The business and financing of airline operations
FINANCING THE 777: DVB DISCUSSES THE FAMILY’S MERITS PLUS: n REGIONAL FOCUS: WE INVESTIGATE REGIONAL AIRLINES, AIRPORTS AND ROUTE DEVELOPMENT n AIRLINE ALLIANCES: CAN AIRLINES GO IT ALONE? n EUROPEAN MRO FORECAST n CHOOSING THE RIGHT TIME FOR PASSENGER-TOFREIGHTER CONVERSIONS
May-June 2011 Issue 73
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Engine Leasing Asset Management All Manufacturer Types Long, Medium & Short Term Leases • Operating Leases • Asset Management • Sales & Leasebacks All Manufacturer Types • Operating Leases Asset Management • Sales & Leasebacks All Manufacturer Types • Long, Medium & Short Term Leases • Operating Leases • Asset Management • Engine Trading • All Manufacturer Types • Sales & Leasebacks • Asset nagement • Long, Medium & Short Term Leases • Operating Leases • Asset Management • All Manufacturer Types • Sales & Leasebacks Operating Leases • Engine Trading • Long, Medium & Short Term Leases • All Manufacturer Types • Operating Leases • Asset Management Leases • Long, Medium & Short Term Leases • Operating Leases Manufacturer Types • Sales & Leasebacks • Engine Trading Long, Medium & Short Term Leases • Operating Leases • Sales & Leasebacks • Engine Trading • Asset Management • Long Medium & Short Term Leases • Engine Trading • Operating Leases • All Manufacturer Types • Asset Management um & Short Term Leases • Asset Management • Sales Leasebacks • All Manufacturer Types • Long, Medium and Short Term Leases • Operating Leases • Asset Management • Sales & Leasebacks • All Manufacturer Management • Long, Medium & Short Term Leases er Types • Operating Leases • Asset Management • S a l e s & Leasebacks • All Manufacturer Types • Long, Medium & Short Term Leases • Operating Leases • Asset Management • Sales Leasebacks ating Leases • All Manufacturer Types • Long Medium Short Term Leases • Operating Leases Asset Management • Engine Engine Trading • All Manufacturer Types Leasebacks • Engine Trading • Asset Management • Medium & Short Term Leases • Operating Leases • Asset Management • All Manufacturer Types Sales & Leasebacks • Operating Leases • Engine Trading • Long Medium & Short Term Leases eases • All Manufacturer Types ent • Asset Management Medium & Short Term Leases • Operating eases •Sales & Leasebacks g • Long, Medium & Short ases • Operating Leases & Leasebacks • Engine nagement • Operating & Short Term Leases Asset Management anufacturer Types hort Term Leases Management Term Leases Term
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C O N T E N T S
The business and financing of airline operations
May-June 2011 • Issue 73 EDITOR Mary-Anne Baldwin: Mary-Anne.Baldwin@ubmaviation.com Tel: +44 (0) 207 579 4843
JOURNALIST Alex Derber: aderber@ubmaviation.com
CONTRIBUTORS Chris Kjelgaard, Bernard Fitzsimons, Simon Finn, Raphael Bejar and Jonathan Naylor.
NEWS ROUND-UP 2 The latest on deals, mergers appointments and more
FOCUS: 12 Regional airline report: Europe and the US
GROUP PUBLISHER & SALES
Europe’s short-haul, low-cost carriers were a direct offshoot from similar airlines in the US, but regional operators on either side of the Atlantic share few comparisons. Regional flying developed radically differently due to sizeable differences in industry structure, regulation and market environment, and this has had a direct impact on present-day fortunes, as Alex Derber reports.
Anthony Smith: Anthony.Smith@ubmaviation.com Tel:+44 (0) 207 579 4875
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16 Engine leasing update
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The niche business of engine leasing used to be somewhat counter-cyclical, as lessors exploited hard times to buy assets and drive sale and leaseback deals. However, more leasing companies have entered the market and many airlines were either unwilling or unable to offload spare engines in the recent recession. Alex Derber looks at the consequences.
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TRADING, LEGAL AND FINANCE: 36 Financing the 777 family Few large aircraft programmes have enjoyed the fairytale success of the 777. Over time, various airlines commented that the 747 was “too big” or that the 767-300ER was “too small”. So in the late 1980s, the industry welcomed the prospect of a new aircraft type that was – in true Goldilocks tradition – ‘just right’. Simon Finn, SVP, aviation finance at DVB Bank gives his detailed financial analysis of the aircraft type.
44 Deals News Catch up on the last month of aircraft deals.
AIRPORTS AND ROUTES: Airports have been blighted by natural hazards and economic crises and just a few of Europe’s regional airports have managed to consistently increase traffic through these hard times. Looking ahead, they are further threatened by national passenger taxes however, some regional airports are managing to hold tight. Bernard Fitzsimons reports on the market.
Paul Canessa: paul.canessa@ubmaviation.com Tel: +44 (0) 207 579 4873 Website: www.ubmaviationnews.com Printed in England by Wyndeham Grange Ltd. Airline Fleet Management™ is a licensed trademark of UBM Aviation Publications Limited. All trademarks used under license from UBM Aviation Publications Limited. ©1999 – 2010, UBM Aviation Publications Limited. All rights reserved.
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Often the internet is the only means by which the customer communicates with an airline before their flight. As such, airlines must optimise their on-line services to meet passenger expectations and increase revenue. Fortunately, these are not mutually exclusive concepts but airlines must become more than just flight operators; they must embrace and understand the e-commerce model. Raphael Bejar, CEO of Airsavings discusses a strategy.
47 Regional airport success stories
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34 Airlines: Mastering on-line sales
50 Going local: Regional route development 22 Airline alliances: Can airlines go it alone? New codeshare agreements are introduced almost daily and they have become part of the fabric of international airline operations. Yet, with so many airlines entering this type of agreement, the flaws are becoming evermore apparent. Mary-Anne Baldwin examines the pros and pitfalls of these increasingly popular collaborations.
28 Cargo conversion: Choosing the right time For owners of commercial jets, deciding to convert passenger aircraft to freighters is an important economic move that involves several key variables. These can make a ‘yes’ decision compelling – or ‘no’ the only sensible option. Chris Kjelgaard reports.
Regional travel is a major part of Europe’s aviation sector. About 80 per cent of scheduled intra-European air passengers start or end their flight at a regional airport. Of these, more than one-third fly between two regional points. Jonathan Naylor, director at the aviation consultancy, AviaSolutions, discusses the market.
MAINTENANCE OPERATIONS: 52 European MRO forecast European airlines will spend $14bn on MRO this year. But what types of work are they spending the money on and how will the balance of expenditure change over the next 10 years? Bernard Fitzsimons answers these questions.
INDUSTRY DATA 58 Data including transactions and market, list and lease rates
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2 | AFM • ISSUE 73 May-June 2011
NEWS ROUND-UP The latest on deals, mergers, appointments and more Embraer’s 1Q profit mounts on tax rebate
Embraer’s 1Q profit has more than tripled, to $110m, because of a tax rebate. The $2.64m repayment compensated for sales, which fell 1.5 per cent to $1.1bn. The company delivered 20 commercial jets in the 1Q and has a total firm order backlog of 987 aircraft, up $400m to $16bn. Revenue for the three-month period rose to $1.1bn.
Republic posts 1Q improvement Republic Holdings, America’s second largest regional airline group, has reported a 23 per cent rise in 1Q fixed-fee profit, despite flat revenues and a rise in costs. The group, through its four regional airlines, serves Delta, Continental, United, American Airlines, US Airways and Midwest – from whom it received $251m in 1Q 2010 and $258m in 1Q 2011. The group’s mainline branded service, Frontier Airlines, raised revenues and narrowed its pre-tax loss to $55m from $70m the year before. Net loss for the Republic group was $22m, down from $37m.
ATSG obtains $325m credit facility
Air Transport Services Group (ATSG) has obtained a commitment for a new five-year secured $325m credit facility with a consortium of banks led by SunTrust. It will replace the current facility, also led by SunTrust, which is scheduled to expire at the end of 2012. The new facility will include a term loan of $150m and a $175m revolver with an accordion for up to an additional $50m. It will initially be priced at the 90-day LIBOR rate plus two percentage points, 25 basis points lower than the comparable rate under the current agreement.
NEWS HIGHLIGHTS
Which neo engine will win? Pratt & Whitney’s (P&W) PW1100G geared turbofan (GTF) will hold an advantage over CFM’s LEAP-X as the engine of choice on the A320neo if it can execute well with a clearer path to further improvements, according to the latest report from Bernstein Research. The analysts are backing P&W’s engine because the technology appears more mature at this stage, and the report states that “should Pratt succeed with the geared turbofan, there is the potential for the geared engine architecture to play a major role in multiple future engines over the long term”. A further advantage for the GTF is that it has a clear upgrade path, by means of higher gear ratios, temperatures and pressures; no such path is present on the Leap-X, of which its aim is to maximise performance from conventional architecture. Bernstein notes that the biggest barrier for the GTF is not its unconventional architecture but customers’ memories of the troubled PW6000 programme and thus the manufacturer’s ability to deliver. Meanwhile, its main concern about the Leap-X is that “greater cooling requirements will reduce fuel burn performance and higher temperatures will reduce blade life on the early engines”. It says CFM must therefore convince customers that reliability will be better than the GTF even through the Leap-X has more stages and consequently, more moving parts. CFM can however point to a recent history of reliability, service and support, and will be able to advertise the Leap-X as the safe, trustworthy option. The GTF has been selected by Airbus as the lead engine for the neo and has so far won all three customer selections: ILFC, IndiGo, and Lufthansa. But Bernstein sees the coming decisions by all-CFM airlines Virgin America and AirAsia as more important indicators. Although the CFM56-5 has an approximate 50 per cent share on the A320 – creating an obvious customer base – Bernstein expects some
Air Lease sells 34.8 million shares
Republic can party
The underwriters for Air Lease Corporation’s (ALC) initial public offering (IPO) have exercised in full their over-allotment option to purchase an additional 4,542,450 shares of the company’s class A common stock. The company sold approximately 34.8 million shares of its class A common stock, raising approximately $868m in net proceeds. ALC’s stock closed at $27.95 a share on the New York Stock Exchange on April 19, up 5.5 per cent from its IPO price of $26.50. JP Morgan Securities, Credit Suisse Securities (USA), Barclays Capital, FBR Capital Markets, RBC Capital Markets, and Wells Fargo Securities acted as joint bookrunning managers for the offering, with Macquarie Capital (USA), Scotia Capital (USA), and SG Americas Securities acting as co-managers.
With Europe’s regional airlines scrapping for every sliver of growth, how the industry must envy America’s capacity purchase system, which guarantees short-hop carriers fixed revenues over long periods and even reimburses their fuel expenses. Republic Holdings, America’s second largest regional airline group, has reported a 23 per cent rise in 1Q fixed-fee profit, despite flat revenues and a rise in costs. The group, through its four regional airlines, serves Delta, Continental, United, American Airlines, US Airways and Midwest – from whom it received $251m in 1Q 2010 and $258m in 1Q 2011. But while it is hard to compare Europe with the US due to fixed fees, there may still be lessons to draw from American carriers. One would expect load factors in the US to trail Europe, where loads are incentivised as they directly link to profits. In fact, average seat occupancy across US regionals, at 75 per cent, is some 10 points higher than in Europe.
customers to switch manufacturers, and says Virgin America is seriously evaluating the GTF. “If it goes with Pratt, it will be an indicator that CFM has a difficult challenge unless Pratt fails to perform,” concludes the report. Bernstein also said that aggressive competition is leading to prices that are essentially in line with that of current engines on the A320. The report warns that both manufacturers will face risks with their guarantees that reliability of their respective engines will exceed the performance of the existing CFM565 and V2500, particularly early in life.
Divergent passenger demand will account for part of that, of course, but might the much-derided 50-seat jet also have something to do with it? Average regional aircraft capacity in Europe is now above 70 seats, whereas in the US it is 55, with Bombardier CRJ100/200s accounting for almost a third of the entire fleet, despite their poor fuel economics. It is often thought that US carriers have stuck with 50-seat jets due to the reticence of Americans to fly on propeller aircraft and their own lethargic approach to upgrading equipment. However, European regionals have rarely, if ever, posted a combined load factor of 70 per cent – a benchmark reached in the US as early as 2005. It is arguable, therefore, that 50 seats are more suited to regional operations than 70, 80 or 90. Conversely, European airlines would argue that without cosy capacity purchase contracts they could never afford the dismal CASMs of antiquated CRJs. Differences in geography, airport congestion and alternative forms transport also radically alter the competitive landscape in Europe.
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The latest on deals, mergers, appointments and more NEWS
ROUND-UP
NEWS HIGHLIGHTS SAA flight crew claim corruption over ultra-long flight The South African Civil Aviation Authority (SACAA) has denied colluding with South African Airways (SAA) for its ultra-long flights to the US. The airline was granted an exemption to operate its lengthy flight to New York, moving its staff and members of the South African Transport Workers’ Union (SATWU) to raise allegations of corruption. Both parties have denied any conspiracy, the SACAA said in a statement: “These entities [SACAA and SAA] operate independent from one another, with different mandates”. The ultra-long flight from
Johannesburg to New York, which started operating on May 1, 2011, exceeded the length in which a flight is deemed safe – the ‘flight and duty period’ – so an exemption was required. SAA had applied for this exemption on April 12, 2011, which was later approved on condition that suitable safety training and flight rostering was arranged, however the SATWU claim the latter was not given, putting crew and passengers at risk. The new non-stop flight shows “a flagrant disregard” for safety, the spokesman for SATWU, Zenzo Mahlangu, said.
EU blacklist African and Asian airlines
EU airspace. The head of the country’s Civil Aviation Authority (CAA) resigned in late 2010 after less than a year in office following a bout of fruitless recrimination between the regulator and government over safety failings, but at least rising star Cebu Pacific, subject of the world’s largest budget airline initial public offering (IPO), hopes to exit the blacklist in June 2011. There was also a measure of good news for Indonesia, which knocked cargo carriers Cardig Air, Republic Express, Asia Link and Air Maleo into sufficient shape to satisfy EU assessors. Its national carrier, Garuda, also remains off the list, but Indonesia – as a touted BRIC member and one of the world’s fastest-growing economies – must do something to rehabilitate the 30-plus airlines.
The European Commission’s latest update to its blacklist of airlines banned from flying into Europe makes grim reading for certain countries harbouring big ambitions for aviation. The usual crowd of African and ex-Soviet safety vacuums pop-up again (plus some new ones like Mozambique), but many airlines from the Philippines and Indonesia – including major lowcost players like Cebu Pacific and Lion Air – remain stubbornly on the list. The Philippines has just announced a major liberalisation of its airspace, but perhaps more foreign airlines need to be let in when even its flag carrier, Philippine Airlines, is adjudged too perilous to enter
ICAO to implement new rules on black box recovery Following the retrieval of the black box from the Air France A330 which crashed in the Atlantic Ocean in 2009, the International Civil Aviation Organisation (ICAO) is hoping to fast-track new rules to make it easier to find flight-data and cockpit-voice recorders in the aftermath of accidents. The organisation wants to make the radio beacons of flight recorders last three times longer than the current 30 days, while also emitting more powerful signals. Under the proposals, the signals could be heard up to nine km away – in contrast to today’s two km. In addition, the recorders would also be able to float in case of an aircraft crashing into water, as happened with the Air France A330. ICAO secretary general, Raymond Benjamin, says the new regulations should come into force within 18 to 24 months. They will be applied to both existing and new-build aircraft, placing an additional cost burden on both airlines and manufacturers. Looking further ahead, ICAO is also examining the possibility
Chinese carriers pen orders for 20 Embraer aircraft Embraer has announced two orders for 20 aircraft, both of which are with Chinese companies. China’s Hebei Airlines has ordered 10 E190s for expansion of its services. Part of Hebei Aviation Investment Group, a state-owned company, the airline currently
Air France A380 clips jet during taxiing
An Air France A380 clipped another commercial passenger jet at New JFK International Airport on April 11. The A380’s wingtip scored the tail of a Comair CRJ 700 regional jet during taxiing, spinning the smaller aircraft 90 degrees on its wheels. The full damage is unknown, but no passengers were hurt.
US and EU launch shared aviation safety act A pact to improve safety in the US and European Union (EU) has come into effect. The Co-operation in the Regulation of Civil Aviation Safety, which was written to help bolster the aeronautical industry, will limit technical and administrative procedures for certificates and approvals. Furthermore, says the European Commission, the pact, which was three years in the waiting, provides a framework for the “continuous, transparent and timely exchange… of information affecting all areas of aviation safety law and policy”.
Traffic demand in March takes a tumble
of aircraft permanently transmitting data on their positions by satellite, so that contact with the ground is never lost. French investigation agency Bureau d’Enquetes et d’Analyses will examine the devices in the hope of determining the cause of the accident.
operates six aircraft, including two ERJ 145s. The other order came from China Southern Airlines through CDB Leasing. The deal follows an order for another 10 E190s earlier this year. A letter of intent was also signed for a third group of 10 E190s, which would bring the total order to 30 aircraft, worth $1.25bn at list prices. All 30 aircraft are intended for China Southern Airlines.
