing act. Management must ensure that the airline can deliver profitability as an independent operator, while always keeping its eye on the bigger prize of linking up with Europe’s network carriers. O’Connell already has interline deals in place with British Airways, SAS and Lufthansa. Predicting that deeper partnerships will be announced by this autumn, he confirms: “We are targeting codeshare agreements that work from the hubs we serve in Europe.” Other regional players face similar challenges. Exeter-based Flybe, which lost £40.7m ($62m) last year, is pinning its hopes on subsidiary Flybe Nordic – a joint venture launched with Finnair in 2011. Like BMI Regional, Flybe is no longer

expanding domestically in the UK, and about 25 per cent of its business is now contract flying. The deferral of 16 ordered E175s suggests a low-risk approach for the near-term. But BMI Regional has also faced unique challenges since the dissolution of its mainline parent. The former subsidiary went from being a “fully integrated part of Star Alliance” to an independent operator in just five months. During this time, it was forced to develop its own IT, financing, reservation and revenue management systems from scratch. It even had to change its flight code. “Everything that you would use within an airline to run the company was provided by BMI mainline [prior to October 2012],” O’Connell recalls. “We basically had to set up our own independent airline infrastructure as if we were a start-up. So we set up our own organisation in East Midlands, which effectively became the nucleus of the commercial, finance and IT functions… There was so much going on in parallel. We started the project without having the platform onto which we were going to migrate those systems.” Likening the process to “doing an engine change inflight”, O’Connell is justifiably pleased with BMI Regional’s performance to date. The airline carried more than 500,000 passengers in its first year of independence. But amid uncertainty in the wider regional market, it remains to be seen whether BMI Regional has the right formula for profitability.

afm • Issue 85 – July–August • www.afm.aero

FOCUS: ERA

One to one: ERA’s Simon McNamara ERA’s director general, Simon McNamara, talks to Martin Roebuck about the impact of the ETS, SES, competition and delay fines.

imes are hard in Europe’s regional aviation market but the new director general of European Regions Airline Association (ERA), Simon McNamara, takes his role of supporting airlines seriously. Environmental concerns, in the dual context of the EU’s troubled Emissions Trading Scheme (ETS) and its decade-long effort to introduce a Single European Sky (SES), dominated McNamara’s in-tray in his first few months as ERA director general. He has sizeable shoes to fill following the retirement of Mike Ambrose at the end of last year. Ambrose had spent 13 years striving to defend the interests of European regional airlines, with McNamara latterly as his deputy. “What I’ve been trying to do in my first six months is to meet as many members as possible and understand the issues they face. The second priority has been to raise the profile of our business through increased communications activity and one-to-one briefings on what we contribute,” McNamara says.

Rail represents an unfair competitive threat because of the generous subsidies it attracts. Considered against the tight controls on state aid to airports, McNamara argues that this distorts the market. “There is a widely held belief that high-speed rail is ‘green’ and that aviation is not. Both perceptions are wrong. Every transport mode uses energy. The key questions are where it comes from, and what the total lifecycle emissions are. When you do that analysis, regional air transport compares favourably,” McNamara says. Average 1Q traffic for the 21 ERA airline members that make their figures public was 10 per cent down on 1Q 2012 in terms of passenger kilometres. It was only through cutting their seat kilometre capacity by 13 per cent year-on-year that carriers were able to improve their passenger load factors. Average seat occupancy improved from 64.2 per cent in 2012 to 66.5 per cent during the quarter. Olympic Air, Carpatair, Air Nostrum and Eastern Airways all saw traffic levels decline by more than 20 per cent,

What I’ve been trying to do in my first six months is to meet as many members as possible and understand the issues they face “We’re in an incredibly competitive market, but that’s not really changed,” McNamara says. “The main problem is reduced demand, and regional airlines have got to look at new ways of stimulating business.” Low-cost carriers’ rapid fleet and route expansion, and the continuing development of high-speed rail services across continental Europe, continue to put pressure on regional aviation.

while only Switzerland-based SkyWork Airlines, starting in its remodelled form from a very low base, showed a double-digit increase. “The data shows that times remain tough,” says McNamara. “Anecdotally, our members are optimistic that things will improve in Europe as the year goes on. IATA [International Air Transport Association] is saying this too – but you have to respond to current conditions

afm • Issue 85 – July–August • www.afm.aero

FOCUS: ERA

rather than plan on the basis of how things may be in future.”

one-year moratorium applies only to flights into and out of the EU and the scheme remains in place for intra-EU flights.

Emissions trading One of the issues McNamara has been working hard on is emissions trading. Aviation organisations in Europe welcomed the European Commission’s (EC) decision to ‘stop the clock’ before fully implementing ETS, theoretically allowing ICAO time to come up with a global formula to mitigate emissions. However, the

ERA joined with the Brussels-based International Air Carrier Association (IACA) and the European Low Fares Airline Association (ELFAA) to protest at this discriminatory measure and called, without success, for the moratorium to be extended to all flights departing from and arriving at EU airports.

afm • Issue 85 – July–August • www.afm.aero

FOCUS: ERA

In a joint statement, McNamara and IACA director general, Sylviane Lust, said: “The two-tier system the European Parliament has voted for discriminates against carriers mainly operating intra-EU flights and penalises their passengers.” Europe’s regulators were forced into this cul-de-sac by political pressure from non-EU countries, McNamara claims. “We will still continue to incur the administrative burden and the costs of compliance. It’s not doing anything for the environment, as aviation accounts for such a small proportion of total emissions anyway.” He doubts in any case whether ICAO can achieve much ahead of its assembly this October. “They will have to show a timescale for change, but what will they do that’s meaningful? If the end of year deadline is not met, Europe will apply emissions charges to all flights. “The worst possible scenario is that ICAO says it will be in a position to act five or 10 years down the line. Then the EU says, ‘OK, we will stay as we are in the meantime, with intra-EU flights covered and non-EU flights exempt.’ If it flips back and emissions trading is reinstated, non-European carriers will still have the same complaints, so there’s pressure on ICAO to act even if what it delivers is weak,” McNamara says.

Under the same sky Progress is equally elusive on another of McNamara’s key issues, the EU’s SES initiative, which he insists could make a more significant contribution to reducing emissions than trading carbon credits and taxing passengers.

SES is based on the simple premise that a harmonised pan-European air traffic management (ATM) system, supported by improved technology on the ground and on board aircraft, would improve operating efficiency. Under current national ATM regimes, passenger flights are delayed by a cumulative 100 million hours per year, resulting in 8.1 million tonnes of unnecessary CO2 emissions. The laudable aims of SES are to provide a three-fold increase in capacity where needed by 2020, compared with 2004; to improve safety performance by a factor of 10; to reduce aircraft impact on the environment by 10 per cent; and to halve the cost to airlines of ATM services. McNamara says the EC must show stronger leadership on this and force member states to act for the common good rather than in their own interests. The ERA collaborated with IATA and the Association of European Airlines (AEA) earlier this year on a report setting out the industry’s perspective on SES, but it has specific concerns of its own. “The cost of equipping regional aircraft types is higher than for narrowbodies and widebodies relative to the benefits,” McNamara points out. He also worries that the kind of airport improvements needed to make long-haul services more efficient are not the most important to regional operators. “For example, you may need remote towers and satellite-based approaches if you’re operating deep into the regions, but not necessarily more capacity. There is no one-size-fits-all solution,” he notes. There is even more European legislation in the pipeline, this time in the arena of passenger rights, which in ERA’s

afm • Issue 85 – July–August • www.afm.aero

FOCUS: ERA

eyes could have a disproportionate impact on regional carriers. Proposed changes to EC Regulation 261/2004, covering compensation for delays and cancellations, would come into effect from 2015 if approved by member states and the European Parliament. The planned revisions “contained some elements we liked and others that we didn’t”, explains McNamara. He thinks an attempt has been made to strike a fair balance by protecting passengers without imposing an unfair burden on airlines, but says there is a lot of work ahead to convince governments of the airlines’ case. Regulators are also looking “to control the disproportionate and unlimited right of assistance in extraordinary circumstances beyond an airline’s control” and seem willing to exempt operators of small aircraft on very short-haul flights from an obligation to provide hotel accommodation when passengers cannot travel as scheduled.

Moreover, a flight diversion – which could be on safety or security grounds – would be classified as a cancellation under the proposed new rules. “Suppose you’re taking a flight from Southampton to Paris and then going on to New York. If you miss your connection – which can be for all sorts of reasons – and are delayed by more than five hours at arrival because of it, the first carrier faces the obligation at a maximum rate of €600 ($777) per passenger,” McNamara says. If the flight out of Southampton was delayed by 45 minutes, but there are only two Paris–New York services per day with the passenger’s chosen carrier, the knock-on effect is out of proportion to the original delay. ERA believes the regulation should stay as it is now, making the penalty proportionate to the delay on the original flight. “If the flight is three hours late and it’s the carrier’s fault, it should be obliged to help the passenger out,” he accepts.

Time is money McNamara is more concerned by the idea that ‘delay’ is defined by the time of arrival at the final destination and not the time of departure. ERA member airlines have a reasonable punctuality record, with 85.7 per cent of flights departing on time during the 1Q and 96.7 per cent within 60 minutes of their scheduled slot. However, they will often be the first carrier on a multi-segment trip and in future could be held responsible for compensation if a missed connection results in a long delay to the passenger’s entire trip.

At the beginning of June, McNamara put ERA’s case before an EC transport committee hearing in Brussels, also attended by ELFAA, Airports Council International (ACI) and IATA. A campaign to lobby individual MEPs is now under way. Whether on economic, political or regulatory grounds, European regional feeder operators, which play a crucial role in linking Europe’s remote regions, are having to deal with reduced demand from cash-strapped customers, increasing costs and unprecedented levels of red tape. McNamara’s ‘to do’ pile will not be thinning any time soon.

afm • Issue 85 – July–August • www.afm.aero

TLF: ATR

Lease is more: ATR’s growing market Mary-Anne Baldwin speaks to ATR’s CEO, Filippo Bagnato, about its growing number of lessor customers.

his year’s Paris Air Show (PAS) was all about the regional jet and turboprop manufacturer, ATR, had its best show to date. It announced a run of double-digit orders reflecting strong interest from both airlines and lessors. ATR’s message to the industry from this year’s PAS was that demand for the ATR is back. It reinforced the message with its display of an ATR aircraft next to the infamous DeLorean, the time-travelling car from the 1980s hit movie, ‘Back To The Future’.

But adding far more weight to the argument was Nordic Aviation Capital’s (NAC) order for 90 ATR-600s, with firm orders for 30 72-600s and five 42-600s. “It’s one of the biggest orders ever signed by ATR,” Filippo Bagnato, CEO of ATR, told AFM. “Some people think it’s [ATR turboprops] a thing of the past. It is a thing of the future,” Bagnato claimed during the press announcement for the $2.1bn order. “NAC’s order is indisputable proof of a return to the

afm • Issue 85 – July–August • www.afm.aero

TLF: ATR By 2016, the Danish leasing company will own more than 150 ATRs. Møller says the majority of demand comes from airlines in Asia, Central and South America. Adding to the support from the leasing sector, Air Lease Corporation (ALC) also signed for five ATR 72-600s during PAS. Speaking at the show, where he revealed the deal, Steven Udvar-Hazy, CEO of the leasing company, said: “This aircraft has been a great fit for a number of our regional airline customers.” Since ALC’s first ATR order three years ago, the lessor has built its ATR fleet to 21 (with this order) and the manufacturer has received nearly 110 firm orders from leasing companies, representing approximately one quarter of its total orders during the three years. Indeed, according to Bagnato, ALC’s first order marked the original turning point for ATR. “When we received our first order from ALC in 2010, we said that we were confident that the importance and prestige of this lessor was going to open up excellent opportunities with leasing companies. Three years later, we are very pleased with the success that not only ALC has had with our ATR 72-600s, but also the success seen with lessors overall.” Since 2010, 75 per cent of ATR’s aircraft of up to 90 seats have been sold to lessors. While the CEO admits that lessors “aren’t buying a lot of regional aircraft”, he says that three out of every four are ATR aircraft. When asked whether he was actively expanding its lessor customer base, Bagnato replied: “It is not that we are looking for lessor customers, we are seeing that more and more of the industry is moving towards leasing… It is definitely becoming a much more flexible and easy solution for airlines.

ATR’s static display at the Paris Air Show featuring the DeLorean.

future for propeller aircraft and the market confidence in our product.” The deal marked a shift for ATR, which typically announced single-digit sales during such shows. More importantly, it highlighted the leasing industry’s interest in the turboprop. Martin Møller, chairman of NAC, explained at the PAS: “Our experience as lessors confirms the strong demand for ATRs with regional airlines. Their low operating costs and high reliability are the major drivers for ensuring profitability, both for airlines and for ourselves.”

“Lessors are changing their minds on what a turboprop is. They’ve had the chance to experience the aircraft and discover what an ATR is today in terms of comfort for passengers [and] in terms of technologies in the cockpit.” But it is not just new technologies that are turning heads. Bagnato explains that ATR has a comparatively large customer base of around 180 customers in more than 90 countries. “They [lessors] are now investing in this because they not only know there are 180 potential customers, but they also know that these customers are increasing their fleets and developing regional aviation with ATRs.” In addition, he believes the aircraft are a “very good asset” due to their high demand, strong residual values and very few aircraft available on the second-hand market.

afm • Issue 85 – July–August • www.afm.aero

TLF: ATR

Filippo Bagnato, CEO of ATR delivering an aircraft to Ignatius Ong CEO, Firefly.

