AFM Issue 92 by AFM Magazine

The business and financing of airline operations AIRLINE FLEET MANAGEMENT

Interview: LATAM & Belavia Chinese aircraft finance Big data & Digital technology Aircraft upgrades

ISSUE 92 September–October 2014

Unfolding in emerging markets Published by

September–October 2014 Issue 92 www.afm.aero

Foreword This issue of is all about emerging markets, but not just geographical markets, we also look at new technology and new ways in which to do business.

Editor Mary-Anne Baldwin mary-anne@afm.aero +44 (0)208 831 7511 Contributors Jonny Williamson, Justin Burns, Tom Zaitsev and Neelam Mathews.

One huge market that has yet to be fully realised is data analytics. Its scope is so vast and opportunities so significant that we’ve dedicated two articles to it. We’ve chosen to speak with both SAP and Accenture, the latter of which also guides us through in-flight connectivity and flight tracking technology.

Advertising Manager Ellis Owen ellis@afm.aero +44 (0)208 831 7519 Editorial Director Joe Bates joe@aviationmedia.aero Design Erica Cooper erica@afm.aero Creative Director 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 (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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Data analytics can touch upon every aspect of the aviation industry and far beyond. Not only is big data a new service to many, but it also provides the opportunity to locate and develop many new markets. In fact, we can find out pretty much anything from data analytics, and our interview with SAP offers many examples. One is how SAP uses data to predict maintenance issues, which offers an 18 per cent cost saving compared with traditional approaches. One market that doesn’t need big data to prove its significance is Asia’s financing market. has already looked at the rise in Japanese leasing, but this time Tadas Goberis, CEO of AviaAM Leasing, breaks down China’s aviation finance market for us. According to him, Chinese financial institutions have grown to cover 75 to 80 per cent of the local market share today. Now, of course, they are looking to take this further afield.

needed a re-cap of what went on there, just check out page 18). Updating aircraft in this way provides the OEMs with product life extension, but it also creates new markets for airlines. According to Domhnal Slattery, CEO of Avolon, the A330 neo’s “sweet spot” is in the developing region of Asia. Azran Osan-Rani, CEO of AirAsia X (which ordered 50), noted that the aircraft is just as effective on a four-hour range as it is on long-haul flights, which means AirAsia X has the flexibility to fly longer haul services with it in the future. As if that hadn’t given you enough homework to read, we’re also spoiling you with not one but two airline interviews. We talk with Belavia, a small Belarusian airline with big ideas and 20 per cent traffic growth, plus LATAM, a leading airline in the developing region of Latin America. You’d better start reading now!

But, we start the magazine with a look at new aircraft technology – namely the A330 neo, 777X design and 200-seat 737 MAX 8 aircraft, all of which were announced at the Farnborough Air Show (oh, and if you

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Editor Mary-Anne Baldwin

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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 MRO Network, 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 92 – September–October • www.afm.aero

The business and financing of airline operations AIRLINE FLEET MANAGEMENT

Interview: LATAM & Belavia Chinese aircraft finance Big data & Digital technology Aircraft upgrades

ISSUE 92 September–October 2014

Unfolding in emerging markets Published by

September–October 2014 Issue 92 www.afm.aero

Issue 92 September –October

In this issue

03 10

Foreword

NEWS

The latest on deals, mergers, appointments and more.

18 20

FLEET OPERATIONS

Farnborough Air Show review re-caps on the events at this year’s Farnborough Air Show. We’ve extracted the best bits, from aircraft orders to OEM rivalry and industry controversy.

Updating the offerings: Aircraft upgrades

Reporting from Farnborough Air Show, where OEMs announced details of the 200-seat 737 MAX 8, 777X and A330 neo, Mary-Anne Baldwin looks into the aircraft upgrades.

FOCUS

One to one: Belavia Belavia’s general manager, Anatoly Gusarov, talks to Tom Zaitsev about the airline’s success in an increasingly demanding and competitive environment.

afm • Issue 92 – September–October • www.afm.aero

CONTENTS

FOCUS

One to one: LATAM Airlines Group On the sidelines of this year’s Farnborough Air

34 38 42

Show, LATAM Airlines Group chairman of the board, Mauricio Amaro, spoke to Jonny Williamson about the group’s fleet development strategy.

TRADING, LEGAL AND FINANCE

Analyse this: The benefit of big data

Mary-Anne Baldwin speaks to data analytics provider, SAP, to find the benefits of crunching numbers.

Let’s get digital: The benefits of digital technology Justin Burns talks to John Schmidt, managing director of Accenture, about the numerous benefits digital technology and data analytics can offer airlines.

A dragon’s appetite: China’s aircraft finance market

AviaAM Leasing provides its analysis of the Chinese aviation finance market and its heady ambitions for growth.

MAINTENANCE OPERATIONS

Thailand’s thrust: Maintenance and manufacture

With Thailand’s aerospace industry booming, Neelam Mathews reports on the country’s latest MRO developments.

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

Aviation prepares for spread of Ebola

he US and Europe are most at risk of Ebola, a research study by EcoHealth Alliance has shown. The non-profit organisation predicted the probable spread of Ebola using available flight data. Its results show that the highest risk countries are the US and much of Europe. Other countries most at risk include the Netherlands, Germany, France, Switzerland, Denmark, Portugal, Austria, Italy, Spain, Senegal, Ghana, Gambia, Israel, the UAE and Japan. EcoHealth Alliance collected flight schedule data from Liberia, Guinea, Sierra Leone, Morocco, Nigeria and Ghana. It formed the method of risk analysis used to chart a possible Ebola outbreak back in 2009 when it examined the spread of the H1N1 virus. “Our initial work identifying the pathways the 2009 outbreak of Influenza A/H1N1 formed the basis of our approach to understand the plausible routes that Ebola could present as a risk to global communities,” said Dr Parviez Hosseini, senior research fellow at EcoHealth Alliance.

In today’s highly connected world, viruses can spread at an alarming rate, and just one infected passenger can produce a domino effect of contamination that spreads across the globe. Ebola is highly contagious (spreads through bodily fluids, including sweat) and is often – although not always – fatal. The experimental drug, ZMapp, has shown promising results; however, there is no formal vaccine. Quarantine is the best defence, which is why global travel poses such a threat. “It is highly unlikely that someone suffering such symptoms would feel well enough to travel,” IATA said in a statement. “In the rare event that a person infected with the Ebola virus was unknowingly transported by air, WHO advises that the risks to other passengers are low.” This is because the virus is not airborne. Most people infected with Ebola lived or cared for a person with the virus. Airline cleaning crew have been instructed to wipe all surfaces with disposable wipes and wear disposable gloves. Any sickness during a flight will be reported to air traffic control.

NEWS IN BRIEF Fastjet incorporates Kenyan company Fastjet has drawn closer to its goal of launching a Kenyan base by incorporating a company in the country, fastjet Kenya, and by applying for its Air Service Licence (ASL). The ASL application process requires all airlines to formally submit a detailed business plan incorporating its proposed operation, network, aircraft specification, operational plan and commercial strategy. To comply with local airline ownership rules, a Kenyan national owns 51 per cent of the equity of fastjet Kenya, with the balance being held by fastjet plc. “We are excited at the prospect of extending the footprint of [our] operation,” said its CEO, Ed Winter.

Aircraft ‘skin’ could detect injury BAE Systems is developing human-like ‘skin’ for aircraft that would be able to detect injury or damage and could ‘feel’ the environment around it. Engineers at its Advanced Technology Centre are investigating the concept that would employ tens of thousands of micro-sensors, or ‘motes’. When applied to an aircraft, the motes would enable it to sense wind speed, temperature, physical strain and movement far more accurately than current technology allows. As small as grains of rice or even dust particles, collectively these motes would have their own power source and would be able to communicate in much the same way that human skin sends signals to the brain.

Ryanair sizes up Israeli offshoot Ryanair plans to build a major hub at Israel’s Ben Gurion International Airport in order to serve destinations across Europe and Russia. Although Ryanair doesn’t yet serve any routes to Israel – something its outspoken CEO, Michael O’Leary, attributes to slow progress by IIsraeli authorities – it plans to serve markets across Israel to destinations in Russia, Central Europe, the UK, Germany and Ireland. It has also bid for Cyprus Airways, despite its public claims of disinterest in the carrier. The deadline for proposals to purchase the airline have closed and it is thought about 20 companies have bid.

afm • Issue 92 – September–October • www.afm.aero

NEWS

Russia threatens sanctions against European airlines Russia has said it may place sanctions on European airlines, stopping them from flying over Siberia en route to destinations such as South Korea and Japan. According to a source quoted by Russia paper, Vedomosti, the ban could cost airlines such as Lufthansa, British Airways and Air France $1.3bn over three months. The threat is in retaliation against a blacklisting imposed by the European Union (EU) on Russian low-cost carrier, Dobrolyot (also known as Dobrolet). The carrier, which is operated by Aeroflot, was forced to suspend operations after its leasing contract was terminated under EU rules. The EU was acting in response to the fact that Dobrolyot flies to Crimea, which was controversially annexed by Russia.

Congo start-up prepares for takeoff A new African airline, Congo Airways, is set to launch before the end of the year. The airline was incorporated as a company on 15 August during an official ceremony in Kinshasa. Congo Airways has $35m in start-up capital and numerous investors, including the Congolese Office of Multimodal Freight Management (Ogefrem), and the Congolese Transportation and Ports Authority (SCTP). The African government is increasing its investment in national aviation in a bid to improve its safety and public perception. Congo Airways will introduce itself with modern aircraft on domestic routes. This will later be increased to regional and international routes.

The carrier’s lessor, AWAS, terminated its lease agreement for 737-800s while its maintenance provider, Lufthansa Technik, also ended its dealings with the airline. Dobrolyot has ordered 16 737-800s directly from Boeing, which is not restricted by EU law, but those planes won’t arrive until 2017. The EU’s move also casts concern over Russia’s remaining airlines, which, apart from Red Wings, lease aircraft from companies in the West. The EU has found Russia’s weak spot; should it decide to impose sanctions on any other Russian airline (for example, Aeroflot or S7), those too would not be able to operate.

A350 XWB completes route trials The A350-900 has completed a route proving tour that took it to 14 cities in three weeks. The flights included high altitude airports, ultra-long-haul routes and a technical route proving trial that is required for type certification, which is expected in 3Q this year. Fernando Alonso, SVP of flight and integration tests, commented: “The aircraft has performed remarkably well.” The exercise took the flight test aircraft, MSN 005, on a 20-day trip over the North Pole, each ocean and stopping at 14 major international airports worldwide. The aircraft flew approximately 81,700nm or 151,300km in some 180 flight hours, with all flights performing on schedule.

PAL fleet grounded by DGCA PAL Airlines has been forced to suspend operations for the second time following an audit by Chile’s civil aviation regulator, the Directorate General of Civil Aviation (DGCA). A DGCA audit of PAL’s accounts revealed that the airline had defaulted on its payment of passenger embarkation taxes, in addition to aeronautical charges. PAL had its Air Operator’s Certificate suspended by the DGCA in May for 10 days as a result of the carrier allegedly breaching “technical requirements” that could “endanger safety”. The DGCA said the airline’s failure to satisfy unspecified technical requirements could puts its safety and security at risk if they are not resolved.

afm • Issue 92 – September–October • www.afm.aero

NEWS

Task force to tackle conflict zone risk

fficial aviation bodies will put together a task force to address the risks to civil aviation in conflict zones following the destruction of flight MH17 in Ukraine. The International Civil Aviation Organization (ICAO), the International Air Transport Association (IATA), Airports Council International (ACI) and the Civil Air Navigation Services Organisation (CANSO) met to review the issues and what should be done following the incident. “As a first step, [member] states have been reminded by ICAO of their responsibilities to address any potential risks to civil aviation in their airspace,” ICAO said in a statement. The bodies will ‘immediately’ establish a senior task force to address civil aviation and national security, and how information can be collected and disseminated. These findings will be submitted to the ICAO Council for action. The industry has also called for fail-safe channels for threat information to be disseminated, and for international laws governing the design, manufacture and deployment of modern anti-aircraft weaponry. The Association of European Airlines (AEA) in particular had called for an international debate about airline security following the destruction of flight MH17.

“The downing of Malaysia Airlines’ flight MH17, which was flying in approved international airspace, triggers questions about how risk assessments are made”, said the AEA’s CEO, Athar Husain Khan. “Together with the International Air Transport Association and our member airlines we ask for an international debate about airspace security guidance, preferably organised by the International Civil Aviation Organisation (ICAO).” The Malaysia Airlines 777 was hit by a ground-to-air missile three hours into its flight as it travelled over a field near the town of Shakhtersk, Ukraine, on its way from Amsterdam Schiphol to Kuala Lumpur International. All 295 people on board were killed. There were also concerns that the recent Air Algérie flight, which was lost from radars on Thursday 24 July and crashed in southern Mali, was also hit by a missile. The Federal Aviation Administration (FAA) had issued a notice to airmen (NOTAM) not to fly below 24,000 feet when in Mali’s airspace due to insurgent activity. However, it is also thought the plane could have come into trouble when it hit a sandstorm. The black box, which should give evidence as to what happened, has been recovered. Similarly, flights to Tel Aviv airport were banned recently after a rocket landed just one mile from the airport.

NEWS IN BRIEF MAS prepares to be privatised Malaysia Airlines (MAS) was de-listed from the stock exchange as its government prepared to fully privatise the airline. Malaysia’s state investment firm, Khazanah Nasional, will pay $435m to privatise MAS, a move that is seen as a necessary attempt to save it from bankruptcy. Khazanah has already invested more than $1.6bn in MAS and currently owns 69.4 per cent of the airline. Khazanah said it must look at all aspects of the airline when it comes to restructure it, including staff, finances and its business model. It was later announced that the airline will cut 6,000 jobs.