Passenger demand slipped two per cent during March, according to the International Air Transport Association (IATA). The figures, based on scheduled international traffic, showed growth had slowed from 5.8 per cent in February 2010, to 3.8 per cent in March 2011. Traffic in March fell one per cent due to the earthquake and tsunami in Japan. Regionally, AsiaPacific carriers saw a traffic loss of over two per cent. Additionally, political unrest in the Middle East and North Africa (MENA) saw international travel fall 0.9 percentage points with Egypt and Tunisia experiencing traffic 10 to 25 per cent below the average for March. However, freight fared better; growth in this market rose to 3.7 per cent in March from the 1.8 per cent recorded in February.
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4 | AFM • ISSUE 73 May-June 2011
NEWS ROUND-UP The latest on deals, mergers, appointments and more
NEWS HIGHLIGHTS Southwest completes AirTran buyout Southwest Airlines has acquired AirTran Airways having bought all outstanding shares, each worth an average $7.57, or $1bn in aggregate. The total transaction was valued at $3.2bn, including outstanding convertible notes and capitalised aircraft operating leases. The acquisition allows Southwest to extend its network into key markets such as Atlanta and Washington, DC, via Ronald Reagan National Airport. Other opportunities include expanding
services at New York La Guardia, Boston Logan, Milwaukee, and Baltimore/Washington, and additional routes to smaller domestic cities, Gary Kelly, CEO, chairman, and president of Southwest Airlines said. AirTran’s revenues and income for the 12 months ending December 31, 2010 were $2.6bn and $128m, respectively. This compares with Southwest’s $12.1bn and $988m. Net annual synergies are estimated to top $400m by 2013; additional costs to merge the two companies are expected to reach $500m.
Strike savages Air India A strike by roughly 800 ex-Indian Airlines pilots at Air India reached its tenth and final day on May 6, forcing India’s national carrier to cancel up to 90 per cent of domestic flights. Delhi’s High Court has strongly criticised both pilots unions and airline management, which has been accused of making insufficient efforts to end the strike. However, the airline still promised to withhold April salaries from striking pilots. Pilots from former carrier Indian Airlines, which merged with Air India in 2007, are demanding equal pay and conditions to flight crew at the airline they joined, as well as the reinstatement of sacked colleagues.
Krakowski takes the rap for ATC incidents Hank Krakowski, head of the US Air Traffic Organisation, has resigned from his role following a spate of air traffic controllers (ATC) falling asleep on the job. Four controllers have dozed at work in as many weeks. On April 13, a controller at Reno-Tahoe International Airport, Nevada, was out of radio contact while a medical flight carrying a patient was forced to land unaided. On Monday April 11, a controller at Boeing Field, King County International Airport, Seattle, was found asleep – much like a fellow controller at Tennessee airport in February. Prior to this was the near miss of a passenger jet and two military aircraft in January, close to New York.
In a public statement Randy Babbitt, administrator for the Federal Aviation Administration (FAA), which governs the Air Traffic Organisation (ATO), described Krakowski as “dedicated” and “professional,” however Babbitt accepted his resignation without protest. “I am committed to maintaining the highest level of public confidence and that begins with strong leadership,” Babbitt asserted. David Grizzle, FAA’s chief counsel, will assume the role of acting ATO chief operating officer for the interim period. It is believed that all US ATC towers without terminal radar approach control (TRACON) will be appointed two members of staff, and those that do will have staff relocated so two controllers are in the tower cabin at all times. Babbitt also announced a fullscale investigation into some 15,000 air traffic controllers, including their training and work practices.
JetBlue and Icelandair form interline deal JetBlue Airways and Icelandair have announced a new interline partnership that will open travel between JetBlue’s destinations in the US and Caribbean, and Icelandair’s flights throughout Scandinavia, the UK, and Continental Europe. “Our harmonious networks from New York, Boston and Washington, DC and like-minded customer service make this a natural partnership,” said Helgi Mar Bjorgvinsson, Icelandair’s SVP of sales and marketing. “Teaming up with Icelandair is a great win for customers,” commented JetBlue’s director of airline partnerships, Scott Resnick.
Clark concerned about fuel The president of Emirates Airline, Tim Clark, has predicted that soaring fuel prices will bring not just aviation but the wider economy to its knees. “I do not believe that the global economy will be able to sustain that kind of price for too long,” he said. Speaking to reporters in Dubai ahead of Emirates’ financial results, Clark said that fuel now accounts for 43 per cent of the airline’s costs, as opposed to 12 per cent a decade ago. Clark added that there was a limit to how much airlines could raise prices in response to rising costs before they started driving customers away.
LAM retains Europe link despite blacklisting Despite a blanket European ban on all Mozambican airlines, announced on April 20, publicly-owned flagcarrier Mozambique Airlines (LAM) will continue flying from Maputo to Lisbon, Portugal. LAM is able to do so because it offers that service via a wet lease of a 767-300 operated by EuroAtlantic Airways, a Portuguese company not subject to any ban. The European Commission reported a “verified evidence of lack of ability of the authority responsible for the safety oversight of air carriers certified in Mozambique to implement and enforce the relevant safety standards”. Mozambique first looked likely to enter the EU blacklist after an audit in January 2010 found that the country failed to properly meet 77 per cent of International Civil Aviation Organisation (ICAO) safety standards.
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The latest on deals, mergers, appointments and more NEWS
NEWS HIGHLIGHTS
EU retains liquids ban
TAP Cargo notes Brazil’s growth potential TAP Cargo has predicted 18 per cent growth in Brazil. TAP is the largest Portuguese exporter and plays a key role in business between Portugal and Brazil. From June it will operate 74 weekly services to 10 Brazilian cities. “In 2010, we reached a perfect operational balance: we transported 17,000 tonnes from Portugal to Brazil and then 17,000 from Brazil to Portugal,” said Pedro Mendes, TAP Cargo’s director in Brazil.
REDjet redemption? After several delays, the first Caribbean budget airline, REDjet, took to the skies but not without mishap. Founded in 2006, REDjet launched May 8 , 2011, however flights to Barbados and Jamaica were postponed between May 11 to 24 due to lack of regulatory approval. The airline’s website states that its “expert management” will bring the social benefits of low-cost travel to the Caribbean. But who are these “experts” and is the region suited to Ryanair-style operations? REDjet was founded by Irish father-son team, Ian and Robbie Burns, both of whom appear new to aviation. Ian, the airline’s CEO, was an accountant and partner at Robson Rhodes until he resigned in 2007, the year in which the loss-making firm was taken over by a rival amid allegations of improper auditing at software group iSoft in three consecutive years. His son, Robbie, appears to have held only one role since graduating in business studies – working for mobile phone network Digicel. Dermot Ryan, the
European Commission to rewrite legislation on passenger rights during airspace closure The European Commission is to rewrite regulations covering airspace closures under ‘extraordinary circumstances’, such as the eruption of Icelandic volcano Eyjafjallajokull. Existing Air Passenger Rights legislation cost airlines $3.5bn during the volcanic ash cloud crisis. It is likely the commission will redistribute responsibility for future natural disasters, suggesting governments cover a portion of costs and that airports pay compensation in the event of failing to deal proficiently with closures, such as those during heavy snow. Siim Kallas, VP of the commission, will consult industry and consumers this year before new legislation is introduced.
ROUND-UP
CFO, is another accountant with no stated aviation experience. COO, Kevin Dudley, however, has worked as an engineer at a number of airlines. Like its management set-up, REDjet’s operating strategy is also somewhat curious. The airline has bought two ex-American Airlines MD-82s, but, rather than follow the established low-cost convention of maxing out each aircraft’s 172-seat capacity, REDjet has fitted only 149 seats “to lower the weight, operational costs and crew required”. Now, it could be that Caribbean passenger traffic is too low to justify more seats, but it still seems a strange decision given that fuel costs are spiralling and the airline is operating 24-year-old aircraft. Unsurprisingly, established Caribbean operator LIAT, which operates 15 Q300 turboprops, has voiced scepticism about the new airline, saying its business model is ill-suited to the region. It is unfair to judge REDjet just yet but, for students of low-cost carrier development around the world, the omens are not promising.
A long-awaited relaxation of the fiveyear ban on carrying liquids aboard aircraft in the European Union (EU) was called off at the last moment. The EU had hoped to allow passengers travelling from non-EU states into Europe to bring duty free liquids on board. However, after some European states, citing security concerns, said that they would continue to enforce to old restrictions, European legislators backtracked in order to avoid confusion. “The restrictions on carrying duty-free liquids purchased outside the EU through European airports should remain in place until passengers can travel with certainty,” said EU Transport Commissioner Siim Kallas. He advised EU states to defer any changes “for a limited period”.
PAL seeks loan for fleet renewal Philippine Airlines (PAL) hopes to raise $200m this year to fund its fleet renewal programme, the Manila Bulletin reported. The airline plans to borrow the money under a syndicated loan to pay for aircraft purchases through to 2013. PAL, the Philippines’ flag carrier, has a fleet of 36 aircraft and posted a 3Q 2010 income of $15.1m, up from the previous year’s loss.
Thai A380 seating announced
Thai Airways has revealed a highdensity, 507-seat configuration for its A380s. Korean Air, which has announced the lowest-density arrangement so far, will fit only 407 seats in its A380s. Thai’s superjumbos will feature 435 economy seats on the lower deck, while the all-premium upper deck will have 60 business- and 12 first-class positions.
BA and Iberia to merge cargo operations British Airways and Iberia will unite their cargo divisions following the merger of their passenger operations to form International Airlines Group (IAG). Heading the business will be Steve Gunning as managing director and Ignacio Díez Barturen as deputy managing director, previously managing directors of BA World Cargo and Iberia Cargo respectively. The new entity will be one of the 10 largest air cargo carriers worldwide. “Both British Airways’ and Iberia’s cargo operations are highly successful in their own right which is why it’s important that they keep their current brands. However, by creating a single business unit, our customers will benefit from an integrated range of products and access to a wider network,” Gunning commented.
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6 | AFM • ISSUE 73 May-June 2011
NEWS ROUND-UP The latest on deals, mergers, appointments and more
NEWS HIGHLIGHTS Airbus moves to advance A320neo
Superjet arrives for service Armenian flag carrier Armavia received the first commercial Sukhoi Superjet 100 on April 19. The aircraft, one of two on order with the airline, was named Yuri Gagarin and replaces Armavia’s Tu-134s. Meanwhile, Aeroflot is pressing for fines against Sukhoi due to delays that have seen its Superjet deliveries slip from 2010 to this year.
AVIC to invest $1.5bn into engine production
Airbus is to bring forward the entry into service (EIS) of the A320neo by six months and could make a full production transition to the upgraded aircraft by 2018. The neo will now be available in October 2015, with Airbus claiming a “spectacular market reception”. It said it had received more than 300 commitments since launching the neo on December 1. Production schedules have been revamped to allow this change, and the manufacturer says that with sufficient demand the full production transition will be made in 2018. This ramp-up could be achieved in
less than 30 months, according to Tom Williams, EVP programmes. John Leahy, COO customers, does not necessarily expect this change to occur so soon as he predicts the last regular A320 will be sold around 202022; however, he says Airbus is prepared for all eventualities. Market forces are already taking hold, as Airbus statistics show that 43 A320 orders were cancelled in February and March. Kuwait’s Jazeera Airways cancelled orders for 25 A320s last month, following DAE Capital’s cancellations for 18 A320s and 12 A350900s in February. The cancelled A320s were worth around $3.7bn at list prices.
Faulty landing gear forces Air France A330 turn-around An Air France A330-200 (registration F-GZCB) was forced to make an emergency landing three hours after take-off as its landing gear would not fully retract on April 13. Flight AF-471 from Caracas, Venezuela to Paris Charles de Gaulle, France, landed at Simon Bolivar International Airport. Staff detected the fault 25 minutes after take-off and pilots spent the remaining time circling the airport to burn fuel.
The Aviation Industry Corporation of China (AVIC) is to invest CNY10bn ($1.5bn) into the development of aircraft engines, the company’s general manager Lin Zuoming, told regional media. “To make China a major player in the world aviation industry, the Aviation Industry Corporation of China has placed aircraft engine development as a top priority,” he said. The Commercial Aircraft Corporation of China (COMAC) will use CFM engines to power its C919 passenger aircraft, though a Chinese engine is set to be ready by 2020, China News Service reported COMAC’s general manager, Wang Zhilin, as saying.
Lufthansa caterer LSG restructures Airline caterer LSG Sky Chefs is to be split into a management company and 12 individual operating companies, under a limited liability structure. “This realignment in the German market will strengthen the entrepreneurial scope of the individual locations, and offer an improved perspective for all parties involved,” said Walter Gehl, CEO of LSG. Labour contracts will be unaffected by the changes.
Kenya agrees settlement with Boeing on delayed 787
Barbados’ safety rating drops to Category 2
Kenya Airways has reached a settlement agreement with Boeing on the delayed delivery of nine 787-8 Dreamliners. Kenya signed a purchase agreement in 2006 for the aircraft, also taking options for four additional 787-8s. First deliveries were expected in October 2010 but have been delayed until 4Q 2013. Titus Naikuni, CEO of the airline, said: “We can only achieve our expansion strategy with the right equipment and we are particularly pleased with Boeing that, despite the delay experienced on the 787 programme, they have committed to the timelines that we have now signed on.” The 787-8 will replace ageing 767 aircraft as well as open new long-range routes for Kenya.
Barbados’ safety standards have been downgraded to Category 2 status following its failure to meet measures set by the International Civil Aviation Organisation (ICAO). With the demotion, Barbados’ carriers cannot establish services in the US unless they already fly there. Detailed reasons for the judgments have not been given publicly. The Federal Aviation Administration (FAA) simply stated: “A Category 2 rating means a country either lacks laws or regulations… or that its civil aviation authority… is deficient in one or more areas, such as technical expertise, trained personnel, record keeping or inspection procedures.”
February fuel costs rise to $2.77 per gallon The cost of aviation fuel to US airlines rose to $2.77 per gallon in February, according to the Bureau of Transportation Statistics (BTS), part of the US Department of Transportation. This compares with a cost of $2.62 in January and $2.15 in February 2010. According to the bureau, US airlines spent $2.2bn to fuel scheduled flights in February 2011 and $39.4m on non-scheduled flights.
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AFM73 News_AFM News 18/05/2011 09:31 Page 8
8 | AFM • ISSUE 73 May-June 2011
NEWS ROUND-UP The latest on deals, mergers, appointments and more
PEOPLE IN THE NEWS
Hawaii next stop on Virgin Blue partnership tour Virgin Blue is preparing a partnership with Hawaiian Airlines, its fourth international airline tie-up after ones with Etihad, Air New Zealand and Delta. The carrier is also poised to announce new flights to Hawaii. John Borghetti, Virgin Blue’s CEO, has added that the airline plans to win 20 per cent of Australia’s corporate travel market within the next three years.
AA adds to 777 order
American Airlines has exercised two options for 777-300ERs, taking its orders for the type to five. The orders are due for delivery in 2012 and 2013. AA operates almost 50 777-200ERs.
Jatropha testing deemed successful Jatropha, a plant used to create bio-fuel, can deliver “strong environmental and socioeconomic benefits”, a report by Yale’s School of Environmental Studies has concluded. Japan Airlines, Air New Zealand, Continental, TAM Airlines and Interjet have, in co-operation with Airbus, held successful test flights using fuel from the plant. James Garton, president of Mission NewEnergy US, said: “We are particularly pleased to learn of repeated testing of Jatropha in aviation with positive results. With… the constant increase in the price of jet fuel, and the global need to accept sustainability as a key to environmental responsibility, the Jatropha solution is timely and efficient.” The study was funded by Boeing and used criteria developed by the Roundtable on Sustainable Biofuels.
Bob Jordan to head AirTran after Southwest takeover
Turner appointed to Rockwell Collins’ board
Southwest’s EVP of strategy and planning, Bob Jordan, will serve as president of AirTran following Southwest’s acquisition of the company, completed on May 2. Bob Fornaro, former chairman, president, and CEO of AirTran, will consult on the integration of the two airlines. The joint integration board will also include Gary Kelly, CEO, chairman, and president of Southwest Airlines; Mike Van de Ven, Southwest’s EVP and chief operating officer; Loral Blinde, AirTran’s SVP human resources and administration; and Jeff Lamb, Southwest’s SVP of administration and chief people officer. Southwest Airlines’ headquarters will remain in Dallas; AirTran’s presence in both Orlando and Atlanta are under review.
Rockwell Collins has elected Jeffrey Turner to the board of directors as its ninth member. He is currently president, CEO and director at Spirit AeroSystems. Turner’s 38-year career has also included a stint with Boeing.
Wisbrun to succeed Male at SkyTeam SkyTeam, the 13-member airline alliance that includes Delta Air Lines and Air France-KLM, has appointed Michael Wisbrun as its new managing director, replacing Marie-Joseph Male, effective June 1, 2011. Wisbrun is currently EVP of KLM Cargo, and he was also heavily involved in developing the KLMNorthwest joint venture.
Constantinos Mavrikis joins Hellenic as CCO Hellenic Imperial Airways has appointed Constantinos Mavrikis as its new chief commercial officer (CCO). Formerly, Mavrikis worked at Olympic Airways for 30 years; he will now head Hellenic’s business development units, including all commercial departments, marketing, sales, reservations and ticketing.