Lessors are helping us introduce new ATR -600s to airlines that, even if they are interested in purchasing their own aircraft directly, would not have those aircraft for another three years Facilitating demand The importance, of course, is not that ATR is gaining orders – nor that those orders are large – what counts is where those orders have come from and where the aircraft will be placed. Lessors will introduce ATRs to new airline customers, opening new markets for ATR and new route opportunities for airlines. The additional benefit is that lessors can supply airlines that would otherwise have to wait long periods for their aircraft to be delivered.

it is quite difficult to understand why they should wait for five or six years… So we have to adapt ourselves in order to increase.” But lessors are not the only way ATR is managing its deliveries. Last year, it delivered 64 aircraft, breaking all records in its 30-year history. Next year, it will rise to 80 and by 2015 it will hit 90. This is a sizeable increase from 2005, when it produced just 15 aircraft a year, and it has had to set up new manufacturing facilities to meet demand.

“Lessors are helping us introduce new ATR -600s to airlines that, even if they are interested in purchasing their own aircraft directly, would not have those aircraft for another three years.”

Since 2007, ATR has tripled its production facilities in Toulouse in terms of area, growing from about 8,000sqm metres to more than 28,000sqm.

With a backlog of 270 aircraft (equivalent to a three-year waiting period), that opportunity is crucial. It is normal for airlines to wait for larger Boeing or Airbus aircraft to be delivered, but Bagnato explains: “For a regional airline,

ATR’s number of direct staff has risen from 600 in 2006 to more than 1,000 today. “The whole population working on the ATR programme, including this 1,000, is more than 5,000 people, including suppliers,” says the CEO.

afm • Issue 85 – July–August • www.afm.aero

TLF: ATR Growth markets NAC was not the only lessor to place a double-figure order for ATRs during PAS. Fellow lessor, HGI Aircraft Division, inked a deal for 20 ATR 72-600s for Brazilian airline, Passaredo Linhas Aéreas, in which it is a shareholder. Of these, 10 are firm sales while 10 are options, which combined are worth $482m at list prices. Over the past three years, ATR has received firm orders for over 60 ATR 72-600s for Brazilian airlines and, since 2005, it has almost quadrupled the number of its aircraft on the Brazilian market. It estimates that over one hundred ATR aircraft will be operating in Brazil by 2015. Looking wider, the ATR 72-600 is Latin America’s most popular aircraft. Indeed, over 200 ATRs will be in operation in Latin America within the next two years. The aircraft allow airlines to fly into the region’s small under-developed airports and are a vital lifeline for numerous Latin American communities. “Modern turboprops are a key solution to making regional aviation remain affordable on several routes,” says the CEO. For example, Brazil’s Trip and Azul, which merged last year, have used the ATR to open new routes and develop new markets. Azul took delivery of its latest ATR 72-600 just one day before Bagnato spoke to AFM. He explained that, despite Embraer producing aircraft in its home nation, it chose to fly ATRs on routes of less than 350nm and with fewer than 70 people because they use less fuel. It is the same for Malaysia’s Firefly (subsidiary of Malaysia Airlines, MAS), which is building its network on a fleet solely comprised of ATR aircraft. It currently has 12 and is adding a further 20 in order to expand within Malaysia and the surrounding areas, such as islands with short runways where other aircraft would not be able to land.

Seat count One aircraft helping to support small islands, archipelagos and other areas where there is not much traffic increase, is the 50-seater. “We definitely believe there is a market for the 50-seater turboprop,” says Bagnato. He says that the ATR 42-600 (which seats between 42 and 50 passengers) will work well in those markets. “It is the natural evolution for these networks.” Further demand for the ATR 42-600 will come from seminal routes (such as in the US) where the 50-seater is being retired, he believes. But the greatest opportunity is in upsizing. ATR plans to enter a new market with its prospective fuel-saving 90-seat aircraft. ATR has already finalised the aircraft’s technical

details and submitted its business plans to shareholders EADS and Finmeccanica. It seems that the latter, at least, is on board. Its CEO, Guiseppe Giordo, told Bloomberg: “If EADS is not interested in developing the aircraft with us, we will find alternatives.” He added: “There is huge market potential for a turboprop larger than the ATR72.” According to Bagnato, ATR was in close talks with its customers during the planning stage and said they showed “real interest”. Indeed, earlier this year, Indonesia’s Lion Air said it is likely to order the aircraft. Firefly showed similar commitment when it took delivery of its ATR 72-600 just prior to the interview with AFM, saying it would also like the aircraft. But it seems the greatest interest has come from engine manufacturers – not only Pratt & Whitney, which has partnered with ATR for many years, but General Electric, which has “shown a clear interest”, the CEO disclosed. According to ATR, there will be demand for 1,300 90-seat turboprops over the next two decades. Added to the existing backlog of 270 aircraft, it seems ATR really is “a thing of the future”.

afm • Issue 85 – July–August • www.afm.aero

TLF: Embraer

The E2: Embraer’s next generation of EJets Paulo Cesar Silva, president and CEO of Embraer Commercial Aviation, talks to Mary-Anne Baldwin about its next generation of EJets, the E2 programme.

mbraer had achieved 365 order commitments at the start of the Paris Air Show in June, but its most exciting news came during the event when it launched its next generation of EJets, the E2 family.

The programme updates, and in some cases stretches, the existing EJet family of E175, E190 and E195 aircraft. The first E2 aircraft to enter service will be the E190-E2, which is due to start commercial flights in 1H 2018. The E195-E2 will enter the following year and the E175-E2 in 2020. One of the most significant changes will be delivered by Pratt & Whitney, which is supplying its PurePower Geared

Turbofan (GTF) high by-pass ratio engines, namely the PW1700G for the E175-E2 and the PW1000G for the E190-E2 and E195-E2. Further changes to the aircraft will include better aerodynamics, including new wings (the E175-E2 will have a different wing from the E190 and E195 as it has a different engine), fourth generation full fly-by-wire controls and improved avionics. “The application of advanced technologies for engines, wings and avionics, distinguishes the EJets E2 by providing airlines with maximum efficiency gains and no compromises, while maintaining commonality with current EJets,” Paulo Cesar Silva, president and CEO of Embraer Commercial Aviation, told AFM.

afm • Issue 85 – July–August • www.afm.aero

TLF: Embraer Moog is supplying the fly-by-wire system, Rockwell Collins the horizontal stabiliser control system and UTC Aerospace Systems the wheels, brakes, APU and electrical system, although those are just a few of the suppliers.

Bang for your buck So aside from all the technicalities, how does the E2 really differ from the EJet family and what can customers expect for their money? Well, in short, the promise is that they can fly longer, with more people, for less money. So let us look at the price tag first. List prices are $46.8m for an E175-E2, $53.6m for an E190-E2 and $60.4m E195-E2, although discounts will obviously apply. What do you get for your money? Embraer projects that it will pump $1.7bn into the new family over the next eight years, and that investment will mean cost savings for the customer. “We are not just re-engining the EJet,” says Silva. “We decided to invest more than a simple re-engine programme. By developing new wings, implementing a fourth generation full fly-by-wire and enhancing several other systems, this allows us to offer more benefits to our customers, exploring all the advantages but still avoiding all the inherent risks of a 100 per cent new design.” In this way, Embraer has taken a route similar to Bombardier, which added an advanced fly-by-wire cockpit, composite wing, aluminium lithium fuselage, geared turbofan and electric brakes to the CSeries, but stopped short of a full make-over. “Other systems – hydraulic systems, air management systems, batteries – we chose not to take the next step in technology,” explained Bombardier’s commercial SVP, Chet Fuller, during the International Society of Transport Aircraft Trading (ISTAT) in Tokyo, in May. “Some things can only get so good, so there really isn’t any advantage of taking a new step with some technologies.”

“This makes the E2 appealing to current EJets operators,” Silva explained. “We follow a similar strategy to Boeing and Airbus by offering new generation products that hold high commonality with current generation ones, leveraging our existing extensive customer base.” The E2 cockpit will also have commonality with that of the current generation EJets, meaning pilots can transition between the two without need for much training. The E2s will include Honeywell’s Primus Epic 2 advanced integrated avionics, which is “an evolution of the existing Primus Epic on current generation EJets,” says Silva. Differences are that it has larger landscape displays, advanced graphics capabilities, and a next generation flight management system (NGFMS).

The E190-E2 will be able to cover a range of 2,850nm, an increase of 450nm from the current version. The E175-E2 and E195-E2 will stay much the same at 2,000nm and 2,200nm, respectively. The E175-E2 will offer up to 88 seats (in a single-class configuration, or 80 seats in dual class), making it one seat-row longer than today’s E170. The 106-seat (or 97 seats in dual class) E190-E2 will stay the same size as its predecessor, the E190. The E195-E2 will grow to 132 seats (or 144 with slim seats or 118 seats in dual class), making it three rows longer than the E195. These specifications make the E175-E2 suited to regional operations; the E190-E2 ideal for business, mainline, regional and low-fare services; and the E195-E2 works excellently for high volume mainline or low-fare operations and delivers good economics with a low cost per seat.

afm • Issue 85 – July–August • www.afm.aero

TLF: Embraer Embraer also claims that the new family will deliver double-digit reductions in fuel consumption, noise, emissions and maintenance costs. It promises that each aircraft will save 15 per cent in direct maintenance costs, which means a saving of between $1m and $1.5m over a five-year period. Considering typical dual-class configurations in a North American environment, the E175-E2 will have a nine per cent lower cost per trip and a 13 per cent lower cost per seat than its current generation counterpart. The E195-E2 will deliver a seven per cent and 16 per cent reduction respectively, and the E190-E2 will bring a 10 per cent improvement in both segments, compared with the existing E190, says Silva. Overall, the E2 family will deliver similar costs per seat to narrowbodies, but significantly lower trip costs. For example, compared with the A319, the E190-E2 has a five per cent lower operating cost per seat and 20 per cent less fuel burn.

The fight for space There has been much discussion over whether Embraer is encroaching on Boeing and Airbus’ territory, but despite comparisons to narrowbodies, Embraer claims that is not the case. While the E190-E2 and E195-E2 can offer similar amenities to narrowbodies, the smaller jets allow airlines to ‘right-size’ their operations, making lower density, thin routes more profitable. It also allows airlines to trial new routes without as much financial risk. The manufacturer claims the jets are ideally positioned between larger next generation aircraft, single-aisle jets and smaller regional aircraft. “We defined our product positioning strategy to complement the larger narrowbodies, rather than becoming a direct competitor,” says Silva. Speaking at ISTAT, John Slattery, Embraer’s chief commercial officer, claimed the company does not want to “dance on the toes of giants”. He continued: “Over the next 20 years, up to 7,000 units need delivering in our sector of the market – that’s 70-120 seats approximately. This is a market where we are currently market share leader and that is a position we want to continue and consolidate. How are we going to do that? We are going to continue to invest in our existing aircraft. We are not taking our eye off the ball by trying to dance with bigger competitors; we are focusing on our marketplace.” With Boeing and Airbus’ knowledge, wealth and customer base, it is perhaps wise for Embraer not to see itself as

E175-E2 WEIGHTS AND PAYLOAD

44.330kg MTOW................................................. 97.731lb 39.100kg MLW................................................... 86.201lb 10.310kg Payload............................................... 22.730lb PERFORMANCE Max operating speed ......................... Mach 0.82 Service celling .................................... 41,000ft 2,240m Take-off field length............................ 7,349ft 1,350m Landing field length............................ 4,429ft Time to climb (minutes)...................... 18 1,920nm Range.................................................. 3,556km

David to their Goliath. Besides, Embraer already has a growing number of competitors. Within this sphere, Bombardier offers the 110- to 160-seat CSeries family; COMAC promises the 78-seat ARJ21; Sukhoi has the 95-seat Superjet 100; and Mitsubishi offers 70 to 90 seats on its MRJ family. So how does the E2 family compete? “The E190-E2 is ideally sized for the 100-110 seat market, which the CS100 is too large to address. It also offers a six per cent better fuel burn per trip compared to the CS100 and 20 per cent better fuel burn per trip compared to the A319 Neo and 737-7 MAX,” Silva explains to AFM. “Against the re-engined A319 neo and 737-7 MAX narrowbodies, the E195-E2 has a 15 per cent better fuel burn per trip and almost 10 per cent better fuel burn per seat.” He adds that the E195-E2 is designed to be larger than the current E195 but smaller than the A319 neo and 737-7 MAX, while offering a lower cost per seat. “They are designed for different missions, in terms of performance, and don’t compete directly.” This differs from Bombardier’s CS300, says Silva, which is a direct competitor to Boeing and Airbus products.

afm • Issue 85 – July–August • www.afm.aero

TLF: Embraer E190-E2

E195-E2

WEIGHTS AND PAYLOAD

49.450kg MLW................................................... 109.018lb

53.750kg MLW................................................... 118.498lb

13.080kg Payload............................................... 28.836lb

15.150kg Payload............................................... 33.400lb

PERFORMANCE

Max operating speed ......................... Mach 0.82

Service celling .................................... 41,000ft

1,800m Take-off field length............................ 5,905ft

1,950m Take-off field length............................ 6,398ft

1,250m Landing field length............................ 4,101ft

1,350m Landing field length............................ 4,429ft

Time to climb (minutes)...................... 18

Time to climb (minutes)...................... 20

2,800nm Range.................................................. 5,186km

2,000nm Range.................................................. 3,704km

The E195-E2 competes directly with the CS100, offering similar fuel burn per trip and about 10 per cent better fuel per seat.

beyond what we see today,” said Buckley. “It certainly means that nobody is going to build another 100-seater, or even a 130-seater. Those aircraft that are already there are going to evolve. We are going to tweak them. We are already working on aerodynamic modifications to reduce fuel burn.”

