AFM Issue 89 by AFM Magazine

The business and financing of airline operations

Engine efficiency Biofuel development An update on SES Singapore Air Show highlights

The green dream: Environmental aviation Published by

Marchâ&#x20AC;&#x201C;April 2014 Issue 89 www.afm.aero

Foreword Editor Mary-Anne Baldwin Mary-Anne@afm.aero +44 (0)208 831 7511 Contributors Kathryn Creedy, Daniella Horwitz, Justin Burns, Andrew Williams and Martin Ferguson. Advertising Manager Ellis Owen Ellis@afm.aero +44 (0)208 831 7519 Editorial Director Joe Bates joe@aviationmedia.aero Design Andrew Montgomery andy@afm.aero Website Jose Cuenca jose@aviationmedia.aero Published on behalf of MRO Network by Aviation Media Sovereign House 26-30 London Road Twickenham, TW1 3RW, UK Managing Director & Publisher Jonathan Lee Jonathan@aviationmedia.aero AFM IS A FULLY AUDITED MAGAZINE

The aviation industry produced 689 million tonnes of carbon dioxide in 2012, says the International Air Transport Association (IATA). It’s a lot but it’s still only two per cent of the global total. Yet, aviation is often vilified. In reality, it has done a great deal to lower emissions and every part of the industry is working towards taking those figures lower. The industry has set an ambitious target to hit carbon neutral growth from 2020 and a 50 per cent reduction in carbon dioxide emissions by 2050 (based on 2005 levels.) Granted, Europe’s biggest project, the Single European Sky (SES), has not had much luck. It’s six years away from the original launch date of 2020 and has already postponed it by four years to 2024. But with fuel covering one third of an airline’s operating cost, there is significant drive and determination not to stop there. Engine manufacturers strive to offer their customers a 1.5 per cent lower fuel-burn every year. Likewise, today’s aircraft are 80 per cent more fuel-efficient than those produced in the 1960s.

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Biofuels are another key area and although investment into their development is costly, it’s an investment that will pay off. We look at each of these topics in this issue, along with how airlines can lower their fuel consumption (pages 18, 14 and 24, respectively). And, of course, airports are playing their part in lowering emissions with the development of air traffic management (ATM). On Page 34, we examine how Middle Eastern carriers are set to spend a whopping $450bn on 2,520 aircraft by 2030. The UAE airspace system, which currently handles 600,000 movements a year, will have

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Already on its way with this is Singapore, which last year formed a deal with Airbus ProSky to develop ATM concepts. Singapore is modernising its ATM and in February launched its new Singapore Air Traffic Control centre. It’s preparing for big business. Speaking at the Singapore Air Show (which we give the highlights of on page 36), Deputy Prime Minsiter, Teo cheee Hean, said: “For the next 20 years, nearly half of the world’s air traffic will be driven to, from, or within the Asia-Pacific region. And the number of aircraft in the Asia-Pacific fleet will nearly triple.” The consensus is that growth is happening and it’s welcome, but it must be met with better traffic management and a lowering of emissions. Thankfully, much of that work is already underway.

Editor Mary-Anne Baldwin

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to accommodate 1.5 million by 2025. All this will need organisation.

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 89 – March–April • www.afm.aero

The business and financing of airline operations AIRLINE FLEET MANAGEMENT

Engine efficiency Biofuel development An update on SES Singapore Air Show highlights

The green dream: Environmental aviation ISSUE 89 March–April 2014

Published by

March–April 2014 Issue 89 www.afm.aero

Issue 89 March –April

In this issue

03 8 14 18 24

Foreword

14 18

NEWS ROUND UP

The latest on deals, mergers, appointments and more FOCUS

Plant power: Biofuel development Justin Burns investigates the development of aviation biofuel and the issues that surround it.

FLEET OPERATIONS

Engine efficiency: The drive to lower emissions Kathryn Creedy takes a thorough look at just how much new engine technologies can lower fuel and noise emissions.

Airline fuel conservation

Fuel efficiency plays a crucial role in determining an airline’s environmental performance and also has an important influence on its bottom line. So, what are the main causes of fuel inefficiency? And what are the best ways for airlines to improve performance in this critical area? Andrew Williams investigates.

Under one sky: The development of SES Mary-Anne Baldwin charts the progress, and delays, of Europe’s scheme to reduce air traffic inefficiencies and emissions – the Single European Sky – and examines some of the initiatives under its air traffic research wing, SESAR.

afm • Issue 89 – March–April • www.afm.aero

CONTENTS

FLEET OPERATIONS

Filtering the flow: The need for Middle Eastern ATM

36 40

The Middle East’s aircraft movements will reach 2.3 million in 2025, yet it will have to make significant air traffic management (ATM) investments to avoid bottlenecks. Airport Show, an event for the Middle East, North Africa and Indian subcontinent region, examines the topic.

TRADING, LEGAL AND FINANCE

The Singapore Air Show: A mark of success Following the 2014 Singapore Air Show in February, Mary-Anne Baldwin takes a look at some of the aviation initiatives to have sprung up in the country and recounts the most significant business to have happened during the event.

Number crunching: The role of data in network planning

Network planners rely on tried and tested data sets to analyse growth potential. But Martin Ferguson asks if big data will bring valuable new intelligence to airlines.

MAINTENANCE OPERATIONS

Aircraft storage: Room of one’s own

Aircraft storage facilities present a solution to aircraft owners, providing a safe haven for expensive assets that are not being utilised. Daniella Horwitz speaks to four storage providers to find out more about the key considerations and the options available.

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

Ex-Im Bank’s 2012 aviation financing tops $1bn

he US Export-Import Bank (Ex-Im Bank) handed out more than $1bn in support of American-made business aircraft and helicopters since the start of the 2012 financial year. Its last deal, which took the bank’s total business and helicopter financing for the year to $1bn, was the guarantee of a $300m loan extended by Apple Bank for Savings to Minsheng Financial Leasing Company of Tianjin, China, for the purchase of eight Gulfstream aircraft. “Business aircraft is a great example of a home-grown American industry that is creating jobs in communities across the country, thanks to support from the Export-Import Bank,” said Ex-Im Bank’s chairman and president, Fred Hochberg. “Despite an increase in the number of foreign competitors, America’s business-jet manufacturers continue to demonstrate the advantages of manufacturing hightechnology, high-quality products in the US.”

However, the Air Line Pilots Association (ALPA) has urged the US Senate to impose tighter rules on the US Ex-Im Bank’s financing of widebody aircraft to foreign carriers. ALPA sent its plea in a letter to Senate banking committee chairman, Tim Johnson, which was sent prior to a hearing on the reauthorisation of Ex-Im Bank. In the letter, ALPA asked congress to “ensure that it [Ex-Im Bank] indeed acts to substantially reduce – with the ultimate goal of ending – financing for widebody aircraft across the board,” as was agreed under the 2012 Reauthorization Act. ALPA argues that the bank’s loans to foreigners wishing to buy widebody aircraft has led to job losses in the US aviation industry and that the bank “disregards the downstream negative impact of its loans on aviation workers and our industry”.

Garuda pays off 2013 debt Garuda Indonesia has paid off all its debts and ended 2013 with an operating revenue of $3.72bn, up seven per cent on 2012. The airline revealed the figures in its year-end financial statement, which showed a successful repayment debt of $130m.

financial performance in 2013 was influenced by the rupiah’s decline against the US dollar. “Despite receiving less income, in 2013 Garuda managed to pay off debt amounting to $130m; consisting of $55m from a Citi Club Deal, and $7m from the Indonesian Exim Bank.”

Passenger and cargo volume also increased by more than 20 per cent and its revenue, which was $3.72bn, was up seven per cent on 2012’s $3.47bn. Emirsyah Satar, Garuda Indonesia’s president and CEO, says: “Garuda Indonesia’s

NEWS IN BRIEF Kuwait Airways orders 25 aircraft Kuwait Airways, the national airline of Kuwait, has ordered 25 aircraft, including 10 A350-900 and 15 A320 Neo Family aircraft. The order is part of the airline’s fleet renewal strategy. “We are pleased to sign this deal with Airbus at this juncture of our 60-year journey,” said Rasha Al Roumi, Kuwait Airways’ chairperson. “The A350-900 will strengthen our long-haul route development while the A320 Neo will further boost our regional route network. These aircraft are an essential part of our ambitious growth plans.” Kuwait Airways already operates three A320s, three A310s, five A300s and four A340 Family aircraft.

MAS to buy 100 aircraft Malaysia Airlines (MAS) is reportedly waiting for government approval before it places an order for up to 100 commercial aircraft. It is thought that the order will be split between Airbus and Boeing and will include 30 Airbus widebodies, as well as the 787-10 and the 737 MAX to replace older 737-800s, news sources have reported. The loss-making airline must gain approval before agreeing the investment, but it was reportedly eager to receive new aircraft deliveries from 2016. The airline made a $104m loss in 4Q 2013, marking its fourth consecutive month of loss.

Air Panama starts new subsidiary Air Panama shareholders, George Novey and Eduardo Stagg, have pulled together to form Tica Air International, according to reports. The new Costa Rican start-up is reportedly set to launch flights sometime before December of this year and will be a subsidiary of Air Panama. Reports claim that, the carrier will launch with flights between San Jose Juan Santamaria and Miami International, using an Air Panama 737-300, while other routes are planned. Stagg says that the two companies running in parallel to one another would provide better economies of scale.

afm • Issue 89 – March–April • www.afm.aero

NEWS

Industry laments lack of funding, says survey Only 16 per cent of the aviation industry is satisfied with their current access to funding, a recent survey shows. While the majority find funding lacking, almost half (43 per cent) have sought or offered funding in the past year, Norton Rose Fulbright’s fifth transport survey shows. The survey indicates that the sector now draws on a more diverse range of funding sources, with 20 per cent anticipating that their primary source of finance will be shareholders over the next year, in comparison with 15 per cent who expect it to be the capital markets, 13 per cent to be bank debt and 11 per cent to be private equity. The legal practice’s survey reveals that while respondents would welcome various forms of government support in order to help unlock funding, a more beneficial view of asset values for risk weighting purposes is seen as the most effective way of increasing the availability of funding. In particular, the aviation sector continues to call for state support in the form of infrastructure investment; 40 per cent of respondents believe this would be the most helpful form of government support for their sector. While concerns over funding and infrastructure persist, 75 per cent of respondents believe current market conditions are positive for their aviation business, with Asia presenting the greatest investment opportunity in the next two to five years. Almost half (46 per cent) believe new opportunities are emerging and investment in additional aircraft and in the development of new markets are seen as the most promising investment opportunities by 25 per cent and 22 per cent of respondents, respectively.

Airbus Group to buy Salzburg Munchen Bank The Airbus Group is to buy Salzburg Munchen Bank in order to provide financing for the aeronautics and defence company. The bank, which is currently 100 per cent owned by Raiffeisenverband Salzburg, will be renamed Airbus Group Bank. “Acquiring Salzburg Munchen Bank provides us with a good platform to launch our company bank projects, said Airbus Group CEO, Haralad Wilhelm. “In the coming years, the whole group can benefit through increased financing flexibility.” The deal is expected to close this year, subject to regulatory approvals.

CEO pockets $13.4m selling American Airline shares American Airlines (AA) Group CEO, Doug Parker, pocketed $13.41m from the sale of his AA shares. The CEO bought 197,000 shares, worth a collective $550,000, in June 2008. Parker sold 702,375 shares at an average of $34.39, equating to a total of $24.16m. This included the 197,000 shares he bought in 2008, plus 505,375 he bought when America West merged with US Airways. He paid $10.75m to exercise those rights, leaving a gain of $13.4m, according to the SEC filing. He still owns almost 1.4 million shares, currently worth nearly $47m. Collectively, AA’s top five executives netted more than $78m from the sale of their shares over the last month. These include president, Scott Kirby, who gained $18.3m; CFO, Derek Kerr, who took $13.1m; and COO, Robert Isom, who is up $12.71m.

Thai AirAsia X receives AOC Thai AirAsia X, a subsidiary of AirAsia X, has been granted its Air Operator’s Certificate (AOC) from the Department of Civil Aviation of Thailand. Thai AirAsia X will now proceed with its application for operating permits and slots on international routes. The airline will start its operations with two A330-300s leased from a subsidiary of AirAsia X. Thai AirAsia X will announce its starting date once it has been granted its permits and slots. It will start services from Don Mueng International Airport, Bangkok. The airline has appointed Nadda Buranasiri as its new CEO.

CAA limits Heathrow’s airline charges The Civil Aviation Authority (CAA) has announced that Heathrow can only increase its airline charges by less than the rate of inflation. London Heathrow says it will “review its investment plans” following the regulator’s decision. The CAA has cut Heathrow’s airport charges by retail price index (RPI) -1.5 per cent from 2014–2019, down from RPI -1.3% in April 2013. This will see Heathrow’s charges per passenger airline fall in real terms from £20.71 in 2013/14 to £19.10 in 2018/19. Heathrow’s CEO, Colin Matthews, says: “We are concerned by the degree of change since the CAA’s final proposals just a short while ago.”

afm • Issue 89 – March–April • www.afm.aero

NEWS

European Commission investigates Cyprus Airways restructuring The European Commission is investigating whether it is legal for the Cypriot government to continue pouring finance into its flag-carrying airline, Cyprus Airways. The commission is concerned that Cyprus Airways’ €102m ($138m) restructuring may not be in line with EU state aid rules. In December 2013, the Cypriot government announced its plans to restructure the carrier by investing €102.9m ($139.2m) in state aid. However, it had already invested restructuring aid in 2007 and the airline has benefited from additional public interventions, including the 2012 capital injection and a €34.5m ($46.7m) rescue aid loan in 2013. The commission upholds its ‘one time, last time’ rule that an airline can only receive restructuring aid once over a

10-year period to avoid inefficient airlines being kept “artificially alive with repeated subsidies”. Cyprus Airways is 93.7 per cent owned by the Cypriot State and has been in financial difficulty since 2009. The latest plan includes a €31.3m ($42.4m) capital injection granted in 2012, a conversion of €63m ($85m) debts into equity and €8.6m ($11.6m) to cover the deficit of the company’s employee benefit scheme. The commission said in a statement that it “Has doubts whether the restructuring plan is suitable to ensure Cyprus Airways’ long-term viability and whether the airline is capable of withstanding likely challenges in the air transport market during the next years”.