Airberlin hires Grimus to lead network plans Wolfgang Grimus has been named head of network planning and development at airberlin, effective May 1. Grimus worked from 2006-2010 at Austrian Airlines, leading the carrier’s commercial passenger division in Central and Eastern Europe. Meanwhile, Barbara Cassani and Saad Hammad are joining Air Berlin’s board as non-executive directors. Cassini was previously the CEO of low-cost airline Go Fly and chaired the organising committee for London’s bid to host the 2012 Summer Olympics, for which she received a CBE. Hammad worked at easyJet as its chief commercial officer as well as holding management positions at Procter & Gamble and the Boston Consulting Group.
Gergye becomes Malév’s CCO Malév has appointed Ottó Gergye as CCO, effective May 1, 2011. Gergye has 15 years’ experience in the aviation business, having occupied posts with CWT, KLM, Flight Center and British Airways. He moves from within Malév, where he has been managing the sales division.
Gulf Air appoints new CCO Karim Makhlouf has become the chief commercial officer of Bahrain flag carrier Gulf Air. Makhlouf joined the airline in October 2010 as director commercial planning. He started his career with Lufthansa before becoming SVP of its subsidiary German Wings. He has also had senior roles at SkyEurope and Malev Hungarian Airlines.
Deamer takes SAS sales role SAS has appointed Anne Deamer as business sales manager following Jo Ashman’s retirement. Deamer was previously general manager at the Institute of Travel Management, but also worked for 20 years at British Airways.
Republic promotes Tim Dooley and Lars-Erik Arnell Republic Airways has promoted two key staff members. Tim Dooley has been appointed SVP of finance and chief financial officer and Lars-Erik Arnell has been named SVP of corporate development, both effective immediately. Dooley is being promoted from VP of financial planning and analysis and replaces Hal Cooper, who retired March 31. Arnell most recently served as VP of corporate development.
Virgin Blue appoints Bayliss as non-executive director Joshua Bayliss has joined Virgin Blue as a nonexecutive director, with immediate effect. He is currently based in Geneva as a senior executive and general counsel with the company. Bayliss has experience as a director across a number of Virgin Group companies, combining investment holding and operational roles.
Luxon takes ANZ general manager role Air New Zealand (ANZ) has announced the appointment of Christopher Luxon as group general manager international airline, effective May 30, 2011. He joins the company from Unilever, where he has worked since 1993, most recently as president and CEO of its Canada division.
Harry Spencer becomes JetBlue’s first VP of compensation JetBlue Airways has appointed Harry Spencer as its VP of compensation and benefits. In the newly created role, Spencer will oversee compensation for JetBlue crewmembers throughout the Americas. Spencer has worked for more than a decade with Time Warner and prior to that held benefits and finance positions at Exxon Mobil Corporation. In his new position, he will report to Joanna Geraghty, JetBlue’s EVP and chief people officer.
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AFM73 News_AFM News 18/05/2011 09:34 Page 10
10 | AFM • ISSUE 73 May-June 2011
NEWS ROUND-UP The latest on deals, mergers, appointments and more
ROUTES NEWS Vietnam Airlines to launch London link
Indian officials uncover 26 fake licences in pilot crackdown India’s Directorate General of Civil Aviation (DGCA) has uncovered 26 fake licences in an extensive screening that is nearing completion. The DGCA has found 13 pilots, six commanders and seven co-pilots were wrongly awarded air transport pilot licences (ATPL), all of which have been revoked. A number of pilots and airline officials have been arrested, including some at Air India. Police have started proceedings in 11 cases of fraud.
Aeroflot considers neo order
Russia’s Aeroflot is considering an order for the A320neo. Speaking to French newspaper La Tribune, the airline’s CEO, Vitaly Saveliev said: “We will continue our orders [and] we are studying the A320neo. On the other hand, we don’t need the A380.” Saveliev said some orders might be announced at the Paris Air Show in June, but he had “no idea” what these might be.
Final Embraer 145 flight at LOT LOT Polish Airlines has carried out its last E145 flight. The aircraft type will be officially retired from the airline’s route network. Its place in LOT’s fleet will be taken by the E170 and E175, and the airline’s latest acquisition, the E190-200, also known as the ERJ-195. LOT received 14 E145s following a contract signed with the Brazilian manufacturer in the 1990s.
Spring into Japan?
Spring Airlines, the privately-owned Chinese budget carrier, hopes to set up a joint venture in Japan, China Daily reports. “To set up a joint venture in Japan, where pilots are relatively abundant, will boost business in Japan and increase the number of routes between China and Japan, and Japan and South Korea,” said Wang Zhenghua, Spring’s chairman. However, a spokesman for Shanghai-based Spring told China Daily that the plan was still at an embryonic stage.
Vietnam Airlines is to inaugurate flights from Hanoi and Ho Chi Minh City to London this winter, although no firm decision has yet been taken if it will serve Heathrow or Gatwick airport. The airline confirmed that it will initially offer four flights per week using a 777-200ER but plans to increase this to a daily schedule by 2014. The UK is currently the largest market from Vietnam that is not currently served by the airline. It already serves Paris CDG and Frankfurt and Moscow Domodedovo from both Hanoi and Ho Chi Minh City, while Air France, Aeroflot Russian Airlines and Vladivostok Air boost capacity in the French and Russian markets. LOT Polish Airlines is the only other European carrier to provide links to Vietnam with a twice weekly service to Hanoi from its Warsaw hub. The number of people travelling between the UK and Vietnam is increasing, according to visitor statistics, with an estimated 90,000 making the journey in 2010, up 28 per cent on the previous year. It is understood that Vietnam Airlines will initially offer two flights per week from Hanoi and two from Ho Chi Minh City and has selected Heathrow as its preferred London gateway, but has yet to secure the necessary slots at the airport.
Aeromexico boosts flights to US Aeromexico is to boost its presence in the competitive Mexico-US market with two new routes to California and increased frequencies on three existing routes between the two countries. The airline will introduce a daily flight from Guadalajara to San Francisco from July 4 and a daily link from Guadalajara to Sacramento, the only overseas carrier to provide links to the latter airport. This Guadalajara-Sacramento service will be launched on July 16, just under a year after Mexicana Airlines suspended flights from Mexico prior to its closure last August. “I am pleased to announce the return of a foreign carrier to our family of airlines,” said G Hardy Acree, director of airports for the Sacramento County Airport System. “Aeromexico understands the strength of our market.” There is a strong demand on the route with more than 45,000 O&D [origin and destination] passengers travelling between the two destinations in the past year, and this led Alaska Airlines to add its own services on the route last December.
Strategic Airlines applies for US traffic rights Australian carrier, Strategic Airlines, has made a formal application to the International Air Services Commission (IASC) for permission to launch flights across the Pacific, potentially becoming the seventh carrier to offer flights between Australia and the United States. The carrier is understood to be looking to rebrand as Air Australia and has set September 2011 as the likely launch date. Although there is an Open Skies agreement between the two countries, airlines still need to apply for written consent to operate scheduled flights so the necessary ‘fit for purpose’ checks can be made on proposed operators. The Brisbanebased carrier launched operations in 2009 and is part of the diverse Strategic Aviation Group, which provides regular airline services, as well as contract and ad hoc charter services, aircraft brokering, and logistics and cargo handling. It currently operates a fleet of A320s, some of which are operated under a Luxembourg Air Operator’s Certificate (AOC) on flights from Europe.
Cathay Pacific to continue Hong Kong-Singapore capacity upgrade Cathay Pacific Airways will continue to operate seven non-stop flights per day between Hong Kong and Singapore, as well as an eighth daily flight via Bangkok. When the Hong Kong carrier introduced its seventh daily rotation on April 29 it had originally planned for it to operate for just two months until June 30, but it will now remain in place for the entire summer schedule.
Firefly to launch Kuala Lumpur-Sandakan Low-cost carrier Firefly is to launch flights between Kuala Lumpur and Sandakan, the second-largest city in Sabah, East Malaysia, on the north-eastern coast of Borneo. The route is already served eleven times per week by the budget carrier’s parent Malaysia Airlines, which carried an estimated 97,000 passengers during the past year, a 31 per cent share of the total market. Traffic is dominated by AirAsia which carried around 212,000 passengers during the same period.
Condor to offer winter links to Antalya German carrier Condor is to add winter flights to the Turkish city of Antalya from Dusseldorf and Frankfurt. The airline will offer four times weekly services in November but will then revert to two flights per week from December through to the end of the 2011/2012 schedule.
Bearskin Airlines launches Waterloo-Montreal Connection Canadian regional carrier Bearskin Airlines launched flights on May 1 between Waterloo International Airport and Montreal with the ambitious goal of building frequency on the route. It is initially offering five flights every week day and reduced schedule at weekends, with three of the flights operating directly and two via Ottawa. It already operates 56 flights per week from Waterloo to Ottawa having served the route since October 2007 and it plans to replicate this in the Montreal market with flights arranged for the business community.
AFM73_Regional airline vers2_AFM71 18/05/2011 11:57 Page 12
12 | AFM • ISSUE 73 May-June 2011
FOCUS: Regional airlines
REGIONAL AIRLINE REPORT:
EUROPE AND THE US
AFM73_Regional airline vers2_AFM71 18/05/2011 11:57 Page 13
May-June 2011 AFM • ISSUE 73 | 13
FOCUS: Regional airlines Europe’s short-haul, low-cost carriers were a direct offshoot from similar airlines in the US, but regional operators on either side of the Atlantic share few comparisons. Regional flying developed radically differently due to sizeable differences in industry structure, regulation and market environment, and this has had a direct impact on present-day fortunes, as Alex Derber reports.
R
ELATIVE TO GLOBAL TRENDS, EUROPE’S AIRLINE industry has been slow to recover from the global economic crisis, and regional airlines have reflected that. The European Regions Airline Association (ERA), representing about 70 airlines, reported 2.5 per cent passenger growth in 2010 for its members. That compared with a 4.2 per cent increase in passenger traffic across European airports.
Tough times in Europe The ERA called 2010 “a second difficult year for intraEuropean airlines”, as the year’s modest growth was only a slight improvement on a dismal 2009 that saw regional passenger demand fall almost five per cent. Record load factors of 66.2 per cent in 2010 provided some good news, but yields remained depressed and capacity only rose fractionally after falling 3.5 per cent in 2009. Airlines were also hit by volcanic ash cloud disruptions, associated costs in compensating passengers, weather disruptions and air traffic control strikes.
In Northern Europe, 2010 was marked by a protracted tussle between Finnair and Latvia’s Air Baltic over Finncomm Airlines, which provided feeder services for Finnair. As Air Baltic plotted a move into the Finnish market, Finnair managed to impose a temporary block on the sale of Finncomm shares. While Finnair insisted it wanted nothing more than a minority shareholding in the regional carrier, Air Baltic accused it of protectionism. By late 2010, Finnair had agreed to buy 20 per cent of its feeder partner, but further wrangling over the contract has seen completion for that deal slip to Q2, 2011. Air Baltic, meanwhile, pursued other avenues for Finnish expansion, announcing a new hub in the country, at Oulu from where it hoped to serve 15 destinations. Shortly after, it revealed plans for a new start-up in Lithuania to exploit the gap in the market left by the bankruptcy of Star1 in October 2010. Details about the new airline remain hazy, but Air Baltic had said it would use 737 aircraft and offer at least 10 destinations by the end of 2011. However, both Ryanair and Wizz Air moved into Vilnius since that announcement, forcing Air Baltic to give up its routes from the Lithuanian capital. There were also mixed fortunes for carriers in the UK, home to leading European regional Flybe. The Exeter-headquartered airline pushed through a £60m ($98m) initial public offering (IPO) in December 2010, but in the same month lost 16 per cent of its flights to weather-related cancellations, costing it £6m ($10m). The airline also lost out in the aforementioned Finnair-Finncomm deal, before which Finnair had planned to award Flybe several feeder services. One tie-up that did go ahead was the purchase of loss-making Air Southwest by Humberside-based Eastern Airways, giving the latter company a foothold in the regional market in southern England. However, in so doing Eastern assumed responsibility for an ailing carrier that had racked up losses of £5m ($8m) in the 18 months leading up to its sale. Grim news indeed for Eastern, which saw passenger numbers fall by a fifth in 2010. It was comparatively brighter in Southern Europe, where Portuguese carrier SATA Air Acores, operating out of the Azores islands in the Atlantic, secured a €37m ($53m) European Investment Bank loan to buy four Q400 turboprops to replace ageing ATP aircraft. Introduction of the larger aircraft saw it raise capacity by 10 per cent in 2010, though passenger numbers fell back slightly. SATA’s 2010 results are still forthcoming, but the Azores government-owned airline capitalised on public demand for intra-island flights to record small but consistent profits for the previous five years. Of network-affiliated regionals, KLM Cityhopper and Air France’s subsidiary, CityJet, saw passenger numbers rise by seven and 13 per cent respectively. In contrast, Lufthansa Cityline numbers fell, from 6.4 million to 6.3 million, but it is difficult to assess the effect of any of this on operating results as regional flying figures are subsumed within the results of parent airlines.
AFM73_Regional airline vers2_AFM71 18/05/2011 11:58 Page 14
14 | AFM • ISSUE 73 May-June 2011
FOCUS: Regional airlines
“
Skywest consolidated its position at the largest US regional with the purchase of ExpressJet, America’s fourth-largest, in November 2010. Operating as part of Atlantic Southeast, a Skywest subsidiary, ExpressJet helped boost its parent airline’s profits from $131m in 2009 to $146m in 2010. A major factor in the deal for ExpressJet was that SkyWest was able to lock down a 10-year capacity purchase deal with Continental, covering 205 of ExpressJet’s ERJ145 aircraft. Such agreements effectively see US majors contract regional flying to airline groups for a fixed sum. Such agreements, often long-term, form the backbone of the US regional industry, but while they provide stability and revenue certainty for many operators, they can also be disastrous for some.
On the legislative front, European plans to revise slot allocation rules, in order to ease congestion, have taken a battering from airline trade bodies, including the ERA, which argues that present rules are adequate. “The problem lies not in the allocation of available capacity: it lies in the lack of capacity at congested airports. The need to introduce any form of slot restriction at an airport is an indication of failure on the part of governments,” it stated in a position paper. Indeed, slot restrictions at major European hubs would severely damage regional airlines, which are already being squeezed out in favour of carriers operating larger-capacity aircraft. Regional flights to Europe’s busiest airports have dropped by a third in the last five years. Reasons for this include rising runway charges that penalise smaller aircraft on a cost-per-seat basis, and the desire of airport operators to allocate scarce runway space to airlines able to push more passengers-per-movement through terminal shops and restaurants. Responding to the problem of congested hubs, manufacturers are designing larger regional aircraft. Airlines are responding and average regional aircraft capacity in Europe has risen in the last decade from 60 to 70 seats. Bombardier’s CSeries, which will challenge small Boeing and Airbus narrowbodies, is the best example of this trend, but the Canadian OEM’s CRJ range has also grown steadily, going from 50- to 100-seat variants. ATR, based in France, is flirting with the idea of producing a 90-seat version of its ATR72 turboprop, though it has ruled out any decision on this until 2012. Bombardier, meanwhile, has reported strong interest from airlines in a 90-seat stretch of its turboprop, dubbed the Q400X, which could be introduced as early as 2013. Recent figures show that Europe’s fleet of 955 regional aircraft is evenly split between turbofans and turboprops, with the latter dominating in central and southern Europe, the former in northern and eastern Europe. The fleet as a whole remained steady in 2009 and 2010, after falling from 1,075 aircraft in 2008.
US: fixed fees In the last decade, regional airlines in the US have doubled the amount of passengers carried, up to 160 million in 2009. This has been achieved despite a fall in the number of operators. Consolidation, prudent capacity management and inevitable failures have improved industry efficiency, resulting in load factors up from 57 per cent in 2000 to 75 per cent 10 years later. In 2009, the largest three airline groups – Skywest, Republic and Pinnacle – accounted for almost half of all of the country’s regional traffic.
Mesa Air Group is a case in point. At one time, the group operated 150 aircraft for mainline partners, but the financial crisis caused many of these to restructure their agreements as they sought to slash costs. In 2008, Delta terminated a contract for Delta Connection flights operated by Mesa’s subsidiary, Freedom Airlines, citing non-compliance with operational benchmarks. Two years of costly legal dispute followed to no avail for Mesa, which shut down the operation in August 2010. By that time, United Airlines had also axed Mesa services, covering the operation of 26 CRJ200s and 10 Dash-8 turboprops. Mesa entered Chapter 11 bankruptcy protection in early 2010 and was subsequently forced to cancel an order for 10 CRJ700s. When the company exited Chapter 11 in March 2011 it had shed 100 aircraft from its fleet. Such experiences have prompted other regional airline groups to push their own, at-risk services. Mesa has its go! subsidiary operating scheduled flights to Hawaii, and Republic Holdings, America’s second largest regional airline group, owns Frontier Airlines. In Q1, 2011 Republic saw sales at Frontier rise 13 per cent, year-on-year, while capacity purchase turnover remained flat.