787 battery fault due to temperature? Cold winter conditions may have caused the notorious fault with the Dreamliner’s batteries, the Japan Transport Safety Board (JTSB) has found. According to a local Japanese paper, a draft report from the JTSB claims that extreme temperatures were the most likely cause of a lithium-ion battery malfunction on an All Nippon Airways (ANA) aircraft. Having spoken with aviation experts, the media outlet claimed that low temperatures could break down the battery’s liquid electrolytes, raising the risk of a short circuit. It is thought that the JTSB will be releasing its final report sometime in the coming months.

Air Algérie voice recorder unusable The cockpit voice recorder (CVR) recovered from flight AH5017 is too damaged to be of any use, say French investigators. The French Civil Aviation Safety Investigation Authority (BEA) has stated that the magnetic tape in the aircraft’s CVR suffered considerable damage during the crash in July. Air Algerié flight AH5017 was flying 116 people from West Africa’s Ouagadougou, Burkina Faso to Algiers, the Algerian capital. The McDonnell Douglas MD-83 aircraft went missing from radars one hour into its flight and subsequently crashed over Mali.

afm • Issue 92 – September–October • www.afm.aero

NEWS

Etihad and Alitalia shake on share deal

litalia and Etihad Airways have finalised their investment deal, securing Alitalia’s restructuring. Subject to regulatory approval, Etihad will invest €560m ($736m) in Alitalia, making it a minority shareholder in the airline. In addition, Alitalia’s existing shareholders will invest a further €300m ($394m), and up to €598m ($786m) will be made by restructuring short- and medium-term debt. The airline will also benefit from an additional €300m ($394m) new loan facility from Italian financial institutions. A breakdown of Etihad’s investment shows that it spent €385.7m ($507m) to purchase a 49 per cent stake in Alitalia. It also spent €112.5m ($148m) to acquire a 75 per cent stake in Alitalia Loyalty Spa, which operates MilleMiglia, the airline’s frequent flier programme, and purchased five pairs of slots at London’s Heathrow Airport valued at €60m ($79m). The slots will be leased back to Alitalia on an “arm’s length basis”. “This is a unique opportunity for Alitalia to restructure and win,” James Hogan, president of Etihad, said during a press announcement in Italy. “Together we will build capabilities and expertise.” Alitalia is 67 years old, while Etihad is just 10. But while significantly younger than Alitalia, Etihad has achieved greater success and has both the acumen and investments to help the struggling carrier. “Alitalia is a good airline. It is a strong airline,” said Hogan. “But for a range of reasons it is a poor business financially. And when you’re a poor business financially, it’s hard to invest.” The burning question is how Etihad plans to turnaround this national gem-turned-disaster story. “We have to stabilise the business,” said Hogan, explaining that this includes route development, investment and – more controversially – job cuts. Gabriele Del Torchio, CEO of Alitalia, said: “We have had to take some tough decisions in a very robust negotiation process, but we have achieved the consensus we require to create the right shape and size for Alitalia in the future.”

Further changes will affect both Alitalia’s branding and routes. “Alitalia is certainly going to look very different,” claimed Hogan. “To me, Alitalia should be the sexiest airline in Europe.” The Italian airline will introduce 10 new long-haul routes and will increase its widebody fleet by 32 per cent. Part of this route development will include new routes linking Italy and Abu Dhabi. The proposed long-haul network plan focuses on growth at Rome Fiumicino and Milan Malpensa. Starting from winter this year, it will increase its frequencies between Rome Fiumicino and Abu Dhabi from five flights per week to a daily service. It will also start a new daily service between Milan Malpensa and Abu Dhabi. From next summer, it will start flights between other Italian cities and Abu Dhabi, with plans for direct flights from markets such as Venice, Catania and Bologna. Etihad currently operates daily services from Abu Dhabi to Rome and codeshares with Alitalia on 31 other destinations. Yet, it is keen to gain a greater foothold in the Italian market and sees Alitalia as its opportunity to do so. “It’s about connectivity,” he explained. “It gives us the opportunity to plug into Italy.” Italy takes €52bn ($68bn) each year in tourism (according to 2012 figures) and also has a large cargo market. Unlike any other airline, Etihad is not part of an airline alliance but relies on independent and organic growth through its partnerships with other carriers. Etihad has 47 codeshare partners and has invested in seven other airlines. The major advantage of equity airline partners is the ability to form better deals for aircraft, MRO, avionics and the like. “We go to the table as one,” explained Hogan. “The possibilities when we knit together our network with those of our existing equity partners... will provide the most compelling customer offering.” “With an airline the size of Alitalia, we have no doubt that, as it starts to turn, it will contribute [to Etihad’s bottom line] considerably.”

afm • Issue 92 – September–October • www.afm.aero

NEWS: People

On the

move Ryanair appoints technology head

Ryanair has announced the appointment of John Hurley as its chief technology officer. He joins the low-cost airline on 15 September from Houghton Mifflin Harcourt and will work closely with the CEO and the Ryanair Labs team. He will be responsible for developing and implementing a digital and technology strategy and heading up a team of 200 people as he oversees the roll-out of the Ryanair Labs digital innovation hub, based at Ryanair’s new Dublin Campus in Swords.

Virgin America fills key role Virgin America has appointed Brad Thomann as its VP of flight operations. Thomann, who has over 30 years of experience in civil and military aviation, now oversees the California-based airline’s technical and administrative flight operations functions. His remit includes flight training, flight operations engineering, flight standards, flight crew communications, flight crew resources and the chief pilot’s office. Thomann brings a wealth of knowledge to the role having held senior leadership roles at Virgin Australia, Boeing and United Airlines. Steve Forte, Virgin America chief operating officer, comments:

“With an aviation career spanning over three decades, Brad brings an impressive depth of experience to this important new role.”

Jet names new CCO Jet Airways has appointed Raj Sivakumar to the position of chief commercial officer with immediate effect. Sivakumar will be responsible for the overall development and implementation of a robust sales strategy, as well as increasing its market share and maximising revenues. Joining Jet Airways in August 2007, Sivakumar possesses a wealth of knowledge and experience from 15 years spent at United Airlines. Having held a number of leadership positions relating to revenue optimisation, R&D, IT and strategic sourcing, Sivakumar was previously responsible for the management, pricing and network planning of the entire Jet Airway’s network. Jet Airways recently named Bill Cramer as its new CEO.

Air Lituanica appoints CEO Gytis Gumuliauskas has replaced Erikas Zubrus as Air Lituanica’s CEO, effective immediately. Zubrus will not be withdrawing from the airline’s activities altogether but

afm • Issue 92 – September–October • www.afm.aero

will be staying on as consultant of strategic affairs. Gumuliauskas has been with the airline as director of ground operations since its establishment last June. He was subsequently made Air Lituanica’s chief operations officer in January this year. Before joining Air Lituanica, Gumuliauskas was director of ground operations and in-flight services at charter outfit, Small Planet Airlines. Having already handled more than 100,000 passengers in its first year of operation, Air Lituanica is planning to expand its fleet next year in order for it to broaden its destination network.

Aer Lingus names new CFO Aer Lingus has appointed Bernard Bot as its new CFO. Bot will join the Irish flag carrier on 1 September ending his most recent role as CFO and executive board member at TNT Express, one of the world’s largest delivery companies. Aer Lingus’ current CFO and executive director, Andrew Macfarlane, will step down to coincide with Bot’s arrival. In the intervening period, Macfarlane will assist with the role’s transition process. Aer Lingus chairman, Colm Barrington, commented: “[Bot’s] experience within the sector and as group CFO of a leading publicly-listed company will complement the skill set of our existing strong management team.”

FLEET OPS: FARNBOROUGH NEWS

Farnborough Air Show review

t seems so long ago now, but for those of you who weren’t at the Farnborough Air Show (FAS) and for those who have since been hiding under a rock or have been on holiday, Airbus won the most business with 496 orders worth $75bn, versus Boeing’s 201 orders, totalling $40.2bn at list prices. The annual question of who won the most orders reflects the competition between the two main manufacturers, Boeing and Airbus, but in the great scheme of things, does it really matter? As Boeing was quick to highlight, its orders for the year-to-date are still higher than its rivals. Boeing had 549 net orders before the air show began, which contrasted with Airbus’ comparably meagre 290 orders. After the show, Airbus stood at 648 firm orders but Boeing won the year-to-date competition with 783 firm orders.

Noteworthy developments Aside from the big two, COMAC used the FAS to announce orders from three clients, boosting its total orders to 258. The Chinese airframe manufacturer signed an MoU with the Republic of Congo’s Ministry of Transport for three ARJ21-700s; YanShang Corporation, a Chinese multi-business conglomerate, signed an order to become the launch customer for a business-jet variant of the ARJ21; and Nanshan Group also signed for two ARJ21 business jets. Following a number of certification issues which have hindered progress, COMAC intends to deliver 20 ARJ21s annually from 2018 and expects to fulfil its first overseas order in late-2016 to early-2017.

Speaking about its orders at the show, COMAC’s CFO, Tian Min, commented: “With this, the continued development of the ARJ21 aircraft has taken the first substantive step.” Mitsubishi Aircraft Corporation announced at Farnborough its plans to hold test flights for the new MRJ in the US in 2Q 2015 and said it expects the first delivery to be in 2017. Other interesting developments were that Boeing revealed design aspects for the new 777X and announced that it would build a 200-seat MAX 8 aircraft, while Airbus revealed that it would build the A330 neo, which has been hotly anticipated. We take a thorough examination of both of those topics on page 20.

Compare and contrast But, if we’re making it a competition, most of the sizeable orders did go to Airbus. Qatar ordered 100 777-9Xs; SMBC struck a deal for 115 A320s; AerCap bought 50 A320 neos; and BOC Aviation ordered 43 A320 and A321s. However, it did lose one very important customer when Monarch switched its allegiance to Boeing by ordering 30 737 MAX aircraft. The order was fiercely fought between Boeing, Airbus and Bombardier. Monarch’s new MD, Andrew Swaffield, explained that Boeing won the order by offering a package that includes better efficiency and a good price. “Was it a hard fought campaign? Absolutely,” said Boeing’s CEO, Ray Conner. “But price isn’t the only factor.” He added that the deal was struck on price,

afm • Issue 92 – September–October • www.afm.aero

FLEET OPS: FARNBOROUGH NEWS

efficiency and its relationship with the airline. Monarch also has a strong history of engineering with Boeing.

A380 from display at Farnborough in a bid to bully the carrier into taking delivery of it.

Iain Rawlinson, executive chairman of The Monarch Group, said Swaffield was also “instrumental in the decision to choose Boeing”.

Qatar refused to take delivery of three A380s, which were due to be handed over in June but did not pass their delivery inspections. The airline is in on going disputes with the OEM regarding the delivery of its A380s and Al Baker said he will pursue compensation.

Swaffield explained: “We included the CSeries in this campaign and it was not successful... For our particular needs, it was not quite right.” But how did the FAS compare against its sister event, the Paris Air Show, and its own previous shows? Aircraft manufacturers took a total of $130bn worth of orders from the FAS this year, proving that, despite record high production rates, the market for new aircraft is particularly strong. This year’s total was just off from last year’s larger Paris Air Show, which recorded a total of $134.7bn in sales. Of this year’s total, $115.5bn was split between the two main OEMs, Boeing and Airbus, but others’ success should not be overlooked. Bombardier took deals worth over $1.5bn in total, and with options this could rise to about $3.5bn. However, its CSeries aircraft was notably absent from the air show displays because all aircraft were grounded after a seal problem in the engine oil system caused by an uncontained failure on 29 May. Still, its notable orders included deals with Loong Air, which penned an LOI for 20 CS100s, and Falcon Aviation, which signed for two CS300s. Petra Airlines ordered up to four CS100 and CS300 aircraft and airBaltic was revealed as the previously announced customer of three CS300s.

Courting controversy Like the CSeries, Qatar’s A380 was also absent. The airline’s CEO, Akbar Al Baker, claimed Airbus withheld its

This was not the only controversy. Over a hundred Russian officials and industry leaders were barred from the air show due to Russia’s actions in Ukraine. The UK’s Foreign Office refused visas for Russian government officials and others wishing to attend the industry air show, meaning they were effectively banned from attending. The UK government said that it played no part in the decision to block Russians, noting that it is a privately run event. However, Farnborough Air Show itself said that it had “done everything” to help all those attending gain visas. Delegates from some 67 Russian companies planned to join the event, most of which were able to attend. Indeed, 75 per cent of the 400 Russian attendees who planned to attend were allowed into the show. However, some urged those attending to leave in protest. It was thought the block affected only government officials and industry leaders at both Russian civil and military aerospace manufacturers. UK Prime Minister, David Cameron, was one political figure to have made it to the event, however. Cameron was welcomed by Qatar Airways’ Al Baker and Airbus CEO, Tom Enders, on the opening day of the FAS. During his visit to the show, the Prime Minister announced a £1.1bn ($1.8bn) investment in capabilities for the armed forces and set out the action plan to improve competitiveness and boost the UK defence sector. Reflecting on the number of attendees and amount of business at this year’s show, it’s clear it won’t be the only development we’ll see.

afm • Issue 92 – September–October • www.afm.aero

FLEET OPS: AIRCRAFT UPGRADES

Updating the offerings: Aircraft upgrades Reporting from Farnborough Air Show, where OEMs announced details of the 200-seat 737 MAX 8, 777X and A330 neo, Mary-Anne Baldwin looks into the aircraft upgrades.

lean sheet aircraft are typically announced at the world’s major air shows, but this year’s Farnborough Air Show (FAS) was all about the upgrade.

Boeing revealed design aspects for the new 777X and announced that it will build a 200-seat 737 MAX 8 aircraft, while Airbus revealed that it will build the A330 neo, which has been hotly anticipated. There are many benefits to upgrading or re-engining aircraft. Largely, having already become acquainted with the older, typically very popular, variant, both customers and the OEM know what they are going to get. This confidence in the product converts to sales. But the biggest benefit to OEMs is that upgrades are cheaper than a clean sheet and can extend a product’s life extensively. So, let’s look at what the market has just been offered.