NEWS IN BRIEF Airbus to raise A320 production Airbus will increase production of its singleaisle aircraft A320 Family to 46 a month in 2Q 2016, up from the current rate of 42. The new higher production rate will be achieved gradually, with an intermediate step up to 44 aircraft per month in 1Q 2016. Airbus says the increase reflects the “continuing appetite for most efficient singleaisle aircraft” of the A320 Family, which consists of the A318, A319, A320 and A321. Tom Williams, executive VP programmes, says: “Based on the healthy market outlook for our best-selling A320 Family and following a comprehensive assessment of our supply chain’s readiness to ramp-up, we are ready to go to rate 46 by 2Q 2016.

Etihad mulls Alitalia investment Etihad Airways is in final talks with Alitalia over investment in the struggling Italian carrier. Alitalia has been in talks with Etihad for weeks on a possible investment, and reports say it could involve Etihad buying a 40 per cent stake in Alitalia for around €300m ($405m). James Hogan, president and CE of Etihad, and Gabriele Del Torchio, CEO of Alitalia, confirmed the news. A statement from both says that during the next 30 days both companies and their advisers will determine how a common strategy can be developed, which “meets the objectives of both parties”.

afm • Issue 89 – March–April • www.afm.aero

US downgrades Indian aviation The US Department of Transportation’s (DOT) Federal Aviation Administration (FAA) has downgraded India’s safety rating to a Category 2 rating. The appraisal was made in accordance with the US’ International Aviation Safety Assessment (IASA) programme and follows a recent reassessment of the country’s civil aviation authority. India’s airlines can continue flying to the US, but will not be allowed to establish new services there. “The FAA is available to work with the Directorate General of Civil Aviation to help India regain its Category 1 rating,” said FAA administrator, Michael Huerta.

NEWS: People

On the

move Spohr becomes CEO of Lufthansa Carsten Spohr has been appointed as the new CEO of Deutsche Lufthansa AG and he will take on the role from 1 May. He currently oversees the business segment of Lufthansa passenger airlines in his capacity as board member. His replacement is yet to be named. Spohr has a commercial airline pilot’s licence from the Lufthansa Flight Training School and has held a number of roles at the German airline. He was responsible for the company’s global partnerships, including the Star Alliance, and was chairman of the executive board of Lufthansa Cargo AG. Spohr says: “As a Lufthansa man born and bred, I view the appointment as the new CEO as both an honour and an obligation.”

Oman Air CEO to step down Oman Air’s CEO, Wayne Pearce, stepped down on 28 February 2014. He spent two years at the helm. Chairman of the board of directors, Darwish bin Ismael bin Ali Al Balushi, said: “Mr Pearce leaves us after introducing greater frequencies on a number of key routes, increasing the revenue and passengers’ numbers and improvement in on-time performance.” Pearce joined Oman Air in January 2012, since then the airline has increased its passenger seat factor to 76 per cent

while achieving more than 30 per cent growth in loads with a 16 per cent increase in seats.

Qantas non-executive director steps down Qantas has announced that its non-executive director general, Peter Cosgrove, has stepped down. The Australian airline’s chairman, Leigh Clifford, said General Cosgrove resigned today from his position on the Qantas board. He has left to take on new responsibilities as the next governor-general of the Commonwealth of Australia. Clifford says: “Australia is indeed fortunate to have a person of Peter’s calibre to take on such an important role. Peter has a distinguished record as a military leader and in a range of corporate and community roles, including more than eight years on the Qantas board.”

Air Seychelles appoints CEO Air Seychelles has appointed Manoj Papa as its new CEO succeeding Cramer Ball, who resigned. Papa joins from South African Airways (SAA) where he was acting general manager, overseeing the entire commercial portfolio for the airline. As part of this role, he was also instrumental in developing the long-term turnaround strategy for SAA.

afm • Issue 89 – March–April • www.afm.aero

Papa started his career with SAA, working across different roles before he joined Etihad Airways in 2007, later serving as VP of corporate strategy. He then returned to SAA in 2012. Ball will stay on to ensure a seamless transition until Papa officially assumes the position of CEO on 1 March.

Sandlund joins SAS management Karl Sandlund has been appointed as the new chief strategy officer of Scandinavian Airlines (SAS). He has been named executive VP of strategic initiatives, with responsibility for a new department focusing on strategy development. Sandlund is currently VP network and partners, with strategic responsibility for the SAS network, and started his new role on 1 February. He started at SAS in 2004 and has since worked on strategy issues at the airline in a variety of managerial positions. Sandlund says: “The airline industry is dynamic and that gives me great motivation. Challenging market conditions and major changes mean we must constantly improve in order to remain at the forefront.” Rickard Gustafson, president and CEO of SAS, says Sandlund is a sharp analyst with ”great strategic ability” who will ensure SAS continues to “renew, improve and strengthen”.

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FOCUS: Biofuels

Plant power: Biofuel development Justin Burns investigates the development of aviation biofuel and the issues that surround it.

ising carbon emissions and ambitious industry targets to reduce them are driving airlines and aircraft manufacturers to develop sustainable biofuels.

Since 2008, about 20 airlines have operated flights using biofuel, and research and development initiatives have now moved on to develop second-generation biofuels. Unlike first-generation biofuels, these sustainable biofuels do not compete with food production. As the air industry expands, fossil fuel prices fluctuate and emissions rise, there is a growing need to find sustainable and cost-effective biofuels that can be mass-produced. According to the International Air Transport Association (IATA), the air transport industry produced about 689 million tonnes of carbon dioxide in 2012, approximately two per cent of the global total, but that figure could reach three per cent by 2050. The industry has set an ambitious target to hit carbon-neutral growth from 2020 and a 50 per cent reduction in carbon dioxide emissions by 2050, based on 2005 levels. Furthermore, the European Commission, airlines and fuel producers aim to produce two million tonnes of sustainably produced aviation biofuel by 2020.

Biofuel breakthroughs Over the last two years, Lufthansa has operated flights using a 50/50 mix of regular fuel and biosynthetic kerosene biofuel in one engine. Fifteen per cent of the biofuel was derived from the jatropha plant, 80 per cent from the camelina plant and five per cent came from animal fats. The German carrier says flights went smoothly and cut emissions by 50 per cent. Joachim Buse, VP of Lufthansa Aviation Biofuel, says: “Biofuel proved to be suitable for everyday use; biosynthetic kerosene is just as reliable as conventional jet fuel, but the environmental effects are more positive. “Following the successful field test, we are now focusing on suitability, availability, sustainability and certification of raw materials.” Bio-kerosene does present issues though, says Buse. The alternative fuel can only be produced in small batches, meaning high prices, but this will come down once large-scale production begins. Lufthansa is in discussions with various potential partners to achieve large-scale production, but has no “concrete plans” to run more flights.

afm • Issue 89 – March–April • www.afm.aero

FOCUS: Biofuels Algae also grows fast and produces up to 15 times more oil per square kilometre than other biofuel crops. But experts say that algae biofuels will not be cost competitive until the mid to late 2020s at the earliest, if ever, so it is likely to be another decade before airlines can use it regularly. In January, Boeing and Etihad Airways announced that they had developed a sustainable aviation biofuel using the shrub-like halophyte plant. The plant feeds off seawater in desert terrain and, according to research, it will produce biofuel more efficiently than other well-known feedstocks. Halophyte seeds contain oil suitable for biofuel production and have the advantage over other biofuel plants because it is grown in the desert and does not take up arable land. Etihad’s CEO, James Hogan, says: “Etihad Airways is very pleased with the research results of these saltwater-tolerant plants. This is real progress in developing a truly sustainable aviation biofuel from a renewable plant source, appropriate to our environment.” Etihad says the biofuel showed no discernible difference from regular fuel when it ran a demonstration flight in January using a 10 per cent mix of biofuel, and that a 50/50 mix with regular fuel could also be used. Research found that emission savings depend on the quantities of biofuel available in the future, but emissions were cut by 50 to 80 per cent.

Used cooking oil, mixed with conventional aircraft fuel, was among the first biofuels to be used in flight. In September 2011, KLM used cooking oil to power flights in Europe, and last year ran once-a-week flights from Amsterdam to New York for six months. Powered on a mix of 25 per cent cooking oil and 75 per cent fossil fuel, it was the first time biofuel had been used on the regular schedule of a trans-Atlantic route, and KLM says emissions were cut by 80 per cent. The benefit of powering an aircraft with used cooking oil is that it is a waste product, which is both plentiful and highly sustainable. But the downsides are that it is currently too expensive; at about $10 a gallon, it is roughly three times the price of regular aviation fuel, and it is difficult to mass-produce.

Algae and green diesel Another promising biofuel source is algae. In November 2011, United Airlines flew a commercial biofuel flight on algae aviation fuel, partially derived from genetically modified algae, which feeds on plant waste and produces oil. United used a mix of 60 per cent fossil fuel and 40 per cent algae biofuel, and this year it plans to operate more flights. The microscopic plant is seen as one of the most promising feedstock for large quantities of biofuel, as plants can be grown on marginal lands, in polluted, or salt water, in deserts and other inhospitable landscapes.

The Sustainable Bioenergy Research Consortium (SBRC), which is working with Etihad and Boeing and is researching the halophyte plant, says it may be possible to develop it at a “low and competitive cost”. SBRC explains that halophytes can also have a global impact, as 97 per cent of the earth’s water is seawater, and 20 per cent of the land is desert, so it could easily be produced at locations around the world. The consortium is also researching agricultural waste, date palm leaves and plants tolerant of salt water, such as salicornia, as potential biofuels that could be grown in coastal areas. The camelina plant is another promising biofuel source, and United is using the feedstock to operate commercial flights from Los Angeles later this year. AltAir, which produces it for the airline, says it is attractive as it requires minimal water and less fertiliser than other crops. It adds that emissions will be reduced by 50 per cent. Boeing has put forward an alternative aviation fuel, in the shape of green diesel, which it says is a “commercial type of biofuel”. Green diesel, also known as ‘renewable diesel’, can be used in any diesel engine and is chemically different from biodiesel as it is made from oils and fats. Boeing says it costs about $3 a gallon, making it competitive with petroleum aircraft fuel for airlines, and it emits 50 per cent less carbon dioxide than conventional fossil fuels.

afm • Issue 89 – March–April • www.afm.aero

FOCUS: Biofuels

Dr James Kinder, a technical fellow in Boeing Commercial Airplanes Propulsion Systems Division, says: “Green diesel approval would be a major breakthrough in the availability of competitively priced, sustainable aviation fuel.” Boeing is working with the US Federal Aviation Administration and industry partners to gain approval to fly on green diesel, and, if approved, it could be blended directly with fossil fuel ready for flights to be operated later this year. Kinder adds that production capacity exists in the US, Europe and Singapore to supply one per cent, or 800 million gallons, of global commercial aircraft fuel. Yet this would only be a short-term solution, as supply is nowhere near the global aviation fuel demand of 60 billion gallons a year.