56.900kg MTOW................................................. 125.443lb

“The current E175-E1 already offers a four per cent fuel burn advantage when compared to the CRJ900, and the E175-E2 will have an advantage in excess of 15 per cent.”

Market dynamics Also speaking at ISTAT, John Buckley, Superjet’s VP of business development for North America, talked about the “tremendous investment” and “steep learning curve” needed to compete in the aircraft manufacturing market.

59.400kg MTOW................................................. 130.954lb

What that means is that newcomers, and their customers, will find the cost of future clean sheet aircraft too high and that manufacturers will instead modify current offerings. Buckley said that Sukhoi already has plans to stretch the Superjet to between 120 and 130 seats, fitting into the top end of the regional aircraft types.

“Everyone has had a progressive introduction into this market. For someone like ourselves, or Mitsubishi, it really is plunging into the deep end with absolutely enormous amounts of investment [and] enormous amounts of recurring costs.”

“We believe the 100-seat aircraft is really a nation-building aircraft. In countries where aviation is starting, where disposable income is not what it is in Europe and the United States, it is an ideal size.”

This gives Embraer, which was founded in 1969, the competitive advantage. It also means that the market (one hopes and expects) will not get any more competitive than it is already.

Ryanair’s Michael O’Leary recently said the ‘sweet spot’ for his low-cost operations is 200 seats; regional carriers look for less capacity but are still increasing their seats across the board.

“Because of this tremendous investment, I don’t think any new manufacturers are going to emerge in the marketplace

Although airlines have different views on what the ‘spot’ is, Embraer is clearly pitched for sweet success.

afm • Issue 85 – July–August • www.afm.aero

FLEET OPS: Business passengers

Pulling in the premiums Daniella Horwitz looks at what the premium passenger wants and what airlines are doing to meet that need.

any CEOs now make a point of sitting at the back of the cabin, yet airlines continue to invest in premium products because high-yield passengers make a substantial difference to the bottom line. Airlines woo premium (first- and business-class) customers because they are a relatively small group that give large rewards – the fares are between three and six times that of economyclass. But according to figures from International Air Transport Association (IATA) and CAPA Centre for Aviation, since 2009 global demand for premium products has nosedived, and it was only last year that there were signs of recovery. The recession heralded a drop of around seven per cent in economy fares, while premium fares fell by about 24 per cent. Economy travel picked up in early 2010, but premium

traffic did not rebound until late 2012. Economy is now around 16 per cent above the 2008 peak, but premium is only around one per cent higher (see graph). The slump has had serious financial implications for carriers, which are now competing even more fiercely for premium travellers. This competition mainly takes place on long-haul routes because recession-conscious companies expect employees to fly economy domestically (preferably on a budget airline) and only upgrade on overnight intercontinental flights. “The business traveller is absolutely crucial to any airline,” notes Joanne Foster, Virgin Atlantic spokesperson. “We know that business travellers have a wide choice of airlines to travel with, and therefore we are always pleased when they choose us. This has been particularly true since the start of

afm • Issue 85 – July–August • www.afm.aero

FLEET OPS: Business passengers

(&2120< 75$)),& 35(0,80 75$)),& 727$/ 75$)),&

-DQ

-XO

-DQ

-XO

-DQ

-XO

-DQ

-XO

-DQ

-XO

-DQ

-XO

Source: CAPA - Centre for Aviation, IATA.

Room to relax Exactly what does the premium traveller demand? Patrick Steiner, a London-based business development specialist for an institutional asset manager, flies an average three legs per week, or six round trips per month. â&#x20AC;&#x153;On long-haul, the main thing for me is comfortable seats,â&#x20AC;? he says. â&#x20AC;&#x153;Preferably seats that go completely flat, and sufficient stow room and work space. On short-haul flights, the only advantages business flights offer are boarding before the crowds and sufficient room for carry-on luggage.â&#x20AC;? Steinerâ&#x20AC;&#x2122;s company tends to use BA on intercontinental flights and he almost exclusively uses BA and Lufthansa/Swiss for European flights.

According to CAPA, four carriers with a high number of premium seats are Emirates, with 15.8 per cent; Singapore Airlines at 14.5 per cent; British Airways (BA) at 14.3 per cent; and Cathay Pacific, which has 14.2 per cent. When premium-economy is included, BA has 18 per cent, twice that of its major European competitors.

Caroline Bathgate, a London-based chartered surveyor for an international real estate consultancy, flies about four times a year for work, generally in economy-class. However, when she does travel premium-class, she believes the flying experience should be as easy and efficient as possible. â&#x20AC;&#x153;Trips for work tend to be time-pressured,â&#x20AC;? she says. â&#x20AC;&#x153;So quality of service in terms of check-in and preferential boarding/ disembarkation is key. Comfort is also important; to arrive after a long-haul flight, ready to go straight to the office, you need to have had a restful flight. The real benefit of business-class travel is the flat bed to allow a good nightâ&#x20AC;&#x2122;s sleep, but it is arguably not required on a day-time flight.â&#x20AC;? She rates BA highly for short-haul trips and Virgin Atlantic for long-haul.

Asked why it has a high proportion of premium customers, Catherine Brennan, Emiratesâ&#x20AC;&#x2122; spokesperson, explains: â&#x20AC;&#x153;We are recognised for our world-renowned service and that is why premium passengers choose Emirates. We have a loyal customer base and as one of the fastest growing airlines, we continuously review our amenities with a view of providing the best in-flight experience.â&#x20AC;? She adds that demand for Emirates premium services remained strong in the 2012â&#x20AC;&#x201C;13 financial year, despite the uncertainty in the eurozone.

John Humphreys, a Johannesburg-based stockbroker with at least four decades of international business travel, believes that the business-/first-class experience has changed for the worse. â&#x20AC;&#x153;Business-class used to have lots of room, but today it is little better than super economy. If you travel business-class to London from Switzerland, you end up with your knees around your ears... The problem is that the first-class compartments are smaller, seating eight to 10 people, whereas they used to seat 20. Business-class has almost doubled [in size] and they cram them in like

the global financial crisis as businesses have had to consider reducing their overseas travel.â&#x20AC;?

afm â&#x20AC;˘ Issue 85 â&#x20AC;&#x201C; Julyâ&#x20AC;&#x201C;August â&#x20AC;˘ www.afm.aero

FLEET OPS: Business passengers

sardines.” He says Singapore Airlines and Cathay Pacific are the best long-haul airlines for first or business-class. Although it was not the factor to determine carrier selection, all business travellers interviewed felt that the level of customer service has declined in recent years. Steiner expands: “It seems as though they have been reducing service for all but their most frequent travellers. A silver card used to be worth something, but these days anything other than a gold card will not give you any valuable perks.” Humphreys believes the Asia-Pacific airlines are dominating the market because they “have excellent service and look after their customers”.

Comfort is important to the globe-trotting business traveller and airlines seeking to attract them regularly refurbish their cabins and upgrade their fleets. Richard Goodfellow, BA spokesman, says that the carrier is now three years into a five-year £5bn ($3.3bn) investment plan in new aircraft, “with smarter cabins, elegant lounges and new technologies to make life more comfortable in the air and on the ground”. Last year, Virgin Atlantic also announced a £100m ($65m) investment in its front-end product, including two new clubhouses in New York and a brand new upper-class suite and bar across its 10 A330 aircraft.

Bridging the gap Maximum choice Business travellers expect to fly where they want, when they want. This calls for frequent flights and an extensive network. Zoë Martin, spokesperson for Singapore Airlines, explains its policy: “To meet the demands of the business traveller, Singapore Airlines offer four daily flights from London to Singapore, offering both day- and night-time departures, as well as an additional daily flight from Manchester. Via our hub at Singapore’s Changi Airport, we offer a range of onward connections to key destinations across South-East Asia and Australasia, with a particular focus on emerging destinations providing business development opportunities.” Cathay announced a fifth daily return flight between its Hong Kong hub and London Heathrow from June 2013. “This additional flight further demonstrates our commitment to serve key long-haul markets around the globe with multiple frequencies offering maximum customer choice,” notes Daisy Pratt, Cathay spokesperson.

The number of premium fares is limited, so some carriers have sought to improve revenues and close the gap between business and economy-class by offering a bridging product – premium-economy. Essentially, the passenger acquires four to six inches more leg room, the seat is wider and has a bigger recline. It is often advertised as having many of the advantages of business-class without the price tag (about 1.5 times the economy fare as opposed to three times for business-class). Virgin claims it was the first airline to launch the product in 1992 when it was named mid-class. Foster says: “As pioneer of the cabin, we are extremely proud of it and it remains very popular with good load factors. With a 38in seat, priority boarding and dedicated check-in, the premium-economy offering is perfect for the business traveller on a tighter budget or leisure travellers looking to splash out. Both upper-class and premium-economy cabins attract a lot of bookings.”

afm • Issue 85 – July–August • www.afm.aero

FLEET OPS: Business passengers

Most business travellers still prefer business-class because of the flat-bed seat. “Premium-economy is a great product for leisure travellers, but it does not replace business-class for business travellers. I would not want to go into a meeting directly after a long-haul flight in premiumeconomy,” declares Steiner. Cathay Pacific maintains that premium-economy appeals to a wide cross-section of people. Pratt explains: “Owners of small/medium-sized enterprises often travel in economy on business. The quiet seclusion of this cabin [premium-economy], with more space to work or relax, could help them be more productive while still focusing on the bottom line. Many of our Marco Polo Club [frequent flyer programme] members travel in business-class while working, but in economy when on vacation with their families.” Bathgate uses the product in a private capacity; for the past 10 years she has mostly used Virgin’s premium-economy for holiday travel. Whether or not an airline offers premium-economy depends on how they position themselves in the market; Singapore Airlines does not currently offer the product and sees no reason to do so. BA states it is one of the few long-haul airlines to offer four cabins, whereas most of its competitors offer three. As we have seen, the most common desire of the business traveller is a good night’s sleep. Thus the flat

bed is now standard in business- and first-class, and each year a different airline has a longer, larger, flatter and more comfortable bed. The fact that one can lie down in business-class means that some travellers now find it harder to justify that first-class ticket. When various innovations become the norm, for example, the individual entertainment module, passengers expect more from the flight. Onboard showers may soon become standard for premium customers. Indeed, first-class Emirates passengers on A380 flights can already use onboard shower spas. As Emirates’ Brennan observes: “The aviation market is shifting and it’s important that airlines keep up with the latest technologies and innovations in order to capture the premium travel market. Premium passengers are becoming more and more discerning and airlines need to up the ante if they wish to succeed in this space.” Even with the cost of spacious premium-class facilities, business- and first-class passengers promise more revenue per seat. For this reason, airlines will continue to chase their custom. While the recession has put more travellers into the cheap seats, it is wise that airlines and airframe OEMs are doing all they can to invest in tomorrow’s premium-class needs. Customers will always value quality service and when the financial clouds clear, they will return.

afm • Issue 85 – July–August • www.afm.aero

AIRPORTS & ROUTES: Regional routes

The role of aircraft in regional route development Peter Donaldson looks at how next generation aircraft are pushing regional route development.

he business model for regional route development is changing; airlines no longer trial routes with cheap and ageing aircraft. Now, economics and operating costs reign supreme and airlines are flying even the latest aircraft on their new routes.

Routing to re-fleet

This fact shone bright at the Paris Air Show (PAS) where Embraer launched its next generation of EJets, the E2 family, and where itself and turboprop manufacturer, ATR, won a stream of orders. The majority came from Latin American and

Customers are ordering record numbers of regional aircraft. The reason for this is threefold: Regional carriers are going through a period of re-fleeting, phasing out old aircraft; they require the most fuel-efficient aircraft in order to cut high fuel costs; and they are ‘right-sizing’ their fleets, bringing in

South-East Asian airlines whose CEOs cited the next generation turboprops and regional jets as a key factor in route development.

afm • Issue 85 – July–August • www.afm.aero

AIRPORTS & ROUTES: Regional routes aircraft that have the most cost-effective number of seats for their routes. The ATR 72-600 is a favourite route opener in Latin America. During PAS, ATR announced orders from HGI Aircraft Division for Brazil’s Passaredo, and Avianca took delivery of its first of 15 ATR 72-600s to replace its fleet of ATR 42s and Fokker 50s, and to expand its networks both domestically and in Central America. “These aircraft will enable us to increase our service standards while operating our regional routes even more efficiently,” said Avianca’s CEO, Fabio Villegas Ramirez. “Their advantages in terms of passenger comfort, as well as their excellent performance on high-altitude runways,

Johor Baruh, which greatly benefits our Malaysian communities, as well as the rest of the population in the Indonesia-Malaysia-Thailand growth triangle (IMT-GT),” said Ignatius Ong, CEO of Firefly. In India, Vijayawada-based Air Costa is leasing three EJets to launch a scheduled regional service connecting southern cities such as Bangalore, Chennai, Hyderabad and Vijayawada, as well as key secondary cities in the north and north-west. “Our plan is to link underserved markets in India with more direct flights,” said Captain Babu, CEO of Air Costa. “The E170 and E190 are ideal in size and range. We can add frequencies and routes without adding too much capacity,