Boeing’s offerings During FAS, Boeing announced plans to build a 200-seat 737 MAX 8, a larger version of the re-engined 737NG narrowbody aircraft. The new “minor model” addition

will deliver a 20 per cent fuel saving on the current 737NG and is positioned to attract low-cost airlines. Also catering to low-cost airlines, it will increase the capacity of the 737 MAX 8 by 11 seats compared with both the current 737NG and the A320 neo (itself a re-engined variant of the 180-seat original). The extra seats will be accommodated by a mid-exit door, located in the rear third of the aircraft, similar to that on the MAX 9. Furthermore, seat pitch will be reduced to 29in per seat, which will increase fuel efficiency per seat-mile by 20 per cent compared with the existing 737NG. Boeing will deliver the first MAX 8 in 2017 and the first MAX 9 in 2018, each equipped with CFM International’s Leap-1B engines. Boeing also revealed a number of the 777X’s design aspects at the show. Speaking at FAS, Scott Fancher, SVP of airplane development at Boeing, explained that the new aircraft will have many of the 787’s design and passenger experience elements, but that these would be “re-made anew”.

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FLEET OPS: AIRCRAFT UPGRADES

The 777X builds on the market-leading 777, which currently holds 55 per cent of the market in its category in terms of backlog, and 71 per cent of the in-service fleet. It will be powered by GE Aviation’s GE9X engine, which will sit below an all-new composite wing with a longer span than today’s 777. “We’re going to replicate and go beyond,” said Fancher. Like the 787, the 777X will have a cabin altitude of 6,000ft, although its cabin humidity will be comparably higher. Fancher believes this will make a significant difference to the way passengers will feel when they leave the plane, particularly after a long-haul flight. The 777X will also feature an enhanced air filtration system, next-generation LED lighting and windows that are 15 per cent larger than the competition – all of which will enhance the passenger experience. The 777X will also have a reduced cabin noise. Seats will be 16in wider and airlines will have the choice of a number of seat widths up to 18inches.

The new aircraft will also deliver 11 more revenue seats, worth an extra five per cent in revenue. The 777-9X will not directly compete with any other aircraft and will offer airlines new growth and route opportunities. It will seat up to 400 passengers depending on configuration and has a range of more than 8,200nm. According to Boeing, the aircraft will have the lowest operating cost per seat of any commercial airplane. Competing against the A350-1000, the 777-8X will seat up to 350 passengers and offer a 9,300nm range capability. According to Boeing, the 777X will offer 12 per cent more fuel efficiency over the A350-1000, plus 10 per cent lower operating economics. Versus the A350-1000, it will offer up to 18 tonnes more cargo, 60 more passengers and an extra 340nm in range. The 777X programme was launched at the 2013 Dubai Air Show in November 2013 with agreements for 259 aircraft from four customers across Europe and the Middle East – the largest product launch by dollar value at $95bn.

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FLEET OPS: AIRCRAFT UPGRADES The 777X currently has 300 orders from six customers. “It took nearly three years for the 777ER to reach this number,” boasted Fancher. The SVP added: “And by the way, sales on the 777ER still continue to make a significant contribution.

The other side of the coin But Boeing wasn’t the only one to announce upgrades at the event. Airbus also added two new aircraft to its widebody family: the A330-800 neo and the A330-900 neo. Ray Conner, CEO of Boeing Commercial Airplanes, responded to the news by saying that he looks forward to the competition. “We know what the [A330] airframe can do, what the engines can do. We are very comfortable with our product line,” Conner said. However, the proof of its competitive prowess is in the orders. Both the A330-800 and -900 neos will incorporate the new Rolls-Royce Trent 7000 engine, aerodynamic enhancements and new cabin features. But the biggest gain is fuel efficiency. The A330 neo will reduce fuel consumption by 14 per cent per seat, lowering operating costs and making the aircraft more versatile.

range increase with the introduction of the 242 tonne version due for entry next year. Rather than add more small incremental improvements in order to extend the aircraft’s lifecycle, a re-engining has sent its sales trajectory back up. According to Jeff Knittel, president of CIT Transportation & International Finance, re-engining could add 10 to 15 years to the life of the programme. A re-engine will require extensive wing strengthening due to the additional weight of the Rolls-Royce Trent 7000 engines, but Airbus has gained valuable experience from the re-engine of the A320. Considering its orders so far, it certainly seems that the market has confidence in the product.

No plan B AirAsia X became the aircraft’s launch customer with an order for 50 of the aircraft. “It’s good to break the virginity of an aircraft,” joked director of AirAsia X, Tan Sri Tony Fernandes, at FAS, where the order was announced. He explained that he left his holiday in order to agree the deal, which as of midnight the night before still hadn’t been agreed. But, having urged Airbus to

Tony Fernandes, director, AirAsia X

I had to make them make this aircraft. If plan A didn’t work we would have kept nagging them. There was no plan B. Along with fuel savings, A330 neo operators will also benefit from a range increase of 400nm and all the operational commonality advantages of the Airbus family. Airbus is pumping €1–2bn into the re-engine programme following widespread demand for the aircraft. The costs will be incurred from 2015–17 with an impact of around minus 70 points on Airbus’ 2015 return on sales target. Deliveries of the A330 neo will start in 4Q of 2017. On the day of the programme announcement at FAS in July, Tom Enders, CEO of Airbus, explained: “The A330 is a very important margin contributor for our group. It is also one of the most reliable and efficient commercial aircraft ever.” Indeed, the A330’s low capital cost has made it Airbus’ most successful widebody aircraft to date, accruing over 1,300 firm orders by the end of last year. But that demand could not stay forever – a step change was needed. Prior to the news on re-engining, Airbus had already invested in a number of upgrades to the A330, including a 50 per cent

re-engine the A330, it was clear the airline would make an order at some point. “I asked for the [A330] neo many times but was told ‘no’ many times in many languages,” explained Fernandes. “I had to make them make this aircraft,” said the director. “If plan A didn’t work we would have kept nagging them. There was no plan B.” He explained that the aircraft will be a “critical part of its fleet” and will allow it to offer lower fares and link to larger flights. “Most of the aircraft being made were for long-haul,” he said, explaining his reasons for ordering the aircraft. “I thought there was a massive opportunity for a mid-haul aircraft. Some of the kit out there was too large and we like to do four or five trips a day.” CEO of AirAsia X, Azran Osan-Rani, noted that the aircraft is just as effective on a four-hour range as it is on long-haul flights, which means AirAsia X has the flexibility and opportunity to fly longer services in the future.

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FLEET OPS: AIRCRAFT UPGRADES

But although AirAsiaX calls itself the launch customer, it was not the first to order the aircraft. That spot was taken by lessor, Air Lease Corporation (ALC), which took 25 A330-900 neos worth $6.9bn just moments after the programme was announced. An early advocate of the re-engine, Steven Udvar-Hazy, CEO of ALC, explained that the A330 neo addresses airline fuel efficiency and labour concerns, while the 13-hour flight range makes it suitable for many routes. He added that research with airlines into the A330 neo found demand for 1,100 of the aircraft by the end of the decade. Another supporter, CIT, also placed an order at the same event. It signed an MOU for 15 A330-900 neos (worth $4.1bn) along with five A321 ceos.

However, Richard Anderson, CEO of Delta, who also voiced his interest in the A330 neo, has yet to place an order. “The sweet spot for this aircraft is in Asia,” commented Domhnal Slattery, CEO of Avolon, who supported Knittel’s thinking by ordering 15 A330 neos at FAS worth $4.1bn. “We see huge potential in city pairs; city pairs that don’t actually exist at the moment.” Slattery predicted a high level of long-term demand for the aircraft, “perhaps higher than we foresee at the moment”. However, this has not stopped the company from also ordering Boeing’s 787-9. “We don’t see them as being conflicted,” explains Avolon’s chief commercial officer, John Higgins.

CIT was extremely vocal about its desire for Airbus to re-engine the A330 and, together with AirAsiaX, played a large part in the decision.

But where conflict may lie is with the A350-800, which some say will be cannibalised by the A330 neo. Prior to the programme announcement, Fernandes claimed that on a 6,000nm trip the A330 neo would have a five per cent fuel burn reduction over the A350-800.

Speaking at a media event at the International Society of Transport Aircraft Trading (ISTAT) in San Diego earlier this year, Steve Mason, VP of CIT, said: “Many airlines would value the ‘out of the box’ reliability of an A330 variation because it lowers the probability of expensive delays, cancellations and downtime.”

But, what is most interesting is whether the A330 ceo continues to sell. Indeed, many of those who ordered the A330 neo at FAS also ordered aircraft with the original engine option at the same time. AirAsia X’s Fernandes said that he had no plans to drop the ceo orders now it has placed a deal for neos. “We may need all of them,” he said.

According to his colleague, Knittel: “There are a lot of people who support an A330 neo… I think for a lot of airlines who are current operators of the A330, it would be a natural evolution.”

Regardless, it’s a wise move by Airbus. Tom Enders, CEO of the company, explained: “With our decision to re-engine the plane, we will keep the A330 flying high for many years to come.”

afm • Issue 92 – September–October • www.afm.aero

FOCUS: BELAVIA

One to one: Belavia Belavia’s general manager, Anatoly Gusarov, talks to Tom Zaitsev about the airline’s success in an increasingly demanding and competitive environment.

ike all other carriers in the former Soviet states, Belavia needed to re-invent itself in order to cope with market challenges. While many of them have already been committed to the history books, the Belarusian national airline appears to have found its footing.

This year the Minsk-based carrier flew its one millionth passenger in mid July – one month earlier than the year before, and two months earlier than in 2012. Its general manager, Anatoly Gusarov, is therefore confident that, given strong bookings, Belavia’s passenger numbers will be at an all-time high in 2014, exceeding two million and rising to 1.6 million in 2013. “Over the past four years, our annual traffic growth rate has averaged 20 per cent,” he told during an interview at the carrier’s headquarters. “This trend obviously continues. There are opportunities to sustain it and we’re working to use them to the fullest.”

Belavia’s current traffic volume may not seem large in comparison with the tens of millions of passengers transported annually by each of the major European flag carriers, but it is pretty substantial for a country with a population of just 9.5 million. In this sense, Belavia performs on a par with – if not better than – its counterparts in nearby Ukraine, Poland and the Czech Republic, says Gusarov.

Prime position He draws attention to Belarus’ location and to how it determines the airline’s operating mode. “On the one hand, it is almost in the centre of Europe. On the other, we’re on the doorstep of Russia and the rest of the CIS countries. This suggests pursuing a hub-and-spoke network model rather than a regional focus. But airlines that operate from capitals of neighbouring countries have similar geographic vantages and we need to take account of that.”

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FOCUS: BELAVIA

While cognisant of the hub-and-spoke concept, Belavia was ill-equipped to implement it a decade ago. At the time, it had a mix of 17 Soviet-built Tu-154s, Tu-134s, Yak-40s and An-24s. That left it exposed to the final phase-out by the European Union of non-Chapter 3 aircraft from its sky. “Western Europe was, and is, a crucial market for us,” says Gusarov. “Once stricter noise and emission rules were introduced in 2002, we simply did not have a choice but to turn to compliant foreign-built aircraft. “In the following year, we saw our international traffic halve as only a few of our planes complied with new regulations. Lacking appropriate equipment, we had to suspend our Minsk–Paris services and drop Berlin, Vienna and Stockholm, although continued to operate the rest of our EU routes using five upgraded Tu-154Ms.” Fast forward 10 years and Belavia has an all-Western mainline fleet of 23 aircraft. It operates 15 737 Classic variants, four CRJ 100/200s and an equal number of Embraer jets, two of which are E175s and two are E195s. Its route network extends across 40 non-stop destinations in 27 countries, spanning six time zones and around 430 services a week.

“Sure, this arrangement represents a considerable financial burden for us today. But in a few years it should give us an opportunity to decrease ownership costs and facilitate capital attraction. Owning a portion of our fleet will translate into higher operational efficiency. This combination cannot but improve our overall economics, to say nothing of a higher residual value of the newly built aircraft.”

Backed for business As a state-owned airline, Belavia has to secure government approval for its fleet renewal and expansion plan. The country’s president, Alexander Lukashenko, gave it the go-ahead by declaring: “We’ll buy the newest types of aircraft from western manufacturers. We should not be skimpy in this matter, so as not to pay twice.” However, Gusarov emphasises that Belavia initially relied entirely on its internal resources to finance aircraft deliveries. The carrier first chose to take a pair of 737-500s in a two-class configuration as part of a plan to take up to five of the type. With their arrival, it restored daily services to Paris and added frequencies to London, Frankfurt, Rome and Larnaca.

In a sign of confidence regarding its future growth, the carrier has placed an order with Boeing for three newly built 737-800s. Like a recently delivered pair of E195s, they will be taken on financial lease. In Gusarov’s view, a lease-toown deal has clear advantages from a long-term standpoint.

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FOCUS: BELAVIA “In the absence of sufficient funding, we acquired those aircraft through operating leases,” recalls Gusarov. “To secure higher cabin loads and meet lease payments, they were deployed on our densest routes. This allowed us to tide over tough times when banks would not have extended loans to us.” By 2008, the 737-500s were complemented by larger capacity -300 models and then by 50-seat CRJ100/200 jets. Alongside increasing scheduled operations, this fleet composition was intended to better tackle charter services and routes with thinner traffic. “Re-aligning capacity and right-sizing operations helped us smooth out the effects of seasonality, which used to be our weak point,” says Gusarov. “Above all, with an optimised route network in place, we managed to raise our competitive position against other carriers in surrounding regions.” Fleet renewal continued in 2012 with the arrival of two E175s, which filled the capacity gap between the CRJs and 737s. At the same time, Belavia started disposing of ageing Soviet planes. Today, it retains only three Tu-154Ms, which are allocated on corporate series charter markets, such as transporting Belarusian oil workers to and from several destinations in Western Siberia. Belavia has also actively pursued partnerships with foreign airlines. Its codeshare partners in the EU include KLM, Austrian, Finnair, CSA Czech Airlines, LOT and airBaltic. Agreements with Aeroflot, Rossiya, Transaero and S7 Airlines cover codesharing on trunk routes to Moscow and St Petersburg. While the carrier is tied into an interline agreement with Azerbaijan Airlines on services between Minsk and Baku, a deal with Etihad Airways provides a codeshare on the Minsk–Dubai route and onwards to Ho Chi Minh, Melbourne and Sydney. “This set-up serves well to feed traffic into our routes,” says Gusarov, noting that it is especially important for Belavia’s Europe-centred network because of competition from the local well-developed railway and highway systems. “Cost-conscious travellers may choose to journey by train or bus to our short- to medium-haul destinations,” he explains. “The scramble for passengers necessitates us to work on the principles of flexible pricing and dynamic fare management.”