Barriers to biofuel use Fuel is the first or second highest of an airline’s running costs, totalling around one third of it expenses, and so, sadly for the cost and availability of biofuels make them prohibitive fot many airlines. Indeed, if the cost of biofuel were not as high, many airlines would already be using it instead of traditional aviation fuel. Based on the limited batch size of the bio-kerosene blended with conventional aircraft fuel, Lufthansa paid three times the price of conventional JET A-1 for the HEFA-kerosene it used for flights. Jessica Kowal, from Boeing’s environment communications team, says the industry faces two issues: “There isn’t enough aviation biofuel to meet airline demand, and we need to bring the cost down to parity with petroleum aircraft fuel.” She adds: “Boeing’s position, which is the same as many airlines we work with, is that aviation biofuel must be produced sustainably, meeting criteria for environmental, economic and social benefit.” Boeing, Airbus and airlines are now focused on developing biofuels that can be mass-produced at a low cost and high yield, and with as minimal an environmental impact as

possible. Such companies are running biofuel initiatives across the UAE, Africa, Europe, Asia, the Americas and Australasia. Experts say that biofuels are likely to be consumed near to where they are produced, and will be dependent on the geographical landscape. By getting as many biofuel technology pathways certified, biofuel can be available in greater quantities, meaning costs can be reduced. Also, by diversifying the types of crops used for production and the locations in which they are grown, consumers will not rely on one single source of energy. That is certainly Etihad’s strategy, says Hogan. The CEO says the company’s goal is to drive the commercialisation of sustainable aviation fuel globally. “We had made some important first steps in this process and our continued focus will be to develop initiatives, which will facilitate the availability of sustainable aviation biofuels for Etihad Airways in the coming years.” Currently, the real challenge for airlines is that despite a strong demand for biofuel, the global supply of renewable aircraft fuel is limited, which raises the cost to use it in daily operations. In decades to come, aircraft are likely to be powered by a mix of biofuel and fossil fuel, with biofuels coming from different sustainable feedstock sources, rather than one single source. But in order for biofuels to be the norm, mass production needs to be developed, and this is likely to be a few decades away. Etihad’s COO, Richard Hill, expects the Gulf carrier to be operating commercial biofuel flights in five years time, although it is too early to elaborate on the total cost of investment or production capacity. “In five years’, technology will mature for biofuel to be commercially viable. We could offer competitive fares in the industry,” he explains. But Lufthansa’s Buse believes that more technological advances are needed before biofuels enter mass production, and for now, he thinks the market needs to be explored. “Current biofuels are a way of bridging into other technologies, and I expect aviation biofuel to become readily available within the next two decades,” he predicts.

afm • Issue 89 – March–April • www.afm.aero

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

The business and financing of airline operations

Interview: NAS CEO Low-cost alliances Foreign investment Cutting airline costs

Engine advancem ents: No turning back Published by

2014

September–October 2013 Issue 86 www.afm.aero

ISSUE 88 January–February

For all advertising please contact Ellis Owen +44 (0) 208 831 7519 ellis@afm.aero or www.afm.aero

r 2013

2013

Issue 90 of AFM, our ENGINE SPECIAL, will contain: 44 Engine lessor interview 44 Interview with Embraer 44 Engine manufacturer interview 44 Engine parts supply 44 Engine MRO

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July-August 2013 Issue 85 www.afm.aero

The business and financing of airline operations

AIRLINE FLEET MANAGEMENT

Interviews with:

Regional aviation : The vital signs are strong

Airline Fleet Management (AFM)

AIRLINE FLEET MANAGEMENT

The business and financing of airline operations

Low-cost: In it for the long -haul January–February 2014 Issue 88 www.afm.aero

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FLEET OPS: Engine efficiency

Engine efficiency:

The drive to lower emissions Kathryn Creedy takes a thorough look at just how much new engine technologies can lower fuel and noise emissions.

ircraft engine manufacturers are locked in a battle to lower operating costs and emissions in order to achieve a 1.5 per cent increase in fuel-burn efficiency every year. Indeed, aircraft coming off today’s production lines are 80 per cent more fuel efficient per passenger seat kilometre than those produced in the 1960s. However, airlines undeservedly remain under attack for their carbon footprint. It is well known that aviation accounts for less than two per cent of emissions compared with 32.8 per cent from the electrical power industry and 25.1 per cent from non-aviation transport. Indeed, between 2000 and 2012, the US commercial aviation industry reduced fuel burn and emissions by 10 per cent while increasing both passengers and cargo carried by 16 per cent. The US Environmental Protection Agency (EPA) has continually noted that aircraft emissions are not growing but diminishing. This compares with 74 per cent growth from trucks, 30 per cent growth from rail and a 19 per cent growth from cars. Between 2000 and 2012, passenger cars and medium- and heavy-duty trucks increased emissions by 13 per cent, says EPA. Meanwhile, the US airline industry improved fuel efficiency by more than 120 per cent since 1978, according to Airlines for America (A4A), and this resulted in 3.4 billion metric tonnes of carbon dioxide being scrubbed from the air.

The aviation industry has set highly ambitious goals to become carbon neutral by 2020 and it has laid out a technology road map that sets the standard for all industries. It is also working to reduce aviation net carbon emissions by 50 per cent by 2050, relative to 2005 levels. Net carbon reduction hinges on four initiatives, including engine and airframe technology, as well as the development of sustainable low-carbon fuels. Other lofty work includes more efficient aircraft operations, infrastructure improvements (including air traffic modernisation, which promises a 12 per cent reduction in emissions) and market-based measures (such as the European Union’s Emissions Trading Scheme, or EU ETS).

Driving efficiency gains “The fuel efficiency of the new narrowbody engines – the Pratt & Whitney PurePower and CFM LEAP – will be about 15 to 16 per cent compared with today’s CFM-56,” AirInsight Analyst, Ernest Arvai, tells AFM. “For widebody aircraft, we are seeing similar gains in fuel economy, much of which results from engines, but also some [come] from composites, aerodynamics and advanced systems. That combined impact is substantial.” Jason Brewer, GE’s general manager of commercial engines, agrees: “It’s not just the engine but the entire aircraft and its operation,” he says. “But I don’t know of any bigger

afm • Issue 89 – March–April • www.afm.aero

FLEET OPS: Engine efficiency contributor to efficiency than engines based on fuel burn and emissions. Wherever you reduce fuel burn you reduce carbon. If you take $3 per gallon, which is about where we are in fuel costs, and take a standard widebody aircraft utilisation of about 640 trips per year, we are looking at $4m to $4.5m in fuel savings per year, per aircraft from engine and airframe improvements. When you look at emissions, if you get a 10 per cent improvement in fuel burn, you have a 10 per cent saving in emissions and a potential 10 per cent emissions carbon tax savings as well.â&#x20AC;? Arvai agrees that engines are the largest factor in reducing emissions, but believes that other technologies contribute significantly. â&#x20AC;&#x153;Weight reduction through composites has a positive impact, as do improved systems, such as fly-by-wire replacing hydraulics to reduce weight. In addition, there are advanced aerodynamics such as winglets, which are now in their third generation of evolution with the Scimitar winglet at Aviation Partners,â&#x20AC;? he says. He noted that fuel burn was the largest single line item, meaning savings fall right to the bottom line. In addition, maintenance costs are reduced as new generation engines stay on-wing longer, and therefore have lower maintenance costs. Lower emissions and noise also impact landing fees, he adds, pointing to Schipholâ&#x20AC;&#x2122;s noise rules and eurozone airports, which have emissions built into landing fees. Experts expect an emissions trading scheme will come into play eventually, most likely a version of the EU ETS. â&#x20AC;&#x153;One can calculate a direct reduction in hydrocarbon emissions to fuel used, and measure the improvements in NOx and CO2 that result from the new engines, all of which exceed the current standards by a wide margin; those four factors mean substantial savings,â&#x20AC;? says Arvai.

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Pratt & Whitneyâ&#x20AC;&#x2122;s VP of development programme, Bob Saia, agrees. â&#x20AC;&#x153;A typical 150-passenger airplane consumes approximately $6m worth of fuel each year,â&#x20AC;? he tells AFM. â&#x20AC;&#x153;This fuel expense represents 40 to 50 per cent of the airlineâ&#x20AC;&#x2122;s direct operational cost. The PW1000G will lower engine operating costs by up to 20 per cent a year. This represents a potential saving of up to $2m per aircraft in fuel burn and reduced maintenance costs, and results in significant cost savings on demanding, short-haul routes. The significant fuel efficiency improvement lowers carbon dioxide by up to 3,500 tonnes per airplane, per year. This saving is equivalent to a forest containing 700,000 trees. In addition, advanced technologies provide a 50 per cent reduction in nitrogen oxide emissions, improving air quality.â&#x20AC;?

10 years, the technology pathway is expected to produce another eight to 12 per cent increase in efficiency, he says.

Fuel has traded places with labour as an airlineâ&#x20AC;&#x2122;s largest cost. Even if fuel costs go down, it is highly doubtful it would return to historic lows. This trend has motivated engine manufacturers, says Brewer. He believes the key is improving both propulsive and thermal efficiency. Over the next five to

Indeed, all manufacturers are pursuing the same fundamental changes, notes Saia. That involves lower engine weight and making engines more efficient at producing power. But just as important is the execution, which has produced a significant change in aircraft manufacturing.

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Source: GE

afm â&#x20AC;˘ Issue 89 â&#x20AC;&#x201C; Marchâ&#x20AC;&#x201C;April â&#x20AC;˘ www.afm.aero

FLEET OPS: Engine efficiency

Stung by years of delays and overwhelming teething pains after the entry into service (EIS) of new aircraft, airlines are now very aware of the risk that comes with new technology. “We are all really diving into our bag of tricks to deliver technology that is mature at EIS,” says Brewer. “GE is spending more money on maturation programmes to get the technology right. We are investing to be sure we deliver that.” Indeed, GE said the key is delivering a low-risk, high-value solution. Despite all the advances in engine technology and the double-digit improvements promised with the next-generation narrowbodies, Brewer suggests that step-change improvements are slowing from the pace seen in the last 20 years. “The GE90 went into service in 1995 and we are now developing the GE9X,” he says. “In that 20-year period, we achieved the same level of improvement as we did in the previous 40 years. The 9X will deliver a fuel-burn improvement of 15 per cent and a 40 per cent NOx improvement. It is levelling out and we won’t necessarily get one per cent, per year. To do that we have to get temperatures up and we need to develop materials to withstand those temperatures. We had very low-bypass-ratio engines in the 1970s and 80s and now we have higher bypass-ratio engines, but it is more difficult to get further step-change improvements without new materials. Even so, I think we will meet the one per cent fuel burn improvement on average.” GE’s solutions include the GEnx, which powers the 787 and 747-8 and delivers 15 per cent better fuel consumption and emissions than the engines it replaces, while delivering NOx levels 56 per cent below regulatory standards. It also posts

30 per cent lower noise levels thanks to larger, more efficient fan blades operating at a slower tip speed. The GE9X, scheduled for EIS in 2018, promises 10 per cent better specific fuel consumption (SFC) than the GE90-115B, which powers the 777-300 ER and claims five per cent better SFC than any other twin-aisle engine by 2020. With a 30 per cent margin to CAEP 8 and 8db margin to Stage 5.

Powering forward Pratt & Whitney (P&W) has attached its star to its geared turbofan (GTF) engine, the PW1000G PurePower, which has taken the narrowbody industry by storm and been chosen to power the Bombardier CSeries (PW1500G), the Mitsubishi Regional Jet (PW1200G), Embraer’s E2, second-generation jets (PW1700G and PW1900G) and the Irkut MC-21 (PW1400G). It is also one of the engine options for the A320 NEO (PW1100G-JM) and, as with its other applications, promises 10 to 15 per cent increased fuel efficiency over current narrowbody engines. The A320 NEO, rival to the 737 Max, is powered by CFM International’s LEAP-1B. That engine promises a 16 per cent lower fuel burn than the current A320 and four per cent less than the A320 NEO. While both new aircraft are due on the market in 2016 to 2018, the Bombardier CSeries is expected to prove the PW1000 concept when it enters service in 2015. “For the new technology engines, which aren’t in service yet, it’s all theoretical,” says Arvai. “But Boeing put out a chart comparing NG and Max [aircraft] that showed a net 4.1 per cent improvement and that was before the announcement of an additional one per cent fuel saving, which would move it to between 4.3 and 4.4 per cent. This would be best obtained from the airframers.

afm • Issue 89 – March–April • www.afm.aero

FLEET OPS: Engine efficiency Today’s fleet: Fuel has doubled as a percentage of airline costs Widebody 50%

30%

100%

15%

Single-aisle

25%

80% 60% 40%

Clear skies ahead

20%

The success of the current PW1000G engine is currently keeping P&W busy, but it is also planning to develop PurePower engines for the 70,000 to 100,000lb thrust class.

0% -

Source: Boeing.

“This is important,” he continues. “Today, predictive modelling has become much more accurate, and new engines are typically coming in within plus or minus three per cent of their targets on initial runs, and typically at their targets by EIS. So the engine manufacturers and the airframe OEMs understand their performance quite well, and typically the results are quite close to [their] promise.” “The PurePower engine programme provides operators with up to 20 per cent lower engine operating costs and savings in fuel burn, maintenance costs, as well as noise and emissions fees, giving potential savings of up to $2m per aircraft, per year compared to current best-performing engines of a similar thrust,” Saia tells AFM. “This is up to a 16 per cent engine fuel burn reduction, which has a direct positive impact on CO2 emissions reduction. It also includes a 50 per cent reduction in NOx emissions and a 75 per cent reduction in noise footprint, allowing longer hours of operation in airports that operate under curfew. “The really noticeable advance with these new engines is noise,” says Arvai. “They offer a 15db reduction and because every 10db reduction means noise is cut in half, these new engines will be 75 per cent quieter. The CSeries’ first flight, which will be the first to fly with these new engines, surprised much of the audience who did not realise the plane was rolling until about halfway down the runway.”

As Saia explained during the recent Pacific Northwest Aerospace Alliance 2014, the controversial reduction gearbox in its PurePower engines is the key to its success. “Fans are best when they are large and turning slowly, which also reduces noise. Turbines are best when they are small and turning fast,” he explained. “When the two are connected by a shaft, the engine designer has to trade off weight and efficiencies of these two subsystems. That trade covers how big the fan is, and how slow it can turn, versus how much efficiency is lost in the turbines because of that. By introducing the gear, we can decouple the fan and turbine, resulting in a fundamental improvement in both by capitalising on the efficiencies of a larger, slower fan and a smaller, faster turbine. That is then coupled with a shorter engine, which weighs less, has significantly fewer parts, six fewer stages and 2,000 fewer airfoils.”