Ignatius Ong, CEO, Firefly

Our ATR 72 fleet has allowed Firefly to develop a unique high frequency network out of Subang, Penang and Johor Baruh perfectly match the requirements of our regional network. They will also enable us to increase our seating offer and reduce operating costs.” Among the first destinations the aircraft will serve are Barrancabermeja, Florencia, Manizales, Neiva, Pasto, Popayán, Tumaco and Yopal in Colombia. As further ATR 72-600s enter the fleet, plans call for them to connect Guatemala City and Flores in Guatemala; Tegucigalpa, Roatán and San Pedro Sula in Honduras; San Salvador in El Salvador; Managua in Nicaragua; as well as San José and Liberia in Costa Rica. The Caribbean’s regional traffic and route networks are also growing. Reflecting this, LIAT is upgrading its fleet and took delivery of the first of eight new aircraft (four 68-seat ATR 72-600 and four 48-seat ATR 42-600s) at the show. The airline serves 21 Caribbean destinations and most of its routes are less than 100nm long, such as Grenada to Trinidad and Dominica to Antigua. “The 68-seat ATR 72-600s are perfectly adapted to many of our existing and potential routes,” said LIAT’s CEO, Ian Brunton. He explained that LIAT is focusing on lower operating costs, next generation technologies and passenger comfort, all of which the ATR 72-600 supplies. It is the same story of growth for South-East Asia’s regional networks. For example, Malaysia Airlines and its subsidiary, Firefly, placed an order for up to 36 ATR 72-600s last February. “Our ATR 72 fleet has allowed Firefly to develop a unique high frequency network out of Subang, Penang and

thus serving places with seasonal demand, as well as key secondary and tertiary business centres.” Japan Airlines (JAL) has ordered another four E170s in 76-seat configuration to add to the 12 that its regional subsidiary, J-AIR, already flies. “We are operating approximately 158 flights daily to 27 destinations in 20 cities throughout Japan. Using these additional aircraft, we are able to expand our network to and from Osaka Itami Airport, which is our main base of operations,” said J-AIR’s president, Tetsuya Onuki. During PAS, Embraer launched its next generation of EJets, the E2 family, with letters of intent from five airline customers from Africa, Asia, Europe and Latin America, and – most interestingly – from lessor, International Lease Finance Corporation (ILFC), which is likely to open new markets by placing the aircraft anywhere where there is demand. Further new additions will come from new and existing regional jet manufacturers, including COMAC with the 78-seat ARJ21; Sukhoi with the 95-seat Superjet 100; and Mitsubishi with its 70- to 90-seat MRJ family. And, of course, there is Bombardier’s existing offering as well as its 110- to 160-seat CSeries family and the 90-seat aircraft ATR has set its sights on.

North America hangs on Route development in the flat US market is tough and national government cutbacks are threatening existing services. For example, sequestration has threatened closure of some regional airports.

afm • Issue 85 – July–August • www.afm.aero

AIRPORTS & ROUTES: Regional routes

Even in this environment, US regional airlines are investing in new fleets with better operating economics enabling them to preserve and eventually develop their route structures. One of the most spectacular of these investments is SkyWest’s order for 100 of Embraer’s next generation E2 EJets, with options for another 100. This comes in the wake of its order for up to 200 current generation EJets.

“With an unmatched balance of speed, comfort, cost efficiencies and highly regarded environmental qualities, the Q400NG aircraft will also allow us to operate more efficiently as we enhance service on more routes,” said Ferio Pugliese, president of WestJet Encore and EVP of WestJet.

Europe’s struggle for survival “The selection of the current E175 and the new E175-E2 is another phase of our fleet renewal strategy that will allow SkyWest to offer the best operating economics for its partners and the most comfortable experience for their passengers,” said Jerry Atkin, chairman and CEO of SkyWest. Even with economic problems, turboprops continue to open new routes, even in North America. Horizon Air, for example, has placed an order with Bombardier for 51 Q400 and Q400NGs aircraft, which will enable the Seattle-based airline to expand much further north.

Europe is a mature market but one ravaged by austerity. There are a number of severe challenges to regional airlines that make route development (and even survival) far from straightforward. What is more, some thinner routes in Europe look set to lose their regional airline services because of lack of connectivity with the wider network and suitable aircraft. The answer appears to be the 90-seater.

“The addition of these three Q400NG aircraft will allow us to venture into the state of Alaska, which is considered America’s last frontier and is now an exciting new frontier for Horizon,” said Horizon Air’s president, Glenn Johnson.

In their report, Are European Regionals’ Successful Days Numbered?, Hanna Schaal of Prologis and Max Oldorf of CH-Aviation, pointed out that between 1 January, 2008 and 17 Feburary, 2013, one third of all regional airlines disappeared. Of the 195 regional carriers in business at the start of the period, just 130 were still operating at the end; that is a loss of 65 airlines.

In June, Canada’s WestJet took delivery of the first of 20 next generation Q400s for operation by new regional carrier, WestJet Encore, which will open routes to Fort St John and Naniamo, British Columbia, and to Brandon, Manitoba, on 3 September, this year. Other destinations due later this year are in Alberta and Saskatchewan.

Schaal and Oldorf identified several contributing factors, one being the decline of affiliations with network carriers. The report also cited Lufthansa’s planned shedding of Augsburg Airways this summer and of Contact Air last October, and Air France-KLM’s merging of Airlinair, Brit Air and Régional into new airline, Hop!, in March.

afm • Issue 85 – July–August • www.afm.aero

AIRPORTS & ROUTES: Regional routes economic efficiency, optimum performance and exceptional passenger comfort. We are convinced that these new airplanes will bring very interesting business opportunities while further developing air traffic in the region.” Flying in Aer Lingus Regional livery, the aircraft will operate on Aer Arann’s current routes from its Dublin base to Cork, Shannon and Knock (all in Ireland) and will fly two newroutes from Dublin to Manchester and Birmingham, both in the UK. In April, Norway’s Flynonstop received its first E190 to launch services between the company’s Kristiansand base and cities in central and southern Europe. The aircraft has 100 seats in a single-class. “The aircraft will allow us to schedule direct routes with eco-efficient aircraft,” said Daniel Lundberg, CEO of Flynonstop. “The E190 will also help us to develop our direct flight network with enhanced frequency and routes in response to the growing and seasonal demand from Norwegian passengers who need to reach some key European cities.” Aer Arann is not alone. During PAS, Bombardier revealed the customer for a previously announced firm order for 10 of its CSeries regional jets, start-up carrier Odyssey Airlines. It will operate CS100s from London City Airport. The CS100 offers 108 seats in a dual-class, 110 in standard-single class or up to 125 seats in a high-density configuration. Regionals often depend on co-operation with larger carriers for interlining, code-sharing and check-in. But as network carriers drop regional routes, the point-to-point demand is not enough for a regional airline to take over and these routes lose their services. Schaal and Oldorf also considered growing competition from low-cost carriers and international carriers based in Middle Eastern hubs as a factor in the decline of regional airlines. The resulting lower yields for point-to-point regional traffic and lower demand for hub and spoke services make it difficult to sustain profitable regional services with small aircraft. With high fuel costs making 37- to 50-seat regional jets much less viable, regionals are moving to jets with 90 seats or more. “Other routes are either dropped altogether or picked up by other carriers operating smaller turboprop aircraft,” said Schaal and Oldorf. But they pointed out that operators of smaller turboprops will have a problem replacing their fleets because there are no new-build regional turboprops with between 20- and 50-seats. Yet, even in Europe, some regionals are acquiring new aircraft to consolidate existing networks and develop additional routes. One of them is Aer Arann, which has taken delivery of the first of eight ATR 72-600s. “Regional traffic is substantially developing and we aim to upgrade our regional aircraft fleet with the new ATR-600s,” said interim CEO, Sean Brogan. “These aircraft offer high

“We are launching Odyssey Airlines with the CS100 aircraft because its transcontinental range will allow us to connect key city airports with stringent performance and environmental requirements both in Europe and further afield,” said Odyssey’s CEO, Adam Scott. “We have a unique strategy that will offer a premier service with a focus on new destinations that cannot currently be served from London City Airport. For us, the game-changing CSeries aircraft offers the best-in-class airfield performance, the lowest sound profile of any commercial aircraft in production in its segment, and will provide the ability to open new markets – all of which are integral to our business model.” Air Lituanica, based in Vilnius, Lithuania, is due to launch a scheduled service with a leased single-class, 76-seat E170 and to add an 86-seat E175 in July. “Air Lituanica is aiming to improve non-stop air travel links between Vilnius and points in Western Europe, Scandinavia, Russia and the CIS. The arrival of our first EJets is a very important milestone for the company,” said Erikas Zubrus, CEO of Air Lituanica. This kind of global interest, despite regional growth trends and GDP, reflects a healthy market and proves that investment in the latest regional aircraft can cut operating costs, push growth and open new markets. It is just as well that the string of new and existing regional aircraft manufacturers are fully aware of this and are working to meet future demand.

afm • Issue 85 – July–August • www.afm.aero

AIRPORTS & ROUTES: Ground ops

Ground handling: Learning to share Yannick Beunardeau, head of airport IT, sales and marketing at Amadeus, examines the need for airlines and airports to share data more effectively.

ommunication throughout the airport ecosystem is less than exemplary. While in terms of volume, airlines and ground handlers produce more than enough data, their IT systems are often incompatible. In other words, airlines and airports often do not speak the same language. Linking legacy systems is often expensive, complex and time-consuming, but one link that demands improvement is the integration between airlines and ground handlers. Ground handling is adopted in many forms; some airlines control it themselves, some contract third-parties and others use an airports´ ground handling services. This variety creates inefficiency and airlines are often unable to effectively and consistently communicate their policies to ground handlers. To co-ordinate these complex operations, ground handlers often use the airline’s individual departure control systems (DCS). This means third-parties and airport ground handlers must engage with a number of different DCS each day – sometimes one handling firm will have staff using 20 different systems. This can cause many problems, for example, training ground staff for a number of different systems is a lengthy and expensive process. Also, the nuances of an airline’s IT system can be missed

and airlines fail to fully differentiate themselves from one another, meaning the brands policies and promises can effectively become lost on the ground.

Planning ahead A common misconception covering ‘common-platform’ models is that airlines are unable to differentiate themselves in this way. In fact, airlines are able to develop their own tailored business policies, making their customer service, rules, needs and operations specific to their company. If airlines engaged in a common DCS platform, ground handlers would be able to use a single platform with greater efficiency and effectiveness. Airports and airlines could communicate freely in real time, passing this information on to ground handlers and customers, increasing speed and efficiency. The rules customising each airline would be stored beside (or ‘parametering’) the common DCS system. Today, airlines often employ their own ground handling staff at their main hub airport, who use the airlines’ own DCS system. In this circumstance, data exchange is strong and updates from handlers relating to cleaning, re-fuelling and servicing are fully visible to the airline. However, large network airlines might have several

afm • Issue 85 – July–August • www.afm.aero

AIRPORTS & ROUTES: Ground ops other hub airports, and many spoke airports where they rely on third-party handling. In this circumstance, events occurring between ‘on block’ and ‘off block’ are completely unknown to the airline. By using a common platform, airlines are able to have a complete view, as are their disparate handling partners. This enables planning and improves decision-making, which can in turn improve efficiency and reduce delays and disruption.

our Altéa airline IT suite. Today, 26 ground-handling firms have adopted the Altéa DCS, making data exchange with their airline partners seamless.

Benefits of data sharing There are significant benefits to data sharing, which go above and beyond simply enhancing operations. For example, in line with privacy laws and airport policies, anonymous data covering passenger activity can enable

If airports were able to engage with a common centralised system, airlines would have insight into what was occurring at the destination airport and could plan passenger-handling activities In many circumstances, virtually no data is exchanged between the airline and the airport operator’s system from the moment the aircraft leaves the ground to the time it lands at its destination. This blindness means the airport has no foresight into future flight arrivals, an insight that is of particular importance for connecting flights.

airports to develop new business models, adding value to their services.

The data can be used to enhance retail experiences, encouraging people to spend more time and money at the airport. This can increase the revenue per passenger for not only the airport but also for the retail, leisure, entertainment and dining concessions within it. The data could also enable the airport to provide passengers with real-time information regarding changes to their journey, or how to locate the check-in, security or boarding areas.

A multi-airport view can be particularly useful during disruption as it provides passengers travelling via a hub airport with insight into their travel plans beyond their initial stopover, enabling them to adapt appropriately.

Passenger activity can be recorded every time a boarding pass is scanned: at check-in, at security, while making purchases and before boarding the aircraft.

Removing stress and streamlining processes such as baggage drop-off can reassure passengers and reduce anxiety.

In essence, the more information that is shared, and the more precisely it happens, the more efficient airlines, ground handlers and passengers can be across the rest of the network.

If airports are able to enhance the passenger experience, they will maintain an advantage over their competitors, and passengers will begin to perceive air travel as an enjoyable and stress-free endeavour.

A complete picture offers significant advantages in terms of disruption management at an intra- and inter-airport level. If airports are able to communicate in realtime, they can reduce the effects of delays and disruptions. For example, airport operators can manage resources and staff (such as at gates, check-in, stairs and baggage handling) and re-adjust those resources in response to unexpected or uncontrollable factors, such as bad weather.

As passenger growth increases, airports must maximise the resources available, position themselves as service providers and improve the passenger experience. Improved data sharing can help airports and airlines meet travellers’ growing expectations and significantly enrich their experience.

We are pursuing this approach at Amadeus, and many European airports and their airline customers already use

IT for the aviation industry is evolving. However, there is still significant progress to be made. As the number of passengers increases, players must improve their customers’ experience to avoid being usurped by competitors or alternative modes of travel.

afm • Issue 85 – July–August • www.afm.aero

MRO: Regional spares

Spare change: Regional aircraft parts Chris Kjelgaard finds that aircraft age, lower life cycles and harsh climates are just some of the reasons why regional carriers manage the supply of spare parts differently.

afm • Issue 85 – July–August • www.afm.aero

MRO: Regional spares

roviding and managing the supply of spares is a vital activity for any airline, but short-haul and regional airline operating requirements often greatly differ from those of long-haul operators.