Routing for growth In a similar vein, Belavia has introduced cheaper, stripped-down services on a number of major routes. “In terms of product offering, there will be an ad hoc shift towards seasonal no-frills product offerings under the hybrid business model,” says Gusarov. Steadily rising traffic and improving financial performance paid Belavia back in terms of creditworthiness. Earlier this

year, the Development Bank of the Republic of Belarus extended a $52m loan to help it fund its fleet renewal programme. The 10-year facility, with a floating interest rate capped at nine per cent, covers two new E195LR jets. In June, Belavia finalised a $272m deal to acquire three 737-800s and is now looking to secure another capital injection. Plans are to obtain lines of credit from domestic and/or foreign financial institutions, including the US Ex-Im Bank. Along with the E195s, the longerrange -800 variants, which will be delivered in 2017, will replace 737 Classics and enable the carrier to further broaden its reach beyond Europe and the Middle East, to Dubai and Tenerife. Working its ties with Belavia, Boeing is considering opening a facility in Minsk to cater to the carrier’s growing fleet of 737s. Gusarov says the two sides have discussed a business case with the local transport ministry and have agreed to prepare a joint proposal for the project.

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FOCUS: BELAVIA

This would fit in well with the long-term development programme for Minsk National Airport, where Belavia is a core tenant. Among other things, it envisages creating a designated centre to provide maintenance services for western-built aircraft. The enterprise would comprise an airframe and engine overhaul facility and a paint shop, as well as technical assessment and testing amenities. It would replace the existing MRO plant, which has a readily available labour force and is located at the defunct airfield within city boundaries. In a good sign for Belavia’s prospects, modernisation of its home base obviously has unwavering state backing, with $22m invested in airside improvements in 2013 alone. Overall, $150m has been allocated to develop a new terminal building and to double the airport’s throughput capacity to 5.8 million passengers. Built in a crescent shape, the 60,000sqm terminal naturally lends itself to smooth transfers between flights. Arrival and

departure halls are within easy walking distance. There is a fully-fledged passport and customs control area with 42 booths providing rapid pre-flight and post-flight checks. Airside, the shopping areas are modern and well-lit, creating the ‘feel-good’ factor so important in tempting customers to spend. The government makes no bones about its plans to capitalise on the Minsk airport’s location and to transform it into a multi-modal transport hub and traveller-friendly gateway for international traffic flows. Accordingly, Gusarov remains focused on the long-term positioning of Belavia to meet its ambition of playing a major role in this development, undeterred by competition from foreign airlines. “Looking ahead, we’re studying the possibility of launching a long-haul arm equipped with a pair of Boeing widebodies,” he says, citing a tangible demand for services to Beijing and New York. It seems that Belavia has set a clear course forward and beyond.

afm • Issue 92 – September–October • www.afm.aero

FOCUS: LATAM

One to one: LATAM Airlines Group On the sidelines of this year’s Farnborough Air Show, LATAM Airlines Group chairman of the board, Mauricio Amaro, spoke to Jonny Williamson about the group’s fleet development strategy.

or the sixth consecutive year, LAN and TAM were both recognised as the Best Airlines in South America at the Skytrax World Airline Awards.

What improvements has LATAM Airlines Group introduced in regard to its fleet management? Following the merger [in 2012], we discovered that we had too many aircraft, specifically narrowbodies on TAM and 767s on LAN. A perfect example of the post-merger synergies we can now take advantage of is how we shifted some of LAN’s

excess 767 capacity over to TAM. This sharing of resources has proved to be very successful and it has become an important part of the business. Another success arose from freezing capacity in Brazil. That decision drove our load factors to the mid-to-low 80s, which was an all-time record for us. We rose from being the country’s lowest load factor airline to the highest. We also realised that LATAM needed to change its product offering in terms of cabin configuration. In this region of the world, very few travellers have the economic means to pay for a first-class ticket. Subsequently, we operate very few

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FOCUS: LATAM

routes where first class generates the sort of revenue required to cover its square footage in costs of service.

What aircraft make up the majority of the group’s current fleet? The merger resulted in a necessary restructuring of the fleet and provided additional investment that wouldn’t have been possible beforehand. Though we are aiming for fleet simplification in a broad sense, our restructure is primarily focused on acquiring aircraft that are 20–30 per cent more efficient. Combined, the in-service fleet comprises 85 widebody, 233 narrowbody and 15 cargo aircraft. LAN’s mainline fleet is predominantly a mixture of A319-100s; A320200s – the real workhorse of the group; and 767-300ERs. TAM’s fleet is similar, in that it has a large number of A319-100s, A320-200s and 767-300ERs; but it also has several A321-200s, A330-200s and 777-300ERs. Though a significant aircraft in its time, the A340 has become inefficient when compared to modern twin-jet alternatives. There isn’t a need for us to hold a four-engine aircraft anymore, so we are returning the A340s, although we will retain a handful of the aircraft in reserve for both LAN and TAM. We also plan to return the A330s whose interiors have become dated and are no longer required; the same goes for the 777s.

What aircraft do you currently have on order? In 2014, LATAM will receive 19 new aircraft and look likely to finish the year with a 327-strong fleet. The investment for 2014 alone stands at almost $1.2bn, of which 60 per cent will be raised through guaranteed credit, with the rest financed via sale and leaseback contracts. Between 2014 and 2020, our purchase obligations total $12.2bn and include 116 A320-family and 48 widebody passenger aircraft (comprising A350-900XWBs, 787-9s and 787-8s).

LAN was the Americas launch customer for the 787. What impact has the aircraft had on operations? Initially we were concerned, what with the reports of issues arising from the aircraft’s electrical systems, specifically its lithium-ion batteries. It did affect our plans to place the plane onto our longer routes, such as to Madrid or New York. However, now the 787 is reaching levels of 98 per cent reliability or higher, so I think it’s only a matter of time before we put the aircraft on our Pacific routes to either New Zealand or Australia. The 787 on the LAN side and the A350 for TAM will be the aircraft that are really going to help power our long-haul growth for the future. They will add capacity on highdemand routes and help to raise efficiency considerably, as compared to the aircraft they will be replacing.

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FOCUS: LATAM

Today, efficiency is a necessity. If you don’t have efficient aircraft, over time your operational costs will absolutely drive you out of business. We operate one of the youngest fleets in the world [the majority is less than seven years old] and that’s what we have invested so heavily in to achieve. That was the philosophy at both airlines before the merger and it certainly continues to be our philosophy today and moving forward.

Will that move pave the way for a more unified visual brand? It will certainly lead the way towards having more similar interiors, class specifications and cabin configurations. It’s too early to tell whether or not we will move towards an absolute single brand regarding livery and staff uniforms, but it is something we are giving serious consideration to.

What is the group’s current position in the market and what’s its strategy to maintain or improve on it?

At the moment, the two airlines operate with two separate liveries and certificates. Is that practice expected to continue or is a more unified brand being considered?

We are the dominant carrier in Brazil, closely followed by GOL, and we’d obviously like to maintain that position. The group is performing very well in Colombia; we are growing steadily and look likely to reach profitability next year.

This year Brazil is involved in two major undertakings, namely the FIFA World Cup and a general election. We are deferring the decision as to which of our carriers will migrate to the other’s host until next year.

I am a little concerned by what is happening in Argentina, in regard to its governmental policies being almost exclusively in favour of the state-owned competition. We can’t really do anything to counter this occurring, so we are content to remain a well-disciplined number two.

When it does happen, that migration will bring considerable improvements in terms of our passenger efficiency and flight booking, especially for connecting flights. It will negate having to manage and finance two check-in counters, two check-in systems, baggage systems and so on.

Our strategy for future growth includes developing our Brazilian hub at São Paulo-Guarulhos International, sourcing a potential second hub in the country and upgrading our Peruvian focus airport, Jorge Chávez International, to become our hub to America’s West Coast.

We haven’t managed to capture those synergies yet, but we are definitely working towards creating a single product experience and operating from a single host is a central pillar of that goal.

LATAM Airlines Group was created in a bid to improve connectivity across the entirety of South America, not just solely the major metropolitan areas. We are achieving that to some extent, but there always remains room for improvement.

afm • Issue 92 – September–October • www.afm.aero

TLF: BIG DATA

Analyse this: The benefit of big data Mary-Anne Baldwin speaks to data analytics provider, SAP, to find the benefits of crunching numbers.

‘

ig Data’ – the collection of vast amounts of data for the purpose of analysis – can create a wealth of opportunities for any business. For example, finance, programme management, manufacturing and the aftermarket can all gain from the use of data analytics. We can find out just about anything from big data: what makes customers buy the things they do, we can locate poor working practices, predict when we need to re-stock and find trends that can help us to prepare for the road ahead. Most companies have access to swathes of information, but the question is whether they make the most of it. Is it collected efficiently? Is it analysed properly and costeffectively? And, is it garnering valuable insights that can

improve your business? The answer, of course, should be yes to all three. To find out more about the use of big data and why it’s so important, caught up with SAP, a data analytics software provider. SAP, and other companies like it, use computer algorithms to analyse massive volumes of data in seconds. This can allow companies to make quick decisions about what to do. In fact, big data can deliver real-time situational awareness, meaning you can know what’s happened as it happens. Better yet, you can predict ahead.

Predictive maintenance SAP has been a dominant provider of data analysis to airlines and OEMs for 15 years, but it’s becoming more relevant every day.

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TLF: BIG DATA

This is called ‘predictive maintenance’. Analytics can find warning signals hidden in the data, which can alert you to a possible problem. In just this way, SAP’s HANA (or high-performance analytic appliance) software uses algorithms to monitor aircraft health. According to SAP, one of its HANA software customers – one of the largest manufacturers of aerostructures – achieved $2m in savings on inventory; 25 per cent shorter production flow times; 30 per cent lower assembly inventory levels; and 40 per cent lower overtime expenses. The problem with such predictive systems is that you can often pull aircraft from its scheduled service just to find there are no faults with it. For this reason, SAP HANA looks for numerous indicators and gives a statistical chance, in per cent, of the likelihood that aircraft would need to make an unscheduled maintenance check within the next 24 hours. For example, it would look at temperature changes, fuel flow and engine efficiency, and if all three showed abnormalities that would indicate a fault. Using the same software, you can look at when the next maintenance check is due, re-schedule it if needed and order any parts required. All the maintenance can be done within the airline’s flight schedule, so there is no unnecessary downtime. Also, it works intuitively, so there is no need for anyone to search for a possible problem. SAP started its predictive maintenance offerings five years ago and started working with airline customers on it two years ago. Bjorendahl says that predictive maintenance can now produce cost savings of 18 per cent compared with traditional approaches.

From Eyjafjallajökull to the World Cup

Magnus Bjorendahl, VP and global head of aerospace and defense at SAP, explains that “aircraft themselves are becoming intelligent [and capable of] capturing data”. This data – such as cabin pressure, altitude and fuel consumption – can amount to half a terabyte for each 787 flight. “It’s becoming increasingly painful for companies to store data,” says Bjorendahl. SAP can store all of an airline’s data and make any part of it instantly accessible. But how can big data actually benefit an airline? Bjorendahl gives us an example. Using the data collected from an aircraft’s systems, SAP can find patterns that led to a fault on that aircraft. It will then use those patterns to find faults on that and other aircraft before they happen.

But it’s not just about detecting, investigating, preventing and monitoring faults in order to improve equipment reliability. You can also use it to improve customer loyalty; manage risk; reduce waste; improve production; reduce costs; and carry out R&D. A specific example of how airlines can use big data is their response during weather disruptions. Heavy wind or snow can cause significant issues to an airline’s operations, but weather disasters like the eruption of the Eyjafjallajökull volcano in 2010 can cost millions. During weather disruptions, airlines have to re-schedule crew, aircraft and passengers with minimum delay and inconvenience. SAP can help decide the best route and flying times and which crew members to employ (depending on their location, rest periods and labour laws). It can even ensure that valued customers are flown first and the needs of all customers – be they kosher meals or wheelchair access – are met. All this is done seamlessly

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TLF: BIG DATA and quickly. Could you imagine how long it would take people to do all that?

MRO alerts, from the OEMs. “They’ve not yet offered this to their customers but they want to,” says Bjorendahl.

Some may be sceptical about putting so much trust in computers, but in fact it is often human error that blights procedures. Bjorendahl explains that computers are far better at searching data. He notes that, at one time, humans would play computers at chess, but the computers could never win. Now, not only do they win but even the world’s best chess players use computers to improve.

In its Current Market Outlook report for this year, Boeing admitted that its customers are calling for these services. “Airlines are seeking airplane and engine health management solutions that provide better prognostic capabilities. The ability to predict maintenance events and connect with maintenance operations during flight can minimise the number and duration of flight disruptions. Improved disruption management solutions can reduce the system wide effect of delays and cancellations.