“Our 10-year technology road map includes improved aerodynamics, more lightweight materials running at higher temperatures and pressure,” he explains. “We are developing materials that can run at those extremes. We are also addressing nacelle technology with both materials and aerodynamics. As we make fans larger, the nacelle becomes the key attribute in driving fuel efficiency in the aircraft. “We see a technology runway that allows us to take the geared architecture and improve it above double digit figures – between eight and 12 per cent – over the next five to 10 years. We will improve the fundamentals of the engine and capitalise on the unique architecture of the PurePower engine. With the ultra-high bypass ratio advantage of the PW1000G (12.5 to 1), the engine core runs cooler, improving hot section durability and extending engine overhaul maintenance intervals.” But engine improvement is only one factor in reducing costs and emissions. “Good maintenance practices are key to efficient engine operation,” says Saia. “Engines run most efficiently when clean, and well maintained,” Arvai agrees. “Monthly cleaning of an engine, with a specialised pressure washing system can improve performance. Of course, routine maintenance is essential, checking fluid levels and operating at the most efficient settings with full authority digital engine controls enabling computers to optimise performance. Engines are getting more reliable and easier to maintain as technology advances, and we’ve seen record-setting engines having more than 30,000 hours on-wing prior to maintenance being required, something unheard of in the old days.”

afm • Issue 89 – March–April • www.afm.aero

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FLEET OPS: Fuel conservation

Airline fuel conservation

afm • Issue 89 – March–April • www.afm.aero

FLEET OPS: Fuel conservation According to Daniel Rutherford, programme director of marine and aviation at the International Council on Clean Transportation (ICCT), aviation contributes about 2.5 per cent of anthropogenic carbon dioxide (CO2) emissions globally, and up to five per cent of ‘historical warming’ if other effects such as NOx emissions and impacts on cloudiness are taken into consideration. Moreover, aviation emissions are projected to increase by about four per cent annually through to 2050, as the number of aircraft, passenger and cargo movements grow. However, as the ICCT’s recent airline fuel efficiency study Evaluating Fuel Efficiency showed, some airlines are more efficient than others, with a 26 per cent gap in performance between the best and the worst, proving that there is great potential to achieve better efficiency and reduce environmental impact.

“For example, when we measure consumption in relation to the passenger-miles travelled only, we’d find that longer flights are generally more efficient than shorter flights, which consume a larger fraction of their fuel use in takeoff and landing. The end measurement could be biased, overlooking other important aspects of efficiency, such as the number of airports served and flight frequency,” he says. In the ICCT’s opinion, the best approach is to use a metric that can account for the full range of transport services that airlines provide to consumers, which is what they call ‘mobility’– a measure of how far a specified number of people are carried on an airline, and ‘access’ – the ability of a traveller to board or deplane an aircraft.

Haldane Dodd, head of communications at the Air Transport Action Group (ATAG)

Air traffic accounts for around two per cent of all man-made CO2 emissions today and, as a growing sector, we need to look to a future where we produce less CO2 “Airlines spend a lot of money on fuel, which is about one-third of their operating expenses. With better efficiency, they can reduce fuel use and costs. Sometimes this can mean the difference between operating at a profit or loss,” says Rutherford. Fuel efficiency has been a major goal of the aviation industry for many years. As Haldane Dodd, head of communications at the Air Transport Action Group (ATAG) in Geneva, explains. The simple fact that aircraft must carry all the fuel they will use on any given flight, taking up valuable room and increasing weight, means that manufacturers have found it profitable to market new aircraft on the basis of fuel efficiency. “Each generation is around 20 per cent more efficient than the one it replaces and we’ve seen well over 70 per cent improvement in fuel efficiency compared to the first jets,” he says. “Fuel accounts for over a third of operating costs. We also have a broader responsibility as a global industry. Air traffic accounts for around two per cent of all man-made CO2 emissions today and, as a growing sector, we need to look to a future where we produce less CO2. Driving down fuel burn is the principal way to do that.”

Measurement methods Rutherford explains that, in measuring its fuel consumption rates, airlines might use different measures, such as: fuel-per-passengermile; fuel-per-passenger; fuel-per-mile; and fuel-per-flight, among others. As well as being simple metrics that “can be quite intuitive and easy for an individual to relate with”, Rutherford says they can also help an airline to compare its fuel consumption from year to year, or aircraft to aircraft. However, when used to compare different airlines’ fuel consumption, he believes that such metrics “oversimplify the various transport services that airlines provide, the key difference being the metric used”.

“These can be measured with revenue passenger miles and departures, respectively. It’s also best to incorporate an airline’s regional affiliate fuel use and operations as they can contribute significantly to a mainline carrier’s overall efficiency. A method to account for circuitous routing, rewarding those airlines that fly passengers more directly between their origin and intended destination, is also recommended,” adds Rutherford.

Airline strategies Dodd points out that, as a whole, the airline industry already has a “comprehensive plan for reducing fuel use over the next few decades”, and that ties in to its climate change goals of capping aviation emissions from 2020 and halving them by 2050. In particular, he believes that the industry needs to use the first three pillars of this plan: new technology, including sustainable biofuels; better operational performance; and improved infrastructure. “Partnerships by organisations across the sector can provide such gains. For example, even though it does not directly help their own bottom line, it is great to see airports and air navigation service providers (ANSPs) teaming up with airlines to implement continuous descent approaches to airports all over the world. These can reduce fuel burn and noise impact to local communities and help the whole industry secure our licence to grow,” he says. Rutherford agrees that technology and operations are likely to play a vital part in future strategies. The ICCT study showed that about a third of the variation in fuel efficiency between airlines was due to technology alone. In terms of operations, Rutherford also highlights the fact that aircraft with a high passenger load factor and seating density can provide more passenger miles for

afm • Issue 89 – March–April • www.afm.aero

FLEET OPS: Fuel conservation

the same amount of fuel burn as an aircraft that’s transporting fewer people. “Fuel loading practices are also important, since carrying excess fuel at takeoff increases the weight and thus the fuel burn for an aircraft. Another cause of inefficiency is circuitous routing; to get a passenger from their origin to intended destination, airlines may fly to a layover airport away from the destination, leading to more fuel burn as well as unproductive miles and wasted time,” he says. Which aircraft airlines choose to fly on specific routes also makes a difference, and Rutherford says that airlines can continue to improve fuel efficiency by using more fuel-efficient aircraft, carrying more passengers, flying directly when possible, loading just enough fuel to fly full course while meeting safety requirements, and matching flight length to optimum aircraft range for the best fuel performance. Dodd points out that one way to obtain a fuel efficiency increase is to add winglets on aircraft that are suitable, but only for use on short flights, otherwise “they might not compensate for the extra weight added to the airframe”. Instead of modifying an aircraft’s auxiliary power unit (APU), he also advises simply “switching it off as often as possible by using fixed electrical ground power”. Similarly, he warns that installing advanced flight navigation technology “will only work if the ANSPs can make the most use of it with their own procedures. “One piece of advice to airlines is to reduce their internal silo cultures [the unwillingness to share information]. It is no good, for example, if the flight catering department saves $100 by using a home-based caterer for the outward and return legs of a flight if the operations department loses $120 in extra fuel because of the weight of the food flying around the world. We have a real opportunity with fuel-efficiency measures to have a look across an airline and really dig in to where efficiencies can be made,” he says.

Future trends Looking ahead, Rutherford’s view is that less efficient airlines can improve “by identifying where the inefficiencies lie – whether in the aircraft fleet or their operations – and take steps to optimise the efficiency in those areas”. The ICCT is currently in the process of ‘firming up’ the fuel efficiency data it has collected in relation to 2011 and 2012, but confirms that it will not be ready to release this until mid to late March – primarily because the raw Bureau of Transportation Statistics (BTS) data needs substantial processing. Even so, he can reveal that, while there seem to be “some shifts in the ranking”, the overall trends still hold, with a 28 per cent gap between best and worst in 2012. “We were a bit surprised by this because we thought that due to high fuel prices the efficiency gap might be closing over time. Also, the industry average fuel efficiency didn’t improve much between 2010 and 2012, which we are trying to square with the claims of very large improvements that you often hear about in the press,” he says. In the future, Dodd believes that there are significant grounds for optimism, and he points to the “amazing work being done in satellite navigation for more precise approaches to airports and in tracking flights over the oceans”, as well as sustainable aviation biofuels, which he says could provide a real opportunity to cut overall emissions of CO2 by 80 per cent. “There have so far been over 1,500 commercial flights on a range of biofuels and more feedstock is being investigated all the time. The biggest hurdle is financial; commercialising the use of alternative fuels for aviation will take years, but we are confident that it can be done and in a way that is truly sustainable.”

afm • Issue 89 – March–April • www.afm.aero

FLEET OPS: SES

urope’s airspace is already saturated and, while predictions of growth are positive, how we facilitate that growth is a major concern.

According to Eurocontrol’s forecasts, the number of European flights from 2012 to 2035 will rise by 50 per cent to 14.4 million. It believes that in 2035, 1.9 million flights, or 12 per cent of demand, will not be accommodated due to airport capacity constraints. That’s why, in 2004, EU member states signed up to a unified European air traffic system. This was the Single European Sky (SES) initiative, which aims to optimise flight operations, now reaching 27,000 each day. SES plans to remove national boundaries so that EU member states collaborate on air traffic management (ATM), enabling

more efficient flying that is also cheaper and greener. The cost of our current inefficiency is about €5bn ($6.9bn) a year, which is passed on to passengers. Added to that is the environmental damage. One aim of SES is to reduce CO2 emissions on each flight by 10 per cent; it should also improve safety performance by a factor of 10, increase ATM capacity and cut ATM costs. The first package of measures, SES1, was announced in 2004; it was updated in 2009 to provide SES2. We are now onto SES 2+, a second update, which, following approval from the member states, aims to fast-track the programme, making up for a series of delays. SES was meant to be up and running by 2020, but this has already been put back to 2024. In a speech to EU transport ministers in Vilnius, Lithuania, last September, Siim Kallas,

afm • Issue 89 – March–April • www.afm.aero

FLEET OPS: SES VP of the European Commission, said: “Progress has been elusive. It’s a bit like a mirage in the desert: each time you think you’re close, it seems to move further away and slips through your grasp.” He noted a “clear lack of political will in key areas of the single sky project”. He questioned whether member states “still want to have a Single European Sky in the future” and whether “achieving greater efficiency and ending this market fragmentation is too difficult politically”? It is true that progress has been slow and the EU must work harder to achieve its goals. In particular, SES 2+ tackles two major issues: the removal of national air traffic boundaries and the unification of ATM by replacing the EU’s 28 national air traffic control systems, or blocks, with nine regional ones. Reworking these national blocks into fewer EU-governed ones will mean aircraft can fly more direct routes, reducing fuel consumption, CO2 emissions and flying time.

it has had none of the language barriers, or political and organisational constraints that a single nation has. Siebert adds: “We were more or less starting from scratch. The development of solutions was fragmented all over the world and there was no common road map.” One recent roadblock became apparent when the Air Traffic Controllers European Unions Co-ordination (ATCEUC), which represents 14,000 European air traffic controllers, held strikes across Europe, varying from 24 hours in France to just 15 minutes in some parts of Italy. It claims the targets set by the European Commission on air navigation service providers (ANSPs) are unsafe and include “unrealistic cost efficiency targets”. The ATCEUC planned to hold a similar strike last October but cancelled it when the commission agreed to meet and discuss the scheme. It argues that the European Commission has since increased its requirements under SES 2+.

Siim Kallas, VP of the European Commission

Progress has been elusive. It’s a bit like a mirage in the desert: each time you think you’re close, it seems to move further away and slips through your grasp Jumping hurdles Alain Siebert is responsible for the chief economics and environment aspects of the Single European Sky ATM Research (SESAR) programme, which is just a small but crucial part of SES. He admits “generating enthusiasm” was initially a challenge for SES on a European level, along with building the “motivation to work together and agree on the working arrangements”. “Another hurdle, frankly speaking, was language,” he explains. “Not all stakeholders speak the same language or see things the same way, because they have never at all considered the possibility or opportunity, before SESAR, to actually work together to modernise it [ATM].” Just compare SES with the US’ alternative modernised ATM system, NextGen. It’s streets ahead of SES. As Kallas pointed out, it: “controls 84 per cent more flight hours with seven per cent fewer controllers. It also costs nearly 40 per cent less per flight hour”. In comparison, SES has so far been a failure, but

Late last year, Jacek Krawczyk, VP of the European Economic and Social Committee, warned that there is no time for further delays. He contended that while airlines bear the cost of inefficient ATM ANSPs are pretty well off. Viewed by government as a valuable source of income, ANSPs know they have the standing to resist changes to Europe’s ATM. The ATCEUC argues that SES could cost air traffic controllers their jobs, but Kallas claimed that there are: “Disproportionally high numbers of support staff working for the service providers”. SESAR forecasts that improvements as a result of R&D could save €419bn and create 328,000 new roles, not to mention cutting CO2 emissions by between 948kg and 1,575kg and fuel by between 300kg and 500kg per flight. However impersonal, the loss of some traffic controllers would be for the greater good of the whole industry and its passengers.

afm • Issue 89 – March–April • www.afm.aero

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FLEET OPS: SES

SES’ ATM initiatives will deliver efficient, more direct flying.