One key factor, says Robert Gogo, supply chain manager for component MRO shop, AJW Technique, is that short-haul and small operators will often lease their aircraft, more so than long-haul carriers. They may also have lower cash reserves, so – together with low-cost carriers (LCCs) – tend to hold smaller inventories.

Old versus new Another factor, says Graham Smith, head of business development for BAE Systems Regional Aircraft, is that many regionals have not renewed their fleets to the same degree as their mainline cousins. This means that, although turboprops and regional jet manufacturers (particularly ATR and Embraer) now have record numbers of orders, many regional carriers still have older and out-of-production aircraft in their fleets. These aircraft are still popular; demand for several out-of-production types (such as the Fokker 100, BAe 146, Avro RJ, Jetstream and Saab 340/2000 families) remains high. This creates strong demand for spares. Because these aircraft are what the industry politely calls ‘mature’, many have been torn down, creating a large stock of spares. However, continued demand means the

market is still competitive, particularly for rotables and expendables, and occasionally for slower-moving airframe components in AOG (aircraft on the ground) situations, or when an airworthiness directive has been issued. Issues are also caused by OEMs focusing on increasing the production of their next generation aircraft rather than producing spares for their in-service families. In some cases, however, OEMS are becoming aware of the value of the spares aftermarket and intend to control it. Each of these situations leaves operators increasingly dependent on OEMs for the supply of spare parts. One result, says Smith, is that many operators (including LCCs) are increasingly reliant on third-party MRO and spares providers to help manage their costs. Hence, operators are creating comprehensive relationships with these companies. These relationships cover spares provisioning, spares pooling and availability guarantees for certain components. This is an expensive process; one consequence is that “airlines are moving away from smaller [spares and MRO] suppliers to bigger ones”, says Smith.

Location, location Jamie Brooks, regional sales director, Middle East and Northern Africa, for UK-based component-service provider, Astride, believes that large, full-service carriers, which operate lots of long-haul flights, tend to have less requirement for spares that do not have hard life limits. This is partly because long-haul aircraft operate far fewer cycles than short-haul aircraft. “We don’t find spares demand is driven by the type of airline. What drives it is utilisation of aircraft and the environment the aircraft is operated in,” says Smith, to which Gogo agrees. Although long-haul aircraft may experience dramatically different environments (for instance, an Emirates 777 might take-off from hot, dry, sandy Dubai and land in snowy, damp and cold Stockholm), regional and short-haul carriers often fly into much smaller, less sophisticated airports, Gogo points out. In addition to having lower-quality runways, these airports may also be located in very harsh climates. These factors can impose greater stresses on the flight-control surfaces and landing gears, creating more need for component removal and repair. For instance, carriers operating to and within Northern Canada often face extreme environmental conditions, which can make operating to and from some airports quite difficult. “You don’t know what [conditions] you’re going to hit on the

afm • Issue 85 – July–August • www.afm.aero

MRO: Regional spares runway,” says Gogo. Aircraft wheels, brakes and landing gears take a pounding at many such airports. Brian Tolley, president and chief information officer (CIO) of Florida-based parts locator service, PartsBase, says another important factor that determines spares provisioning is location. For instance, carriers in China (Hainan Airlines being one example) conduct practically no maintenance activity during their peak travel seasons covering the Chinese New Year in February, and in the summer. However, in March and September, when these peak seasons are over, Chinese carriers require their MRO partners to provide deferred and heavy maintenance on their aircraft. This is unlike carriers in the West, which tend to spread heavy-maintenance tasks throughout regular A and B maintenance checks, providing more flexibility. Another difference, says Tolley, is that Chinese carriers rely far more on their MRO partners to handle urgent AOG maintenance compared with airlines in the West, which conduct AOG through their own line-station maintenance operations.

their first major shop visit. (Hard-time, low-cycle expendables such as tyres and brake pads must, of course, be available in sufficient numbers throughout the life of the aircraft, but are often only available from OEMs or their top-tier vendors). In the five-to-10-year period after entry into service, shortages in most categories of spares diminish greatly or vanish. This is because the initial operators will have a thorough understanding of which spares are seeing high removal and repair rates. They will start selling some of their initial spares in order to reduce their surplus of those in low demand. However, says Smith, a large surplus of spares in any category will not yet have accumulated. Surplus of some types start appearing in the 10-to-15year period after the aircraft was introduced into service. This happens for any, or all, of four reasons. First, operators continue to divest low-demand spares. Second, leased aircraft are likely to move from their initial operator to another carrier and the former operator will release some spares, even high-demand

The geographical distribution of demand is rapidly changing. A good example is demand for ATR turboprop spares. For the last three years, turboprop manufacturer, ATR, has enjoyed strong demand for its highly fuelefficient, fairly inexpensive aircraft from regions such as Mexico, South America (particularly Brazil), South-West Asia and Eastern Europe. The situation in Brazil is changing dramatically, says Tolley. Although demand for mainline services is falling because of Brazil’s slowing economic growth (for instance, GOL is cutting domestic capacity by nine per cent for 2013 to 2014), demand for turboprop flights is rocketing. This is due to two factors. First, Brazil’s air transport network is developing and many smaller cities are now seeing scheduled services for the first time. Second, mainline carriers are using regional partners (such as Trip and Passaredo) to provide supplementary off-peak, or even replacement, seat capacity on existing routes.

Production and obsolescence While the practice of stocking spares varies between regional and mainline (particularly long-haul) operators, practically every commercial aircraft type demonstrates a similar spares market cycle. According to Smith and Gogo, within the first five years of an aircraft type’s life, there are very few spares available in the open market. This is when the OEM concentrates on increasing the production of the aircraft and those aircraft already in service are nowhere near

afm • Issue 85 – July–August • www.afm.aero

MRO: Regional spares items. Third, some airlines – even large ones – fail, and their spares are made available in the aftermarket. Fourth, changing economic and market conditions make teardowns of some relatively young aircraft – particularly single-aisle models – more attractive than keeping the aircraft in service. “As always, the increase in teardowns of aircraft due to age translates to an increase in the spares available, leading to a decline in the value of the [spares] units,” says Brooks. While this is good news for airlines that operate older aircraft of that type, as they can now obtain cheap spares, component-providers such as Avtrade have to adapt to the changing market by acquiring as many spares as possible, so they can maintain their return on investment and profit margins. After 15 years of service, there is a surplus, rather than a shortage, of spares, says Smith. After 20 years, when the

aircraft type starts to become obsolete, the situation may reverse (particularly for regional aircraft types) and shortages may return. Vendors will concentrate on supplying parts for aircraft that are still in production. When the aircraft stops being produced, so do the spares. The situation may be worse for electrical components as they are more likely to fall out of production. This is why BAe Systems Regional Aircraft, a specialist in spares and MRO services for regional aircraft, has “a very aggressive obsolescence programme to make sure the aircraft keeps flying”, says Smith. Regardless of the issues, a well-prepared airline, or parts suppliers that are knowledgeable about the regional market, will be able to navigate a clear path. As is often the case, knowledge is power.

afm • Issue 85 – July–August • www.afm.aero

AIRCRAFT

FINANCE

GUIDE

The business and financing of airline operations

Be a part of the 2014 Aircraft Finance Guide The Aircraft Finance Guide (AFG) is a leading annual publication covering aircraft finance. Produced by Airline Fleet Management (AFM) magazine, the AFG includes analysis of market trends, asset values, leasing, financing, MRO, aviation law and popular aircraft and engine types. The guide is written by AFM’s aviation journalists, together with some of the industry’s most knowledgable specialists.

Topics already confirmed are: 44 Narrowbody rental rates 44 Why aircraft are a worthy investment 44 ECA Financing 44 Analysis of aircraft values 44 New forms of financing 44 Airline cost management 44 Global MRO trends 44 Transitioning aircraft between leases 44 Asian aviation financing 44 The MAX versus the NEO

Circulation

The AFG has an international circulation of 4,000 copies and is distributed to market leaders in commercial aviation including ISTAT, IATA and RAA members. It is essential reading for CEOs, CFOs, operators, lessors, lawyers, brokers, appraisers and investors in the field of aviation.

Contact

To discuss possibilities, please contact Ellis Owen. Ellis Owen, Sales manager ellis@afm.aero +44 (0) 208 831 7519

Bonus distribution includes: • ISTAT Europe • ISTAT Americas • ISTAT Asia • ALTA`s Aviation Law Americas • World Routes (America) • Engine Leasing, Trading & Finance conference (Europe) • ACI Airport Economics & Finance (UK)

published by

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INDUSTRY DATA: Deals

Industry data

59 64

Aircraft deals Firm orders

Engine data

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

Aircraft deals 16 April to 24 June MSN Manu- facturer

Model

Event

5519 5543 36908 38400 41786 5546 33915 39725 5548 5554 5555 5557 5576 5578 5581 1093 39369 40038 1407 1405 5549 37778 42001 17000357 1408 1411 5558 5593 38943 38038 39331 1406 5567 5569 1082 39616 1409 5571 5587 5602 1078 41686 38730 36592 39057 1402 5573 5575 5596 5598 5604 5560 5608 1410 5610 41995 31653

A321-200 A321-200 737-800 737-800 737-800 A321-200 737-800 737-700 A320-200 A320-200 A321-200 A320-200 A320-200 A320-200 A320-200 777-300ER 737-800 737-800 A330-200 A330-300 A321-200 737-800 737-800 170 A330-300 A330-300 A321 A320 737-800 737-86N 737-800 A330-200 A321-200 A319-100 72-600 737-800 A330-300 A320-200 A320-200 A320-200 72-600 777-300ER 737-900ER 737-800 737-800 A330-200 A321-200 A321-200 A320-200 A320-200 A320-200 A330-200 A320-200 A330-200 A320-200 767-300ER 737-900ER

Airbus Airbus Boeing Boeing Boeing Airbus Boeing Boeing Airbus Airbus Airbus Airbus Airbus Airbus Airbus Boeing Boeing Boeing Airbus Airbus Airbus Boeing Boeing Embraer Airbus Airbus Airbus Airbus Boeing Boeing Boeing Airbus Airbus Airbus ATR Boeing Airbus Airbus Airbus Airbus ATR Boeing Boeing Boeing Boeing Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Boeing Boeing

65 66

List prices and lease rates

Current Owner/Operator China Eastern Airlines Sichuan Airlines Southwest Airlines Xiamen Airlines China Airways Turkish Airlines All Nippon Airways China Eastern Airlines LAN Airlines LAN Airlines Vietnam Airlines Lufthansa Air Arabia Aeroflot Monarch Airlines Qatar Airways Qantas Air China Virgin Austrailia Iberia Saudi Arabian Airlines GECAS Turkish Airlines AirNorth Thai Airways International AirAsia China Eastern Airlines Thai AirAsia China Southern Airlines SAS Hebei Airlines Qatar Airways Cargo Swiss Germanwings AZUL - Linhas Aereas Brasilerias GOL Transportes Aeros Cathay Pacific Citilink Garuda Indonesia Vueling Airlines China Southern Airlines UNI Airways Aeroflot Batil air Air Europa Jet Airways China Eastern Airlines Air China China Eastern Airlines Tiger Airways Jetstar Japan Wizz Air Hungary Citilink Garuda Indonesia Wizz Air Hungary Garuda Indonesia Tunisair LAN Airlines United Airlines

Date 16/04/2013 16/04/2013 16/04/2013 16/04/2013 16/04/2013 17/04/2013 17/04/2013 17/04/2013 19/04/2013 19/04/2013 19/04/2013 19/04/2013 19/04/2013 19/04/2013 19/04/2013 19/04/2013 19/04/2013 19/04/2013 20/04/2013 22/04/2013 22/04/2013 22/04/2013 22/04/2013 22/04/2013 23/04/2013 23/04/2013 23/04/2013 23/04/2013 23/04/2013 24/04/2013 24/04/2013 25/04/2013 25/04/2013 25/04/2013 25/04/2013 25/04/2013 26/04/2013 26/04/2013 26/04/2013 26/04/2013 26/04/2013 26/04/2013 26/04/2013 26/04/2013 26/04/2013 27/04/2013 27/04/2013 27/04/2013 27/04/2013 27/04/2013 29/04/2013 29/04/2013 30/04/2013 30/04/2013 30/04/2013 30/04/2013 30/04/2013

Source: IBA’s JetData.

afm • Issue 85 – July–August • www.afm.aero

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

Aircraft deals 16 April to 24 June MSN Manu- facturer

Model

Event

41779 5574 33486 113 5580 5613 1083 38689 39617 41303 5582 5615 5584 38884 38930 116 5586 39691 31169 40146 39430 39370 41259 619 1084 5577 41519 38946 39928 39199 5592 35821 42243 31648 5616 5590 5594 41787 41009 5583 5588 1081 35605 1413 1074 1079 41054 37567 1416 40259 5606 5618 5619 41264 1415 5597 38731 42173 31171 38945 40020 5617 5601 5620 5622 5609 33125 5614 1414 5624 37833 1418 5603 5607 34840 34422 40966 5625 34923 39775 5550 37100 5627 5638 1086 38380 41011 119