Fleet differences In contrast to the European fleet, American regional carriers rely heavily on small turbofan aircraft. Despite their poor economics and age, a third of the US regional fleet is comprised of 50-seat CRJ100/200 types. A huge number have also been mothballed due to rising fuel costs, but a fall in lease rates and values, combined with squeezed financing for new aircraft, has meant that these aircraft remain the backbone of regional flying in North America. As a result, average regional aircraft size in the US is 55 seats, whereas in Europe it has crept past 70 seats, and was above 60 a decade ago. Yet European carriers struggle to fill their larger aircraft. Average seat occupancy across US regionals was 75 per cent in 2010, some 10 points higher than in Europe where the regional industry has rarely, if ever, posted a combined load factor of 70 per cent – a benchmark reached in the US in 2005. European airlines would, of course, argue that capacity purchase contracts and under-developed forms of alternative transport grant the US industry a marked structural advantage. They might also point to losses incurred by mainline operators on capacity purchase deals that have profited the regional partner. The US is also following the European trend towards larger aircraft, though it still has ground to make. Advocates of the US system, on the other hand, would argue that previously unheard of cost pressures on network carriers have forced them to review the cosy capacity purchase deals of the past, and to now insist on only the most efficient and operationally slick regional operators.
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AFM73_Engine leasing_AFM73 18/05/2011 10:30 Page 16
16 | AFM • ISSUE 73 May-June 2011
FLEET OPERATIONS: Engine leasing The niche business of engine leasing used to be somewhat counter-cyclical, as lessors exploited hard times to buy assets and drive sale and leaseback deals. However, more leasing companies have entered the market and many airlines were either unwilling or unable to offload spare engines in the recent recession. Alex Derber looks at the consequences.
Spare engines at GA Telesis
ENGINE LEASING UPDATE R
ECESSIONS USUALLY PROVE TO BE CATALYSTS FOR deal-flow in the spare engine market, as airlines seek to bolster balance sheets by selling and renting back powerplants. That is exactly what occurred during the first downturn of this century and many lessors were expecting to add to their asset base in the run-up to the second. That the latest drop in the cycle coincided with the worst financial meltdown in living memory would have only heightened their appetite.
A return to profit for many airlines in 2010 also saw tentative capacity increases, increasing the need for spare engines. Bobby Janagan, general manager of the lessor, Rolls-Royce and Partners Finance (RRPF), says: “Sale-leaseback is picking up. It’s not up to 2007/8 levels because people are taking new deliveries and there’s always a time-lag between the economic recession and the aviation recession so we are only now coming out of that bottom line.”
However, far fewer engines than expected were offered for sale and leaseback deals. Low interest rates and fuel prices, allied to the fact that many airlines had already off-loaded spare engines in the previous recession, meant there was far less incentive for operators to sell, and far less liquidity pressure on airlines than there had been in the past.
Rates and residuals
“When we hit this particular recession, there were some differences in how airlines handled their on-balance-sheet engine fleets. Airlines horded cash because they were not clear how and if banks would lend to them. There was never a sudden influx of engine sale-leaseback opportunities, but rather a steady flow that did not exhibit any market pressure. Airlines were also using different means to raise cash like signing up to credit card and receivables deals,” says Abdol Moabery, CEO of the aircraft and engine lessor, GA Telesis (GAT). Since the recovery began, the situation has improved. British component support specialist, AJ Walter Aviation (AJW), moved into engine leasing in early 2011. Its director of aircraft engine services, Steve Williams, describes “a growing trend to move engines off the balance sheets”, particularly among start-up airlines which traditionally outsource non-core activities. Assisting this trend, he says, has been a rise in funding opportunities that allow lessors to pursue sale and leaseback deals.
Tight availability of some engine lines during the downturn meant that their lease rates held up better than expected. Janagan reports a disparity between widebody and narrowbody engine trends, with widebody engines continuing to command pre-crisis rents throughout the downturn due to a shortage of supply, while the opposite held true for narrowbody powerplants. “In the narrowbody market there were a lot of speculators, both independents and airlines that bought engines, so there was overcapacity in that market, and that forced rental factors down in 2009/10,” he says. Despite the setback, Janagan says that narrowbody engine lease rates have now almost completely recovered. This is even true of older engine types, according to Williams at AJW. “There is a shortage of good quality lease engines in the market and companies are reluctant to invest in the overhaul of lease engines such as the CFM56-3 because they are not sure of the future demand profile. This then places an additional premium on the engines that are currently in circulation,” he says. Residual values for older engines have also recovered, despite the approaching introduction of new technologies such as Pratt & Whitney’s geared turbofan and a new variant of the bestselling CFM56.
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AFM73_Engine leasing_AFM73 18/05/2011 10:31 Page 18
18 | AFM • ISSUE 73 May-June 2011
FLEET OPERATIONS: Engine leasing
The GA Telesis facility in Fort Lauderdale, Florida
“ enginesparked
torn down, are required to support the spare fleet so values are likely to hold. Therefore we don’t see a major deterioration in asset prices because the A320neo is coming. Until aircraft get
and
– Bobby Janagan, general manager, RRPF
”
According to Moabery, lease factors – the cost of rent as a proportion of the engine value – remain under one per cent for newer engines, and between one and two per cent for older types. “Residual values for narrowbody engines have endured overall,” he comments. “While there were some distressed situations in 2008 and 2009 that led to low-priced engine availability, almost all have recovered, including the CFM56-3 and JT8D-200 series, which were hit the hardest in that period.” There may also be little near-term danger of new equipment damaging residuals, as Janagan points out: “Until aircraft get parked and torn down, spare engines are required to support the fleet so values are likely to hold. Therefore we don’t see a major deterioration in asset prices because the A320neo is coming.”
The leasing market Traditionally, engine leasing has been dominated by three large independent players: Engine Lease Finance, GA Telesis, and Willis Lease Finance plus manufacturer-affiliated lessors such as RRPF and GECAS Engine Leasing. In recent years, there have been several smaller entrants to the market, including AJW, Aercap
GA Telesis engineers prepare an engine to be leased out
(via its Aeroturbine subsidiary), Aersale and Macquarie Aviation Capital. One of the ‘big three’ independents, Florida-based GA Telesis has a portfolio of roughly 65 engines, including: CFM56-3C1; CFM56-5A1/F; CFM56-5B; CFM56-5C3/F; CF34-3A1; CF34-3B1; CF6-80C2B1F; CF6-80C2A2; CF6-80C2A5; CF6-80C2B6F; PW4056; PW4077; JT8D-219; and V2500. GAT, which also leases aircraft and provides component support, offers short- and long-term leases ranging from 60 days to 60 months. Moabery says that the company currently has eight engines off lease. A perceived problem for independent lessors in the past has been total care maintenance. On selling engines to airlines – often at a heavy discount – OEMs would seek to tie their customers into allinclusive repair contracts. However, this made it difficult for an airline to sell and lease back an engine because the lessor would also demand a maintenance reserve to compensate for the hours and cycles burned off an engine, effectively forcing the airline to pay twice.
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AFM73_Engine leasing_AFM73 18/05/2011 10:32 Page 20
20 | AFM • ISSUE 73 May-June 2011
FLEET OPERATIONS: Engine leasing Since launching its engine leasing business in January 2011, AJ Walter Aviation has built its portfolio to 20 powerplants, all CFM56 variants. Of these, half are on conventional leases, while half are running off ‘green time’. Though the company is concentrating on the CFM56 in the short-term, it plans to add CF680, V2500 and PW4000 engines in the future. To support its new leasing business, AJW announced in February 2011 that it was opening an engine services division in Wales. The company’s CEO, Christopher Whiteside, said at the time that he anticipated $50m worth of business within the division’s first 12 months.
Competition Despite the small influx of players such as AJW, engine leasing remains a niche market, requiring expert financial, technical and risk analysis. As such, it is unlikely to ever attract the glut of private equity and institutional-capital backed vehicles that entered the aircraft leasing market in the mid-2000s.
Unsurprisingly, the ubiquitous CFM56 provides one of the deepest markets for lessors, who report that even older variants of the type are holding their values well.
GAT’s Moabery describes some of the pitfalls awaiting speculative investors: “Securing an engine on lease is very different to doing so with an aircraft. If a transaction is not structured properly an investor can lose control or ownership of their engine in certain jurisdictions. There are also issues like performance management, foreign object damage and PMA parts.”
Despite the rise of total care, however, Moabery appears unconcerned: With so many emerging markets, it is likely that Parts manufactured by parties other than the engine younger airlines do not want to deal with engine fleet manufacturer (PMA parts) continue to be a divisive issue: PMA management, so it can make sense to hand that over to an OEM suppliers see lessor acceptance as a vital step towards industry or third party. On a dollar for dollar basis, an airline is definitely acceptance, but lessors normally insist that no PMA parts (or DER better off not going with a total care programme as it limits fleet repairs) are installed on their assets in case they damage the flexibility and the maintenance reserves are built in, and paid over residual value. the long-term. I don’t think airlines look at total care as an alternative to leasing and paying maintenance reserves. In fact, “All of our leases say there shouldn’t be any PMA parts. As an we have leases with maintenance reserves with airlines under operating lessor we put greater focus on our residual value and total care programmes.” that is factored into the lease rental. If we allow people to put in PMA parts then the rental has to go up to offset the reduction in With a portfolio of 350 engines, RRPF is among the largest residual value,” says Janagan at RRPF. engine lessors in the world. A 50:50 joint venture between RollsRoyce and GATX Capital, RRPF sources its engines from the open Another bone of contention is withholding tax, presently applied market and directly from Rolls-Royce the manufacturer “at full to engine leases but not to aircraft. Janagan outlines their list price”, according to Janagan. One-third of the company’s financial impact: “As more people are starting to lease engines portfolio supports Rolls-Royce’s total care business, which it’s becoming a major issue and cost to the airline. In some guarantees spare engine support, while the rest are leased countries it’s five per cent and in some countries it goes to 20 per directly to third parties. cent. That’s quite a lot to pay each month on top of rentals. That split may alter as airlines struggle to raise finance for new “If aircraft are treated as an exempt category for withholding tax engines from banks that are more willing to lend to a stable purposes, why not treat the next most expensive asset class – operating lessor than an operator exposed to the myriad spare engines – the same?” pressures and crises of the air transport industry. “Rolls-Royce used to bundle together spare engine services with engine sales. Now we are trying to do a separate lease so the engine can be sold to whomever,” says Janagan. Unlike GECAS Engine Leasing, which stocks non-GE lines, RRPF only offers Rolls-Royce and IAE engines. “Engines need a lot of technical understanding in terms of pricing, maintenance and risk – we don’t want to speculate by being on other engine types where we don’t have that much knowledge,” explains Janagan. In other ways, though, Janagan notes the similarities between RRPF and other types of lessor: “We’re all doing one job, which is financing assets for airlines, and the market is getting bigger because the price of engines is going up and banks are reluctant to lend directly to airlines. It’s about who offers the best package, which is a combination of the return conditions, maintenance requirements and the cost of the rent.”
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AFM73_Airline alliances_AFM73 18/05/2011 15:44 Page 22
22 | AFM • ISSUE 73 May-June 2011
FLEET OPERATIONS: Airline alliances New codeshare agreements are introduced almost daily and they have become part of the fabric of international airline operations. Yet, with so many airlines entering this type of agreement, the flaws are becoming evermore apparent. Mary-Anne Baldwin examines the pros and pitfalls of these increasingly popular collaborations.
AIRLINE ALLIANCES:
CAN AIRLINES GO IT ALONE? A
N INVESTIGATION BY THE EUROPEAN COMMISSION into two Star Alliance codeshare relationships has raised concerns not only over competition but of the true value of such alliances. Who really benefits from codeshares and is it even possible for airlines to go it alone nowadays? The European regulators are examining flight agreements between Lufthansa and Turkish Airlines, and Brussels Airlines and TAP Portugal, namely the three trunk routes of FrankfurtIstanbul, Munich-Istanbul and Brussels-Lisbon. The body is concerned that the operators ought to be competing against each other on these routes. “This form of free-flow, parallel, hubto-hub codeshare agreement may distort competition leading to higher prices and less service quality for customers,” the commission said. The well-polished argument is that codeshares offer a better service to passengers, streamlining long-haul journeys and offering a wider choice of routes. But who really prospers from these arrangements and would different collaborations better suit the customer? In a codeshare, airlines benefit from selling more flights under the guise of it having more routes – it will trade ‘off the back’ of another airline’s network, pretending – to the unwise customer– that it has a greater scope. Although rules demand that ticket sellers must disclose which airline operates the flight, in the confusion of their travel plans, unseasoned travellers often overlook this important detail until they reach the airport where they find they are flying with another airline, will receive a different service, and perhaps a poorer level of safety. Robert Crandall, who was chairman and CEO of American Airlines when, in 1996, it applied for anti-trust immunity for an alliance with BA, told the Telegraph: “Any objective observer would have to look very hard to find a way in which alliances have benefited consumers”.
Global airline alliances Horst Findeisen, VP of business development at Star Alliance told Routes Online that global airline alliances offer: “A winwin situation for airlines and customers, as they [customers] have a one-stop shopping experience to connect to over 1,000 destinations.” However, in listing the benefit to airlines, his response was notably longer: “From a network perspective, airlines are connected to a network that spans the globe, so they can sell destinations that they can’t reach themselves. It’s not really feasible to launch [a] service to a secondary airport half way around the world, but you can build a connection there in an alliance. So, economically, it’s a valuable proposition in an airline’s network portfolio. “Flying from your home base into an alliance partner’s hub creates hub-to-hub routes, which network planners love because flights tend to be much fuller, with higher yields and more traffic flow. Other major benefits include tapping into an enormous frequent flyer base, which is good for attracting premium traffic. Carriers can also benefit from inclusion in broader corporate alliance agreements,” he continued.
AFM73_Airline alliances_AFM73 18/05/2011 10:19 Page 23
May-June 2011 AFM • ISSUE 73 | 23
FLEET OPERATIONS: Airline alliances Jaan Albrecht, CEO of Star Alliance hands a welcome gift to Theodore Vassilakis, president of Aegean
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24 | AFM • ISSUE 73 May-June 2011
…
FLEET OPERATIONS: Airline alliances
alliances make check-ins and connections easier and quicker for passengers travelling on connecting flights. Passengers purchase just one ticket and check their bags and clear security just once Theoretically,
…
collectively they will build a growth engine from which all stakeholders will benefit.” He adds: “Some airports are also working very well with their hub carrier. Munich, for example, has embraced the concept of Lufthansa in Star Alliance and it has a new dedicated terminal designed to co-locate Star carriers under one roof, so that they are closely connected and within short walking distances. We are seeing a similar dynamic in Tokyo-Narita, with a dedicated Star terminal… Unfortunately, airlines and airports aren’t working closely in all cases.” And here is the crunch – as alliances gather more clout, other organisations, including airlines, aviation bodies and airports, will be expected to tow the alliances’ lines. Yet it is only with co-operation from airports that alliances can promote their ideal of ‘seamless’ travel with honesty. “The word ‘seamless’ has been used far too loosely in alliances,” voices Golden. Alliances may be seamless in concept, even seamless in their business operations, but until they become so to the traveler, they are little more than a marketing tool that brings strength in numbers. Star Alliance’s answer for airlines and passengers to “move under one roof” (by which it means airports should create a hub from which all of its alliance member airlines operate and interconnect) is a nice ideal, but it is likely to cost the airport inconvenience and a hefty bill – indeed some deem it too unreasonable a request.
SkyTeam flight crew celebrate the alliance’s tenth anniversary
Robert Golden, director of sales, US and Canada at Malev Hungarian Airlines believes: “The benefit of alliances really is focused on corporate and global business.” We can clearly see the benefit of alliances to airlines, but says Golden, the pros do extend to passengers – though perhaps only the “executive air warrior”, or business-class frequent flyer whom airlines are so eager to have onboard. However, Golden believes it is not connectivity that most benefits the hardened traveler, rather frequent flyer programmes. Each of the three airline alliances offer their customers the ability to collect frequent flyer points on any flight operated by airlines under their umbrella. Business flyers are further rewarded with access to any of the member airlines’ airport lounges. This is great if you are a seasoned traveler, but what about everyone else – such as the typical family member who flies perhaps once or twice a year? Theoretically, alliances make check-ins and connections easier and quicker for passengers travelling on connecting flights. Passengers purchase just one ticket and check their bags and clear security just once however, this service is not restricted to alliances or code-sharing but are aspects of interlining, something the US did many years ago and something that IATA brought in as standard. It seems little can be said about the benefit to the ‘average flyer’. Indeed, the converse argument is that, in relation to codeshares, it is the average flyers who is most likely to be confused and inconvenienced by cross-pollinated operations. “But I booked with BA,” the passenger might say. “Now I’m travelling part of the journey with American. I don’t like American and I have to pay for food!” Is it fair to assess that airlines are out for themselves? Findeisen believes airports benefit too: “If there is a good working relationship between the airport and the alliance home airline,
Alliances also have significant influence over the allocation of slots. Airports are swayed to favour member airlines to the detriment of smaller or newer airlines. In this respect, alliances and their members have the control. Able to unduly influence airports, and in theory (if not in practice) collude to set prices and standards, alliances work much like cartels. With most of the world’s large airlines connected to one of these alliances, have regulators failed to prevent oligopoly and the inevitable temptation that brings – driving smaller businesses to ruin and then raising prices? Another type of alliance is the smaller pairing of airlines that are granted immunity to co-ordinate fares, sales, flight schedules, and frequent flyer programmes. Essentially a loop-hole in anticompetition laws, immunity is being granted to many airlines that wish to team-up with the premise that they offer an advantage to customers. Officials have granted immunity in many cases however, they now doubt airlines’ claims and the European Commission has since investigated many alliances. Perhaps realising that it has been lax, it is thought the commission will introduce fines of up to 10 per cent of an airline’s revenue if it cannot prove the benefits customers.