Improvements so far Despite delays and discomfort, some achievements have already been made. “SESAR is only one of the components of the Single European Sky,” Siebert explains. “We are only talking about the technological and operational dimension of the modernisation of the ATM systems. We are not dealing with regulating performance or other forms of regulation.” Yet SESAR has delivered significant results. “It’s not research and development for the sake of research and development,” he says. One clear achievement is the Atlantic Interoperability Initiative to Reduce Emissions (AIRE), which has allowed Europe to learn important lessons from the US and its research behind the successful NextGen ATM system. The EU found that the US’ findings could also be applied to flights in the EU. Signed in 2007, AIRE is an agreement between the EU and US to develop more efficient ATM, such as more efficient trajectories. “AIRE is just one of the ways we are working on environmental aspects in Europe,” says Siebert. “It offers quick wins that have significant benefits in the environmental domain.” He adds: “It has been very successful.” “We’ve demonstrated more than 10,000 green flights with fuel savings just on those flights of just over 1,100 tonnes of fuel. That covers only 24 projects.” Siebert explains that all of the demonstrations under collaboration are in operation today, or will be shortly. “What’s great about these activities is that they show tangible results.” Siebert claims that the heart of SESAR “is a green heart” and

notes that approximately 80 per cent of all of SESAR’s 200 projects have a contribution to the environment. On a wider level, SES aims for a 10 per cent reduction of CO2 and fuel consumption against a baseline of 2005, but Siebert admits: “It is too early to say when the 10 per cent will be achieved.”

Future enhancements Beyond AIRE, Siebert explains that SESAR is still in its development stage but that the deployment stage is being initiated. Speaking about the work it has done, he explains: “The industry already sees tangible results from all of these changes in the sense that research and development is mature on these aspects. That is to say that the organisational bodies – in particular, manufacturers are very active – are already setting the standards for ATM transformation in Europe but also, by extension, the world. The European Commission is looking at the regulatory framework to support the implementation of these changes; in the next couple of months member states will decide the ultimate ambition levels that will be taken for the implementation of SESAR in the near-term, this being 2014–2020.” SESAR has a budget of about €2.1bn for research and development, and up to the end of 2013 it had spent about 40 per cent of that, says Siebert. Following that research, SESAR has produced a raft of targets, which it has packaged into six units of implementation, or ‘ATM functionalities’. “The first two target the 25 airports in Europe that have the hardest challenges in terms of the operations and capacity constraints – the busiest airports.”

afm • Issue 89 – March–April • www.afm.aero

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FLEET OPS: SES

Flight control tower at Bari Karol Wojtyła Airport, Italy.

The initiative will optimise the technological advancements of aircraft to deliver more efficient ATM. “We are basically saying ‘how can we better use the technological investments that have already been made?’ So we are changing everything around the aircraft. In a nutshell, you will have much more reliable arrival and departure flows into those major hubs, you will have safer and more predictable operations on the ground, and you will have processes and systems that will allow the different stakeholders at these airports to make better decisions together, in particular in the case of severe weather conditions, etc. We expect a great deal of performance improvements through optimised flight trajectories, fuel efficiency, safer trajectories [and] better control of productivity,” explains Siebert. The third package covers optimised flying at cruise levels and avoids “the famous zig-zagging” of aircraft during their flight. The first tranche covers operations above flight level 310. “This comes together with a more flexible use of military airspace and the supporting systems that are required for that.” “The fourth package looks at collaborative network management. That means that whenever there is constraint in a particular airport or a piece of airspace, the decision to manage those delays will be taken in a much more dynamic way. We will not block aircraft on the ground and have delays for really unnecessary reasons.

“Then we have the two other packages, which lay down the pillars of SESAR and the next stage of deployment, which are to connect the ground systems so they are a piece of infrastructure that serves multiple purposes.” This allows everyone with systems on the ground – from airlines to airports and the military – to exchange information. “The last package looks at better feeding this ground system with aircraft-derived data. So we look at sharing aircraft data to optimise flights. In our world, we call that ‘initial 4D trajectory sharing’.” It’s clear, just from looking at SESAR, that many achievements have been made; the groundwork has been done. But now it’s time for the real hard graft. Implementation is both the test and the reward for SESAR’s efforts and the longer we wait, the more this industry loses. As Kallas told the EU transport ministers: “Given the constant and rising demands on air travel and the aviation industry, time is running out fast. We need to deliver now. While Europe’s air transport sector handles things competently, our airspace is not ready to cope with the expected growth in traffic. If we leave things as they are, EU airspace will face heavy congestion – and chaos.” While no one appears to be arguing against SES, many seem to be arguing about when and how it will be achieved.

afm • Issue 89 – March–April • www.afm.aero

FLEET OPS: Middle East’s ATM

Filtering the flow:

The need for Middle Eastern ATM The Middle East’s aircraft movements will reach 2.3 million in 2025, yet it will have to make significant air traffic management (ATM) investments to avoid bottlenecks. Airport Show, an event for the Middle East, North Africa and Indian subcontinent region, examines the topic.

he Arabian Gulf states, which are in the midst of game-changing multi-billion-dollar airport expansions to handle 450 million passengers by 2020, are grappling with mitigating the airspace bottlenecks and increasingly looking towards innovative technology and solutions to keep the growth clear of crowded skies. The civil aviation authorities in the region, which boasts 16 globally competitive international airports, have been good at finding ways and means to support their airports expansion drive. However, they have faced near-acute constraints. To ensure more effective air traffic management (ATM), they have introduced more air corridors and other technology-driven initiatives to decongest the airspace as the region emerges as the new global travel crossroads. One factor that will contribute to the problem is accelerating growth in aircraft movements in the Middle

East, which according to the International Civil Aviation Organization (ICAO), International Air Transport Association (IATA) and Airports Council International (ACI) is witnessing rapid growth, far above the global average rate. UAE airports are projected to have 1.62 million aircraft movements by 2030, while the overall Middle East region will witness 2.3 million aircraft movements in 2025. ICAO predicts a 5.2 per cent annual growth in regional air traffic until 2030. Middle East carriers are set to spend a whopping $450bn on 2,520 aircraft by 2030, taking the number of passenger aircraft from 1,060 to 2,710 – an incredible increase of 160 per cent. Emirates Airlines alone is aiming for 70 million passengers in 2020. Saif Mohammed Al Suwaidi, director general of UAE’s General Civil Aviation Authority (GCAA), remarked: “Airspace is part of the air traffic management system; we

afm • Issue 89 – March–April • www.afm.aero

FLEET OPS: Middle East’s ATM

cannot take it in isolation from the rest of the system components. To improve the system, many other areas have to be collaboratively improved – such as airport design and operations. We are working to improve ATM efficiency in the region through an airspace enhancement and restructuring programme.” According to ICAO, investing in new facilities and expanding existing airports to meet the demands of the region’s fast-growing airlines has made airspace capacity an emerging issue. It believes that current constraints limit capacity and force inefficient routings. As airspace becomes more scarce and sought after, there will need to be a balanced approach to airspace management and a need to accelerate the implementation of Flexible Use of Airspace (FUA). ICAO says that the airspace to the northern part of the Bahrain Flight Information Region (FIR) continued to be the busiest and most complex airspace in the Middle East, while the northern and eastern part of the Muscat FIR is also very complex, as is the airspace in Jeddah/Riyadh FIR. There are also delays and bottlenecks in UAE’s FIR due to heavy air traffic. In order to effectively manage air traffic in the UAE skies through to 2030, Airbus Prosky has made 53 recommendations. In line with those recommendations from the Airbus Prosky study, which was commissioned by the GCAA, two working groups have been formed to enhance the airspace capacity, one of which is led by Dubai Air Navigation Services (DANS).

states, our growth will be hampered, and severe departure delays– as well as arrival delays – are inevitable.” The UAE airspace system currently handles approximately 600,000 movements a year. By 2025, it needs to accommodate the range of 1.2 million movements. This target is broadly equivalent to the current volume of traffic handled in the New York or London areas, he added. A wide portfolio of ATM technology and solutions designed to make skies safer for air travel will be showcased at the 2014 Airport Show at the Dubai International Convention and Exhibition Centre (DICEC) from 11 to 13 May 2014. Ahli believes that the expo will “certainly put more pressure” on the development of the airspace and that new technologies will support a more modern airspace development and management. “We are well equipped with the expertise and knowledge, but in this rapidly growing environment, we certainly require support from leading organisations in the industry. For many years, we have built up relationships with prominent, well-reputed companies, leading the development of SESAR and NextGen [in the EU and US respectively],” he added. Daniyal Qureshi, director of the event, said: “There is no doubt that the biggest challenge affecting the aviation industry in the Middle East is congestion. Airspace is an asset and, just like any other asset, it can be managed and maximised. This is where technology is coming into the big picture.”

Ibrahim Ahli, director of DANS, said: “The importance of managing the UAE airspace efficiently is obvious, but the importance of harmonisation with adjacent [and other] states is imperative. Without co-operation from these

afm • Issue 89 – March–April • www.afm.aero

TLF: Singapore Air Show

uch smaller than its counterpart air shows in Paris and Farnborough, this year’s Singapore Air Show still packed a lot in. Over 40,000 trade visitors from 125 countries joined the bustle to network and form deals at the event. And that figure only covers the first three days.

Teo said: “For the next 20 years, nearly half of the world’s air traffic will be driven to, from, or within the Asia-Pacific region. And the number of aircraft in the Asia-Pacific fleet will nearly triple. This will translate to increased demand for maintenance, repair and overhaul (MRO) and other aftermarket services in the region.”

Attendees of this year’s Singapore Air Show announced $32bn worth of commercial deals during the six-day event. This was up $1bn from the $31bn taken during the last event in 2012, which contributed over $254m to Singapore’s economy.

This explains the string of developments Singapore and its business partners announced at the show. For example, the Minister of State for Trade and Industry, Teo Ser Luck, announced the launch of JTC Aviation Two, which will house companies specialising in parts supply management and component MRO. JTC Aerospace also announced that it will expand its space at Seletar Aerospace Park (SAP), a 320-hectare industrial park dedicated to the aeronautical industry; 160 hectares are dedicated to the aerospace industry – including MRO, cargo and business aviation – and the rest is occupied by Changi Airport.

During the opening address for what was the fourth biennial Singapore Air Show this year, Deputy Prime Minister Teo Chee Hean marked Singapore’s increasing stake in the aviation industry. He noted that Singapore’s aerospace industry achieved a record output of S$8.7bn ($6.8bn) last year, and employed some 19,900 workers. The country is known for its MRO capabilities and leads Asia in this field, holding a quarter of Asia’s MRO output. Those figures are set to rise. According to Airbus, Asian airlines will take some 10,940 new passenger and cargo aircraft from 2013 to 2032, worth $1.8tn. This is equivalent to 37 per cent of worldwide aircraft deliveries over the 20-year period, and the region will account for 42 per cent of the global market for new aircraft.

Crucial to the growth of Singapore’s aviation industry, SAP is in its third phase of development and new companies are coming on board as it reaches the end of this final stage of expansion. Loo Choon Yong, chairman of JTC Corporation, said: “With the presence of aerospace heavyweights in SAP, JTC saw the need to provide more space for SMEs [small to medium enterprises]

afm • Issue 89 – March–April • www.afm.aero

TLF: Singapore Air Show

Singapore’s Minister of Transport, Lui Tuck

Yew, gets a tour of the A350 XWB.

specialising in parts supply management and MRO aircraft components. These form a critical segment of the aerospace value chain.” Shortly before the show started on 11 February, ST Aerospace officially opened its $26.6m 246,000sq ft aviation centre at SAP. The new MRO facility can handle up to 11 narrowbodies and 24 general aviation aircraft and has a 13,000sq ft aircraft hangar. The facility, which already has 1,000 employees, will also be used for pilot licence training and for ST Aerospace’s passenger-tofreighter conversions. Coinciding with the air show, Bombardier held an inauguration event marking the opening of its service centre located at SAP. Its facility features 32,000sq ft of hangar space, 38,000sq ft of dedicated ramp and 38,000sq ft of workshop, warehouse and office space. With over 40 employees, it is equipped to perform scheduled and unscheduled maintenance, as well as modifications, avionics installations and aircraft on ground (AOG) support for Learjet, Challenger and Global aircraft. Although its focus is currently on business jets, Bombardier plans to offer commercial aircraft solutions at a later date. “Growing services and support in the Asia-Pacific region is a top priority for Bombardier,” said Michel Ouellette, president, customer services, Bombardier Aerospace. “The addition of the Singapore service centre strengthens our expanding presence in the region and provides Bombardier business aircraft customers with high-quality maintenance support and access to the entire network closer to their base of operations.” Another initiative launched by the aircraft manufacturer was a MOU with Singapore Polytechnic for a five-year partnership covering flight training, which will include internship at Bombardier. Similarly, Airbus and Singapore Airlines (SIA) signed a MOU at the event to form a joint venture offering flight training in Singapore. The facility, which will be called Airbus Asia Training

Centre (AATC), will be 55 per cent owned by Airbus and 45 per cent owned by SIA. These initiatives address Asia’s need for pilots, which as yet are not forecasted to match industry growth. “Demand for air travel is forecast to continue growing steadily in the Asia-Pacific region and the joint venture will help the industry keep pace with training requirements,” said SIA’s CEO, Goh Choon Phong. “The partnership makes good business sense for Singapore Airlines, while also enhancing Singapore’s position as a leading aviation hub.” The Airbus group also announced a €11,000 ($15,000) donation to aerospace training at the Air Transport and Training College (ATTC), as well as the opening of a new Singapore office for its air traffic management (ATM) subsidiary, Airbus ProSky, in April 2014. The latter announcement comes one year after Airbus ProSky firmed a research agreement with the Civil Aviation Authority of Singapore (CAAS) to develop ATM concepts. ATM is another concern and key investment trend for Asia. Singapore is modernising its ATM and, at the start of the event, launched its new Singapore Air Traffic Control centre, which houses the LORADS III ATM system. In addition, Singapore has established a new ATM research institute at the Nanyang Technological University.