Perhaps you’ve had enough of aviation and want to see how this big data applies in the real world. Perhaps you’re doubtful it really pays off. Well, perhaps in that case you watched the World Cup. Even if you didn’t, you will know that Germany – one of SAP’s customers – won. The German football team used SAP’s data analytics tools to analyse and improve their players’ techniques, and it seems to have done the trick. SAP already has over 3,000 customers across a variety of industries and over 900 customers in aerospace and defence. Most of the aircraft on display where we met at Farnborough

“Supply-chain solutions using optimised inventory management and parts procurement solutions can also reduce operating costs,” Boeing noted. “Airline planners and ground operations suppliers can take advantage of new technologies that allow airlines to react quickly to ever-changing situations, including crew legality, weather and airport traffic congestion. IT solutions help airlines optimise activities in real time as the operational environment changes. Mobile solutions that connect applications that assist baggage handlers, gate agents,

Irfan Khan, SVP and general manager, SAP

Business will get continuously better at extracting value from big data, but a disciplined approach is critical. Air Show were built using SAP’s software. However, Bjorendahl says: “Everyone has a slightly different view of what they want, so there is no standardised operation.” SAP works with its individual customers to design a tool that is right for their needs. The key is finding out what those needs are first. Irfan Khan, SVP and general manager of SAP, wrote in his company blog: “Technology itself is not the silver bullet – and there is no benefit to collecting lots of data just because you can… Big data needs robust analysis that is relevant to the business; technology is a critical enabler only after you have figured out the first part of the equation… That’s why big data projects need to begin in the business boardroom with support from trained data scientists.”

Learn as we go Having accrued a good customer base, SAP is focused on tying up with OEMs. Engine OEMs have monitored their data by themselves for many years, “but for airframe OEMs, this is a new environment”, Bjorendahl says. Partnering with the likes of Boeing or Bombardier would allow the OEMs to offer new services to their customers. Instead of going directly to SAP, airlines would receive data analysis, including predictive

caterers, fuel providers and passengers on the ground will become more important as airlines strive to reduce flight disruptions and maximise airplane utilisation to gain the greatest return on their investment.” Apart from the OEMs, SAP aims to do business with small, charter and business airlines. Many of the larger carriers – such as Lufthansa – have fleets that are large enough for them to do their own statistical analysis. “I expect it to grow from the smaller guys up,” says Bjorendahl. He admits that big data is not a ‘fix all’ solution – unforeseeable issues will happen. For example, older aircraft will naturally face more faults than a new one. But according to Bjorendahl: “the more data you have, the more precise the statistics”. The use of big data is in evolution. “We learn as we go,” he confesses. But while it’s not a panacea and there are still lessons to be learned, big data should not be ignored. Khan writes: “Business will get continuously better at extracting value from big data, but a disciplined approach is critical. No one wants to be left behind as other companies work through the challenges, refine their approaches, and gain increasingly rich insights.”

afm • Issue 92 – September–October • www.afm.aero

AIRCRAFT

FINANCE

GUIDE

The business and financing of airline operations

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TLF: DIGITAL TECHNOLOGY

igital technology has been a part of commercial aviation for many years now, but as capabilities grow, airlines and their partners are using it to enhance operational performance in a wider range of ways.

In a bid to steal a march on fellow industry competitors, airlines are now investing in data analytics, faster broadband and more connectivity. The use of digital technology also extends to engineering, manufacturing, assembly and right through to passenger services.

Global management consulting company, Accenture, is at the forefront of providing airlines and other industry players with such digital solutions. John Schmidt, managing director of the firm’s North American Aerospace and Defense business, spoke to at the Farnborough Air Show about the technologies that are dominating the aviation industry. “Digital technologies have been used by the industry for several years. But what is different is the accelerating

movement towards digital in new and different ways, and what we are now able to do with these new technologies. This shift marks a fundamentally new way of doing business, which the industry is starting to embrace,” Schmidt explains. Schmidt says that airlines are focusing on how to provide their customers with added services and how they can use digital systems, such as data analytics, to improve aircraft tracking, reduce costs and boost operational efficiencies.

In-flight connectivity Passenger access to in-flight connectivity is now widespread; it is an increasingly important service for travellers to have, yet some airlines are still reluctant to invest. Many carriers already offer consumers the ability to connect their mobile devices to onboard broadband, while international regulators are looking at the possibility of using a mobile network onboard. Schmidt says that research by Accenture has found digital-savvy passengers now crave data access at their

afm • Issue 92 – September–October • www.afm.aero

TLF: DIGITAL TECHNOLOGY

seats via tablets, phones and laptops. He explains that this is “becoming an expectation of the flying public”. He adds: “Customers want to use their own devices and get to their stuff, they want connectivity on their devices and not on a screen on the back of a seat. Now more than ever, aircraft passengers expect high-speed Internet connections in the air, especially on long flights.” A recent survey carried out by Honeywell Aerospace supports this finding. The Honeywell Aerospace Wireless Connectivity Survey found that 85 per cent of 1,000 respondents in the US would use onboard Wi-Fi if it were free. The report also found that in-flight Wi-Fi availability influences flight selection for 66 per cent of travellers, while 22 per cent say they have paid more for their ticket in order to fly on an aircraft equipped with Wi-Fi. “What airlines are seeing is that the flying public are making decisions based on their ability to have connectivity. If it means charging customers $10 and they then buy a ticket, rather than flying with another airline, then it is worth installing,” argues Schmidt.

But new digital technology won’t just aid customers – it provides a wealth of information for the airlines and their partners. New high-speed broadband pipe technology will stream data from wirelessly connected aircraft to the ground. This will not only accelerate connectivity for passengers, but it also brings operational benefits. Schmidt explains that the installation of a high-speed connection pipe is worth the cost to any airline. Carriers now have the ability to stream the data collected by aircraft and their engines down to the ground. “Once you have that data coming to the ground, you can start using analytics to get ahead of things… They can then provide better customer satisfaction and customer efficiency. There is the same opportunity with in-flight entertainment. The investment can now be justified as we can do it better, cheaper and at a higher quality.”

Data analytics The use of analytics is becoming more widespread and central to commercial airline business strategies – and it is also a key competitive differentiator.

afm • Issue 92 – September–October • www.afm.aero

TLF: DIGITAL TECHNOLOGY

Every aircraft has masses of data onboard, but the search is on to find a way to utilise it faster and more efficiently. This can save money, time and maintenance work as well as making things easier for crews and more enjoyable for passengers. According to Schmidt, in the future data analytics will help airlines make decisions and improve performance on everything from how the aircraft is flown, to maintenance, avionics and the services it provides. As an example, Schmidt explains how one of Accenture’s clients has benefitted from the use of analytics. Doing so, they have detected possible maintenance problems, revealing that the aircraft had an issue with its cabin pressure. Analytics helped to detect a broken seal, which was going to fail earlier than it was meant to and the client was able to change it beforehand. This allowed for planning and prevented costly aircraft downtime and emergency MRO, not to mention avoiding a safety risk. Unlocking corporate data using analytics can also be powerful for improving and accelerating programme management decisions throughout engineering and manufacturing, and it can also reduce over-engineering and generate new revenue streams, Schmidt says.

Flight tracking Following the disappearance of the aircraft on Malaysia Airlines’ flight MH370 in March, there has been much discussion about the need for a high-tech global flight tracking system. In Schmidt’s view, it all depends on how the aviation industry comes together to find a solution. While there is the capability to have small space-based satellites tracking aircraft, that option may not be taken. “It is easy to see how we can cover

the planet with satellites and track aircraft, but the question is whether we want to do this or not, whether the airlines would agree, and if global government bodies want to make it happen.” The industry continues to look for a solution. The International Air Transport Association (IATA) has launched an aircraft tracking task force to analyse options for enhanced global aircraft tracking and will report to the International Civil Aviation Organization (ICAO) in December. Inmarsat has also proposed to ICAO a free global airline tracking service over its network as part of the anticipated adoption of further aviation safety service measures. “The technology is there, and it is not that expensive, but someone has got to pay for it, and that is the question,” Schmidt explains. “I do think it will happen, as there is a lot of pressure on the industry, especially while MH370 is not found.” Improving connectivity on aircraft will help meet future challenges, such as connecting passengers, improving operations and safety, and tracking flights. In Schmidt’s view, future collaboration and data sharing is critical, and operational success will be driven by the kinds of digital technology now available. He warns firms that a lack of investment in digital technology today will ultimately cost them tomorrow. “If firms are failing to look into and invest in digital technologies – leveraging what is out there – then they risk being left behind by their competitors. “The digital age is something on everyone’s mind – and there is no question in my mind that if it’s not on their agenda, it should be.”

afm • Issue 92 – September–October • www.afm.aero

TLF: CHINESE AIRCRAFT FINANCE

A dragon’s appetite: China’s aircraft finance market AviaAM Leasing provides its analysis of the Chinese aviation finance market and its heady ambitions for growth.

ecently, the Irish lessor, AWAS, announced the sale of its portfolio of 100 aircraft, worth approximately $5bn. China’s Hong Kong Aviation Capital (HKAC) and Cheung Kong Holdings (CKG) are allegedly among the main bidders for the deal. Should this prove true, 2014 might turn a page in the development of global aviation as Chinese financiers look to become a pillar of the aviation finance market.

The rise of Chinese finance Despite the tendency for financial markets to remain calmer during the summer season, that was not the case this year. Chinese investors were particularly active in issuing announcements about new deals, which illustrated their growing ambitions in the aviation industry. For instance, China’s largest domestic aircraft lessor, ICBC Financial Leasing, announced plans to double its fleet by delivering over 300 aircraft to various customers by 2017. Apart from the aforementioned AWAS bid, HKAC had already spoken about placing orders for 70 Airbus aircraft worth over $7bn. Similarly, another Chinese lessor, BOC Aviation, has just announced its order for a total of 80 737s. “While Western leasing companies have traditionally dominated the global aircraft leasing playground, such a specific market as China is being controlled by local players. The situation has naturally evolved from strict market regulation, as well as the fact that both major aircraft lessors and lessees are government-owned,” Tadas Goberis, the CEO of AviaAM Leasing, explains. “However, the success in air travel development within the country has opened new opportunities for Chinese leasing

companies and investors wishing to expand their presence in the leasing segment.” He adds: “Moreover, these opportunities are being backed by the Chinese authorities. They have recently declared support for the need to boost the low-cost air travel segment. As a result, we might see a demand for extra aircraft, which would facilitate the development of the upcoming low-cost projects. At the same time, there are obvious signs that China is willing to push its major aircraft leasing companies into the international market.” Following the financial regulator’s approval back in 2007, Chinese financial institutions have actively developed their leasing activities in the aviation market, topping approximately 75 to 80 per cent of the local market share today. Owned by the Industrial and Commercial Bank of China, ICBC Leasing has alone enlarged its fleet six times (up to about 380 aircraft) over the past several years. Meanwhile, the leasing subsidiaries of China’s remaining ‘Big four’ banks – CCB Financial Leasing Corporation (China Construction Bank), ABC Financial Leasing Co. (Agricultural Bank of China) and BOC Aviation (Bank of China) – as well as other major players such as CDB Leasing Company and China Aircraft Leasing – are actively observing new opportunities outside their home market.

Stepping out, stepping in Back in 2011 and 2012, government-backed export credit agencies such as the UK’s ECGD, the US’ Ex-Im Bank, France’s Coface and Germany’s Hermes held approximately 30 per cent of the aircraft financing market. However, today now that the financial markets are much more stable and ECA fees are on the rise

afm • Issue 92 – September–October • www.afm.aero

TLF: CHINESE AIRCRAFT FINANCE

afm • Issue 92 – September–October • www.afm.aero

TLF: CHINESE AIRCRAFT FINANCE

aircraft operators and owners are willing to explore wider opportunities with regard to financing their deliveries. As a result, the market is enjoying both the growing confidence of traditional financiers (mostly, European banks which are re-entering the market after fleeing it during the financial downturn) and the development of other financial sources, such as capital markets. In 2014, Boeing expects the aircraft market to require approximately $112bn worth of funding. At the same time, almost every carrier avoids paying for new deliveries in cash, either to support its financial flexibility, or due to the absence of its own funds. Thus, lessors, banks, capital market providers and the like are further penetrating the market. “Being a Warsaw Stock Exchange-listed company, we ourselves see the growing importance of capital markets and their institutional investors in the industry,” says Tomas Sidlauskas, senior project manager at AviaAM Leasing. “We also see that these players, along with commercial banks, are showing an increasing interest in our industry, particularly in the segment of aircraft investment. On average, it provides a 10 to 15 per cent return on investment against the optimistic four to five per cent in airline business.”

The know-how However, one must understand that, unfortunately, the majority of non-aviation investors and commercial banks

– which are expected to fund almost half of this year’s deliveries – don’t possess enough aviation expertise in order to manage the potential risks effectively. And, the risks are abundant. The list includes asset values, maintenance, registration and insurance, but it does not stop there. “Of course, certain financial players from Europe, and partly from Japan, have already accumulated significant experience in aircraft financing,” says Goberis. “However, the majority of financiers from the Asia-Pacific – first and foremost China – still lack experience due to the relatively short period of activity in the segment. “So, in their aspiration for asset diversification and higher yields with lower risks, banks and institutional investors from the emerging countries are increasingly exploring three-party deals. Those are between a financier (lessor), an operator (lessee) and a mediator with long-standing expertise in aircraft management. The latter acts as an adviser in creating and, if required, managing the aircraft portfolio on behalf of the owner, as well as auditing its exploitation.” Goberis concludes: “All in all, the demand for the funding of aircraft deliveries will increase by approximately one-third by the end of the decade. Attracting such funding from outside of the industry is essential for the market’s long-term development. Hopefully, through partnership and experience sharing, market players will be able to secure the trust and confidence of non-aviation financial institutions.”

afm • Issue 92 – September–October • www.afm.aero

MRO: THAILAND

Thailand’s thrust: Maintenance and manufacture With Thailand’s aerospace industry booming, Neelam Mathews reports on the country’s latest MRO developments.

hailand’s focus on aerospace is fast making it an emerging centre for component manufacture and maintenance

While investors have indicated that they would like the return of an elected government, in July alone, Thailand’s Board of Investment (BOI) approved applications for 15 industrial projects valued at $1.6bn, indicating business was back to normal. A string of incentives are making investors bullish about moving their business to a country that has already become the third largest in the world in terms of automobile manufacture.

encourage foreign investment include import duty exemption on machinery and raw materials, double tax allowance for utility bills, permission for foreign companies to own land and 100 per cent repatriation of money. Maintenance, Repair and Overhaul (MRO) in Thailand is expected to take off, with Boeing estimating that the region’s airlines will need an additional 12,820 aircraft, valued at $1.9tn, over the next 20 years. That represents 36 per cent of the world’s new aircraft deliveries. Thailand’s aircraft maintenance industry was valued at $637m in 2011 and saw a 20 per cent increase in the following years.