Competition “Alliances have great benefits especially for the smaller carriers that cannot leverage business on their own accord,” says Golden. For these carriers, an alliance offers the ability for it to trade to a wide number of travellers and be a part of much wider operations. An example of this, says Findeisen, is ANA, which flourished from being a domestic airline to being globally recognised under Star Alliance. However, Juergen Barthel, former head of marketing at Erfurt Airport notes that many competing airlines, in particular the smaller ones, suffer as a result of these coalitions. “What chance does a small airline have… Look at oneworld, SkyTeam and Star [Alliance]… Where do they overlap? Where are commercially interesting routes that are not dominated by the one, or other, or two, or all three of them?”
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26 | AFM • ISSUE 73 May-June 2011
FLEET OPERATIONS: Airline alliances
Oneworld members’ livery in line-up
He adds that smaller or new entrant airlines have little chance to develop routes in order that they can prosper and become competitive on a large scale. “Air Berlin was only able to become a major player as it grew in charter [operations]. Only with the acquisition of DBA [the German domestic airline, bought outright by Air Berlin in 2006] and a strategic expansion in scheduled flying, [did they] suddenly become a competitor to Lufthansa.”
Bruce Ashby, CEO of oneworld
Perhaps the answer is not to beat, but to join them. Counter to the argument that alliances are detrimental to minor carriers is the small Romanian airline, TAROM. By joining SkyTeam it has achieved a global network. The benefit to the alliance of adding smaller airlines is that it can deliver routes to uncovered markets. What each alliance wants is a network covering the entire globe – essentially global dominance, and it is a battle to get there first. Markets still relatively untouched by alliances include India (with the exception of Kingfisher entering Star Alliance), Russia (with exception of oneworld’s S7) and the Middle East. So far, Saudi Arabian Airlines is the only United Arab Emirates (UAE) carrier to have joined an alliance, this being SkyTeam. Saudi does bring SkyTeam enviable routes to the UAE however, it is not one of ‘big three’ UAE airlines – Emirates, Etihad, and Qatar. None of these has chosen to join an alliance, believing instead that they are unusually well-positioned to service the entire globe from their central geographic point. With such an advantage, these airlines desire their own global network, not one patch-worked from other airlines.
Mergers: the other option Alliances were initially focused on code-sharing; now they encompass co-locating at airports, sharing IT systems and other technology and joint investment. They have become so interwoven, and so beneficial to airlines, that one could argue they bypass the need for mergers. By far the more cumbersome option, mergers can take years to agree, they are often prohibitively expensive and are restricted by law. For example, US law limits foreign ownership of an airline to 25 per cent. Alliances can now provide the same benefits within existing regulatory framework – but that then begs the question; if alliances are mergers in all but name, why do they escape scrutiny? Yet it seems even with the dominance of alliances, mergers will continue – though there may not be many big ones left. According to US Airways’ CEO, Doug Parker, there is only one big airline merger left, and that will include US Airways. In a press event in early April, Parker hinted that should United, Delta or American be interested, US might quite like to merge with them. Such a statement is an open invitation, however Parker was quick to assure the press that should it not get any interest, US was happy to go it alone.
US has already missed out on a number of collaborations and instead watched from the sidelines as Delta bought Northwest, United merged with Continental, and most recently, Southwest bought AirTran. It appears that coalitions, whichever form they make take, are the way forward – and US is eager not to be left out. US already benefits from being a member of Star Alliance, so it must see additional value propositions in a merger – particularly as a merger with any party seems fraught with complexity. Both United and Delta are awkward exes of US. United toyed with US in a game of ‘will they, won’t they’ for three years but ditched the deal at the last minute and chose Continental instead. Similarly, US was set to takeover Delta as it struggled with insolvency however, Delta opted for Northwest. Another airline slow to join the fold is Virgin – and it has suffered for its independence. CEO of Virgin Group, Sir Richard Branson, was highly vocal about the impact IAG would have on his airline, claiming the merger between its rival BA and Iberia and their transatlantic pact with American Airlines, would create hugely unfair competition. His protests were ignored and it seems Virgin has little option but to team-up, or loose market share. In February, AFM reported that Air France-KLM and Delta were attempting to woo a reluctant Virgin Airlines into SkyTeam. Entering an alliance would of course make Virgin more competitive but it appears that SkyTeam is not the only option. Although Lufthansa has not stated formal interest, it is likely to want to purchase shares in Virgin so that it can bring it to the rival consortium, Star Alliance. But Branson finds alliances so unpalatable that he is considering selling his stake in the airline instead. Singapore Airlines, which owns 49 per cent in the carrier, has said it will sell its stake if it can broker the right deal. If not, Branson may sell some of his 51 per cent majority stake, which is thought to be worth $800-$1.5bn. Singapore is unlikely to sell its stake to Air France or Lufthansa as either would benefit from Virgin’s European slots, making them stronger competition. Of course, the airline has said it is open to offers ‘at the right price’, and it may be willing to sell to either airline at a premium. Another candidate is Etihad, which already expressed an interest in buying Virgin, and according to reports, it has called in Bank of America Merrill Lynch and Deutsche Bank to advise on the possible deal. Even if a global alliance is not to Branson’s liking, this much is clear – alliances of some form are not just fashionable, they are essential to survival. As a result, the market is getting smaller, more competitive, and harder to enter. Whichever way you coat it – with the title of alliances, codeshares or mergers – it is all part of the trend to consolidate.
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AFM73_Cargo Conversions_AFM73 18/05/2011 10:08 Page 28
28 | AFM • ISSUE 73 May-June 2011
FLEET OPERATIONS: Cargo conversions For owners of commercial jets, deciding to convert passenger aircraft to freighters is an important economic move that involves several key variables. These can make a ‘yes’ decision compelling – or ‘no’ the only sensible option. Chris Kjelgaard reports.
CARGO CONVERSION: CHOOSING THE F RIGHT TIME
REIGHTER CONVERSION REPRESENTS ONE OF THE most interesting and challenging economic decisions for any owner of a commercial jet, whether the aircraft is a narrowbody or a widebody.
1 Cycle Per Day
Cycle Accumulation Frequency (annual)
2 Cycle Per Day
Cycle Accumulation Frequency (annual)
Aircraft With (Cycles)
Years to reach 50k at 5 day rate
Years to reach 50k at 6 day rate
Aircraft With (Cycles)
Years to reach 50k at 5 day rate
Years to reach 50k at 6 day rate
16,000 18,000 20,000 22,000 24,000 26,000 28,000 30,000 32,000 34,000 36,000
131 123 115 108 100 92 85 77 69 62 54
109 103 96 90 83 77 71 64 58 51 45
16,000 18,000 20,000 22,000 24,000 26,000 28,000 30,000 32,000 34,000 36,000
65 62 58 54 50 46 42 38 35 31 27
54 51 48 45 42 38 35 32 29 26 22
3 Cycle Per Day
Cycle Accumulation Frequency (annual)
Aircraft With (Cycles)
Years to reach 50k at 5 day rate
16,000 18,000 20,000 22,000 24,000 26,000 28,000 30,000 32,000 34,000 36,000
44 41 38 36 33 31 28 26 23 21 18
Years to reach 50k at 6 day rate 36 34 32 30 28 26 24 21 19 17 15
4 Cycle Per Day
Cycle Accumulation Frequency (annual)
Aircraft With (Cycles)
Years to reach 50k at 5 day rate
Years to reach 50k at 6 day rate
16,000 18,000 20,000 22,000 24,000 26,000 28,000 30,000 32,000 34,000 36,000
33 31 29 27 25 23 21 19 17 15 13
27 26 24 22 21 19 18 16 14 13 11
Factors such as the state of the cargo market, the availability of aircraft for conversion, and what makes an aircraft a suitable candidate (i.e. its age and operating history) are all highly important. These must be considered with aircraft residual values, the cost of conversion, the availability of financing, and even the state of the spare-parts market. Furthermore, when an operator does choose to convert a freighter, it must decide whether to own the aircraft or to lease it. For instance, when it comes to choosing between buying and converting an existing widebody aircraft versus leasing a converted freighter from a third-party: “One of the countervailing issues is the lack of ability to get financing,” notes Robert Agnew, president and CEO of Morten Beyer & Agnew. “There is not a lot of credit around. You have to buy the aircraft, sit on it for 120 days [while it is being converted] – more if it is a widebody – and all that while you have committed capital and you have to pay for the conversion. It’s a costly process.” A basic economic equation governs whether and when a passenger aircraft is suitable for freighter conversion. It must be old enough – or have accumulated enough flight cycles – for the aircraft’s residual value to have declined to the point at which the acquisition price, plus the cost of any maintenance checks, plus the cost of conversion, leaves the owner with an aircraft that it can either sell for a profit, or lease at a rental that will achieve a suitable return on the owner’s investment over a given time.
The right time for conversion In most cases, that ‘given time’ is 10 to 15 years for a narrowbody or 15 to 20 years for a widebody. Commonly accepted wisdom is that, in order to be suitable for a conversion, a narrowbody aircraft needs to remain in operation for 10 years or more after being converted, says Usman Ahmed, senior analyst with IBA Group. For widebody aircraft, the expectation is that the converted aircraft will remain in service much longer than 10 years, because the widebody typically will not have accumulated as many flight cycles as a narrowbody jet before conversion, so its useful remaining life will be longer. Calculations on conversion candidacy often use the 50,000-cycle figure as a rough estimate for an aircraft’s overall economic life, as structural safety rules on various ageing-aircraft use this mark as a starting point for much stricter inspection regimes that quickly eat into an aircraft’s economic viability.
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May-June 2011 AFM • ISSUE 73 | 29
FLEET OPERATIONS: Cargo conversions In many cases, residual values and cycle accumulation will create a sweet spot for freighter-conversion suitability when an aircraft has been in service from 15 to 20 years since new. The suitableage range can even be as much as 22 or 23 years, depending on an aircraft’s flight-cycle accumulation, according to Lars Becker, CEO of Airbus Freighter Conversions. In the 15- to 20-year age range, many narrowbodies have completed 30,000 to 35,000 cycles and many widebodies far fewer, so they still have 15,000 cycles or more to go until they reach the critical 50,000cycle mark. At the low utilisation rates at which cargo airlines typically operate – particularly cargo integrators such as FedEx or UPS – a remaining useful life of 15,000 cycles can keep an aircraft in operation for well over 20 years. The life of a potential freighter can be so long that the reasons for it becoming uneconomic to operate are not dramaticly increased maintenance costs associated with ageing-aircraft inspections, but increasing fuel prices and stricter noise legislation. Historically, notes Agnew, the ‘magic number’ at which the conversion of a widebody aircraft to a freighter used to make economic sense was when the aircraft was 20- to 25-years-old. “[Now] it seems to be a moving target – and it’s moving earlier,” he says. This is due to factors such as fuel price – in the heyday of the 747-400, jet fuel cost a small fraction of what it does now and operators now want twin-engine widebodies for most longhaul routes – and to the growth of export credit financing to become a primary funding mechanism, which has made new passenger aircraft widely available to smaller carriers. Such airlines have become less interested in 15- to 20-year-old
widebodies and for a time the residual values of large widebodies fell sharply. Until recently, that is. Because of a strong resurgence in the cargo market following the crash of the industry, 747-400s have become treasured candidates for freighter conversions. “All of a sudden, [values] bounced back to a significant percentage of their old values,” says Agnew. “We saw a 20 per cent value jump as people went back for 747s to convert to freighters.” All things being equal, many 15- to 20-year-old passenger aircraft will still be able to begin second lives as cargo aircraft and make money for their owners and operators for long enough to justify the costs of conversion. But not all things are equal. For instance, notes Owen Geach, commercial director of IBA Group, various developing countries have adopted regulations that prevent imports of aircraft older than a certain age. India usually bans imports of aircraft more than 15-years-old, while China bans aircraft older than 20-years-old and Nigeria older than 22years-old. Another problem specific to and increasingly affecting the 757, is that carriers and lessors have rushed to have their aircraft retrofitted with blended winglets. The 757 now seems to have been ahead of its time. Boeing stopped producing the aircraft not long before it took on a new lease of life with major airlines as a transatlantic jet. The 757 remains in widespread passenger service and the blended winglet adds enough performance to make most passenger carriers want to have their 757 fleets modified. As a result, more than 300 757s have now been fitted with blended winglets.
How Far Are You Going? Let Us Carry Your Load As the world leader in passenger to freighter conversions, it’s our job to make the B767-300 the most versatile converted freighter in the world. With superior payloads, longer ranges and six configuration options, our planes promise superior capacity, performance and flexibility. We offer the most costefficient purchase option for any cargo aircraft, significantly extending its life – making the difference to your business.
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Robert Agnew, President and CEO, Morton Beyer & Agnew
Owen Geach, commercial director of IBA Group
AFM73_Cargo Conversions_AFM73 18/05/2011 12:16 Page 30
30 | AFM • ISSUE 73 May-June 2011
FLEET OPERATIONS: Cargo conversions Summary of the conversion costs and down time Models 727 PF
Aquisition Cost $0.3m - $0.75m $0.3m - $0.75m $0.3m - $0.75m $0.3m - $0.75m $0.3m - $0.75m $0.3m - $0.75m
TU-204-100
Conversion Providers Aeronautical Engineers Avborne Heavy Maintenance Hamilton Aviation Aeronautical Engineers Stambaugh Aviation and Universal Cargo Pemco World Air Services Lockheed Individual Operators Tupolev
Resale Value $1.5m - $2m $1.5m - $2m $1.5m - $2m $1.5m - $2m $1.5m - $2m
$0.3m - $0.75m
Conversion Cost (US$) $1.2m (2007) $1.090m (2002) $1.2m (2002) $1.7m (2010) $1.7m (2010) unknown unknown unknown Factory Built
Narrowbody Models 737-300 737-400 MD-80 757-200 A320 A321-100
Conversion Providers AEI, IAI Bedek, Pemco AEI, IAI Bedek, Pemco Aeronautical Engineers Boeing, Pemco, Precision conversions Airbus Airbus
Aquisition Cost $2m - $5m $3.5m - $6m $0.5m - $3.75m $6m - $10m (1986-1992) $6m - $13m (1988-1995) $13m - $19m (1994-2001)
Conversion Cost (US$) $2.3m - $2.5m (2010) $2.9m - $3.2m (2010) $2.2m (2010) $4.9m (2010) $4.1m (2010) $4.5m (2010)
Resale Value $5.9 - $8m $8.5m - $9.9m $2m - $4.5m $14m - $18m $13m - $20m $20m - $26m
Widebody Models A310-300
Conversion Providers EADS
Aquisition Cost $4.5m - $10m
Conversion Cost (US$) $8.5 - $9m (2011)
A300-600 767-300ER 777-200ER 747-400
EADS, B/E Aerospace IAI Bedek, ST Aerospace Boeing Boeing, IAI Bedek
$6.8m - $18.8m (1988-2002) $12.5 - $22m (1990-1998) $50m - $69m (1997-2002) $18m - $27m (1989-1995)
$9.5m (2011) $10m - $13m $35m $25m - $30m
Resale Value $9 - $11.5m (1985 - 1992) $18.5m + $27m - $38m N/A $47m - $57m
737-200 DC-9-30 L-100-20/30
Brian McCarthy, VP marketing and sales, Precision Conversions
However, says Brian McCarthy, VP of marketing and sales for Precision Conversions:
suitable for conversion – ‘feedstock’, as they are collectively known – will never become candidates.
“The alarming part for the afterlife of the airplane is that, right now, you cannot convert a winglet-modified aircraft.” Precision Conversions holds a 757-conversion supplemental type certificate (STC) and is currently converting its 30th 757 to freighter configuration. But through Aviation Partners, Boeing controls all the engineering data on the 757’s blended winglet and to date has not made it available to any of the three 757 freighterconversion STC holders so they can perform the analysis necessary to demonstrate that their STCs are compatible with the major structural modification that the installation of blended winglets represents.
“Another trigger to sell a passenger aircraft” for freighter conversion is if its passenger cabin requires a major reconfiguration or refurbishment, says Wolfgang Schmid, EADS EFW’s VP of sales, marketing and customer support. This is a job that can cost $12m or more for a widebody, he says. If the operator decides the aircraft is not worth such a major investment, a clear alternative is to convert it to a freighter.