Work under way Speaking during the address, Teo highlighted a number of aviation initiatives that Singapore already has under way, most of which are in collaboration with its educational institutions. “Since the last air show two years ago, new aftermarket investments from leading industry teams, such as ATR, Bombardier, Meggitt, Pratt & Whitney, and Airbus Group subsidiaries, Satair and Vector Aerospace, have been seeded at Seletar Aerospace Park. In manufacturing, RLC Engineering will open its first aerospace

afm • Issue 89 – March–April • www.afm.aero

TLF: Singapore Air Show manufacturing facility in Singapore in the near future. Collectively, the investments made over the past two years will have created 1,500 new jobs in our aerospace industry when fully implemented,” he explained. In July 2013, Rolls-Royce established a S$75m ($59m) corporate laboratory with the Nanyang Technological University to research manufacturing and repair technologies, computational engineering, and electrical and power control systems. “We are also investing in the development of advanced manufacturing technologies, such as additive manufacturing, and data analytics. There is scope for aerospace companies to collaborate in these areas,” said Teo. Last year, the National University of Singapore established the Centre for Aerospace Engineering in collaboration with Singapore’s Defence Science Organisation, and local aerospace companies SIA Engineering Company and ST Aerospace. And this year, Temasek Polytechnic will open a new building housing an aircraft hangar and two flight simulators. And Singapore is also investing in its youth to ensure workers are adept to respond to its growing aviation market. For example, Nanyang Business School has partnered with the International Air Transport Association (IATA) to deliver MBA and diploma programmes tailored to industry needs. Similarly, Singapore Aviation Academy, the training arm of the Civil Aviation Authority of Singapore, has partnered with Cranfield University and Embry-Riddle Aeronautical University to deliver industry-specific masters programmes.

A done deal But perhaps of most importance to the global community is the number of aircraft orders announced during the event. Traditionally, airlines and OEMs will withhold announcing their orders until at an air show where they can bolster publicity. The more successful the show, the more orders it will have announced. This year, Singapore Air Show announced $32bn worth of commercial aircraft orders. Military deals, which are largely kept private, were in addition to that figure. It’s not a patch on last year’s Paris Air Show where Airbus alone took $69bn worth of aircraft orders and Boeing $66bn; however, it did make some landmark agreements. The most notable was Embraer, which took the largest new order, which was from the little-known Indian airline, Air Costa. The deal – which includes firm orders for 25 E190-E2s and 25 E195-E2s, plus 50 options – is worth $2.94bn for the firm orders and $5.88bn if all options are exercised. Launched in January 2012 out of Vijayawada, Andhra Pradesh, the airline is focused on second- and third-tier routes, connecting tertiary cities, which hold 70 per cent of India’s population. Such cities include Bangalore, Chennai and Hyderabad, as well as those in the north and north-west of India. Ramesh Lingamaneni, chairman of the airline, predicts 15 per cent market growth each year for 15 to 20 years. However, critics may

still wonder whether such a sizeable order is suited to such a young and delicate airline. Lingamaneni argued that India’s government waives landing and parking fees for aircraft with fewer than 80 seats and that tax rebates and exemptions also apply. The airline is looking into a number of finance options and the chairman said that “a lot of lessors are interested” in the sale and leaseback of the E2s. When asked whether it’s seeking foreign equity investment, he implied interest from its part, but not from investors: “The answer cannot be no – but at the moment, no.” Similarly, Air Costa currently has no codeshare partners although is looking for them and seeks to provide feeder flights to larger carriers, the chairman explained. While the order was substantial to both the airline and the OEM, Embraer’s chief commercial officer, John Slattery, was clear that Embraer should do more to increase its market penetration in Asia. “We’ve made no secret that we see gaps in the market where Embraer should be,” he said, adding: “There is no doubt we have

afm • Issue 89 – March–April • www.afm.aero

TLF: Singapore Air Show Airbus also signed for up to 100 aircraft, however this was just the firming of a previously announced order from VietJet for up to A320s. Likewise, it firmed a deal with lessor Amedeo (formerly Doric) for up to 20 A380s, which was also previously announced.

Asia’s OEMs Mitsubishi Heavy Industries, which has so far delayed the launch of its Mitsubishi Regional Jet (MRJ) four times, gave a programme update at the show, revealing that it will join the wings to the fuselage of the first aircraft, an MRJ90, in April. The fuselage has been assembled, the outer wings are structurally complete and are ready for final assembly of the first prototype, which is due to fly in 2Q 2015. However, the first commercial delivery, which will be to Japan’s All Nippon Airways, is still not due until 2Q 2017 and, having already missed 165 aircraft deliveries, Mitsubishi will now have to increase its production rate from five aircraft to seven or eight a month. Indeed, it even said that a production rate of 10 a month might be needed, yet it also raised concerns that it may not be able to procure enough parts in time, nor find enough skilled staff to assemble the aircraft. Fellow Asian airframe OEM, the Commercial Aircraft Corporation of China (COMAC), is likewise delayed with its C919 programme but it is trying to make up for delays by adding a sixth aircraft to its flight testing plan. It has delayed the C919 entry into service from 2014 to 2015 but still faces a lack of orders from Western airlines and lessors. Speaking to media at the air show, Chaker Chahrour, EVP of CFM International, which is developing the engines for the aircraft, said Western investors would want to see the aircraft flying within Asia for some time before they are confident enough to buy it. momentum” in the Chinese market, and he hinted at further order announcements from this region over the next 10 months. Filippo Bagnato, CEO of rival regional OEM, ATR, said that he was “Very satisfied with ATR’s commercial results after the Singapore Air Show. This quantity of orders, just 45 days after the beginning of the year, puts us on the right track for achieving our 2014 business objectives”. ATR took orders for 48 aircraft (including 28 firm orders), worth nearly $1.2bn. These included a contract for 40 ATR 72-600s (including 20 firm orders) from the UAE leasing company, Dubai Aerospace Enterprise, and a contract with the Spanish company, Binter Canarias, which confirmed the purchase of six ATR 72-600s, announced previously. Also, Bangkok Airways was revealed as the previously unnamed purchaser of eight ATR 72-600 aircraft (including six firm orders), an order first placed on Embraer’s order book in 2013. In addition, Nok Air ordered 17 737s and Myanma Airways signed a leasing agreement with GECAS for 10 Boeing aircraft.

Chahrour was open in his review of COMAC, telling press: “They need more experienced programme management.” He explained: “You have to work the (C919) programme with a different mindset than you do with Boeing and Airbus because of the different level of experience,” but he added that the companies still “work well together”. The C919 currently holds 380 orders, mostly from Chinese carriers. But having a strong market base in China is no bad thing. Chahrour says that in terms of commercial aircraft sales; “It’s going to be a huge year for China. Perhaps 800 to 1,000 airplanes” will be ordered in 2014. But what is forecast for Singapore in particular? The end of the 2014 Singapore Air Show coincided with the last day of the Chinese New Year, which Singapore marked with street decorations depicting this year’s animal, the horse. It is also a wood year, which astrologers say means people will stand firm, making negotiations hard. However, the year of the horse is also a time for decisive action, and thankfully for Singapore and us all, it is the perfect year for travel!

afm • Issue 89 – March–April • www.afm.aero

TLF: Big data

Number crunching: The role of data in network planning Network planners rely on tried and tested data sets to analyse growth potential. But Martin Ferguson asks if big data will bring valuable new intelligence to airlines.

ode breaking was responsible for many successful British missions during the Second World War. Scientists, physicists and probability theorists from across the Allied Powers developed the first data-processing machines. They pulled structured and unstructured data from multiple sources, including operational records, mission documentation and Nazi radar signals. The information was mined. Trends and patterns were sought. Often, the results led directly to victory on the battlefield. It was big data in its purest form. Arguably, it helped to alter the course of history. Fast-forward 70 years and big data is again at the core of change. The world of commerce is in the fledgling years of a data arms race. It’s Moore’s Law in action. The equation is simple: add the falling cost of data storage, lightning-fast processing and connection speeds, the volume of people connected to the Internet and the advent of social media, and it equals 90 per cent of the world’s data, ever, generated in the last two years. Google is a leader in the field. It can, for example, monitor social media posts and search engine results to alert medical authorities

to potential health epidemics around the world. The power and potential of big data is overwhelming. Enterprises across industry verticals are scrambling to stay ahead of the competition. Commercial aviation is data rich. Some airlines and data aggregators have information about ticketing, reservations, schedules, customer support, trading, irregular operations, maintenance logs and crew dating back three or four decades. The ‘code breaking’ happens when these data sets are combined with unstructured information to create a business benefit. That’s the random, voluminous stuff created every second from the Web, in social media, text messages, videos, images and audio files. Since the topic emerged a few years ago, many legacy carriers have invested heavily in research and development, predominantly to improve customer service and the passenger experience. On the operational side, network planners rely heavily on data to make decisions. And although there are no significant big data solutions yet available in the marketplace, there is little doubt about what lies ahead.

afm • Issue 89 – March–April • www.afm.aero

FLEET TLF:OPS: Big data XXX company receives up to 600,000 messages a day on schedule changes alone. “That includes everything from a new market or destination being served, a change of aircraft or even a five-minute delay. All of which has an impact on potential route traffic. The ability to see and understand the immediate impact of those changes is still not available to the aviation community. But it’s the Holy Grail,” he says. Such is the pace of development in this area, Grant predicts that a software solution providing a transparent and accurate assessment of data is only a few years away.

What might have been One man in zero doubt about the potential of big data for network planners is Alessandro Ciancimino, Sabre Airline Solutions’ VP of consulting. He says new requirements are emerging, though traditional methods still have their place… for the moment. “In network planning there are key questions: what is the size of the marketplace [on a route]? What is the total demand? And if I put in a service, how much market share can I take from those already operating? MIDT is important, but it doesn’t represent the total traffic on a route. Its relevancy is decreasing on some routes because of low-cost carriers [which sell most of their fares direct to customers rather than through the GDSs]. You also have to know the number of people who wanted to fly but couldn’t because there wasn’t enough capacity. MIDT accounts for booked seats, not shopping enquiries,” says Ciancimino.

The Holy Grail Starting a new route is a huge capital investment. An airline could be putting two or three aircraft on a long-haul route, so getting the analysis correct is crucial to the financial health of the business. There is booking and reservation information; credit card and frequent flyer data; government and immigration figures, and airport customer statistics. One of the most valuable data sources is MIDT, an aggregation of booking and reservation data from the global distribution systems (GDSs). “It’s all extremely valuable, but has the potential to be confusing as there is no definitive source,” says John Grant, EVP of aviation intelligence specialist, OAG. “Network planners are reluctantly forced to combine this data. They’re making hugely expensive capital investment decisions based on it. A lot of people are now looking for a one-stop shop, or a limited selection of shops, that will give them all the answers they need,” he adds. Grant highlights the sheer volume of data being generated – whether it’s from airline systems or social media posts monitored in real time – as the key challenge, revealing his own

He adds that IT providers are already developing software to analyse shopping and location data, and predicts that will revolutionise network planning. “With shopping data, you understand where a passenger would have liked to fly as opposed to where they ended up going. You can intercept the shopping enquiries made in markets only served by LCCs. You could even garner information about markets that don’t yet exist. For example, there may be a significant volume of enquiries made from IP addresses in the Bristol area for flights from London to a particular destination. If you spot that trend, you may see the potential for a service between Bristol and that searched-for destination. You couldn’t perform that level of analyses without big data,” he says. He bemoans the fact that a product is not yet available, but is excited by the potential.

Better the devil you know Over the past decade, easyJet’s network has been one of the fastest growing in Western aviation. The budget carrier remains focused on selling seats through its website, but in recent years it has tried to snatch a share of European business travel traffic by selling seats through the GDSs and entering route deals with corporations.

afm • Issue 89 – March–April • www.afm.aero

TLF: Big data

That makes the need for relevant data more important than ever to the carrier’s planners. Neil Slaven, the airline’s network development manager, says his objective is to find the sweet spot between capacity and demand. For the moment, he uses traditional methods and data sets. He says: “We look at macro economic data at a European, country and regional level. We might look at unemployment in a region, or the spread of a particular diaspora, such as the growing Eastern European community in the north of Italy. “On the capacity side, we are interested in what other airlines do,” he continues. “We use a number of sources, the main one being OAG, which gives a view of our competitors’ schedules and what they have on sale. In certain places, we’re able to access data on passengers carried. We gather data from airport operators, tourism authorities, from governments and the European Commission. And to a certain extent we use MIDT. But there are no big data solutions, and there’s no silver bullet off-the-shelf source,” he explains. Slaven won’t rule out using a big data solution if and when one becomes available, but is sceptical about the supposed benefits of a one-stop-shop data solution. “You’re always seeking a competitive edge. If your competitors can access the same product, that edge might be lost. I’d almost rather it was the way it is now, where we rely on us being better at what we’re doing than the competition,” he says. John Strickland, director at JLS Consulting, agrees with the sentiment, saying network planners have to act like detectives.