Building the future

Recognising that infrastructure is a basic need, deputy secretary general of the BOI, Ajarin Pattanapanchai, has said that plans for an aerospace industrial park will be announced soon.

Reflecting Thailand’s growth in aviation, Suvarnabhumi airport transported 50.9 million passengers last year, making it the third busiest airport in ASEAN behind Indonesia’s Soekarno–Hatta and Singapore’s Changi Airport.

The country is looking to encourage Tier 2 and 3 manufacturers of aircraft parts as it works on its ambition to move up the value chain, she explained. Incentives to

A leading light “This industry is expected to continue growing in the coming years and further accelerate with the launch of the

afm • Issue 92 – September–October • www.afm.aero

MRO: THAILAND

ASEAN Economic Community (AEC) in 2015,” said Wasan Krasair, director of technical support at Thai Airways. This will expand the market to ASEAN’s 10 member countries, which collectively comprise 600 million people. The AEC will open new doors to manufacturers by transforming ASEAN into a region with a free flow of goods, investment, capital, skilled labour and services. With a vast network and 110 aircraft, Thailand’s national carrier, Thai Airways, has a large requirement for MRO. It has 30 repair stations and a 190,400sqft facility at Suvarnabhumi airport alone, including 24,300sqm of hangar space that can simultaneously accommodate three extra widebody aircraft, such as the A380 (of which it has ordered six). Capabilities include technical support for narrowbodies, landing gear change, wheel and brake workshops, A and C checks for A380, and line maintenance. But Thai Airways’ mixed fleet does create problems, including spare parts stocks control, Krasair told . “We cannot stock every part for our aircraft engines.” Technical skills are often lacking for inflight entertainment as many types of systems are installed in the planes, making it difficult to get all the mechanical skills required. This results in high costs, as it is difficult to stock spare parts for different versions. “The challenge is to keep in step with change,” Krasair explained. The airline’s 170,000sqm Don Mueang base in Bangkok handles structural, hydro-mechanical, engine, instrument, radio, electronics and avionics overhaul for all A300-600,

A310, A330 plus the 737, 747 and 777 series. It has five hangars (six bays) with a full support system for widebody aircraft and 20,000sqm of apron area. Located 125km south-east of Bangkok, the JAR-145 U-Tapao facility is 240,000sqm and offers heavy maintenance services for both C and D-Checks on three aircraft simultaneously (two widebody aircraft and one small aircraft type). The facilities include a 24,000sqm widebody aircraft maintenance facility (twin hangar) and 43,000sqm for parking. US-based Triumph Aviation Services Asia (TASA) is the group’s Asia-Pacific aftermarket services headquarters and a single-source service centre for the region. It has capabilities for repair that include full APU diagnostics, test and certification, rotating group balancing, curvic grinding, NDT, piece part machining, paint application, sheet-metal repair and full pneumatic, electric, and fuel accessory repair and testing. Furthermore, Scandinavian Aircraft Maintenance (SAMTHAI) signed a joint venture with Thai Aviation Industries, which is partially owned by the Thai Air Force, and they plan to develop a civilian MRO facility in Bangkok. It has also signed a contract in co-operation with Geven to supply and install new seats for Thai aircraft. TASA’s subsidiary, Triumph Structures, is located on a sprawling 14,000sqm facility in the Amata industrial zone near the modern, well-equipped Laem Chabang Port. Triumph manufactures numerous parts and is also a single-source supplier for hinge assemblies to fit

afm • Issue 92 – September–October • www.afm.aero

MRO: THAILAND

composite panels of the A330, the manufacturing of which has shifted from the US to Thailand, Alex Beysen, president of Triumph, told . Amata is Thailand’s largest listed conglomerate in the industrial estate sector. Among its factories are aerospace plants, which contribute close to 10 per cent of Thailand’s gross domestic product.

will forge compressor blades made of steel, titanium and nickel-based alloys. According to Oxford Economics, approximately 393,000 people are employed in Thailand’s aviation sector, but there are efforts to expand that further through eight newly approved training schools. This includes Rolls-Royce’s partnership with Kasetsart University to support aviation education.

Outside interests Outside of Thailand’s domestic market, there is also wide interest in the country’s aviation industry. For example, leading aviation companies already in Thailand include General Electric Co., Boeing, Michelin, Triumph Group, Chromalloy, Ducommun Incorporated, Aeroworks, Driessen and Minebea. Rolls-Royce’s sourcing operations in Thailand include three separate supply companies that manufacture parts for the company’s engines before they are shipped to Singapore for assembly. For example, Senior Plc, formerly known as Weston EU, has facilities in Thailand’s Chonburi Province. There it produces compressor blades, vanes and compressor aerofoils that are used in Rolls-Royce’s V2500 engine. Primus International, a Tier 2 supplier of engineered metallic and composite parts, supplies composite and metallic propulsion and structural aircraft products for Rolls-Royce. The company has also signed a 10-year contract with existing supplier, Leistritz, to open and operate a manufacturing base in Chonburi in which it

Furthermore, Thailand’s BOI recently approved $3.7bn in investment projects, which include an aviation training school of New York-based FlightSafety International. THAI Flight Training (TFT), a subsidiary of Thai Airways, also trains cockpit crew and cabin crew for all commercial airlines. In addition, the Pan Am International Flight Training Centre (Thailand) will be launched in mid September with an A320 simulator. Its plans for expansion include four simulators–two A320s and two 737NGs by 2015. “Thailand is in close proximity to Singapore, where we have a major manufacturing presence. This makes it convenient and efficient for our suppliers to be located in Thailand, where they have further reach into the regional supply chain ecosystem,” said Erin Atan, spokesperson at Rolls-Royce for Asia-Pacific and the Middle East. “We see Thailand as having good fundamentals for aerospace manufacturing, and we will continue to support the development of an aerospace industrial roadmap for Thailand.”

afm • Issue 92 – September–October • www.afm.aero

The business and financing of airline operations

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INDUSTRY DATA: Deals

Industry data

Aircraft deals

Firm orders

57 58

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

Aircraft deals 1 May to 19 June, 2014 MSN

Manufacturer

Model

Event

Owner

Operator

Date

4203 3433 39440 30675 26244 23974 41819 15314 1703 41795 41994 15315 41249 30666 32243 27614 53217 3492 664 33022 41319 49215 32684 34253 29401 2658 3522 29081 41271 42103 40946 2752 1006 445 3171 27061 6124 4463 27530 27608

Airbus Airbus Boeing Boeing Boeing Boeing Boeing Bombardier Airbus Boeing Boeing Bombardier Boeing Boeing Boeing Boeing McDonnell Douglas Airbus ATR Boeing Boeing McDonnell Douglas Boeing Boeing Boeing Airbus Airbus Boeing Boeing Boeing Boeing Airbus Airbus Airbus Airbus Boeing Airbus Airbus Boeing Boeing

A320 A320 737-800 737-800 757-200 767-200 777-300 CRJ-705/900 A319 737-800 767-300 CRJ-705/900 737-800 737-800 737-800 767-300 MD-80 A320 ATR72 737-800 737-800 MD-80 737-700 737-800 777-200 A320 A321 737-700 737-800 777-300 737-800 A320 A321 A320 A319 737-300 A320 A320 737-500 777-200

Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease

Afriqiyah Airways CIT AWAS ILFC Airco KMW Leasing GECAS Delta Air Lines Air Lease Corp ILFC LAN Airlines Wells Fargo GECAS ILFC GECAS ILFC Bank of Utah CIT Nordic Aviation Capital CIT Air Lease Corp Eurofly GECAS Air Lease Corp ILFC GECAS AerCap Pembroke Group GECAS GECAS Avolon Aerospace AerCap Aircastle Investment Nordic Aviation Capital AerCap Volito Aviation Sahaab Aircraft Leasing Volito Aviation GECAS AerCap

Air Contractors Ural Airlines Sunwing Airlines Enter Air Icelandair Dynamic Airways Kenya Airways Endeavor Air BQB Lineas Aereas Travel Service TAM Linhas Aereas Delta Air Lines Okay Airlines SmartWings Jet2.com UTAir Aviation FitsAir Vueling Darwin Airline Corendon Airlines China Southern Airlines ItAli Airlines SAS Corendon Airlines Air New Zealand Vueling Monarch Airlines Europe Airpost Solaseed Air EVA Airways China Airlines Viva Aerobus Thomas Cook Airlines YanAir Sky Airline Belavia Jazeera Airways Vueling Air Peace Nordwind Airlines

01/05/2014 01/05/2014 01/05/2014 01/05/2014 02/05/2014 02/05/2014 03/05/2014 05/05/2014 06/05/2014 06/05/2014 08/05/2014 08/05/2014 09/05/2014 09/05/2014 09/05/2014 09/05/2014 12/05/2014 13/05/2014 13/05/2014 14/05/2014 15/05/2014 15/05/2014 16/05/2014 16/05/2014 17/05/2014 20/05/2014 20/05/2014 20/05/2014 21/05/2014 21/05/2014 22/05/2014 23/05/2014 23/05/2014 24/05/2014 27/05/2014 27/05/2014 28/05/2014 28/05/2014 28/05/2014 28/05/2014

Source: IBA’s JetData.

afm • Issue 92 – September–October • www.afm.aero

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

Aircraft deals 1 May to 19 June, 2014 MSN

Manufacturer

Model

Event

Owner

Operator

Date

35313 373 4504 3484 29368 35278 25597 4415 32903 24255 19000216 2151 18 41250 4907 1419 41320 33021 41267 6150 5930 2745 3476 6148 48520 3487 5928 6143 7601 24917 26065 3139 961 301 39094 2863 25260 37561 26245 30735 4221 29660 34690 37250 32672 35275 29669 475 30719 30477 32907 32740 30724 2151

Boeing Airbus Airbus Airbus Boeing Boeing Boeing Airbus Boeing Boeing Embraer Airbus Saab Boeing Airbus Airbus Boeing Boeing Boeing Airbus Airbus Airbus Airbus Airbus McDonnell Douglas Airbus Airbus Airbus Bombardier Boeing Boeing Airbus Airbus ATR Boeing Airbus Boeing Boeing Boeing Boeing Bombardier Boeing Boeing Boeing Boeing Boeing Boeing Airbus Boeing Boeing Boeing Boeing Boeing Airbus

787-8 A320 A320 A320 737-800 737-800 757-200 A320 737-800 737-300 E-190/195 A320 Saab 2000 737-800 A320 A330-200 737-800 737-800 737-800 A319-100 A320-200 A320-200 A320-200 A321-200 MD-11F A320-200 A320-200 A321-200 CRJ-200 737-400 737-400 A319 A330-200 ATR72 737-800 A320 747-400 747-8 757-200 757-200 DHC8-400 737-800 737-800 737-800 737-800 737-800 737-800 A340-600 737-800 737-800 737-800 737-800 737-800 A320

Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating lease Operating Lease Operating lease Operating lease Operating lease Operating Lease Operating Lease Operating lease Operating Lease Operating Lease Operating lease Operating lease Operating lease Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned Returned

AerCap Andjet Havacilik ve Seyehat Avolon Aerospace AerCap AerCap AerCap Aviation Capital Group Avolon Aerospace NBB Leasing Co GECAS Republic Airlines GECAS Nordic Aviation Capital GECAS GECAS Royal Air Force Air Lease Corp CIT GECAS Aviation Capital Group ICBC Leasing Celestial Irishlynch Leasing Air Lease Corp Sky Lease I Inc CIT Qantas BOC Aviation US Bank Trust NA Trustee Flysafair FlySafair Air Berlin Wells Fargo Danish Air Transport Aviation Capital Group GECAS AerSale Inc Atlas Air Icelandair Airco GOAL CIT Sumisho Jetairfly GECAS AerCap Air Lease Corp AerCap Macquarie Airfinance Macquarie Airfinance Aircastle GECAS ILFC GECAS

Norwegian Unknown (Tajikstan) VietJetAir Aegean Airlines Air Transat Orenair Yakutia Airlines VietJetAir Pegasus Mistral Air Unknown (Mexico) Rossiya - Russian Airlines Loganair China Southern Airlines VietJetAir Royal Air Force China Southern Airlines Sun Country Airlines Garuda Indonesia American Airlines China Southern Airlines VietJetAir Vueling Airlines Sichuan Airlines Sky Lease Cargo Nouvelair Tunisie Tianjin Airlines Etihad Airways Delta Air lines Air Contractors Air Contractors BH Air Wells Fargo Danish Air Transport TUIfly BH Air AerSale Inc Atlas Air Icelandair Icelandair FlyBe Jetairfly Thomson Airways Jetairfly GECAS Travel Service Travel Service AerCap Travel Service Wells Fargo Travel Service Travel Service SmartWings GECAS

28/05/2014 29/05/2014 30/05/2014 30/05/2014 30/05/2014 30/05/2014 30/05/2014 31/05/2014 31/05/2014 03/06/2014 03/06/2014 04/06/2014 04/06/2014 05/06/2014 06/06/2014 06/06/2014 10/06/2014 13/06/2014 16/06/2014 17/06/2014 17/06/2014 17/06/2014 17/06/2014 17/06/2014 18/06/2014 18/06/2014 18/06/2014 18/06/2014 18/06/2014 18/06/2014 18/06/2014 01/05/2014 01/05/2014 01/05/2014 01/05/2014 02/05/2014 02/05/2014 02/05/2014 02/05/2014 03/05/2014 05/05/2014 08/05/2014 12/05/2014 16/05/2014 16/05/2014 21/05/2014 21/05/2014 23/05/2014 26/05/2014 28/05/2014 28/05/2014 28/05/2014 30/05/2014 04/06/2014