“I would be quite concerned if I were an owner,” says McCarthy. “Precision Conversions is working on a solution, but [the winglet issue] is somewhat alarming for the value of the airplane. Owners should pay special attention to that.” If they wait too long to convert their 757s to freighters and in the meantime have blended winglets installed, “residual values will collapse immediately to scrap.” “When certain 757s and 737 Classics get to the right age for freighter conversions, the owner also has the option to part them out,” notes Geach. This is particularly true for owners wishing to realise a prompt return on their assets. IBA Group estimates that, in the current market, for every two owners wanting to convert their 15- to 20-year-old 737-300s or other aircraft to freighters, 10 are choosing to tear their aircraft down to release the value inherent in engines and aircraft parts. As a result, many aircraft
It’s all in the timing For freighter conversion to make sense, the amount of available feedstock – the supply side of the equation – must align with customer demand. The process must also take into account a temporal offset that depends on the date of the conversion slot booked by the customer and the duration of the conversion process, which can vary from four to seven months depending on the lead time for parts and whether the aircraft being converted is a narrowbody or a widebody. McCarthy says Precision Conversions has now seen at least two cycles of mismatch between supply and demand, during which plenty of customers want freighters but the feedstock is not available for conversion. Then the scales tip to having too many aircraft available but few customers who want them. Even when the stars do align, institutional owners of converted widebody freighters still can face an uphill battle in competing against the economics of longer-lived new freighters if they do not buy or convert their aircraft at the right time, says Dan da Silva, VP of freighter conversion for Boeing Commercial Airplanes.
Project4_Layout 1 10/05/2011 14:35 Page 1
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AFM73_Cargo Conversions_AFM73 18/05/2011 10:09 Page 32
32 | AFM • ISSUE 73 May-June 2011
FLEET OPERATIONS: Cargo conversions
Today, the overall cost of buying and converting a 13- to 20-yearold Boeing 767-300ER can range from $27m to $38m, according to Ahmed, but da Silva says the cost might average $35m for an aircraft with 15 years of economic life remaining. For a lessor to make its business case stick at a 15 year life assumption, “The lease rate would have to be $450,000 [a month],” says da Silva. “The obvious difficulty for the market is that you can’t get $450,000 for a 767-sized freighter. You can get $350,000 to $375,000.” Usman Ahmed, senior analyst with IBA Group
What this means, he says, is that because Boeing (or IAI Bedek) is never going to discount its 767 conversion price by more than about 10 per cent, and so customers will never find major savings there. Customers must wait until the residual values of suitable 767-300ERs drop considerably before they buy their aircraft or release them from passenger service. Continuing high 767-300ER residual values point to another problem affecting the freighter-conversion industry in recent times. Although Boeing launched its 767-300ER conversion programme with All Nippon Airways (ANA) in 2006 knowing it was doing so ahead of the market, the company believed that, by the time the ANA conversion programme ended in late 2010, 767-300ER values would have fallen to where many aircraft would be suitable for, and available for, conversion. However, says da Silva, delays to the 787 and A380 production programmes, and Airbus’ false start with the A350 in 2005, made airlines want to hang on to their 767-300ERs. “We hope the 767 market comes sooner rather than later,” says da Silva. “With the 787 delivering this year, we expect the values of 767s and the appetite of airlines to renew and extend their leases on older 767s to definitely go down. At the meeting [ISTAT in March, 2011], the interest from leasing companies in talking to us about 767 conversions had grown exponentially since the meeting in Munich [in October, 2010]. Then, it was the 747-400 they were interested in. Now, those deals are consolidating, and we expect the same with the 767.”
What comes next? Customers are keenly watching three other conversion programmes, one of which has already started. Dresden-based Airbus Freighter Conversion (AFC) has launched the A320 and A321 conversion programme with an order from AerCap for 30 conversions in 2011 to 2015. The company – a joint venture involving EADS EFW, Airbus and Russia’s United Aircraft Corporation and Irkut – is also in discussions with other potential customers for slots from 2012 onwards as it seeks to ramp-up production to 15 to 20 aircraft a year. Along the way, AFC hopes to launch the A321-100 conversion programme in 2013, says Becker, noting AFC is in discussions with two potential customers to provide A321-100s for prototyping the conversion. Eventually, AFC expects to convert as many A321s as A320s. Becker says a number of good candidates are becoming available among older A320s with residual values from $7m to $10m and soon A321-100 candidates with values from $12m to $15m should be available. AFC sees prime A320 feedstock as being aircraft that are 18- to 20-years-old. “We are getting some requests between 12 and 14 years but these are exceptions,” he says. “The most interesting thing is that the narrowbody aircraft is getting a second life after 20 years. This supports the level of values for the aircraft… it creates a certain demand, allowing the value to hold and not dramatically decrease.”
Ahmed believes the sizable number of A320s likely to reach the market for conversion during the next few years may make it extremely difficult to establish an eventual conversion market for 737NGs. Once the A320 programme is established, hundreds more A320-family aircraft will continue to become available for conversion over time, impacting 737NG freighter demand. Agnew sees older A320s as being natural freighter competitors for 737-400s, saying: “I think that’s going to be the race. [The 737-400] offers one more container than the -300 for essentially zero cost.” However, one big variable that could dramatically impact the market for 737-300 and 737-400 conversions is how the new FAA-mandated inspection regime for 737 Classics with more than 30,000 cycles plays out following the Southwest Airlines fuselage-rupture on April 1. EADS EFW, meanwhile, is seeing a resurgence in A300-600R conversions as up to six of the 32 former American Airlines aircraft are signed for conversion (the rest of the fleet is too runout to be suitable) and many of the 18 A300-600Rs that Japan Airlines formerly owned, and the four it formerly leased, are checked in. EADS EFW is also expected to announce a significant new conversion deal on ex-JAL aircraft. Once these aircraft are converted, A300 conversions will end. Meanwhile, A310-300 conversions will remain at best a niche market, says Schmid. However, some customers are close to signing A310-300 conversion deals, he says. But the programme everyone has their eyes on is the A330-300, an aircraft with no true competitor. “It’s below the 777 and above the 767,” notes Schmid. “It’s the most-demanded aircraft and there will be some pretty good candidates in two to three years’ time. In the beginning, the airframes are pretty expensive – but this is always the case, and then they get cheaper and cheaper.” Given a three-year development programme, Schmid hopes EADS EFW will be able to offer A330-300 conversions from 2014 or 2015. The only problem is “demand is so high there might not be enough A330-300s. It’s definitely a hot item.” The company is not actively pursuing A330-200 conversions – it has no wish to “interfere” with Airbus’ solid market for new A330200Fs and in any case no A330-200 is yet old enough to make sense as a candidate – but Schmid notes that, “once we’ve done the A330-300, the smaller aircraft is an easy jump.” However, while EADS EFW has had some institutional-customer interest in converting A340-300s (and the job would be essentially the same as that for the A330-300), Schmid says the company sees no enduser market at present and would not accept any A340-300 conversions until operator interest did become evident. Another programme of great interest is the 777-200ER. “Some carriers would love the 777BCF in a couple of years, but they don’t want to pay the prices”, says da Silva. Originally, Boeing looked at converting non-ER 777-200s first, but there are so few of these (and almost all are operated by United) that it quickly turned its attention to the more capable model. A timing problem is that while there are some 415 potential 777-200ER candidates, only a few are in the oldest batch, completed from 1995 to 1997. “A large number of 777-200ERs at prime age will be available later in the decade,” and this is once the 787-9 and the A350 XWB enter service, da Silva notes. He says Boeing expects to have the first conversion slots available from about 2016, following three years of engineering development.
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AFM73_Online Sales_AFM73 18/05/2011 11:54 Page 34
34 | AFM • ISSUE 73 May-June 2011
FLEET OPERATIONS: On-line sales In many cases, the internet is the only portal through which the customer has contact with an airline before boarding the aircraft. As such, airlines must optimise their on-line services to meet passenger expectations and increase revenue. Fortunately, these are not mutually exclusive concepts but airlines must become more than just flight operators if they are to succeed in their on-line sales strategy; they must embrace and understand the e-commerce model. Raphael Bejar, CEO of Airsavings discusses a strategy.
AIRLINES:
MASTERING ON-LINE SALES T
HE AIRLINE INDUSTRY HAS EMERGED FROM A tumultuous past decade almost completely changed. Skyrocketing fuel costs made capacity and load factors the highest priority for most carriers. At the same time, the proliferation of successful low-cost airlines held fares in check and the global recession put a staggering damper on demand. Ancillary revenues, derived from unbundling standard airfare and commissions from third-party products and services, became the most promising route for growth in earnings. With this in mind came perhaps the most important development in the last 10 years – the migration of airline operations to on-line platforms. Airlines are still in the business of transporting passengers, and interaction between airlines and their customers is still at the heart of any given transaction, yet increasingly, this is preformed on-line. The web is not simply a cyber haven for travel bookings or convenient check-in, it is the single most important sales channel in terms of both the central product (seats) and the all-important ancillary revenue streams. In terms of brand interaction, it is often the first encounter a passenger has with an airline. In terms of merchandising, it is the most effective platform for introducing extra products and services. And in terms of overall operations, it is the lifeblood of most airlines. All of this is old news to most airline operators. On-line bookings have covered the majority of sales for some years now and airlines have taken great strides toward optimising their proprietary websites and overall web presence. Airlines recognise that the internet resists categorisation as a narrow revenue stream; it is a dynamic, shifting space that they must continually expand, explore, and improve upon. Furthermore, the importance of the internet implies that airlines ought to view themselves as e-commerce entities with an airline component. This may seem radical, but it is where the industry is heading.
Raphael Bejar, CEO of Airsavings
Finding value On-line revenues are inexorably tied to an airline’s website. While there are opportunities to generate revenue through third-party sites, the development and establishment of a proprietary website that can attract and retain even casual passengers remains one of the most important components of a strong online strategy. Certainly, an airline can sell seats through a thirdparty on-line travel agency (OTA) and reap the distribution benefits that come with such a tactic, but if this is all it does, the airline looses the opportunity to make ancillary revenue through its own website. It is important to remember that a travel booking company (for example Orbitz) receives commission (for example on a hotel booking) regardless of which airline flies the passenger to their destination. The question is whether the increase in sales received by an airline that places its inventory with an OTA outweighs the potential revenue it could otherwise make from ancillary services. A good inventory distribution mix mitigates this dilemma, but having a good mix implies having a strong proprietary website. A survey by SITA, an aviation IT and communications specialist, found that 74 per cent of leisure travelers booked their flights online. A survey by Business Travel News found that 68.5 per cent of US domestic air tickets in 2009 were booked on-line – and both figures have no doubt increased greatly since then. But simply steering this sizable pool of customers towards a website is not enough. The website must offer something that makes consumers part with more cash, or at least become better acquainted with the brand. This can be accomplished by integrating the overall travel experience and the on-board experience with the on-line or booking path experience. Airlines have long incorporated aspects of the travel ecosystem with their websites and have historically been adept at offering passengers the ability to book hotel rooms, rent a car, and
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FLEET OPERATIONS: On-line sales purchase trip insurance through their website – netting a commission for each in the process. Only in the last few years, however, have airlines also begun to focus on the on-board experience, such as offering passengers the option to purchase extra leg-room or choose a seat. A relatively new option available to travelers is Wi-Fi – here we find a service that can generate revenue through multiple means. On-board Wi-Fi access can be sold to a passenger pre-flight in the booking path, but the same passenger might opt into a travel insurance bundle that includes Wi-Fi access at their destination through a partnership with a third-party Wi-Fi provider. By providing the traveler with what he or she perceives as one ancillary service, the airline has earned a commission from two third-party entities.
Commission based profits The key to growth potential in the example of offering Wi-Fi is its commission-based nature. While many compulsory fees are levied on-line, for example checked baggage charges, these fees do not present a growth opportunity. Commission-based ancillaries have continuous potential as they are based on changing customer desires and can be used to sell numerous products and services from numerous external companies. In the case of Wi-Fi access, the demand is more pronounced than, for example, the ability to book a hotel room but value remains at the heart of commission-based ancillaries, and commission-based ancillaries remain at the heart of on-line sales. The SITA leisure traveler survey cited earlier found that 38 per cent of fliers booked their hotel rooms through an airline website, an increase of 17 basis points on 2009. This means that at least one of the ‘big three’ ancillary revenues (hotel, car hire, travel insurance) is still enjoying substantial growth exclusively through the on-line channel. Airlines need to focus on growth areas such as this to optimise their on-line revenues in addition to expanding their commission-based offerings. One next-generation ancillary offering to have generated significant excitement involves a flexible ‘concierge’ service. This provides travelers with a hotel, restaurant, event locator, taxi and transfer reservations, access to a doctor for non-emergency medical care abroad, and assistance re-scheduling in the event of disrupted travel. Here is a programme designed to strip the anxiety out of travel, and airlines – once the very source of that anxiety – are earning a commission providing it! There are many similar innovations, from weather insurance to ‘bundled’ ancillaries (for example covering many types of travel insurance). Others apply a retail model to the in-cabin shopping experience, while others still collaborate with airports and travelrelated agencies to provide service options at every step in the journey. Each of these has a strong on-line component and most rely on position within the booking path to work effectively.
Mobile web technology Having the right ancillary revenue stream is clearly paramount to increasing on-line sales. In today’s environment, however, it is instructive to look at how the on-line channel is evolving and how airlines can best position themselves to take advantage of it. Most conversations about the on-line channel presuppose the consumer uses a computer. This supposition is aging. The popularity of Smartphones and tablet computers has given rise to a plethora of mobile applications. Mastering the presentation of on-line services through mobile technology is vital to forming a successful on-line sales strategy.
“forward-lookingincorporate Airlines will do well to
more
tactics into their overall web
strategies, primarily the effective tracking and management of customer data and the automatic presentation of additional highadoption-potential offerings. For airlines, this means optimising the website for mobile use, incorporating new aspects to its content, and making sales more conducive to mobiles. Airlines should be first to capitalise on mobile web technology as the industry is primed for mobile sales; travelers are by definition less able to access the web – so airlines should be rushing to meet them. Airlines will do well to incorporate more forward-looking tactics into their overall web strategies, primarily the effective tracking and management of customer data and the automatic presentation of additional high-adoption-potential offerings. This technology is already available and waiting to be used by the industry. Success is reliant on mastering the basics while still embracing the next big developments. Airlines must welcome commission-based ancillaries as these are the only on-line revenue streams with bona fide growth potential. New and value-driven ancillaries should also be examined, including bundled services and high-demand, consumer-centric services. And crucially, airlines should look forward to the next wave of technology created by the evolution of Smartphones. Only those airlines flexible enough to accomplish all these prerequisites will be able to create a competitive advantage for themselves both now and in the future.
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AFM73_financing 777_AFM73 18/05/2011 10:34 Page 36
36 | AFM • ISSUE 73 May-June 2011
TRADING, LEGAL & FINANCE: 777 Few large aircraft programmes have enjoyed the fairytale success of the 777. Over time, various airlines commented that the 747 was “too big” or that the 767300ER was “too small”. So in the late 1980s, the industry welcomed the prospect of a new aircraft type that was – in true Goldilocks tradition – ‘just right’. But finding favour from airlines is not enough – they must win over the financial and investment community if they are to command good liquidity and value in the market. Simon Finn, SVP, aviation finance at DVB Bank gives his detailed financial analysis of the aircraft type.
F
OR FINANCIERS OF COMMERCIAL AIRCRAFT, THERE ARE important differences between financing smaller, more prolific aircraft – such as the 737 or A320 Family – and larger, more expensive aircraft – like the A330, A340, A380, 747, 767, 787 and 777. The majority of airline routes are served using smaller jets as passengers are typically airborne for under two hours. Also, schedules are built around a frequency of service primarily designed to appeal to the business traveller, which dictates the use of smaller aircraft so load factors remain high enough to generate satisfactory yields. A notable exception is when serving high densities of traffic between two major destinations. Such city-pairs are best served using widebodied aircraft. Ascend indicates that there are around 1,600 operators of today’s 22,700 commercial aircraft. While over 17,000 are single-aisles operated by more than 1,400 operators, there are only 5,000 widebodied aircraft flown by fewer than 500 operators. Once subdivided by aircraft size, one might reasonably conclude that the market for widebodied aircraft is considerably less liquid as there are fewer remarketing opportunities. The principal risk of financing such aircraft is that a default may occur. IATA believes that airlines worldwide lost $9.9bn in 2009, made $16bn in 2010, and will see this reduced to around $8.6bn in 2011. As a result, it is generally perceived that the risk of airline default has diminished compared to two years ago. It can be argued that widebodied aircraft operators have increasingly better credit, meaning there is less chance of default and more stability in aircraft values. However, the high capital cost, high transition costs and reduced remarketing opportunities associated with widebodied aircraft suggest that the severity of any default would be much greater for a single-aisle type. Appraisers’ base and market values implicitly assume an aircraft in half-life maintenance condition is ‘market-ready’, but it is important that financiers and investors do not underestimate the up-front costs of maintenance and cabin reconfiguration required to achieve this ‘market-ready’ status. The value of the aircraft is one thing, but the value to the seller may slide by many millions of dollars because of these transition costs.
Competitive position The 777 would become remarkable for being the first twinengine aircraft capable of serving routes over 7,000nmi. However, Boeing had to compete with two major aircraft manufacturers – Airbus and McDonnell Douglas. All manufacturers believed the market needed an aircraft capable of seating around 300 passengers in three classes to replace and expand the market at that point served by the ageing DC-10 and L-1011 tri-jet.