“Using traditional data is fine, but like the financial sector, past performance is no guarantee of what is going to happen in the future. You have to do your own work,” he says. Earlier in his career, Strickland was a network planner. Nowadays he advises and lectures on the subject. He believes airlines can often be too tied to dated methodologies and structures, and therefore recommends they embrace big data and the opportunities offered by social media. “There are a lot of important and valuable conversations happening online. Airlines have to watch and react,” muses Strickland. “This intelligence you couldn’t get before. It’s more random, but we’re at the early stages of being able to manipulate and learn about people’s desires and motivations. It will be a valuable source of data for network planning because you need to understand that intangible human sentiment. What gets a person on a plane and how are you going to maximise it?” Pricing, and the planning of networks and schedules, is very commercially sensitive – for that reason, a number of airlines even declined to participate in this feature. What is clear, however, is that as big data solutions are unveiled by IT providers and third parties, airlines will have no option but to play ball, or risk losing share to the competition. Many are already evolving their processes, and hiring staff with the skills to break the big data codes. As history tells us, whoever wins the most battles will eventually win the war.

afm • Issue 89 – March–April • www.afm.aero

MRO: Aircraft storage

Aircraft storage: Room of one’s own Aircraft storage facilities present a solution to aircraft owners, providing a safe haven for expensive assets that are not being utilised. Daniella Horwitz speaks to four storage providers to find out more about the key considerations and the options available.

here are a myriad of reasons for parking an aircraft, including lease return maturity, parking during off-peak months, and teardown.

Allan Rennie, COO of Sycamore Aviation, explains: “Owners and lessors generally store an aircraft, because at that time, they have nowhere more financially viable to put it. A leasing company doesn’t want to park aircraft – that is not what they are in business to do. For them, it is a case of being between lessees... An operator may park an aircraft if the network changes, [or] maybe it is a freighter, and all of a sudden they have stopped doing freight.” Robert Nichols, COO of AerSale, points out that aircraft are often stored “in anticipation of improving market conditions”, when the aircraft can then be redeployed for a higher sum. The duration of storage depends on the owner and what they want to do with the aircraft. For Tarmac Aerosave, the average storage period is six months, but smaller facilities such as Sycamore Aviation and Apple Aviation Group do not have a typical storage period. Apple’s storage period can last “anything from a couple of days to a couple of

years”, says Bernard Longman, its group commercial director. “We provide the storage solution for the customer’s needs, however short or long-term.”

What to consider when parking According to Tarmac Aerosave, there are four main factors a customer should consider when deciding to park an aircraft. These are dryness, accessibility, capacity and cost. Jose Moliner, sales director at the company, explains that aircraft need to be stored in dry areas, away from the coast or other damp conditions, in order for them not to rust. He adds that it must be easy for customers to ferry their aircraft to the site, and to visit it once it is there. In order to be more efficient, aircraft owners must also be able to store numerous aircraft in the same location, should they need to – and all this must be offered at a competitive cost. AerSale (which has 200,000sq ft of hangar space, 200,000sq ft of inventory storage and a 35,000sq ft engine facility, all in Roswell, US) and Tarmac Aerosave (which has facilities in Tarbes, in southern France, and Teruel, in north-eastern Spain) warn that a dry climate is necessary to avoid corrosion.

afm • Issue 89 – March–April • www.afm.aero

MRO: Aircraft storage

Tarmac Aerosave Tarbes, France facility.

Tarmac Aerosave presents itself as the European alternative to American aircraft storage facilities. “We have the biggest aircraft storage capacity in Europe with space for 250 aircraft,” says Moliner. In operation since 2009, it offers line and base maintenance for all Airbus aircraft (the A380 is limited to cabin modifications) and 737 family aircraft (CG/NG, MD-80, 717, 747-200/-300/400 and 777). Approval for 757, 767, Embraer and ATR aircraft is under way.

Depreciation

However, Sycamore’s Rennie argues that the cost of transporting an aircraft to a hot and dry climate should be weighed up against the price of local storage. It is based in Darlington, County Durham, UK.

However, Sycamore developed its business in reverse. It began operations in 2011 and back then it was primarily an aircraft teardown facility. Rennie explains: “There are a lot of unknowns in this business... People don’t automatically decide to just tear aircraft down.” So, after consultation with clients and colleagues, Sycamore went into business with partners, which allowed it to offer the EASA Part 145 capability to park and maintain most types and sizes of aircraft. The company can now accommodate aircraft from the 747 all the way down to personal jets and has in excess of 40 parking slots at Durham Tees Valley Airport, with scope to expand further.

Either way, Longman advises that aircraft owners store their aircraft in accordance with an approved maintenance programme from day one. This can save the owner serious costs in the long-term as it minimises costly engine shop visits and heavy maintenance input requirements. The consensus is that the primary concerns when parking aircraft are the storage facilities’ technical ability (including their experience with the aircraft type) and competitive prices. But once these boxes have been ticked, there are other factors to consider. These include the range of maintenance services, the length of the runways, the size of the storage area, ground conditions, security and accessibility.

Another key consideration is asset depreciation. An aircraft may considerably depreciate in value if it is stored for a long period. In this case, the operator may decide to tear down the aircraft for parts and therefore recycling facilities should also be considered. Sycamore’s Rennie asks: “If it’s not going to fly back out, is there somewhere approved on-site that they could recycle the aircraft?”

“Asset value preservation is the primary goal of a reliable storage programme,” says AerSale’s Nichols. He goes on to explain: “Storage is preferable when market values are anticipated to improve, or when asset revenue, cost or realisation is more advantageous in a future fiscal period. Part-out is preferred where

afm • Issue 89 – March–April • www.afm.aero

MRO: Aircraft storage

Sycamore Aviation’s aircraft storage facility.

the combined value of the aircraft’s engines and components are greater than that of the aircraft as a whole, or when a continued decline in market conditions for asset monetisation is forecast.” Nichols stresses that aircraft owners and operators are becoming increasingly sophisticated in their understanding and management of flight equipment value realisation. “Their ability to properly read the market and fully optimise the alternative revenue streams that can be realised from their aircraft takes not only an exceptional understanding of the aircraft market itself, but just as important, [it takes] an ability to extract full value of its sub-components. It is these considerations that primarily guide their decisions as to aircraft deployment, storage or part-out.”

Future demand The global fleet is set to double in the next 20 years and Moliner says 85 per cent of that will be replaced by new aircraft. Therefore, the number of aircraft stored globally can only increase. According to Nichols, AerSale is experiencing a significant growth in demand for its services, which are highly cyclical and in direct correlation with aircraft supply and demand. “The current bow wave of new deliveries, in conjunction with stricter import age limitation, is fuelling the current increase,” he says.

In Rennie’s opinion, the second-hand market is waning slightly because of a preference for new equipment, which is being built in record numbers. Contributing factors are the ease with which finance can be obtained for new aircraft and the fact that the residual values of new aircraft are stronger. Additionally, legislative issues come into play, with Indonesia bringing in caps on aircraft age and Russian states also trying to limit the age of aircraft they can import and register. Rennie explains: “Whereas before you used to be able to take an aircraft and run it through a number of different operators, a number of different tiers... that is almost becoming merged now.” But, significantly, he does not think we will see an increase in the number of storage facilities. “People don’t buy multi-million dollar assets to see them sitting around gathering dust. I think what we are seeing – and it is a new phenomenon really – is that the number of aircraft in operation isn’t growing nearly as much as the amount of production would suggest.” Because of this, Moliner anticipates that aircraft recycling will become stronger as an industry. And although such business is cyclical, there will always be demand for safe and cost-effective aircraft storage.

afm • Issue 89 – March–April • www.afm.aero

INDUSTRY DATA: Deals

Industry data

47 50

Aircraft deals

List prices and lease rates

Firm orders

Engine data

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

Aircraft deals 3 January to 13 February, 2014

MSN

Manfacturer

Model

Event

Owner

Operator

Date

49524 23307 3240 23869 34247 662 2003 4197 10033 41265 5926 25176 41198 5937 29920 5943 42102 19000655 41245 4028 4281 1500 28167 28244

Boeing Boeing Airbus Boeing Boeing Airbus Airbus Airbus Bombardier Boeing Airbus Boeing Boeing Airbus Boeing Airbus Boeing Embraer Boeing Bombardier Bombardier Airbus Boeing Boeing

MD-80 767-200 A320 737-400 737-800 A320 A320 A320 CRJ-700 737-800 A320 737-500 737-800 A320 737-800 A320 777-300 E190/195 737-800 DHC8-400 DHC8-400 A320 757-200 737-800

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

CATIC Cargo Aircraft Management AWAS GECAS GECAS AAR Engine Group Inc GECAS The Cit Group Inc Horizon Air GECAS AWAS WFBN Aviation Capital Services CIT Aerospace Aircastle Investment AWAS GECAS BOC Aviation GECAS DR PPJ Aircraft Leasing DR PPJ Aircraft Leasing AerCap ILFC ILFC

China Northern Airlines Asian Air Lucky Air Trigana Air Service Primera Air Scandinavia AAR Engine Group Inc Air Berlin Air Macau SkyWest Airlines(USA) China Southern Airlines Vanilla Air Sudamericana Aeroflot Sichuan Airlines SunExpress Airblue Ethiopian Airlines KLM Cityhopper China Southern North Cariboo Air Sunwest Aviaton (Canada) TAME Aer Lingus Nordwind

06/01/2014 08/01/2014 09/01/2014 09/01/2014 09/01/2014 10/01/2014 14/01/2014 14/01/2014 14/01/2014 15/01/2014 16/01/2014 16/01/2014 17/01/2014 22/01/2014 22/01/2014 24/01/2014 24/01/2014 24/01/2014 28/01/2014 30/01/2014 30/01/2014 01/02/2014 01/02/2014 02/02/2014

Source: IBA’s JetData.

afm • Issue 89 – March–April • www.afm.aero

INDUSTRY DATA: Deals

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

Aircraft deals 3 January to 13 February, 2014

MSN

Manfacturer

Model

Event

Owner

Operator

Date

39437 30249 30694 1885 25261 27904 27623 2158 3907 7029 19000002 34249 27130 2383 422 730 33962 30687 27157 30249 24132 23685 24569 31185 39933 41315 41314 41794 5925 33233 41266 33234 5968 932 24327 3146 7044 24125 25203 53217 1450626 67 24663 24432 36874

Boeing Boeing Boeing Airbus Boeing Boeing Boeing Airbus Airbus Bombardier Embraer Boeing Boeing Airbus Airbus Airbus Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Airbus Boeing Boeing Boeing Airbus Airbus Boeing Dornier Bombardier Boeing Boeing Boeing Embraer Airbus Boeing Boeing Boeing

737-800 737-700 737-800 A320 737-400 737-300 757-200 A320 A320 CRJ-200 E190/195 737-800 737-500 A319 A320 A320 737-700 737-700 737-400 737-700 737-300 737-300 737-300 737-800 737-800 737-800 737-800 737-800 A320 737-800 737-800 737-800 A320 A320 737-300 328JET-300 CRJ-100 737-400 767-300 MD-80 ERJ-145 A320 737-300 737-400 737-700

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 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

GECAS AWAS ILFC NBB Leasing Co Ltd Air Lease Corp Automatic LLC ILFC ILFC ILFC Bombardier Services ECC Leasing Co Ltd GECAS Aviatorcap Siii, Limited ILFC Aviation Capital Group GECAS Turkish Air Force ILFC LOT Polish Airlines AWAS ACG Acquisitions XX LLC ACG Acquisition XXI LLC Aviation Capital Group AerCap SMBC Air Lease Corporation Air Lease Corporation ILFC Aviation Capital Group Avolon Aerospace GECAS Aercap BOC Wells Fargo Bank NW Belavia Unknown (South Africa) Unknown Jetran LLC Unknown Bank of Utah Champion Air LLC Global Airways Ltd Wilmington Trust Aergo Trading Ltd Ruili Airlines

Travel Service Southwest Airlines Jeju Air Brussels Airlines Swiftair Aloha Air Cargo Aer Lingus ILFC ILFC Bombardier Services Wells Fargo Bank Wilmington Trust Co Bank of Utah ILFC Aviation Capital Group GECAS Turkish Air Force ILFC LOT Polish Airlines AWAS ACG Acquisitions XX LLC ACG Acquisitions XX LLC Aviation Capital Group American Airlines Shanghai Airlines China Southern Airlines Air China Garuda Indonesia Vueling American Airlines SAS Scandinavian Airlines American Airlines Air Astana Aeroturbine Belavia Unknown (South Africa) Unknown Jetran LLC Unknown Bank of Utah Champion Air LLC Aircraft Support Group Wilmington Trust Aergo Trading Ltd Ruili Airlines

04/02/2014 06/02/2014 06/02/2014 07/02/2014 10/02/2014 10/02/2014 13/02/2014 06/01/2014 06/01/2014 06/01/2014 15/01/2014 17/01/2014 22/01/2014 30/01/2014 31/01/2014 31/01/2014 03/02/2014 04/02/2014 05/02/2014 05/02/2014 07/02/2014 10/02/2014 10/02/2014 10/01/2014 15/01/2014 20/01/2014 21/01/2014 22/01/2014 23/01/2014 28/01/2014 29/01/2014 04/02/2014 08/02/2014 03/01/2014 03/01/2014 06/01/2014 06/01/2014 06/01/2014 06/01/2014 06/01/2014 06/01/2014 07/01/2014 07/01/2014 09/01/2014 09/01/2014

Source: IBA’s JetData.

afm • Issue 89 – March–April • www.afm.aero

INDUSTRY DATA: Deals

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

Aircraft deals 3 January to 13 February, 2014

MSN

Manfacturer

Model

Event

Owner

Operator

Date

297 2338 26603 7851 1450507 53055 53235 520 1967 10178 25443 28151 28156 10171 26276 1450322 7297 234 4028 380 1450970 53005 1450356 15228 24808 25038 26856 759 7226 10165 4281 53496 24903 95034 373 25043 24749 25223 27157