Source: IBA’s JetData.

afm • Issue 92 – September–October • www.afm.aero

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

Aircraft deals 1 May to 19 June, 2014 MSN

Manufacturer

Model

Event

Owner

Operator

Date

34254 29000 33021 28616 49847 38820 35148 250 35142 26245 6085 31194 6082 31932 37792 6099 6070 42121 39066 15316 39944 39943 1508 31933 6138 1450402 1531 E2047 373 24231 24901 30597 36303 7176 11505 40586 26689 26693 26244 11549 284 27905 380 15077 3160 1626 4137 1450481 25167 27392 27392 7196 53125 53120

Boeing Boeing Boeing Boeing McDonnell Douglas Boeing Boeing Airbus Boeing Boeing Airbus Boeing Airbus Boeing Boeing Airbus Airbus Boeing Boeing Bombardier Boeing Boeing Airbus Boeing Airbus Embraer Airbus BAE Systems Airbus Boeing Boeing Boeing Boeing Bombardier Fokker Boeing Boeing Boeing Boeing Fokker ATR Boeing ATR Bombardier Dornier Airbus Bombardier Embraer Boeing Boeing Boeing Bombardier McDonnell Douglas McDonnell Douglas

737-800 737-400 737-800 737-800 MD-83 737-800 737-800 A330-200 737-800 757-200 A319 737-800 A320 737-900 737-800 A319 A321 777-300 737-800 CRJ-705/900 737-800 737-800 A330-200 737-900 A321 ERJ-135 A330-300 146-200 A320 737-400 737-400 767-300 777-200 CRJ-100/200 Fokker 100 737-700 757-200 757-200 757-200 Fokker 70 ATR42 737-300 ATR42 CRJ-705/900 328JET-300 A320 DHC8-400 ERJ-145 737-500 767-300 767-300 CRJ-100/200 MD-80 MD-80

Returned Returned Returned Returned Returned Returned off sub-lease Returned off sub-lease Returned off sub-lease Returned off sub-lease Sale & leaseback Sale & leaseback Sale & leaseback Sale & leaseback Sale & leaseback Sale & leaseback Sale & leaseback 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

ALC B378 34254 Scorpius Co CIT GECAS Swiftair ILFC Macquarie Airfinance ILFC TUI Travel PLC Airco Wells Fargo Wilmington Trust Wells Fargo Wells Fargo GECAS Wilmington Trust CIT Air Lease Corp BOC Aviation Wells Fargo SMBC SMBC Wells Fargo Wells Fargo Wells Fargo Embraer Netherlands AWAS Southern Aircraft Consultancy Andjet Havacilik ve Seyehat Kahala US-28200 Hermes Airlines Sunday Airlines Etihad Airways Cyberjet Denim Air Samsung Techwin United Airlines United Airlines Airco Alliance Airlines DGI II Aircraft 27905 Unknown (Colombia) Mesa Airlines Unknown (Philippines) Avion Express Unknown (Canada) Unknown (Mexico) Southern Aircraft Consultancy Jetran Spectre Air Capital SkyWest Airlines(USA) Falcon Air Express Falcon Air Express

Air Lease Corp Wells Fargo CIT Wells Fargo Swiftair TUIfly Jetairfly Air Transat Jetairfly Icelandair American Airlines American Airlines Spirit Airlines Delta Air Lines Transavia France Avianca American Airlines British Airways Jet Airways Delta Air Lines Aeromexico China Airlines Avianca Delta Air Lines Avianca EEC Leasing Philippine Airlines Meteor Aero Southern Aircraft Consultancy Kahala US-28200 Hermes Airlines Sunday Airlines Etihad Airways Cyberjet Denim Air Samsung Techwin Aviation United Airlines United Airlines Airco Alliance Airlines DGI II Aircraft 27905 Unknown (Colombia) Mesa Airlines Unknown (Philippines) Avion Express Unknown (Canada) Unknown (Mexico) Southern Aircraft Consultancy Jetran Spectre Air Capital SkyWest Airlines(USA) Falcon Air Express Falcon Air Express

10/06/2014 13/06/2014 13/06/2014 17/06/2014 19/06/2014 01/05/2014 02/05/2014 07/05/2014 13/05/2014 02/05/2014 06/05/2014 06/05/2014 07/05/2014 07/05/2014 13/05/2014 17/05/2014 23/05/2014 28/05/2014 04/06/2014 05/06/2014 11/06/2014 12/06/2014 13/06/2014 13/06/2014 14/06/2014 18/06/2014 18/06/2014 18/06/2014 01/05/2014 01/05/2014 01/05/2014 01/05/2014 01/05/2014 01/05/2014 01/05/2014 02/05/2014 02/05/2014 02/05/2014 02/05/2014 03/05/2014 06/05/2014 06/05/2014 07/05/2014 07/05/2014 07/05/2014 08/05/2014 08/05/2014 08/05/2014 12/05/2014 12/05/2014 12/05/2014 12/05/2014 12/05/2014 12/05/2014

Source: IBA’s JetData.

afm • Issue 92 – September–October • www.afm.aero

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

Aircraft deals 1 May to 19 June, 2014 MSN

Manufacturer

Model

Event

Owner

Operator

Date

961 216 529 557 2792 33791 25156 26709 53314 27987 33096 7203 15068 8006 8014 26440 27416 27417 1451098 24365 34296 25129 24828 7612 28332 26064 15104 15124 5894 24645 26606 15126 15234 15239 3171 49996 27001 15273 15274 26694 77 76 76 400 15233 15275 27007 15075 28085 24342 26063 26298 49728 76 23306

Airbus Airbus Airbus Airbus Airbus Boeing Boeing Boeing McDonnell Douglas Boeing Boeing Bombardier Bombardier Bombardier Bombardier Boeing Boeing Boeing Embraer Boeing Boeing Boeing Boeing Bombardier Boeing Boeing Bombardier Bombardier Airbus Boeing Boeing Bombardier Bombardier Bombardier Dornier McDonnell Douglas Boeing Bombardier Bombardier Boeing Airbus Airbus Airbus ATR Bombardier Bombardier Boeing Bombardier Boeing Boeing Boeing Boeing McDonnell Douglas Airbus Boeing

A330-200 A340-300 A300-600 A300-600 A320 737-700 757-200 757-200 MD-80 737-800 747-400 CRJ-100/200 CRJ-705/900 CRJ-100/200 CRJ-100/200 737-300 737-500 737-500 ERJ-135 737-300 737-700 757-200 737-500 CRJ-100/200 737-300 767-300 CRJ-705/900 CRJ-705/900 A320 737-500 737-400 CRJ-705/900 CRJ-705/900 CRJ-705/900 328JET-300 MD-80 737-400 CRJ-705/900 CRJ-705/900 757-200 A320 A320 A320 ATR42 CRJ-705/900 CRJ-705/900 737-400 CRJ-705/900 737-300 767-300 767-300 737-400 MD-80 A320 767-200

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 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

AMES CAMO Bank of Utah Wells Fargo Wells Fargo TAP Air Portugal Privatair United Airlines United Airlines Delta Air Lines Jet2.com 33096 Leasehold Skywest Airlines(USA) Mesa Airlines Skywest Airlines Skywest Airlines Aero Maximum Air North Air North Unknown (Gambia) Grand Cru Airlines Wilmington Trust Federal Express Wells Fargo Unknown (Bolivia) Belavia Bank of Utah Mesa Airlines Mesa Airlines Tianjin Airlines Dragon Air Petrus Aircraft Mesa Airlines Mesa Airlines Mesa Airlines Air Peace American Airlines Go2Sky Mesa Airlines Mesa Airlines United Airlines US Airways Global Airways Aircraft Support Group Unknown (Nicaragua) Mesa Airlines Mesa Airlines Blue Air Mesa Airlines Unknown (Mexico) Jet Midwest Group Bank of Utah Unknown (Spain) Delta Air Lines Unknown (South Africa) Boeing Capital Corp

AMES CAMO Bank of Utah Wells Fargo Wells Fargo TAP - Air Portugal Privatair United Airlines United Airlines Delta Air Lines Jet2.com 33096 Leasehold Skywest Airlines(USA) Mesa Airlines Skywest Airlines Skywest Airlines Aero Maximum Inc Air North Air North Unknown (Gambia) Grand Cru Airlines Wilmington Trust Federal Express Wells Fargo Unknown (Bolivia) Belavia Bank of Utah Mesa Airlines Mesa Airlines Tianjin Airlines Dragon Air 24645 Petrus Aircraft MSN Mesa Airlines Mesa Airlines Mesa Airlines Air Peace American Airlines Go2Sky Mesa Airlines Mesa Airlines United Airlines US Airways Global Airways Aircraft Support Group Unknown (Nicaragua) Mesa Airlines Mesa Airlines Blue Air Mesa Airlines Unknown (Mexico) Jet Midwest Group Bank of Utah Unknown (Spain) Delta Air Lines Unknown (South Africa) Boeing Capital Corp

14/05/2014 14/05/2014 15/05/2014 15/05/2014 15/05/2014 15/05/2014 15/05/2014 15/05/2014 15/05/2014 16/05/2014 16/05/2014 16/05/2014 16/05/2014 19/05/2014 19/05/2014 20/05/2014 20/05/2014 20/05/2014 21/05/2014 22/05/2014 22/05/2014 22/05/2014 23/05/2014 23/05/2014 24/05/2014 27/05/2014 27/05/2014 27/05/2014 28/05/2014 28/05/2014 29/05/2014 29/05/2014 29/05/2014 29/05/2014 29/05/2014 29/05/2014 30/05/2014 30/05/2014 30/05/2014 02/06/2014 03/06/2014 04/06/2014 04/06/2014 04/06/2014 04/06/2014 04/06/2014 05/06/2014 05/06/2014 06/06/2014 06/06/2014 06/06/2014 09/06/2014 10/06/2014 12/06/2014 13/06/2014

Source: IBA’s JetData.

afm • Issue 92 – September–October • www.afm.aero

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

Aircraft deals 1 May to 19 June, 2014 MSN

Manufacturer

Model

Event

Owner

Operator

Date

15116 7136 1450300 E2047 35109 22320 22320 1668 27364 24702 30717 32363 48461 48495 48496 48497 2732 35838 96 28373 40233 15315 664 33791 40234 40236 40235 15316 4674 55019 27094 34903 1011 786 5666 800 35282 2114 24126 40592 4563 29083 5539 4476 26456 28606 28602 25583 3568 25584 29351 11505 27007 27902

Bombardier Bombardier Embraer BAE Systems Boeing Boeing Boeing Airbus Boeing Boeing Boeing Boeing McDonnell Douglas McDonnell Douglas McDonnell Douglas McDonnell Douglas Airbus Boeing Airbus Boeing Boeing Bombardier ATR Boeing Boeing Boeing Boeing Bombardier Airbus Boeing Boeing Boeing ATR Airbus Airbus Airbus Boeing Airbus Boeing Boeing Airbus Boeing Airbus Airbus Boeing Boeing Boeing Boeing Airbus Boeing Boeing Fokker Boeing Boeing

CRJ-900 CRJ-100 ERJ-145 146-200 737-700 767-200ER 767-200ER A319-100 777-200 737-300 737-700 737-800 MD-11F MD-11F MD-11F MD-11F A320 737-800 A330-300 737-800 737-800 CRJ-705/900 ATR72 737-700 737-800 737-800 737-800 CRJ-705/900 A320-200 717-200 737-400 737-800 ATR42-600 A330-300 A320 A319 737-700 A320 737-400 767-300 A319 737-700 A320 A320 737-500 737-300F 737-300F 767-300ER A320-200 767-300ER 737-800 Fokker 100 737-400 767-300ER

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 Sold with 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 Sub-leased Sub-leased Sub-leased Sub-leased Sub-leased Sub-leased Sub-leased Transferred Transferred Transferred Transferred Transferred Transferred Transferred Transferred Transferred Transferred Transferred Transferred Transferred Transferred Transferred Transferred Transferred Wet-leased Wet-leased Wet-leased Wet-leased

Mesa Airlines FMI Air NovoAir Meteor Aero Southwest Airlines Jet Midwest Group KMW Leasing VII TAP Air Portugal Bank of Utah AerCap AerCap Wells Fargo Sky Lease I Inc Sky Lease I Inc Sky Lease I Inc Sky Lease I Inc BOC Aviation Natixis Lease SA ILFC Sojitz Aircraft Leasing GECAS Wells Fargo Nordic Aviation Capital Privatair Avolon Aerospace GECAS AWAS Wells Fargo Air Berlin Boeing Capital Corp Aircastle Investment BBAM ATR ILFC LAN Airlines Air Canada Rouge ILFC Aviation Capital Group Solinair Tagua Leasing LAN Ecuador Pembroke Group Wizz Air Hungary LAN Airlines GECAS Lease Investment Flight GECAS Air Canada Rouge AirAsia Zest The Cit Group Inc AerCap Denim Air Blue Air AWAS

Mesa Airlines FMI Air NovoAir Meteor Aero Southwest Airlines Jet Midwest Group KMW Leasing VII TAP Air Portugal Bank of Utah China United Airlines RwandAir Wells Fargo Sky Lease Cargo Sky Lease Cargo Sky Lease Cargo Sky Lease Cargo Thomas Cook Airlines SunExpress Germany Flynas Transavia Jetairfly Endeavor Air Etihad Regional ECAir Ryanair Ryanair Ryanair Endeavor Air Vueling Airlines Delta Air lines Blue Panorama Airlines Travel Service Portugalia Thai AirAsia X LANAirlines Air Canada Rouge Jetairfly Thomas Cook Airlines Belgium Solinair TAM Linhas Aereas LAN Ecuador Jettime Finland Wizz Air Hungary LAN Airlines Argentine Air Force Yangtze River Express Yangtze River Express Air Canada Rouge AirAsia Zest Air Canada Rouge Travel Service Greenland Express Meridiana Finnair