777-300ER A320-200 737-800 A380-800 A320-200 A320 72-600 737-900 737-800 737-800 A321-200 A320-200 A321-200 737-800 737-800 A380-800 A320 777-FFX 737-800 737-800 737-800 737-800 737-800 E-190 72-600 A320-200 767-300ER 737-800 737-800 737-700 A320-200 747-8F 787 737-900ER A320-200 A320-200 A321-200 737-800 737-800 A320-200 A321-200 42-600 777-300ER A330-300 72-600 72-600 777-300ER 747-8F A330-200 737-800 A321-200 A320-200 A320-200 737-800 A330-200 A320-200 737-900ER 737-900ER 737-800 737-800 737-800 A320-200 A320-200 A320-200 A320-200 A319-100 777-300ER A320-200 A330-200F A320-200 747-8 A330-200F A321-200 A320-200 787 787 737-800 A320-200 787 737-800 A320-200 737-900ER A320-200 A320-200 72-600 737-800 737-800 a380-800

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 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

Boeing Airbus Boeing Airbus Airbus Airbus ATR Boeing Boeing Boeing Airbus Airbus Airbus Boeing Boeing Airbus Airbus Boeing Boeing Boeing Boeing Boeing Boeing Embraer ATR Airbus Boeing Boeing Boeing Boeing Airbus Boeing Boeing Boeing Airbus Airbus Airbus Boeing Boeing Airbus Airbus ATR Boeing Airbus ATR ATR Boeing Boeing Airbus Boeing Airbus Airbus Airbus Boeing Airbus Airbus Boeing Boeing Boeing Boeing Boeing Airbus Airbus Airbus Airbus Airbus Boeing Airbus Airbus Airbus Boeing Airbus Airbus Airbus Boeing Boeing Boeing Airbus Boeing Boeing Airbus Boeing Airbus Airbus ATR Boeing Boeing Airbus

Current Owner/Operator Qatar Airways Citilink Garuda Indonesia American Airlines Emirates Airline Aeroflot Air Astana Aer Lingus Regional Baltik Air GOL Transportes Aeros China Southern Airlines ACG Wizz Air Hungary Turkish Airlines Garuda Indonesia China Southern Airlines Emirates Airline LAN Airlines Etihad Airways American Airlines Malaysia Airlines SpiceJet Qantas SpiceJet Kenya Airways Air New Zealand Link (Mount Cook) IndiGo MIAT - Mongolian Airlines China Southern Airlines Garuda Indonesia Lucky Air EasyJet Cargolux Airines International All Nippon Airways United Airlines Vueling Airlines Iberia Express US Airways China Airways Virgin Austrailia LAN Airlines US Airways Malindo Air Emirates Airline Air China Wings air Wings air Saudi Arabian Airlines Atlas Air Air Pacific flydubai Monarch Airlines Jetstar Japan AirAsia Skymark Airlines US Airways Citilink Garuda Indonesia Batik Air Korean Airlines American Airlines China Southern Airlines Shandong Airlines Wizz Air Hungary Lufthansa Vueling Airlines Avianca Sichuan Airlines American Airlines Aeroflot Etihad Airways Spirit airlines lufthansa Turkish Airlines Condor. Leased from ALC S7 - Siberia airlines Japan Airlines Thomson Airways Ethiopian Airlines Jazeera Airways China Southern Airlines Turkmenistan Airlines Shenzhen Airlines United Airlines Indonesia AirAsia easyJet Aeromar Xiamen Airlines Virgin Austrailia Emirates Airline

Date 01/05/2013 02/05/2013 02/05/2013 03/05/2013 03/05/2013 03/05/2013 03/05/2013 03/05/2013 03/05/2013 03/05/2013 07/05/2013 07/05/2013 07/05/2013 07/05/2013 07/05/2013 08/05/2013 08/05/2013 09/05/2013 09/05/2013 09/05/2013 09/05/2013 10/05/2013 10/05/2013 10/05/2013 11/05/2013 14/05/2013 14/05/2013 14/05/2013 14/05/2013 14/05/2013 15/05/2013 15/05/2013 15/05/2013 15/05/2013 16/05/2013 16/05/2013 16/05/2013 16/05/2013 16/05/2013 17/05/2013 17/05/2013 17/05/2013 17/05/2013 18/05/2013 18/05/2013 18/05/2013 18/05/2013 18/05/2013 21/05/2013 22/05/2013 23/05/2013 23/05/2013 23/05/2013 23/05/2013 24/05/2013 24/05/2013 24/05/2013 24/05/2013 24/05/2013 24/05/2013 24/05/2013 25/05/2013 27/05/2013 28/05/2013 28/05/2013 28/05/2013 28/05/2013 29/05/2013 29/05/2013 29/05/2013 29/05/2013 30/05/2013 30/05/2013 30/05/2013 30/05/2013 30/05/2013 30/05/2013 01/06/2013 01/06/2013 01/06/2013 03/06/2013 03/06/2013 04/06/2013 04/06/2013 04/06/2013 04/06/2013 04/06/2013 05/06/2013 Source: IBA’s JetData.

afm • Issue 85 – July–August • www.afm.aero

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

Aircraft deals 16 April to 24 June MSN Manu- facturer

Model

1421 5630 4440 5631 1090 37864 39371 39200 42174 38732 42174 1423 5632 37651 38961 39111 39059 5634 34424 34841 33322 39332 1420 5644 5640 5648 5635 1077 42218 38947 4441 5629 5651 5653 38322 36703 5643 123 5663 1092 38382 41010 4171 95023 5647 38948 36284 1422 1427 1425 5658 5659 35941 40904 41304 5655 5661 39644 400043 39726 456 5086 345 2214 1018 1372 3086 145387 145407 5585 38038 37778 1922 3162 509 27219 28566 55192 15233 15234 15239 15273 19000615 4438 19000620 1413 290 300

A330-200 Entry Into Service A320-200 Entry Into Service Q400 Entry Into Service A320-200 Entry Into Service 72-600 Entry Into Service 767-300ER Entry Into Service 737-800 Entry Into Service 737-700 Entry Into Service 737-900ER Entry Into Service 737-900ER Entry Into Service 737-900ER Entry Into Service A330-300 Entry Into Service A320-200 Entry Into Service 777-300ER Entry Into Service 737-800 Entry Into Service 737-800 Entry Into Service 737-800 Entry Into Service A320-200 Entry Into Service 787-8 Entry Into Service 787-8 Entry Into Service 737-800 Entry Into Service 737-800 Entry Into Service A330-300 Entry Into Service A321-200 Entry Into Service A320-200 Entry Into Service A320-200 Entry Into Service A320-200 Entry Into Service 72-600 Entry Into Service 777-300ER Entry Into Service 737-800 Entry Into Service Q400 Entry Into Service A320-200 Entry Into Service A320-200 Entry Into Service A320-200 Entry Into Service 787-8 Entry Into Service 737-800 Entry Into Service A320-200 Entry Into Service a380-800 Entry Into Service A321-200 Entry Into Service 72-600 Entry Into Service 737-800 Entry Into Service 737-800 Entry Into Service Q400 Entry Into Service SSJ100 Entry Into Service A321-200 Entry Into Service 737-800 Entry Into Service 787-8 Entry Into Service A330-200 Entry Into Service A330-300 Entry Into Service A330-300 Entry Into Service A320-200 Entry Into Service A321-200 Entry Into Service 787-8 Entry Into Service 777-200ER Entry Into Service 737-800 Entry Into Service A321-200 Entry Into Service A320-200 Entry Into Service 777-F Entry Into Service 737-800 Entry Into Service 737-800 Entry Into Service A330 Op Lease A320 Op Lease A330-200 Op Lease A319-100 Op Lease A319-100 Op Lease A320 Op Lease A320 Op Lease 145MP Op Lease 145MP Op Lease A320 Op Lease 737-800 Op Lease 737-800 Op Lease A320 Op Lease A320 Op Lease 72-200 Op Lease 757-200 Op Lease 737-300 Op Lease 717 Op Lease CRJ900LR Op Lease CRJ900LR Op Lease CRJ900LR Op Lease CRJ900LR Op Lease E-195 Op Lease DHC-8-402Q Dash 8 Op Lease E-195 Op Lease A320 Op Lease A330-200 Op Lease A330-200 Op Lease

Airbus Airbus Bombardier Airbus ATR Boeing Boeing Boeing Boeing Boeing Boeing Airbus Airbus Boeing Boeing Boeing Boeing Airbus Boeing Boeing Boeing Boeing Airbus Airbus Airbus Airbus Airbus ATR Boeing Boeing Bombardier Airbus Airbus Airbus Boeing Boeing Airbus Airbus Airbus ATR Boeing Boeing Bombardier Sukhoi Airbus Airbus Boeing Airbus Airbus Airbus Airbus Airbus Boeing Boeing Boeing Airbus Airbus Boeing Boeing Boeing Airbus Airbus Airbus Airbus Airbus Airbus Airbus Embraer Embraer Airbus Boeing Boeing Airbus Airbus ATR Boeing Boeing Boeing Bombardier Bombardier Bombardier Bombardier Embraer Bombardier Embraer Airbus Airbus Airbus

Event

Current Owner/Operator

Date

China Eastern Airlines 05/06/2013 Capital airlines 05/06/2013 WestJet Encore 06/06/2013 JetStar Airways 07/06/2013 UNI Airways 07/06/2013 UPS 07/06/2013 Qantas 07/06/2013 Lucky Air 07/06/2013 Korean Airlines 07/06/2013 Malindo Air 08/06/2013 Korean Airlines 10/06/2013 AirAsia 11/06/2013 Avianica 11/06/2013 Korean Airlines 11/06/2013 China Southern Airlines 11/06/2013 Shandong Airlines 11/06/2013 Jet Airways 12/06/2013 British Airways 13/06/2013 Thomson Airways 13/06/2013 Japan Airlines 13/06/2013 American Airlines 13/06/2013 Shandong Airlines 13/06/2013 Cebu Air Pacific 14/06/2013 US Airways 14/06/2013 Peach 14/06/2013 Niki 14/06/2013 Lufthansa 14/06/2013 LIAT 14/06/2013 Air Canada 14/06/2013 China Southern Airlines 14/06/2013 WestJet Encore 14/06/2013 Air New Zealand 15/06/2013 Volaris 15/06/2013 InterJet 15/06/2013 Qatar Airways 15/06/2013 Aeromexico 15/06/2013 TAM Linhas Aeras 17/06/2013 Emirates Airline 18/06/2013 Turkish Airlines 18/06/2013 Avianca 18/06/2013 Xiamen Airlines 18/06/2013 Virgin Austrailia 18/06/2013 Yakutia Airlines 18/06/2013 InterJet 18/06/2013 Sichuan Airlines 19/06/2013 China Southern Airlines 19/06/2013 Air India 19/06/2013 Hawaiian Airlines 20/06/2013 Singapore Airlines 21/06/2013 China Southern Airlines 21/06/2013 Lufthansa 21/06/2013 US Airways 21/06/2013 LOT Polish Airlines 21/06/2013 All Nippon Airways 21/06/2013 China United Airliens 21/06/2013 China Southern Airlines 22/06/2013 Frontier airlines 22/06/2013 Qatar Airways Cargo 22/06/2013 Shandong Airlines 22/06/2013 China Eastern Airlines 23/06/2013 SriLankan Airlines. Leased from ALC 18/04/2013 SriLankan. Leased from CIT 18/04/2013 Syphax Airlines. Leased from Airbus Financial 22/04/2013 Sky Airline. Leased from BBAM 22/04/2013 Air Cote d’Ivoire. Leased from ILFC 22/04/2013 Vueling Airlines. Leased from GECAS 22/04/2013 SAS. Leased from MSN 3086 Leasing(DAE Capital) 22/04/2013 Trans States Airlines. Leased from AFS Investments XIV (GECAS) 22/04/2013 Trans States Airlines. Leased from AFS Investments XIV (GECAS) 22/04/2013 Aeroflot. Leased from AWAS 23/04/2013 SAS Scandinavian Airlines. GECAS 24/04/2013 Transavia France. Leased from GECAS 25/04/2013 Skywest Airlines. Leased from Aviation 29/04/2013 Aegean Airlines. Leased from Global Aircraft Fund 1 29/04/2013 Aer Arann Regional. Leased from Danish Air transport 29/04/2013 Privatair. Leased from Thomson Airways 29/04/2013 VivaAerobus. Leased from GECAS 29/04/2013 Voletea. Leased from BCC 29/04/2013 Mesa Airlines. Leased from Bombardier 29/04/2013 Mesa Airlines. Leased from Bombardier 29/04/2013 Mesa Airlines. Leased from Bombardier 29/04/2013 Mesa Airlines. Leased from Bombardier 29/04/2013 Azul Linhas Aereas. Leased from GECAS 29/04/2013 Air Baltic. Leased from NAC 01/05/2013 Azul Linhas Aereas. Leased from GECAS 02/05/2013 Monarch Airlines. Leased from ACG 06/05/2013 Aerolineas Argentinas. Leased from ILFC 06/05/2013 Aerolineas Argentinas. Leased from ILFC 06/05/2013

Source: IBA’s JetData.

afm • Issue 85 – July–August • www.afm.aero

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

Aircraft deals 16 April to 24 June MSN Manu- facturer

Model

Event

358 Airbus 364 Airbus 888 Airbus 1229 Airbus 1886 Airbus E-2278 BAE 48746 Boeing 30679 Boeing 33593 Boeing 33594 Boeing 5582 Airbus 39430 Boeing 120 Airbus 822 Airbus 2457 Airbus 799 ATR 818 ATR 28042 Boeing 26263 Boeing 30724 Boeing Boeing 24329 7363 Bombardier Fokker 11395 425 Airbus 1715 Airbus 29141 Boeing 29885 Boeing 35093 Boeing 30629 Boeing 55183 Boeing 41264 Boeing 19000621 Embraer 5614 Airbus 5620 Airbus 38039 Boeing 3102 Airbus 32841 Boeing 4475 Airbus 4512 Airbus 2707 Airbus 3120 Airbus 27960 Boeing 30665 Boeing 1293 Airbus 2569 Airbus 3889 Airbus 26295 Boeing 262 Airbus 5491 Airbus 5642 Airbus 41524 Boeing 1097 Airbus 39059 Boeing 5616 Airbus 481 Airbus 1884 Airbus 27959 Boeing 1450 Airbus 1451 Airbus 28009 Boeing 19034 Bombardier 28215 Boeing 28535 Boeing 29038 Boeing 29040 Boeing 17000278 Embraer 17000293 Embraer 345 Airbus 3159 Airbus 4600 Airbus 3868 Airbus 532 Airbus 529 Airbus 527 Airbus 27289 Boeing 6 Airbus 24952 Boeing 27535 Boeing 27900 Boeing 27901 Boeing 149 Airbus 2645 Airbus 734 Airbus 39019 Boeing 5604 Airbus 5608 Airbus 39616 Boeing