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

ATR72-202 A320 737-400 CRJ-200 ERJ-145 MD-80 MD-80 A310-300 A321 CRJ-700 767-300 737-400 737-300 CRJ-700 757-200 ERJ-145 CRJ-100 A300 DHC8-400 ATR72-202 ERJ-135 MD-80 ERJ-135 CRJ-900 737-400 737-500 737-300 ATR42-300 CRJ-200 CRJ-700 DHC8-400 MD-90 737-400 A320 757-200 757-200 757-200 737-400

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

Boeing

737-400

Sold off lease

20th Hole Inc Tianjin Airlines City Airways Aeromar Link Conexion Aerea Bank of Utah Bank of Utah GA Telesis Yamal Airlines Aerocentury Corp KMW Leasing VIII LLC Aero Acquisitions LLC China Postal Airlines Aerocentury Corp Blue Dart Aviation Chautauqua Airlines Unknown Southern Aircraft Charters DR PPJ Aircraft Leasing DGI LLC Embraer Executive Aircraft Delta Air Lines Embraer Netherlands BV Delta Air Lines Unknown (Brazil) Rising Sun Aviation Wilmington Trust Co. Air Caledonie Wells Fargo Bank NW Aerocentury Corp DR PPJ Aircraft Leasing AerSale Inc KP AIRCRAFT 24903 LLC Interjet Unknown United Airlines Aerolease 3 LLC United Airlines Petrus Aircraft MSN 27157 LLC Petrus Aircraft MSN 26455 LLC

10/01/2014 13/01/2014 13/01/2014 14/01/2014 14/01/2014 15/01/2014 15/01/2014 16/01/2014 17/01/2014 17/01/2014 17/01/2014 17/01/2014 17/01/2014 21/01/2014 21/01/2014 21/01/2014 22/01/2014 23/01/2014 23/01/2014 24/01/2014 24/01/2014 27/01/2014 27/01/2014 28/01/2014 28/01/2014 28/01/2014 28/01/2014 29/01/2014 29/01/2014 29/01/2014 30/01/2014 30/01/2014 31/01/2014 01/02/2014 03/02/2014 03/02/2014 04/02/2014 05/02/2014 05/02/2014

26455

19th Hole Inc HKAC City Airways Aeromar Link Conexion Aerea Bank of Utah Bank of Utah GA Telesis Yamal Airlines Aerocentury Corp KMW Leasing VIII LLC Aero Acquisitions LLC China Postal Airlines Aerocentury Corp DHL Aviation BV Chautauqua Airlines Unknown Southern Aircraft Charters DR PPJ Aircraft Leasing DGI LLC Embraer Executive Aircraft Delta Air Lines Embraer Netherlands BV Delta Air Lines Unknown (Brazil) Rising Sun Aviation Wilmington Trust Co. Air Caledonie Wells Fargo Bank NW Aerocentury Corp DR PPJ Aircraft Leasing AerSale Inc KP AIRCRAFT 24903 LLC Interjet Unknown United Airlines Aerolease 3 LLC United Airlines Petrus Aircraft MSN 27157 LLC Petrus Aircraft MSN 26455 LLC

SSJ 100-95LR

06/02/2014

Source: IBA’s JetData.

afm • Issue 89 – March–April • www.afm.aero

INDUSTRY DATA: Deals

Firm orders – From 3 January to 13 February 2014

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

Source: IBA’s JetData.

Firm orders – From 3 January to 13 February 2014

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

Variant

Customer

Airbus

A321ceo

American Airlines

06/01/2014

No of Aircraft 7

Airbus

A319

Tibet Airlines

21/01/2014

Airbus

A350-900

Libyan Airlines

07/02/2014

Trent XWB

Airbus

A350-900

ILFC

07/02/2014

Trent XWB

Airbus

A321ceo

VietJet

11/02/2014

Airbus

A320ceo

VietJet

11/02/2014

Airbus

A320neo

VietJet

11/02/2014

Airbus

A380

Amedeo (Previously Doric)

12/02/2014

ATR

72-600

Air Algerie

06/01/2014

PW127M

ATR

72-600

Dubai Aerospace Enterprise

12/02/2014

PW127M

ATR

72-600

Binter Canarias

12/02/2014

PW127M

Boeing

787-8

VIP customer

02/01/2014

Boeing

737-800

Jackson Square Aviation

13/01/2014

Boeing

737-900ER

Alaska Airlines

14/01/2014

Boeing

737 Max 8

Unknown

20/01/2014

Boeing

777F

Unknown

22/01/2014

Boeing

737-700

LAM

05/02/2014

Boeing

737-800

Air Algerie

06/01/2014

Bombardier

CS300

Al Qahtani Aviation Company

16/01/2014

PW1500G

Bombardier

CSeries

Unknown

10/02/2014

PW1500G

Bombardier

Q400

Falcon Aviation

10/02/2014

PW150A

Embraer

E190-E2s

Air Costa

13/02/2014

PW1900G

Embraer

E195-E2s

Air Costa

13/02/2014

PW1900G

Manufacturer

Order date

Engines -

Source: IBA’s JetData.

afm • Issue 89 – March–April • www.afm.aero

DOWNLOAD THE FREE AFM MAGAZINE APP NOW! HOW TO DOWNLOAD THE FREE APP: Search for ‘AFM Magazine’ on the App Store or Google Play to download it directly to your device. Sponsor the app! Contact Ellis Owen E-mail: ellis@afm.aero Direct line: +44 (0) 208 831 7519

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

List prices and lease rates – February 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

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

Type

Oldest

Newest

A300-600R $3.50m $10.00m A310-200 $1.00m $2.00m A310-300 $3.00m $5.50m A318-100 $9.80m $18.00m A319-100 $8.00m $34.30m A320-200 $3.60m $42.00m A321-100 $8.00m $13.00m A321-200 $13.00m $50.00m A330-200 $20.00m $90.00m A330-200F $75.00m $91.00m A330-300 $16.00m $103.00m A340-200 $5.00m $9.00m A340-300 $5.00m $30.00m A340-500 $18.00m $43.00m A340-600 $20.00m $45.00m A380-800 $135.00m $225.00m B717-200 $5.80m $9.80m B737-300 $0.70m $4.00m B737-400 $1.00m $4.50m B737-500 $0.90m $3.80m B737-600 $8.00m $13.80m B737-700 $11.00m $35.00m B737-800 $14.00m $47.40m B737-900 $14.00m $20.00m B737-900ER $30.00m $49.60m B747-400 $8.00m $30.00m B747-8F $130.00m $180.00m B757-200 $4.00m $17.00m B767-200ER $2.00m $12.00m B767-300ER $6.00m $50.00m B767-300F $20.00m $60.00m B777-200 $18.00m $39.00m B777-200ER $29.00m $97.00m B777-200LR $66.00m $135.00m B777F $130.00m $165.00m B777-300 $40.00m $60.00m B777-300ER $85.00m $166.00m B787-8 $97.00m $115.00m MD-11 $7.00m $12.00m MD-81 $0.50m $0.50m MD-82 $0.50m $0.85m MD-83 $0.50m $1.10m MD-87 $0.50m $0.80m MD-88 $0.70m $1.50m MD-90 $3.60m $5.20m CRJ-100/200 $1.20m $4.00m CRJ-700/705 $7.50m $22.00m CRJ-900 $10.50m $25.30m CRJ-1000 $19.80m $27.80m Q200 $4.90m $8.00m Q300 $5.60m $11.00m Q400 $7.80m $21.00m ERJ-135 $1.50m $4.00m

% Change -7% -17% -15% -8% 0% 2% -5% 0% -5% -2% 3% -36% -20% -31% -23% 3% -3% -13% -45% -2% -1% 0% 1% -7% 1% -16% -10% -3% -6% -18% -13% -11% -13% -7% 0% -5% -1% 0% -21% 0% -11% -19% -15% -36% 5% -12% -3% -1% -4% -1% -1% -6% -9%

Dry Lease Rate Oldest $0.110m $0.075m $0.100m $0.120m $0.105m $0.060m $0.140m $0.165m $0.250m $0.700m $0.250m $0.170m $0.170m $0.290m $0.300m $0.130m $0.100m $0.040m $0.050m $0.040m $0.125m $0.130m $0.190m $0.190m $0.285m $0.190m $1.300m $0.080m $0.080m $1.650m $0.265m $0.320m $0.365m $0.700m $1.200m $0.350m $0.880m $0.900m $0.140m $0.035m $0.035m $0.037m $0.030m $0.035m $0.070m $0.042m $0.125m $0.135m $0.160m $0.060m $0.065m $0.090m $0.038m

Newest $0.150m $0.090m $0.135m $0.230m $0.280m $0.340m $0.185m $0.420m $0.850m $0.800m $0.900m $0.280m $0.350m $0.450m $0.500m $2.000m $0.135m $0.080m $0.090m $0.060m $0.150m $0.300m $0.365m $0.210m $0.390m $0.360m $1.500m $0.210m $0.250m $0.460m $0.580m $0.350m $0.850m $1.000m $1.400m $0.600m $1.500m $1.100m $0.200m $0.040m $0.045m $0.060m $0.040m $0.060m $0.090m $0.065m $0.185m $0.200m $0.235m $0.080m $0.120m $0.190m $0.050m

% Change 15% 15% 13% 0% 3% 3% 15% 5% 0% 0% 6% 7% 6% 5% 6% 0% 13% 0% 0% 0% 16% 0% 0% 11% 5% -2% 0% 0% 0% 70% 1% 15% 1% -12% 0% 0% 5% 0% 0% 20% 13% 7% 7% 0% 0% 7% 8% 1% -11% 18% 11% 0% 9%

Source: IBA’s JetData.

afm • Issue 89 – March–April • 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 – February 2014

Current Market Value Average List Price $28.02m $38.66m $41.61m $46.08m $48.67m -

Manufacturer Embraer Embraer Embraer Embraer Embraer Fokker Fokker Sukhoi Sukhoi ATR ATR ATR ATR

$18.10m $18.90m $21.90m $22.70m

Type 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

Newest

$1.90m $12.50m $15.00m $18.00m $19.00m $2.00m $2.00m $17.50m $18.50m $4.20m $5.50m -

$7.00m $27.00m $29.20m $33.00m $35.00m $3.00m $3.50m $23.00m $24.00m $12.00m $16.00m $15.50m $20.00m

Dry Lease Rate

% Change -13% -1% -2% -1% -3% -6% -5% -12% -11% -6% -9% 0% 0%

Oldest

Newest

$0.040m $0.125m $0.130m $0.155m $0.165m $0.040m $0.045m $0.140m $0.145m $0.060m $0.080m -

$0.075m $0.230m $0.250m $0.280m $0.300m $0.070m $0.090m $0.225m $0.230m $0.140m $0.180m $0.150m $0.190m

% Change 0% -1% -5% -6% -5% 0% 0% -10% -10% 0% 0% 0% 0%

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

Airbus: List prices and lease rates – February 2014

A300 -600R

A310 -200

A310 -300

A318 -100

A319 -100

A320 -200

A321 -100

A321 -200

Boeing: List prices and lease rates – February 2014

A330 -200

A330 -200F

A330 -300

A340 -200

A340 -300

A340 -500

A340 -600

A380 -800

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

B717 B737 B737 B737 B737 B737 B737 B737 B737 B747 B747 B757 B767 B767 B767 B777 B777 B777 B777F B777 B777 B787 -200 -300 -400 -500 -600 -700 -800 -900 -900ER -400 -8F -200 -200ER -300ER -300F -200 -200ER -200LR -300 -300ER -8

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

afmafm • Issue • Issue 87 –89 November–December – March–April • www.afm.aero • www.afm.aero

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

Engine data – February 2014

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

CRJ -700

E170/ E190/ A300 B767 MD-11 A330 B777 A320 MD-82 B747 A310 B757 Fokker A340 A330 B777 A380 ERJ B717 175 195 -600R -300ER -200 -300ER -200 -400 -300 -200 100 -600 -300 -200ER -800 -145ER -200

Source: IBA’s JetData.

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

Engine data – February 2014

standfirst Type

Engine

B737-300 B737-400 B737-500 A321-200 A319-100 body 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

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 January 2014 $1.15m $1.60m $2.30m $8.20m $6.40m $5.85m $7.00m $7.60m $8.20m $8.50m $2.20m $4.60m $4.70m $6.50m $5.50m $7.10m $5.80m $14.80m $30.74m $7.75m $0.95m $7.00m $6.30m $4.20m $2.20m $14.48m $14.58m $21.10m $19.80m $2.30m $4.00m

Current half-life market value January 2014 $0.60m $0.75m $1.20m $6.00m $4.40m $4.00m $4.80m $5.40m $6.10m $6.50m $1.15m $3.20m $3.00m $3.00m $2.80m $4.40m $3.10m $9.90m $22.95m $5.40m $0.60m $4.00m $3.40m $2.80m $1.30m $8.60m $8.60m $13.80m $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 Issue89 89––March–April March–April••www.afm.aero www.afm.aero

Born different Some are born great, others have greatness thrust upon them. With the LEAP engine, you get a little of both. Itâ&#x20AC;&#x2122;s a legend in the making, with 3-D woven carbon ďŹ ber composite fan blades, a built-in debris rejection system, and ceramic matrix composites. If you want to know where all that innovation comes from, blame the parents. Go to cfmaeroengines.com CFM International is a 50/50 joint company between Snecma (Safran) and GE.

Superior performance | Lower cost of ownership | Greater reliability

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