18/06/2014 18/06/2014 18/06/2014 18/06/2014 19/06/2014 19/06/2014 19/06/2014 19/06/2014 19/06/2014 15/05/2014 17/05/2014 10/06/2014 18/06/2014 18/06/2014 18/06/2014 18/06/2014 01/05/2014 01/05/2014 04/05/2014 05/05/2014 05/05/2014 08/05/2014 13/05/2014 15/05/2014 15/05/2014 01/06/2014 01/06/2014 05/06/2014 17/06/2014 17/06/2014 18/06/2014 18/06/2014 19/06/2014 02/05/2014 05/05/2014 06/05/2014 07/05/2014 14/05/2014 14/05/2014 15/05/2014 26/05/2014 27/05/2014 30/05/2014 30/05/2014 01/05/2014 18/06/2014 18/06/2014 19/06/2014 19/06/2014 19/06/2014 15/05/2014 02/06/2014 06/06/2014 19/06/2014

Source: IBA’s JetData.

afm • Issue 92 – September–October • www.afm.aero

INDUSTRY DATA: Firm orders Firm orders – From 26 June to 31 July, 2014 Manufacturer Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus ATR ATR ATR ATR Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Bombardier Bombardier Bombardier Bombardier Bombardier Bombardier Bombardier Bombardier Bombardier COMAC COMAC COMAC Embraer Embraer Embraer Embraer Embraer Embraer Mitsubishi Sukhoi

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

Variant

Customer

Order date

A320ceo A321ceo A319neo A320ceo A320neo A320neo A321ceo A321neo A320neo A321neo A320neo A321neo A320neo A320 A321 A320neo A320neo A320ceo A320neo A320 A321 A320neo A321neo A320neo A321neo A350-900 72-600 42-600 72-600 72-600 737-800 777-8X 777-9X 737 MAX 8 777-300ER 787-9 777-300ER 737-700C 787-9 777-9X 737 MAX 777-300ER 777X 787-9 CRJ900 Q400 CS300 CS300 Q400 Q400 Q400 Q400 Q400 ARJ-21 ARJ-21 ARJ-21 E175-E2 E190 E175-E2 E190-E2 E190 E190-E2 MRJ90 SSJ-100

Aerospace International Group Aerospace International Group Undisclosed Undisclosed Undisclosed Undisclosed Undisclosed Undisclosed AirAsia Air Lease Corporation IAG (British Airways) IAG (British Airways) ILFC BOC Aviation BOC Aviation LATAM Airlines Group S.A. Qantas SMBC Aviation Capital SMBC Aviation Capital Undisclosed Undisclosed Hong Kong Aviation Capital Hong Kong Aviation Capital ANA Holdings ANA Holdings International Airlines Group (IAG) Bangkok Airways Nordic Aviation Capital Air Lease Corporation Myanma Airways Undisclosed Emirates Airlines Emirates Airlines Air Lease Corporation Air Lease Corporation CIT Aerospace Intrepid Aviation Air Algerie MG Aviation Qatar Airways Undisclosed All Nippon Airways All Nippon Airways All Nippon Airways Undisclosed Air Kazakhstan airBaltic Falcon Aviation Services Abu Dhabi Aviation Horizon Air Nok Air WestJet Encore Ltd. Undisclosed Nanshan Group Yanshang Corp Republic of Congo Trans States Azerbaijan Airlines Fuji Dream Airlines ICBC Leasing Tianjin Airlines Tianjin Airlines Air Mandalay Bek Air

27/06/2014 27/06/2014 27/06/2014 27/06/2014 27/06/2014 27/06/2014 27/06/2014 27/06/2014 11/07/2014 14/07/2014 14/07/2014 14/07/2014 14/07/2014 15/07/2014 15/07/2014 15/07/2014 15/07/2014 15/07/2014 15/07/2014 15/07/2014 15/07/2014 17/07/2014 17/07/2014 31/07/2014 31/07/2014 01/08/2014 09/07/2014 14/07/2014 15/07/2014 16/07/2014 29/06/2014 09/07/2014 09/07/2014 15/07/2014 15/07/2014 15/07/2014 15/07/2014 16/07/2014 16/07/2014 16/07/2014 16/07/2014 31/07/2014 31/07/2014 31/07/2014 30/06/2014 07/07/2014 14/07/2014 14/07/2014 15/07/2014 15/07/2014 16/07/2014 29/07/2014 30/07/2014 14/07/2014 14/07/2014 15/07/2014 14/07/2014 15/07/2014 15/07/2014 17/07/2014 17/07/2014 17/07/2014 15/07/2014 15/07/2014

No of Aircraft 6 7 4 10 16 70 20 30 23 60 13 7 50 23 17 12 21 5 110 38 7 40 30 7 23 8 3 25 7 6 10 35 115 21 6 10 6 2 2 50 50 6 20 14 16 10 3 2 2 1 2 5 5 2 1 3 50 2 3 10 20 20 6 7

Engines CFM LEAP-1A PW1100G-JM PW1100G-JM PW1100G-JM Trent XWB PW127M PW127M PW127M PW127M CFM56-7B GE9X GE9X CFM LEAP-1B GE90-115B GE90-115B CFM56-7B Trent 1000 GE9X CFM LEAP-1B GE90-115B GE9X Trent 1000 CF34-8 PW150A PW1500G PW1500G PW150A PW150A PW150A PW150A PW150A CF34-10A CF34-10A CF34-10A PW1700G CF34-10A PW1700G PW1900G CF34-10E PW1900G PW1217G SaM146

Source: IBA’s JetData.

afm • Issue 92 – September–October • www.afm.aero

AIRPORTS INDUSTRY & ROUTES:DATA: Airport List charges prices Data supplied by IBA’s JetData. www.ibagroup.com

List prices and lease rates – August 2014 Current Market Value Manufacturer Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing McDonnell Douglas Boeing McDonnell Douglas Boeing McDonnell Douglas Boeing McDonnell Douglas Boeing McDonnell Douglas Boeing McDonnell Douglas Boeing McDonnell Douglas Bombardier (Canadair) Bombardier (Canadair) Bombardier (Canadair) Bombardier (Canadair) Bombardier Bombardier Bombardier Embraer Embraer Embraer Embraer Embraer Embraer Fokker Fokker Sukhoi Sukhoi ATR ATR ATR ATR

Average List Price $67.70m $80.70m $88.30m $103.60m $208.60m $211.50m $231.10m $389.90m $74.80m $89.10m $94.60m $352.00m $160.20m $182.80m $185.40m $258.80m $291.20m $295.70m $315.00m $206.80m $37.30m $42.80m $30.00m $21.58m $28.02m $38.66m $41.61m $46.08m $48.67m $18.10m $18.90m $21.90m $22.70m

Type A300-600R A310-200 A310-300 A318-100 A319-100 A320-200 A321-100 A321-200 A330-200 A330-200F A330-300 A340-200 A340-300 A340-500 A340-600 A380-800 B717-200 B737-300 B737-400 B737-500 B737-600 B737-700 B737-800 B737-900 B737-900ER B747-400 B747-8F B757-200 B767-200ER B767-300ER B767-300F B777-200 B777-200ER B777-200LR B777F B777-300 B777-300ER B787-8 MD-11 MD-81 MD-82 MD-83 MD-87 MD-88 MD-90 CRJ-100/200 CRJ-700/705 CRJ-900 CRJ-1000 Q200 Q300 Q400 ERJ-135 ERJ-145 E170 LR E175 LR E190 LR E195 LR Fokker 70 Fokker 100 SSJ 100-95B SSJ 100-95LR ATR 42-500 ATR 72-500 ATR 42-600 ATR 72-600

Oldest $3.50m $1.00m $2.50m $9.80m $7.50m $3.50m $7.50m $13.00m $18.00m $75.00m $15.00m $4.50m $5.00m $18.00m $20.00m $129.00m $5.80m $0.70m $1.00m $0.90m $8.00m $10.50m $14.00m $14.00m $28.50m $8.00m $125.00m $3.80m $2.00m $6.00m $20.00m $18.00m $28.00m $65.00m $125.00m $40.00m $76.00m $93.00m $6.00m $0.50m $0.50m $0.50m $0.50m $0.70m $3.60m $1.20m $7.50m $10.50m $19.80m $4.90m $5.60m $8.00m $1.50m $1.80m $11.00m $14.50m $16.50m $18.00m $2.00m $2.20m $17.50m $18.50m $4.20m $6.00m -

Newest $9.50m $2.00m $5.50m $18.00m $37.00m $43.50m $13.00m $51.00m $93.50m $91.00m $105.00m $9.00m $28.00m $32.00m $45.00m $225.00m $10.00m $4.00m $5.50m $3.50m $13.00m $36.00m $48.00m $19.50m $49.50m $30.00m $180.00m $17.50m $11.20m $65.00m $60.00m $41.00m $105.00m $145.00m $167.00m $68.00m $166.00m $115.50m $10.00m $0.50m $1.20m $1.60m $1.00m $1.50m $4.60m $4.30m $20.30m $25.00m $28.00m $8.00m $11.00m $21.50m $4.00m $6.50m $26.00m $29.50m $33.00m $35.00m $2.50m $3.20m $23.00m $24.00m $12.00m $16.80m $16.00m $21.00m

% Change 0% 0% 0% 0% 2% 2% -2% 2% 0% 0% 0% -4% 0% 0% 0% -2% 0% 0% 0% 0% 0% 0% 1% 0% 0% 0% -2% 1% 0% 0% 0% 0% -1% 0% -1% -1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 1% 0% 0% 0% 0% 2% 0% -1% -2% 0% 0% -1% 0% 17% 0% 0% 0% 6% 3% 5%

Dry Lease Rate Oldest $0.060m $0.040m $0.055m $0.100m $0.090m $0.050m $0.080m $0.160m $0.220m $0.700m $0.210m $0.120m $0.130m $0.225m $0.275m $1.150m $0.070m $0.030m $0.045m $0.032m $0.080m $0.120m $0.195m $0.125m $0.255m $0.125m $1.300m $0.060m $0.050m $0.125m $0.250m $0.230m $0.340m $0.650m $1.200m $0.400m $0.700m $0.800m $0.100m $0.020m $0.020m $0.020m $0.020m $0.020m $0.060m $0.035m $0.080m $0.120m $0.180m $0.060m $0.065m $0.090m $0.035m $0.045m $0.105m $0.140m $0.155m $0.165m $0.040m $0.050m $0.140m $0.145m $0.060m $0.080m -

Newest $0.165m $0.090m $0.120m $0.185m $0.305m $0.360m $0.170m $0.425m $0.860m $0.800m $0.910m $0.190m $0.360m $0.380m $0.525m $2.000m $0.125m $0.070m $0.095m $0.065m $0.150m $0.310m $0.400m $0.200m $0.415m $0.390m $1.500m $0.210m $0.200m $0.480m $0.560m $0.390m $0.870m $1.000m $1.400m $0.675m $1.550m $1.100m $0.180m $0.040m $0.045m $0.050m $0.040m $0.050m $0.090m $0.065m $0.200m $0.240m $0.270m $0.080m $0.120m $0.190m $0.070m $0.080m $0.225m $0.255m $0.290m $0.300m $0.060m $0.090m $0.225m $0.230m $0.140m $0.180m $0.155m $0.195m

% Change 2% 0% 6% 0% 1% 1% 0% 1% -2% 0% -1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 1% -2% 0% -4% 0% 0% 0% -2% -4% -4% -3% -3% 0% -1% 2% 0% -7% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 11% 4% -4% 0% 0% 0% 0% 17% 0% 0% 0% 0% 3% 3%

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

afm afm••Issue Issue87 92––November–December September–October ••www.afm.aero www.afm.aero

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

Engine data – August 2014

Source: IBA’s JetData.

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

Engine data – August 2014 Type B737-300 B737-400 B737-500 A321-200 body A319-100 A340-300 B737-600 B737-700 B737-800 B737-900ER CRJ-200 CRJ-700 E170/175 E190/195 A300-600R B767-300ER MD-11 A330-200 B777-300ER A320-200 MD-82 B747-400 A310-300 B757-200 Fokker 100 A340-600 A330-300 B777-200ER A380-800 ERJ-145 ER B717-200

Engine CFM56-3B1 CFM56-3B2 CFM56-3C1 CFM56-5B3/P CFM56-5B5/P CFM56-5C4/P CFM56-7B22 CFM56-7B24 CFM56-7B26 CFM56-7B27 CF34-3B1 CF34-8C5 CF34-8E5 CF34-10E6 CF6-80C2A5 CF6-80C2B6F CF6-80C2D1F CF6-80E1A3 GE90-115B V2527-A5 JT8D-217C PW4056 PW4152 RB211-535E4 Tay 650-15 Trent 556-61 Trent 772B-60 Trent 895 Trent 970 AE3007-A1 BR715A

Full-life market value August 2014

Current half-life market value August 2014

$1.00m $1.40m $2.10m $8.65m $6.75m $5.60m $7.05m $7.85m $8.60m $8.90m $2.20m $4.60m $6.00m $7.10m $5.15m $7.10m $5.20m $14.80m $31.90m $7.80m $0.90m $6.50m $6.00m $4.20m $2.20m $14.00m $14.58m $20.50m $19.80m $2.30m $4.00m

$0.60m $0.75m $1.20m $6.30m $4.35m $3.80m $4.70m $5.50m $6.25m $6.55m $1.15m $3.20m $3.20m $5.00m $2.65m $4.00m $2.75m $10.00m $24.10m $5.35m $0.55m $3.90m $3.30m $2.80m $1.30m $8.50m $8.60m $13.50m $13.80m $1.30m $2.50m

Market lease rate $0.020m $0.022m $0.028m $0.065m $0.045m $0.045m $0.047m $0.056m $0.065m $0.066m $0.017m $0.045m $0.045m $0.065m $0.040m $0.055m $0.045m $0.120m $0.250m $0.060m $0.025m $0.055m $0.045m $0.050m $0.025m $0.110m $0.120m $0.170m $0.170m $0.025m $0.042m Source: IBA’s JetData.

afm afm •• Issue Issue92 92––September–October September–October••www.afm.aero www.afm.aero