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TRADING, LEGAL & FINANCE: 777
FINANCING THE FAMILY
Airbus split the market into long-range and regional widebody offerings. The result was the A330-300 and A340, which shared the same fuselage cross-section as the preceding A300/A310 Family of widebodies. However, wing, systems and engines were all new, giving the new aircraft the range and efficiency required to enter the new market segment with the MD-11. Airbus believed that twin-jet economics suited widebodies for flights that averaged 3,000 to 4,000nmi, a surprising conclusion given the consortium’s A300/A310 development history. For the long-range market, Airbus selected a traditional four-engine solution. Hindsight suggests that this was not the optimal decision but it is easy to forget that airlines and regulators were unconvinced by the use of twin engine aircraft for long-range flights. Also, by choosing the CFM56-5C to power the A340, Airbus believed it had calculated a weight advantage over the twin-engine solution. However, the A340’s climb performance and cruise speed would eventually prove to be a competitive disadvantage and four-engine
maintenance costs would also have their effect on the aircraft’s operating economics. Although Boeing’s board had authorised the 777 programme in 1989, the competing aircraft had entered service while Boeing was still determining the design. Boeing had planned to deliver two variants of the initial 777 series, followed by a longer-range development. The first of the two variants was to supply what Boeing called the ‘A market’ and would replace DC-10-10 and L-1011-1 aircraft, as well as satisfy growth demand. The ‘B market’ demand would be for an A340 competitor in the longrange market. In the early 1990s, Boeing had already spoken publicly on the possibility of stretching its A market aircraft for its Asian customers. Unlike the competitors, the 777 would be an all-new design – new fuselage, new wings (offered with a folding wingtip option never selected by the airlines), new General Electric (GE), Pratt & Whitney (P&W), and Rolls-Royce powerplants and Boeing’s first commercial implementation of a fly-bywire flight control system.
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TRADING, LEGAL & FINANCE: 777 These features and the essential certification for Extended Twin Engine Operations (ETOPS) would make the 777 an expensive development programme but ultimately these decisions would reward Boeing with strong overall market share. There is further competition. Airbus offers the A350XWB type. The -900 series will offer long-range capability for 314 passengers and the -1000 version will be smaller than the largest 777 series aircraft but with arguably better economics. Boeing has postulated another 787 series called the -10, which would be approximately the same size as the 777-200 Series and might also therefore, bleed market share away from the 777. In fact, given the considerable efficiencies of the new 787, even the smaller 787-9 may offer seat-mile costs that make it a competitor to the 777-200ER.
The 777-200 The 777-200A was the original name for the A market 777 offering, now known as the 777-200. It entered commercial service with United Airlines in June 1995. Boeing marketed this initial offering with either two-class seating for 375 passengers or three-class seating for 305 passengers. A variety of weight schedules was developed with the lowest schedule offering a maximum take-off weight (MTOW) of 506,000lb for a range of 4,100nmi and the highest MTOW of 535,000lb giving a range of up to 5,210nmi. To date, relatively few 777-200 aircraft have been remarketed – a process that is further complicated by Boeing’s decision to offer engines from all three major manufacturers on the initial 777 Family. The fleet of just 87 777-200 aircraft with only 12 operators would be a tough remarketing prospect but as operators of one original equipment manufacturers’ (OEM) engines are usually unwilling to accommodate the expense of introducing a second OEM’s product, sellers are left targeting a market that is split between the three OEMs, not all of which operate the same engine type. Otherwise, they may try to expand the operator base by attracting a new operator. Boeing’s 777-200 Increased Gross Weight (IGW) was envisaged to serve the B market and offer competition against the A340300 and MD-11. If the design choices for the 777 may have hindered its success in the A market against the mid-range A330300, the all-new wing, engines and fuselage seemed to lend a long-term advantage to the 777 once the long-range markets were the target. Boeing presented an aircraft capable of seating 301 passengers in three classes. The IGW variants featured MTOWs ranging from 580,000lb to 632,500lb with corresponding variation in range from around 5,800nmi to 7,300nmi. Later developments of the 777 wing and structure led to further evolution of the weight schedules, until an ultimate MTOW of 656,000lb was offered, extending the range of the aircraft to over 7,700nmi. Boeing subsequently renamed all versions of the 777-200 featuring an MTOW of 580,000lb or more as the 777-200 Extended Range (ER). This enormous variation of weights and capabilities highlights the flexibility of the 777s design. The new weights also demanded more powerful engines to facilitate runway and aircraft climb-out performance. Today, with most orders for the 777-200ER seemingly placed, Rolls-Royce appears to have won the engine OEM market share battle from GE, with P&W having the smallest share. Operating lessors were more confident of 777-200ER liquidity and BOC Aviation, GECAS and ILFC have all ordered the type over the course of its programme.
Very few MD-11 passenger aircraft are listed in the table above, as following the merger of McDonnell Douglas and Boeing, operators lost confidence in the type and market values collapsed. The majority of the MD-11 fleet was converted to freighters. From DVB’s perspective, passenger configured MD-11s are the least liquid of the types shown. For all their efficiency and flexibility, remarketing of the 777-200ER suffers from the decision to offer a tri-source engine supply from each of the major manufacturers. This disadvantage must be weighed against the greater popularity and perceived efficiency of the 777-200ER fleet, of which few are stored and for which a small order backlog still exists. Many banks have withdrawn from the sector and many that remain prefer to contemplate business on a credit basis. In better times, an asset-based lender would prefer to finance the 777200ER than the A340-300, as many Airbus operators are thought to be examining fleet replacement plans. With fuel prices escalating, the economics of the 777-200ER make it less vulnerable to early retirement. Clearly, some care over the airframe-engine combination is advisable as there are so few operators. This will present something of a challenge for remarketing. Avoiding too much exposure to a single operator’s large fleet is desirable.
The 777-300 In March 1993, Boeing was rumoured to be in talks with Cathay Pacific to switch some of its orders from the shorter A market 777-200 to a new larger or stretched 777. Boeing was thought to have held further discussions with ANA, JAL and Thai Airways International. The talks resulted in the launch of the 777-300 Series featuring a fuselage stretch that increased the marketed three-class seating capacity to 368 passengers or 451 passengers in a two-class layout. A commensurate increase in belly hold cargo also came, which pushed the maximum optional MTOW to 660,000lb giving the -300 a range of just over 6,000nmi. As with the shorter -200 Series, all three engine OEMs offered power for the 777-300 but, airlines selected only the PW4098 and Trent 895, deeming the GE90 unsuitable. The precedents for high-capacity regional aircraft are mostly from the Asian market. It was unlikely that the 777-300 would attract broad market acceptance, nor did it. Today, just seven airlines (all operating into Asia) carry the small global population of 60 777-300s. Ascend data shows that ILFC, BOC Aviation and Pembroke collectively own eleven Rolls-Royce-powered 777-300 aircraft. While the specifics of the transactions are not known, it is unlikely that there is significant residual value risk for the lessors who, rather like a bank, are likely to rely on the credit of the lessee and the integrity of the long-term lease revenue. The 777-300 is unusually difficult for its small operator base to replace. The niche nature of high-capacity regional services does not encourage manufacturers to build aircraft specifically for such range and ‘misusing’ long-range aircraft is theoretically unattractive as operating costs are sub-optimal for the airlines. While harbouring no illusions regarding the liquidity or resale value of the 777-300 fleet, it seems the aircraft remains financeable largely due to its airline operators. Without this, the aircraft would rely on its asset characteristics alone and as the market indicates, these are not sufficient to qualify the 777-300 for pure asset-based finance. Finally, while it has been possible to compare other 777s with competitors on the basis of relative seat-mile costs, comparable seat capacity and range capability, when measured in this way, the 777-300 has no competition.
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TRADING, LEGAL & FINANCE: 777
In June 1999, Boeing announced it was studying longer range derivatives of the 777 and on February 29, 2000 the board approved the launch. To achieve the additional range, the aircraft would feature aerodynamic improvements in the form of 6.5ft raked wingtips to reduce takeoff field length, increase climb performance and reduce fuel burn. A new and improved gear was required to cope with the heavier weight schedules and a semi-levered gear would enable the 777-300ER to takeoff from fields with a limited runway length. In a departure from its previous position on the 777 Family, Boeing gave GE sole engine supplier status on the second generation aircraft, upsetting airlines that had selected P&W or Rolls-Royce on first generation versions but gaining a formidable risk-sharing partner for the longer-range 777 programme. For its part, GE developed a new version of its GE90 able to supply either 110,100lb or 115,300lb thrust depending on airframe requirements. The first of this new generation, the 777-300ER entered service with Air France on April 29, 2004. The 777-300ER offers a threeclass seating capacity of 365 passengers and a range of up to 6,240nmi for the basic version and up to 7,930nmi for the version with the maximum optional weight schedule.
It seems overly generous, based on today’s data, to describe the comparison as competition. One unkind (and unnamed) commentator was moved to describe the A340-600 as “roadkill”. While undoubtedly harsh, it is hard to deny the dominance of the 777-300ER. The picture may change given the A350XWB programme and the undefined nature of the A350-1000. However, Boeing and GE have worked hard to achieve this dominance and are likely to introduce ongoing improvements to maintain the competitiveness of the 777-300ER. Without the complication of a multi-source engine supply, the 777-300ER has much greater remarketing potential than any preceding 777 Family member and thanks to a significant fuel burn advantage over the A340-600, its sales volume has been sufficiently robust to suggest better-than-average residual value retention going forward. As well as depth, the 777-300ER market is also broad with 34 operators having this version either in service or on order. With 101 777-300ER orders, Emirates’ fleet concentration may be an issue for financiers. Some caution over advance levels may also be advisable, as pricing seems to have been highly variable depending on the nature of customers and their orders activity.
The 777-200LR The 777-200 Long-range (LR) is marketed by Boeing with a three class seat capacity of 301 passengers and a range of up to 8,240nmi for the basic version and up to 9,450nmi for the version with the maximum optional weight schedule. The 777200LR entered commercial service with Pakistan International Airlines in February 2006. Perhaps it pales in contrast to the larger 777-300ER but somehow the orderbook for the 777-200LR variant disappoints. The payload/range performance results from incorporating the structural changes made for the -300ER to the shorter airframe of the -200 Series. But unsurprisingly, airlines were already pleased with the performance of the very flexible -200ER and while many did not feel the need for the additional range or belly-freight payload advantage of the -200LR, relatively few routes demanded the performance of the new 777-200LR. Using the -200LR on routes that can also be served using the -200ER is another ‘no-no’ as the LR’s extra structure and weight mean that the -200ER may be more economical.
Project1_Layout 1 11/05/2011 12:38 Page 1
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AFM73_financing 777_AFM73 19/05/2011 11:51 Page 42
42 | AFM • ISSUE 73 May-June 2011
TRADING, LEGAL & FINANCE: 777 more potential for a life-extending role-change to cargo usage in the future provided that market appetite for conversions does not dwindle in the long-term and provided Boeing’s conversion costs can be economically attractive.
Another complication is that more routes support use of the larger 777-300ER and as long-range routes offer limited opportunity for frequency (airport slot timing is often key), demand for the -200LR looks likely to remain constrained. Airbus’ competitor offering – the A340-500 – found a similar indifference for ultra-long-range capability but also suffered more noticeably in the financial crisis as some airlines cancelled orders or realised that their requirement for the A340-500 no longer remained. Neither of these is easy to finance on the basis of the asset alone but the A340-500 suffers from four-engine economics in an increasingly environmentally conscious world, whereas the 777-200LR benefits from its association with the overall success of the twin-engine 777 Family. As with the A market versions of the original 777 Family, the 777200LR is not considered suitable for pure asset-based finance but may be considered in combination with an appropriate airline/lessor credit. Further pressure will come from the A350-900 and 787-9 which are expected to offer seat-mile costs that will be very competitive for the -200LR. Lastly, the 777-200LR may have
The A market 777s are an entirely different proposition. These aircraft are generally not suited to pure asset-based finance as they rely on strong market conditions for their liquidity and value. In a weak market, the aircraft’s ongoing appeal to investors and financiers is largely dependent on the creditworthiness of the counterparty. The smaller quantity of A market 777 sales, condensed over a shorter period also suggests that the A market versions will have a shorter serviceable life than the more popular and long-range versions. As the quality of the operator base is so crucial to maintaining widebodied aircraft values, the older average age of the A market fleet is already prompting some of the original operators to divest numbers of these aircraft from their fleets. The resulting value volatility may well reduce the level of advance in financings and prompt more conservative residual value assumptions for lower balloon positions at the end of the loan term. So thanks to the 777-300ER in particular, the 777 Family’s fairytale continues and while dark murmurings about the possible impact of the A350-1000 have begun, whether or not the fairytale eventually becomes ‘Grimm’ will depend on Boeing’s ability to protect the Family with technological advancements and by ensuring that the 777-300ER and future derivatives maintain their competitiveness. For today’s long-range markets though, the 777-300ER blend of range and capacity remains ‘just right’ and the aircraft is a firm favourite with financiers of larger aircraft.