A330-200 A330-200 A320 A320 A319 Avro RJ-85 MD-11 737-800 737-800 737-800 A321 737-800 A330-200 A330-200 A320 72-500 72-500 767-300ER 767-300ER 737-800 737-300 CRJ200LR F100 A330-300 A320-200 737-300 737-700 737-800 737-700 717 737-800 E-195 A320-200 A320-200 737-800 A319-100 737-800 A320-200 A320-200 A321-200 A321-200 767-300ER 737-800 A321-200 A320-200 A320-200 737-300 A330-200 A320-200 A320-200 777-300ER A330-300 737-800 A320-200 A310-300 A319-100 767-300ER A320-200 A321-200 737-700 CRJ1000 737-800 737-800 737-800 737-800 E-170 E-170 A330-200 A320-200 A320-200 A320-200 A330-200 A330-200 A330-200 737-300 A340-200 767-300 737-500 737-500 737-500 A340-300 A320-200 A319-100 737-800 A320 A319 737-800

Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Op Lease Retired Retired Retired Retired Retired Retired Returned Returned Returned Sale/leaseback Sale/leaseback Sale/leaseback Sale/leaseback

Current Owner/Operator

Date

Aerolineas Argentinas. Leased from ILFC Aerolineas Argentinas. Leased from ILFC Hamburg Airways. Leased from FLY Aer Lingus. Leased from Dia Madrid Leasing Helvetic Airways. Leased from AWAS Eco Jet. Leased from Flair Aviation AV Cargo Airlines. Leased from Boeing Capital UTAir Ukraine. Leased from ILFC Nok Air. Leased from FLY Nok Air. Leased from FLY Monarch Airlines. Leased from ACG SpiceJet. Leased from AWAS Ifly. Leased from Aercap Air Berlin. Leased from ILFC Air Via. Leased from AWAS Alsie Express. Leased from NAC Alsie Express. Leased from NAC Nordwind Airlines. FLY KharKiv Airlines. Leased from ILFC Travel Service Airlines. Leased from ILFC Peruvian Airlines. Leased from ACAP Air Uganda. Leased from from EDC Lease Finance Trust No.3 Moldavian Airlines. Leased from Carpatair CSA Czech Airlines. Leased from Korean Air Small Planet Airlines. Leased from MCAP Jet2.com. Leased from Dart group SAS Scandinavian Airlines. Leased from GECAS Travel Service Airlines. Leased from MCAP Sun Country Airlines. Leased from ILFC Volotea Airlines. Leased from BCC Skymark Airlines. Leased from GECAS Azul Linhas Aereas. Leased from GECAS Aeroflot. Leased from AWAS Vueling Airlines. Leased from AWAS SAS Scandinavian Airlines. Leased from GECAS Aer Lingus. Leased from SMBC Kharkiv Airlines. Leased from ILFC VietJetAir. Leased from GECAS VietJetAir. Leased from GECAS Ural Airlines. Leased from ILFC Nordwind Airlines. Leased from ILFC Nordwind Airlines. Leased from ILFC Jeju Air. Leased from ILFC Kolavia. Leased from ILFC Nasair. Leased from Jazerra Airways Nas Air. Leased from GECAS Surinam Airways. Leased from AWAS Hifly. Leased from ILFC Juneyao Airlines leased from GECAS Orbest. Leased from GECAS Thai Airways International. Leased from BOC Air Europa. Leased from AWAS Jet Airways. Leased from BOC Vueling Airlines/ Leased from CIT Gadames Air Transport. Leased from Jordan Aviation Ural Airlines. Leased from ILFC Nordwind Airlines. Leased from ILFC Bingo Airways. Leased from BOC Atlasjet. Leased from CAT Yakutia Airlines Garuda Indonesia. Leased from NAC UTAir Ukraine. Leased from ILFC Corendon Airlines. Leased from AWAS Ukraine International Airways. Leased from AWAS Ukraine International Airways. Leased from AWAS Air Costa. Leased from EEC Air Costa. Leased from EEC Sphax Airlines. Leased from ILFC SAS. Leased from DAE Capital Tianjin airlines. Leased from GECAS Nas Air. Leased from GECAS Turkish airlines. Leased from ILFC Turkish airlines. Leased from ILFC Turkish airlines. Leased from ILFC Shantou Airlines (China Southern) South African Airways SmartLynx Airlines United Airlines United Airlines United Airlines Boeing Holding company Bingo Airways ILFC “Norwegian. Leased from Mitsubishi UFJ Lease & Finance” Wizz Air. From ICBC Wizz Air. From ICBC Gol Linhas Aereas. Leased from SMBC

06/05/2013 06/05/2013 06/05/2013 06/05/2013 06/05/2013 06/05/2013 06/05/2013 06/05/2013 06/05/2013 06/05/2013 08/05/2013 09/05/2013 13/05/2013 13/05/2013 13/05/2013 13/05/2013 13/05/2013 13/05/2013 13/05/2013 13/05/2013 13/05/2013 13/05/2013 13/05/2013 20/05/2013 20/05/2013 20/05/2013 20/05/2013 20/05/2013 20/05/2013 20/05/2013 23/05/2013 27/05/2013 28/05/2013 28/05/2013 28/05/2013 31/05/2013 01/06/2013 02/06/2013 03/06/2013 04/06/2013 04/06/2013 04/06/2013 04/06/2013 06/06/2013 06/06/2013 06/06/2013 06/06/2013 07/06/2013 10/06/2013 10/06/2013 11/06/2013 12/06/2013 12/06/2013 13/06/2013 14/06/2013 14/06/2013 16/06/2013 17/06/2013 18/06/2013 18/06/2013 18/06/2013 19/06/2013 19/06/2013 19/06/2013 19/06/2013 19/06/2013 19/06/2013 20/06/2013 21/06/2013 22/06/2013 23/06/2013 24/06/2013 24/06/2013 24/06/2013 10/05/2013 30/05/2013 04/06/2013 04/06/2013 04/06/2013 04/06/2013 13/06/2013 14/06/2013 24/06/2013 25/04/2013 01/05/2013 01/05/2013 01/05/2013

Source: IBA’s JetData.

afm • Issue 85 – July–August • www.afm.aero

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

Aircraft deals 16 April to 24 June MSN

Make

5615 Airbus 41009 Boeing Airbus 34422 Boeing 40966 Boeing 34423 Boeing 31172 Boeing 38040 Boeing 5622 Airbus 5632 Airbus 33322 Boeing 39332 Boeing 1318 Airbus 1347 Airbus 23885 Boeing 24288 Boeing 27476 Boeing 1922 Airbus 26274 Boeing 27233 Boeing Bombardier 4056 7460 Bombardier 779 Airbus 886 Airbus 53360 Boeing 53515 Boeing 667 ATR 25317 Boeing 26525 Boeing 26527 Boeing 27679 Boeing 27680 Boeing 24622 Boeing 693 Airbus 697 Airbus 425 ATR 272 ATR 29141 Boeing 27268 Boeing 532 Airbus 525 Airbus 521 Airbus 4503 Airbus 23885 Boeing 28042 Boeing 4079 Bombardier 27521 Boeing 37 Airbus 45 Airbus 30 Airbus 26608 Boeing 27219 Boeing 35832 Boeing 30646 Boeing 27346 Boeing 461 Airbus 2791 Airbus 36115 Boeing 28102 Boeing 17000106 Embraer Airbus 115 2442 Airbus 2446 Airbus 25884 Boeing 35782 Boeing 35782 Boeing 29250 Boeing 38819 Boeing 24365 Boeing 25178 Boeing 28867 Boeing 49403 Boeing 27157 Boeing 2261 BAe 37567 Boeing 26850 Boeing 30436 Boeing 923 Airbus 689 Atr 20111 Fokker 343 Airbus 24318 Boeing 26251 Boeing 32672 Boeing 37365 Boeing 37366 Boeing

Model

Event

A320 737-800 A320-200 787 737-800 787 737-800 737-800 A320-200 A320-200 737-800 737-800 A320 A320 737-400 747-400 767-300ER A320 757-200 737-400 Q400 CRJ 100ER A340-600 A340-500 MD-90 MD-90 42-500 737-500 737-500 737-500 737-500 737-500 757-200 A310-300F A310-300F 72-200 72-200 737-300 737-500 A300-600F A300-600F A300-600F A318-100 737-400 767-300ER Q400 737-300 A330-300 A330-300 A330-300 767-300ER 757-200 737-800 737-800 737-300 A330-200 A320 737-700 737-700 E-170 A320 A319 A319 757-200 777-300ER 777-300ER 737-800 737-800 737-400 737-400 737-400 MD-87 737-400 Avro RJ-85 747-8 737-300 767-200ER A330-200 42-500 50 A330-200 767-300 757-200 737-800 737-800 737-800

Sale/leaseback Sale/leaseback Sale/leaseback Sale/leaseback Sale/leaseback Sale/leaseback Sale/leaseback Sale/leaseback Sale/leaseback Sale/leaseback Sale/leaseback Sale/leaseback Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold off lease Sold with lease Sold with lease Sold with lease Sub-leased Sub-leased Sub-leased Sub-leased Sub-leased Sub-leased Sub-leased Sub-leased Sub-leased Sub-leased Transferred Transferred Transferred Transferred Wet-leased Wet-leased Wet-leased Wet-leased Wet-leased Wet-leased Wet-leased Wet-leased Wet-leased Wet-leased Wet-leased Wet-leased Wet-leased Wet-leased Wet-leased Wet-leased Wet-leased Wet-leased Wet-leased Wet-leased Wet-leased Wet-leased

Current Owner/Operator

Date

Wizz Air. From ICBC 08/05/2013 Virgin Austrailia. Leased from ILFC 20/05/2013 Volaris. Leased from GECAS 21/05/2013 Thomson Airways. Leased from BBAM 30/05/2013 Ethiopian Airlines. Leased from AWAS 30/05/2013 Thomson Airways. Leased from BBAM 31/05/2013 American Airlines. Leased from Aercap 06/06/2013 Garuda Indonesia. Leased from GECAS 07/06/2013 Avianca. Leased from Avolon 10/06/2013 Avianca. Leased from Avolon 10/06/2013 American Airlines., Leased from Aercap 13/06/2013 Shandong Airlines. Leased from BBAM 13/06/2013 Allegiant Air 22/04/2013 Allegiant Air 22/04/2013 Shell Aerospace Supplies 22/04/2013 Atlas Air 22/04/2013 Air Do 22/04/2013 Aviation 29/04/2013 FedEx 29/04/2013 First Air 29/04/2013 Blue Bird Aviation 29/04/2013 Eagle Aviation 29/04/2013 AJW Capital 06/05/2013 Azerbaijan Airlines 06/05/2013 Delta Air Lines 06/05/2013 AerSale 06/05/2013 Nusantara Air Charter 08/05/2013 Vx Capital Partners 08/05/2013 Vx Capital Partners 08/05/2013 Vx Capital Partners 08/05/2013 Vx Capital Partners 08/05/2013 Vx Capital Partners 08/05/2013 Aeroturbine 13/05/2013 Pennant Aviation. 20/05/2013 Pennant Aviation. 20/05/2013 Island Air 20/05/2013 Avanti Air 20/05/2013 Dart Group 20/05/2013 Midair 20/05/2013 CALC 14/06/2013 CALC 14/06/2013 CALC 14/06/2013 Avcon Jet 19/06/2013 Avior Airlines 22/06/2013 Nordwind Airlines 22/06/2013 AeroContractors Company of Nigeria 23/06/2013 Jubba Airways 24/06/2013 Gladiator Leasing 20/05/2013 Gladiator Leasing 20/05/2013 Gladiator Leasing 20/05/2013 Business Air. Leased from Pegasus 22/04/2013 EC Air. Leased from Pivatair 29/04/2013 Transavia Airlines. Leased from GOL 29/04/2013 Corendon Airlines. Leased from ILFC 06/05/2013 FastJet. Leased from Star Air Cargo 06/05/2013 Air Europa. Leased from Orbest 13/05/2013 Jet2.com. Leased from Titan Airways 13/05/2013 Germania. Leased from Air Berlin 13/05/2013 Air Berlin. Leased from Germania 20/05/2013 Air Lituanica. Sub-leased from Estonian Air, who lease it from Finnair 22/06/2013 Air France 29/04/2013 Rusline 06/05/2013 Rusline 06/05/2013 SCAT 06/05/2013 Garuda Indonesia. Air austral 17/04/2013 Garuda Indonesia. Air austral 17/04/2013 Jet2.com. Leased from Travel Serivice 22/04/2013 Luxair. Leased from XL Airways France 22/04/2013 ArkeFly. Leased from AirExplore 22/04/2013 ArkeFly. Leased from AirExplore 22/04/2013 ArkeFly. Leased from AirExplore 22/04/2013 Cronos Air. Leased from Danish Air Transport 06/05/2013 Carpatair. Leased from LOT 28/05/2013 Um Air. Leased from Mahan Air 31/05/2013 Etihad Airways. Leased from Atlas air 07/06/2013 Tunisair. Leased from Europe airpost 10/06/2013 Boliviana de Aviacion. Leased from Omni Air International 13/06/2013 Etihad Airways. Leased from Jet Airways 14/06/2013 SEAir International 14/06/2013 Haajara Airlines. Leased from Skyward International Aviation 18/06/2013 Saudia. Leased from Air Atlanta Icelandic 19/06/2013 Royal air Maroc. Leased from euroAtlantic Airways. 24/06/2013 Aegean Airlines. Leased from Air Baltic 24/06/2013 Smart Wings. Leased from SpiceJet 24/06/2013 Smart Wings. Leased from SpiceJet 24/06/2013 Smart Wings. Leased from SpiceJet 24/06/2013

Source: IBA’s JetData.

afm • Issue 85 – July–August • www.afm.aero

AIRPORTS & INDUSTRY DATA: ROUTES: FirmAirport orders charges Firm orders - From 19 April to 1 July 2013

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

Firm orders - From 19 April to 1 July 2013

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

Manufacturer Variant Customer

Airbus A320neo Turkish Airlines Airbus A321-200 Turkish Airlines Airbus A321neo Turkish Airlines Airbus A319 Private Airbus A320-200 Easyjet Airbus A350-900 Singapore Airlines A320neo ILFC Airbus Airbus A320neo ILFC Airbus A320ceo Lufthansa Airbus A320neo Lufthansa Airbus A321neo Lufthansa Airbus A350-900 AirFrance-KLM Group Airbus A330-300 Srilankan Airlines Airbus A321ceo Spirit Airlines A350-1000 United Airlines Airbus Airbus A320ceo Nepal Airlines 72-600 Nordic Aviation Capital ATR ATR 42-600 Nordic Aviation Capital ATR 72-600 HGI Aircraft Division ATR 72-600 Air Lease Corporation Boeing 737-800 Unknown Boeing 777-200ER Unknown VIP Boeing 737-800 WestJet Boeing 777-300ER KLM Boeing 777-300ER United Airlines Boeing 737-800 Turkish Airlines Boeing 737 MAX Turkish Airlines Boeing 737-800 Southwest Airlines Boeing 737 MAX Southwest Airlines Boeing 777-300ER Swiss Boeing 737-800 Unknown Boeing 737 MAX Unknown Boeing 737 MAX 8 TUI Travel Plc Boeing 737 MAX 9 TUI Travel Plc Boeing 737-900ER United Airlines Boeing 777-300ER Qatar Airways Boeing 787-10 United Airlines Boeing 787-10 Singapore Airlines Boeing 737-800 Unknown 737 MAX Unknown Boeing Boeing 737 MAX CIT Boeing 737-800 Ryanair Bombardier Q400 Rwandair Bombardier CRJ1000 Arik Air Bombardier Q400 Arik Air Bombardier Q400 Horizon Air Embraer E-157+ United Airlines Embraer E-175 SkyWest Embraer E-190 Conviasa Embraer E-190 Air Costa Embraer E-170 Japan Airlines Embraer E175-E2 SkyWest

Order Date of Aircraft

Source: IBA’s JetData.

Number

Engines

19/04/2013 4 19/04/2013 25 19/04/2013 53 26/04/2013 1 09/05/2013 3 30/05/2013 30 17/06/2013 20 17/06/2013 30 17/06/2013 30 17/06/2013 35 17/06/2013 35 19/06/2013 25 19/06/2013 6 20/06/2013 20 20/06/2013 10 01/07/2013 2 18/06/2013 30 18/06/2013 5 19/06/2013 10 20/06/2013 5 25/04/2013 50 26/04/2013 1 07/05/2013 10 07/05/2013 1 07/05/2013 2 08/05/2013 20 08/05/2013 50 13/05/2013 5 13/05/2013 30 21/05/2013 6 21/05/2013 40 21/05/2013 6 31/05/2013 40 31/05/2013 20 06/06/2013 2 17/06/2013 2 18/06/2013 10 18/06/2013 30 19/06/2013 20 19/06/2013 20 19/06/2013 30 19/06/2013 175 22/04/2013 1 19/06/2013 3 19/06/2013 4 21/06/2013 3 30/04/2013 30 21/05/2013 40 07/06/2013 14 19/06/2013 1 19/06/2013 4 17/06/2013 100

Trent XWB Leap 1A PW1000G Trent XWB Trent 700 IAE Trent XWB IAE PW127 PW127 PW127 PW127 CFM56-7B CFM56-7B GE90 GE90 CFM56-7B Leap 1B CFM56-7B Leap 1B GE90 CFM56-7B Leap 1B Leap 1B Leap 1B CFM56-7B GE90 CFM56-7B Leap 1B Leap 1B CFM56-7B PW150 CF34-8C PW150 PW150 CF34-8E CF34-8E CF34-10E CF34-10E CF34-8E PW1000G

Source: IBA’s JetData.

afm afm •• Issue Issue 85 – July–August July–August •• www.afm.aero www.afm.aero

AIRPORTS INDUSTRY & ROUTES:DATA: Airport List charges prices List prices and lease rates - July 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 Airbus - A300-600R $4.40m $11.00m -1% $0.070m $0.160m Airbus - A310-200 $1.50m $2.00m 0% $0.050m $0.090m Airbus - A310-300 $3.50m $8.00m -3% $0.070m $0.140m Airbus $67.70m A318-100 $11.50m $25.00m -1% $0.120m $0.230m Airbus $80.70m A319-100 $9.50m $35.00m 0% $0.110m $0.270m $88.30m A320-200 $4.00m $40.50m 0% $0.065m $0.320m Airbus Airbus - A321-100 $9.50m $16.50m -2% $0.090m $0.200m Airbus $103.60m A321-200 $16.00m $48.00m 0% $0.165m $0.365m Airbus $208.60m A330-200 $32.00m $87.00m -2% $0.320m $0.850m Airbus $211.50m A330-200F $79.50m $91.00m 0% $0.730m $0.800m Airbus $231.10m A330-300 $17.50m $100.00m 0% $0.180m $0.900m Airbus - A340-200 $7.00m $15.00m 0% $0.140m $0.300m Airbus - A340-300 $7.00m $40.00m -6% $0.140m $0.460m Airbus - A340-500 $35.00m $80.00m -4% $0.350m $0.700m Airbus - A340-600 $35.00m $90.00m -4% $0.400m $0.750m Airbus $389.90m A380-800 $140.00m $205.00m 0% $1.350m $2.000m Boeing - B717-200 $6.00m $10.00m 0% $0.075m $0.140m Boeing - B737-300 $1.50m $5.00m -10% $0.040m $0.080m Boeing - B737-400 $2.50m $6.00m -9% $0.050m $0.090m Boeing - B737-500 $1.50m $4.50m -8% $0.040m $0.060m Boeing - B737-600 $9.00m $15.00m -6% $0.090m $0.160m Boeing $74.80m B737-700 $12.00m $34.50m 0% $0.135m $0.300m Boeing $89.10m B737-800 $15.00m $46.00m 0% $0.190m $0.360m Boeing - B737-900 $15.00m $24.00m -3% $0.150m $0.220m Boeing $94.60m B737-900ER $30.00m $48.50m 0% $0.260m $0.390m Boeing - B747-400 $11.00m $41.00m -4% $0.190m $0.450m Boeing $352.00m B747-8F $162.00m $180.00m 0% $1.300m $1.500m Boeing - B757-200 $5.50m $20.00m 0% $0.080m $0.220m Boeing $160.20m B767-200ER $3.40m $16.00m 0% $0.090m $0.250m Boeing $182.80m B767-300ER $9.50m $61.50m 0% $0.170m $0.460m Boeing $185.40m B767-300F $26.00m $65.00m -5% $0.280m $0.580m Boeing - B777-200 $21.00m $50.00m -5% $0.250m $0.400m Boeing $258.80m B777-200ER $38.00m $115.00m -3% $0.400m $0.900m Boeing $291.20m B777-200LR $78.00m $143.00m -1% $0.750m $1.150m Boeing $295.70m B777F $130.00m $165.00m 0% $1.200m $1.400m Boeing - B777-300 $42.00m $75.00m -1% $0.400m $0.650m Boeing $315.00m B777-300ER $88.00m $162.00m 0% $0.800m $1.550m Boeing $206.80m B787-8 $100.00m $113.00m 0% $0.900m $1.100m Boeing McDonnell Douglas - MD-11 $10.00m $16.00m 0% $0.150m $0.220m Boeing McDonnell Douglas - MD-81 $0.50m $0.09m -61% $0.025m $0.035m Boeing McDonnell Douglas - MD-82 $0.50m $1.40m -5% $0.025m $0.045m Boeing McDonnell Douglas - MD-83 $0.70m $1.80m -7% $0.035m $0.060m Boeing McDonnell Douglas - MD-87 $1.00m $1.70m 0% $0.025m $0.040m - MD-88 $1.00m $2.20m -11% $0.035m $0.060m Boeing McDonnell Douglas Boeing McDonnell Douglas - MD-90 $4.20m $5.70m -5% $0.072m $0.100m Bombardier (Canadair) - CRJ-100/200 $1.50m $5.50m -9% $0.035m $0.070m Bombardier (Canadair) $37.30m CRJ-700/705 $9.00m $22.50m -2% $0.090m $0.200m Bombardier (Canadair) $42.80m CRJ-900 $11.50m $25.00m -1% $0.120m $0.220m Bombardier (Canadair) CRJ-1000 $23.00m $27.50m 0% $0.200m $0.250m Bombardier - Q200 $4.50m $8.50m 0% $0.035m $0.080m - Q300 $5.30m $11.50m 0% $0.045m $0.120m Bombardier Bombardier $30.00m Q400 $9.50m $21.00m 0% $0.090m $0.200m Embraer $21.58m ERJ-135ER $1.70m $5.00m 0% $0.030m $0.050m Embraer $28.02m ERJ-145ER $2.80m $8.00m -2% $0.040m $0.080m Embraer $38.66m E170 LR $14.00m $27.00m 0% $0.140m $0.230m Embraer $41.61m E175 LR $17.00m $28.95m 0% $0.160m $0.250m Embraer $46.08m E190 LR $20.00m $32.00m 0% $0.180m $0.280m Embraer $48.67m E195 LR $22.00m $34.00m 0% $0.200m $0.300m Fokker - Fokker 70 $2.50m $3.00m 0% $0.040m $0.070m Fokker - Fokker 100 $2.30m $3.50m 0% $0.045m $0.090m Sukhoi SSJ 100-95B $22.00m $24.00m 0% $0.177m $0.225m Sukhoi SSJ 100-95LR $22.80m $24.70m 0% $0.182m $0.230m ATR $18.10m ATR 42-500 $4.20m $15.00m 0% $0.060m $0.140m ATR $18.90m ATR 72-500 $6.40m $19.30m 0% $0.080m $0.190m ATR $21.90m ATR 42-600 - $15.66m 0% - $0.150m ATR $22.70m ATR 72-600 - $20.00m 0% - $0.190m

% Change -4% 0% 0% 0% 0% 0% 0% 0% -3% -1% 0% -2% -8% -15% -12% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% -6% 0% 0% 0% -5% -2% -4% -7% -7% 0% -1% 0% 0% -3% 0% 0% 0% 0% 0% 0% 0% -3% 0% 0% 0% 0% -3% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

Source: IBA’s IBA’s JetData. JetData. Source:

afm afm••Issue Issue85 85––July–August July–August••www.afm.aero www.afm.aero

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

Engine data - July 2013

BB737- 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 20000

Source: IBA’s JetData.

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

Engine data - July 2013

standfirst

Type Engine Full-life mkt value Current half-life mkt value Mkt lease rate July 2013 July 2013 July 2013 B737-300 CFM56-3B1 $1.30m $0.70m $0.020m B737-400 CFM56-3B2 $1.90m $1.10m $0.022m B737-500 CFM56-3C1 $2.45m $1.40m $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 $4.30m $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 $6.10m $0.065m B737-900ER CFM56-7B27 $8.50m $6.50m $0.068m CRJ-200 CF34-3B1 $2.30m $1.30m $0.018m CRJ-700 CF34-8C5 $4.60m $3.20m $0.045m E170/175 CF34-8E5 $4.70m $3.30m $0.045m E190/195 CF34-10E6 $6.35m $4.95m $0.065m A300-600R CF6-80C2A5 $5.80m $3.00m $0.045m B767-300ER CF6-80C2B6F $7.50m $4.80m $0.054m MD-11 CF6-80C2D1F $5.80m $3.10m $0.045m A330-200 CF6-80E1A3 $14.80m $9.90m $0.120m B777-300ER GE90-115B $30.74m $22.95m $0.260m A320-200 V2527-A5 $7.75m $5.40m $0.060m MD-82 JT8D-217C $0.90m $0.50m $0.018m B747-400 PW4056 $7.20m $4.20m $0.055m A310-300 PW4152 $6.30m $3.40m $0.045m B757-200 RB211-535E4 $5.00m $3.20m $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 $8.60m $0.120m B777-200ER Trent 895 $21.10m $13.80m $0.170m A380-800 Trent 970 $19.80m $13.80m $0.170m ERJ-145 ER AE3007-A1 $2.35m $1.40m $0.025m B717-200 BR715A $4.00m $2.50m $0.042m Source: IBA’s JetData.

afm afm •• Issue Issue 85 – July–August July–August •• www.afm.aero www.afm.aero

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