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AFM73_Deals _AF&NM Special Feature 18/05/2011 10:05 Page 44
44 | AFM • ISSUE 73 May-June 2011
AIRCRAFT DEALS REPORT
FLEET FINANCE – Deals report Aircraft transactions March 1 to 19, 2011 Equipment Model
New Owner/ Operator
Previous Owner/ Operator
Boeing 737-2q8 737-2t5 737-232 737-3t0w 737-306 737-3s3 737-322 737-322 737-3q8 737-3m8 737-3m8 737-33a 737-33a 737-33a 737-36m 737-4u3 737-4u3 737-4y0 737-4q8 737-430 737-48e 737-4m0 737-4m0 737-53a 737-522 737-524w 737-54k 737-7bk 737-7bkw 737-73v 737-73v 737-7bdw 737-76jw 737-700w 737-85p 737-81q 737-883 737-8bkw 737-8bkw 737-8q8w 737-8q8w 737-8q8w 737-86nw 737-8k5w 737-8asw 737-8asw 737-8asw 737-8asw 737-8asw 737-8few 737-8few 737-8few 737-8few 737-8f2w 737-8f2w 737-8f2w 737-8f2w 737-8k5w 737-8k5w 737-86nw 737-85cw 737-8k5w 737-8k5w 737-8k5w 737-8k5w 737-8k5w 737-86jw 737-86jw 737-86nw 737-86nw 737-86nw 737-86nw 737-8jpw
Nas Air Georgian Star Intl Global Aircraft Solutions Orient Thai GS/MC Leasing Velvet Sky Midamerican Aerospace Chanchangi Airlines Viva Aerobus Aero North Intl Kalstar Aviation Trans Air Congo Aircraft & Engine Support Wells Fargo Danube Wings Indonesian Air Force Indonesian Air Force GE Capital Tombo Aviation Flyfirefly ILFC Celestial Celestial Aircraft & Engine Support Apollo Aviation Utair Aviation Hokkaido Intl CIT Aeromexico BOC BOC Southwest Airlines Air Berlin Boeing Business Jets Aircastle Aeromexico SAS CIT Sun Country Airlines Caribbean Airlines Air Jamaica Unknown Celestial Tabarak Aviation Okay Airways Airline Taimyr Okay Airways RBS RBS IGAF Virgin Blue Bali Australia Virgin Blue Anadolujet Anadolujet Anadolujet Anadolujet Thomson Airways Thomson Airways GE Capital Xiamen Airlines TUI Amentum Capital Thomson Airways TUI ACG RBS Izmir Airlines Brookdell Norwegian Air GE Capital Xiamen Airlines Norwegian Air
Georgian Star Intl Ave.Com Pamir Airways AS & L LLC Air Slovakia Safair Wells Fargo Jordan Aviation Celestial Aviation Southern Aircraft Aero North Intl. Wells Fargo Air Austral Aircraft & Engine Support Ames-Camo Garuda Garuda Pamir Airways Merpati Nusantara ACS Leasing Air One Garuda Garuda Air Austral Air Ivoire BLF ANAWings CIT CIT Easyjet Easyjet Boeing Boeing Boeing Air Europa Wells Fargo Moskovia Airlines CIT CIT ILFC Caribbean Airlines ILFC Pegasus Airlines Travel Service Airlines Wells Fargo RBS Wells Fargo Ryanair Ryanair VBNC IGAF VBNC Bali Australia Leasing Turk Hava Yollari Turk Hava Yollari Turk Hava Yollari Turk Hava Yollari Sunwing Airlines Sunwing Airlines AMC Airlines Boeing Boeing TUI Amentum Capital Boeing TUI Air Berlin RBS Celestial Brookdell Boeing GE Capital Boeing
Serial No. or No. of (Orders)/(Options) 21960 22395 23077 23375 23545 24059 24250 24662 24962 25040 25040 25138 27452 27452 28333 25714 25719 26088 26280 27001 27632 29206 29207 24877 25001 28905 28993 30617 30617 32421 32422 36726 36874 -1 28382 29052 30468 30620 30620 30661 30661 30671 32732 32907 33557 33559 33560 33561 33562 34167 34167 34168 34168 34409 34410 34412 34413 35134 35138 35220 37153 37253 37253 37253 37254 37254 37743 37743 37884 37884 38015 38015 39005
Engine Model
Date of Manf or First Exp Deliv
Jt8d-15 Jt8d-15 Jt8d-15a CFM56-3b1 CFM56-3b1 CFM56-3b2 CFM56-3c1 CFM56-3c1 CFM56-3c1 CFM56-3b2 CFM56-3b2 CFM56-3b2 CFM56-3b1 CFM56-3b1 CFM56-3c1 CFM56-3c1 CFM56-3c1 CFM56-3c1 CFM56-3c1 CFM56-3c1 CFM56-3c1 CFM56-3c1 CFM56-3c1 CFM56-3b1 CFM56-3c1 CFM56-3c1 CFM56-3c1 CFM56-7b22 CFM56-7b22 CFM56-7b20 CFM56-7b20 CFM56-7b24 CFM56-7b24 CFM56-7b27 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b27 CFM56-7b26 CFM56-7b27b1 CFM56-7b24 CFM56-7b24 CFM56-7b24 CFM56-7b24 CFM56-7b24 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b27b1 CFM56-7b27b1 CFM56-7b26 CFM56-7b26 CFM56-7b27b1 CFM56-7b27b1 CFM56-7b27b1 CFM56-7b27b1 CFM56-7b27b1 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26
1980-02 1980-12 1983-10 1986-02 1987-01 1988-01 1988-11 1990-04 1991-09 1991-02 1991-02 1991-10 1994-11 1994-11 1996-07 1993-09 1993-10 1993-05 1992-02 1992-06 1997-01 1998-07 1998-09 1990-10 1990-10 1997-08 1998-09 2001-03 2001-03 2003-07 2003-07 2011-02 2010-11 1999-03 2000-04 2000-09 2001-10 2001-10 2002-07 2002-07 2003-03 2002-01 2002-03 2003-12 2004-01 2004-01 2004-02 2004-02 2005-03 2005-03 2005-04 2005-04 2006-03 2006-04 2006-05 2006-05 2006-12 2008-01 2007-09 2011-02 2011-02 2011-02 2011-02 2011-02 2011-02 2009-02 2009-02 2010-03 2010-03 2011-02 2011-02 2011-02
Equipment Sale-L/Back Sold Returned Leased Returned Sub-Leased Sold Sub-Leased Leased Sold Leased Leased Sold Sold Leased Sold Sold Returned Returned Leased Returned Returned Returned Sold Returned Leased Sub-Leased Sold Leased Returned Returned Delivered Delivered Cncl-Order Returned Leased Returned Sold Leased Leased Sub-Leased Sold Returned Sub-Leased Leased Leased Leased Returned Returned Sold Leased Sold Leased Sub-Leased Sub-Leased Sub-Leased Sub-Leased Returned Returned Returned Delivered Delivered Sold Leased Delivered Sold Sold Leased Sold Leased Delivered Leased Delivered
Date 2011.03.02 2011.03.01 2011.03.19 2011.03.01 2011.03.01 2011.03.20 2011.03.14 2011.03.01 2011.03.17 2011.03.10 2011.03.10 2011.03.02 2011.03.09 2011.03.21 2011.03.01 2011.03.09 2011.03.09 2011.03.19 2011.03.01 2011.03.08 2011.03.18 2011.03.13 2011.03.13 2011.03.09 2011.03.16 2011.03.21 2011.03.15 2011.03.01 2011.03.18 2011.03.01 2011.03.10 2011.03.18 2011.03.08 2011.03.01 2011.03.07 2011.03.10 2011.03.21 2011.03.07 2011.03.07 2011.03.11 2011.03.12 2011.03.18 2011.03.19 2011.03.21 2011.03.21 2011.03.11 2011.03.21 2011.03.11 2011.03.14 2011.03.18 2011.03.18 2011.03.18 2011.03.18 2011.03.01 2011.03.01 2011.03.01 2011.03.01 2011.03.15 2011.03.17 2011.03.01 2011.03.08 2011.03.01 2011.03.01 2011.03.01 2011.03.21 2011.03.21 2011.03.05 2011.03.05 2011.03.11 2011.03.11 2011.03.04 2011.03.04 2011.03.08
AFM73_Deals _AF&NM Special Feature 18/05/2011 10:05 Page 45
May-June 2011 AFM • ISSUE 73 | 45
AIRCRAFT DEALS REPORT Equipment Model
New Owner/ Operator
Previous Owner/ Operator
737-8jpw 737-8jpw 737-8jpw 737-8jpw 737-8jpw 737-8ctw 737-8ctw 737-8fzw 737-8fzw 737-824 737-824 737-89lw 737-8h6w 737-8knw 737-8v3w 737-82rw 737-8jpw 737-8jpw 737-8jpw 737-8q8w 737-8fverx 737-9gperw 737-924erw 747-446d 747-446d 747-446 747-412 747-412 747-446 747-89l 757-230 757-236 757-28aetops 757-28aetops 757-204bwetops 757-23netops 757-23netops 767-246 767-246 767-2j6er 767-2eyertt 767-33aer 767-33aer 767-343er 767-316erw 777-223er 777-3dzer 777-323er 777-367er 777-3dzer Airbus A300b4-622r A300b4-622r A300b4-622r A310-304 A318-111 A318-111 A319-112 A319-112 A319-112 A319-112 A319-111 A319-111 A319-111 A319-132 A319-111 A319-111 A319-111 A319-115x A319-115x A319-115lr A319-115x A319-115x A319-100x A320-214 A320-214 A320-214 A320-214 A320-231
SMFL Aircraft Corp Norwegian Air Norwegian Air DY2 Norwegian Air ACG Westjet Babcock & Brown MAS Continental Airlines Continental Airlines Air China MAS Flydubai Copa Airlines Pegasus Airlines Norwegian Air SMFL Aircraft Corp Norwegian Air ILFC US Navy Lion Air Continental Wells Fargo Wells Fargo Aersale Orix Wells Fargo Wells Fargo Air China Vim Airlines Wells Fargo ILFC Guggenheim Air Finland Airco Icelandair Au7 Dynamic Jetlease Air Transport Intl Italian Air Force Aerosvit Airlines Aerosvit Airlines Condor LAN Argentina American Airlines Qatar Airways American Airlines Cathay Pacific Qatar Airways
Boeing SMFL Aircraft Corp Boeing Boeing DY2 Boeing ACG Boeing Babcock & Brown Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing Boeing SMFL Aircraft Corp Boeing Boeing Boeing Boeing JAL Wells Fargo JAL Singapore Airlines Wilmington Trust JAL Boeing Air Bashkortostan Air Greenland Air Finland ILFC Allegiant Air Flycorp Airco JAL Au7 Cargo Aircraft Mgmt Boeing Royal Brunei Airlines Royal Brunei Airlines GECAS LAN Wells Fargo Boeing Boeing Boeing Boeing
Wells Fargo JAL Maximus Air Cargo Saga Airlines Avianca Avianca Avianca Karthago Airlines Eden Leasing Germania Whitney Leasing Easyjet Easyjet Turk Hava Yollari Easyjet Easyjet Easyjet Genting Singapore Senegal Air Force S7 Airlines Comlux Aviation Comlux Malta Unknown AFS Celestial Hello Celestial Sky Airline
JAL Signet Lease JAL Ariana Afghan Airlines Wells Fargo Wells Fargo Wells Fargo Koralblue Airlines Koralblue Airlines Unknown Armavia Airbus Unknown Airbus Airbus Unknown Airbus French Air Force French Air Force ILFC Airbus Comlux Aviation Airbus Philippine Airlines AFS Celestial Air Jamaica Wells Fargo
Serial No. or No. of (Orders)/(Options)
Engine Model
Date of Manf or First Exp Deliv
39005 39005 39006 39006 39006 39092 39092 39319 39319 39998 39999 40026 40131 40243 40666 40724 40867 40867 40867 33 40595 37279 11 25214 25214 26346 27068 27068 27645 5 25439 25620 25622 25622 26963 30735 30735 23212 23212 23307 33687 25532 25534 30009 34628 31478 38245 2 10 2
CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b27 CFM56-7b27 CFM56-7b27 Cf6-80c2b1f Cf6-80c2b1f Cf6-80c2b1f Pw4056 Pw4056 Cf6-80c2b1f Genx-2b67 Pw2040 Rb211-535e4 Rb211-535e4 Rb211-535e4 Rb211-535e4 Rb211-535e4-B Rb211-535e4-B Jt9d-7r4d Jt9d-7r4d Jt9d-7r4e4 Cf6-80c2b6fa Pw4056 Pw4060 Cf6-80c2b6f Cf6-80c2b7f Trent892-17 Ge90-115b Ge90-115b Ge90-115bl2 Ge90-115b
2011-02 2011-02 2011-02 2011-02 2011-02 2011-02 2011-02 2011-02 2011-02 2010-12 2011-01 2011-02 2011-02 2011-02 2011-02 2011-02 2011-02 2011-02 2011-02 2012-08 2010-12 2011-02 2012-01 1991-09 1991-09 1991-12 1993-09 1993-09 2000-11 2014-11 1992-02 1992-03 1993-02 1993-02 1992-03 2000-05 2000-05 1985-04 1985-04 1985-08 2005-01 1992-06 1993-01 1999-03 2006-06 2002-02 2011-02 2013-02 2014-02 2012-07
Sold Leased Delivered Sold Leased Delivered Leased Delivered Leased Delivered Delivered Delivered Delivered Delivered Delivered Delivered Delivered Sold Leased Ordered Delivered Delivered Ordered Sold Sold Sold Returned Sold Sold Ordered Returned Sold Returned Sold Sub-Leased Sold Leased Sold Sold Leased Sold Leased Leased Leased Leased Sale-L/Back Delivered Ordered Ordered Ordered
2011.03.08 2011.03.08 2011.03.17 2011.03.17 2011.03.17 2011.03.15 2011.03.15 2011.03.02 2011.03.02 2011.03.16 2011.03.18 2011.03.15 2011.03.15 2011.03.17 2011.03.03 2011.03.09 2011.03.01 2011.03.01 2011.03.01 2011.03.07 2011.03.02 2011.03.08 2011.03.02 2011.03.15 2011.03.18 2011.03.16 2011.03.10 2011.03.10 2011.03.07 2011.03.01 2011.03.11 2011.03.17 2011.03.09 2011.03.11 2011.03.14 2011.03.01 2011.03.02 2011.03.09 2011.03.09 2011.03.01 2011.03.11 2011.03.01 2011.03.12 2011.03.01 2011.03.01 2011.03.14 2011.03.17 2011.03.17 2011.03.09 2011.03.17
730 836 837 562 2358 2367 2662 3171 3171 3818 3834 4624 4624 4629 4635 4635 4640 1485 1556 2279 4622 4622 1 1210 1210 1210 1390 179
Pw4158 Pw4158 Pw4158 Cf6-80c2a2 CFM56-5b8/P CFM56-5b8/P CFM56-5b6/P CFM56-5b6/P CFM56-5b6/P CFM56-5b6/3 CFM56-5b5/3 CFM56-5b5/3 CFM56-5b5/3 V2524-A5 CFM56-5b5/3 CFM56-5b5/3 CFM56-5b5/3 CFM56-5b7/P CFM56-5b7/P CFM56-5b7/P CFM56-5b7/3 CFM56-5b7/3
1994-02 2002-05 2002-07 1990-11 2004-11 2004-12 2006-01 2007-06 2007-06 2009-02 2009-03 2011-02 2011-02 2011-02 2011-03 2011-03 2011-03 2001-05 2001-08 2004-08 2011-03 2011-03 2015-07 2000-03 2000-03 2000-03 2000-12 1991-08
Sold Lease-Buyout Sold Returned Leased Leased Leased Returned Returned Leased Repossessed Delivered Sale-L/Back Delivered Delivered Sale-L/Back Delivered Sold Sold Leased Delivered Leased Ordered Returned Sold Leased Returned Leased
2011.03.10 2011.03.10 2011.03.02 2011.03.01 2011.03.08 2011.03.18 2011.03.04 2011.03.03 2011.03.03 2011.03.03 2011.03.01 2011.03.09 2011.03.09 2011.03.11 2011.03.16 2011.03.16 2011.03.15 2011.03.01 2011.03.01 2011.03.03 2011.03.11 2011.03.11 2011.03.01 2011.03.08 2011.03.08 2011.03.08 2011.03.09 2011.03.07
CFM56-5b4/P CFM56-5b4/P CFM56-5b4/P CFM56-5b4/P V2500-A1
Equipment
Date
AFM73_Deals _AF&NM Special Feature 19/05/2011 12:34 Page 46
46 | AFM • ISSUE 73 May-June 2011
AIRCRAFT DEALS REPORT Equipment Model
New Owner/ Operator
Previous Owner/ Operator
A320-214 A320-232 A320-232 A320-212 A320-231 A320-232 A320-231 A320-231 A320-214 A320-214 A320-216 A320-216 A320-211 A320-216 A320-216 A320-214 A320-214 A320-231 A320-232 A320-214 A320-214 A320-214 A320-214 A320-232 A320-214 A320-214 A320-214 A320-214 A320-214 A320-214 A320-214 A320-214 A320-214 A320-214 A320-214 A320-214 A320-214 A320-214 A320-232 A320-214 A320-214 A320-214 A320-232 A320-232 A320-232 A320-214 A320-214 A320-214 A320-214 A320-232 A320-232 A320-232 A320-232 A320-232 A320-232 A320-214 A320-214 A320-214 A320-214 A320-214 A320-214 A320-214 A320-214 A321-211 A321-232 A321-231 A321-211 A321-232 A330-223hgw A330-243 A330-243 A330-343e A330-343e A330-343e A330-343e A330-342 A330-342 A330-342e A380-841
Interjet Cyprus Airways CIT Donbassaero Myanmar Airways Wizz Air Hungary Khors Air SAS Alafco Alafco Orix Alitalia Travel Service Airlines Orix Alitalia ILFC Alafco Unknown Aegean Airlines Easyjet Aerventure Aerventure Aerventure Hainan Airlines Spring Airlines Gulf Air China Southern A/lines Gulf Air Avianca Wells Fargo Avianca Air France Air France Air France Air France ACG Bank Of Utah Virgin America Jetblue Airways Air Berlin ICBC China Southern Airlines Indigo Indigo Qatar Airways ACG Bank Of Utah Virgin America Swiss Intl ILFC Sichuan Airlines Wizz Air Wizz Air Wizz Air Wizz Air Air Berlin Air Berlin Belair Airlines Easyjet AWAS AWAS Frontier Airlines Jazeera Airways Royal Air Maroc Air China Macquarie GATX A321 Partners Turk Hava Yollari Korean Air Lines Echo Leasing One Virgin Blue Iberworld Airlines Virgin Atlantic Virgin Atlantic China Airlines ILFC Air Transat Cathay Pacific Lufthansa
ILFC CIT China Southern Airlines Aercap Cyprus Airways Wizz Air Bulgaria Wells Fargo Wells Fargo Wataniya Airways Wataniya Airways Unknown Orix Smartlynx Airlines Unknown Orix Wataniya Airways Wataniya Airways IAI Olympic Air Easyjet Wataniya Airways Wataniya Airways Wataniya Airways Airbus Airbus Pembroke Airbus Pembroke Airbus Airbus Wells Fargo Airbus ALC Airbus Safe N03 Airbus Airbus Bank Of Utah Airbus Airbus Air Berlin ICBC Airbus MCAP Europe Airbus Airbus Airbus Bank Of Utah Airbus Airbus ILFC Airbus HKAC Airbus HKAC Airbus Celestial Air Berlin Airbus Airbus Airbus AWAS Airbus Atlas Blue Airbus Free Bird Airlines Aigle Azur Airbus Airbus Zamrid Echo Leasing One Aerolinea Principal Chile Airbus Aercap Virgin Atlantic Dragonair ILFC Airbus Airbus
Serial No. or No. of (Orders)/(Options)
Engine Model
Date of Manf or First Exp Deliv
2048 2334 2343 235 295 3562 362 369 3739 3791 3831 3831 384 3885 3885 3907 4049 405 4094 4196 4235 4304 4411 4482 4499 4502 4507 4541 4599 4599 4599 4601 4601 4604 4604 4610 4610 4610 4612 4613 4613 4613 4614 4614 4615 4616 4616 4616 4618 4619 4619 4621 4621 4628 4628 4631 4631 4631 4636 4641 4641 4641 -25 2076 4617 771 823 10 1203 365 365 1097 1206 1206 1206 132 132 15 061
CFM56-5b4/P V2527-A5 V2527-A5 CFM56-5a3 V2500-A1 V2527-A5 V2500-A1 V2500-A1 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b6/3 CFM56-5b6/3 CFM56-5a1 CFM56-5b6/3 CFM56-5b6/3 CFM56-5b4/3 CFM56-5b4/3 V2500-A1 V2527-A5 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b4/3 V2527-A5 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b4/3 V2527-A5 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b4/3 V2527-A5 V2527-A5 V2527-A5 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b4/3 V2527-A5 V2527-A5 V2527-A5 V2527-A5 V2527-A5 V2527-A5 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b3/P V2530-A5 V2533-A5 CFM56-5b3/P V2530-A5 Pw4170 Trent772b-60 Trent772b-60 Trent772b-60 Trent772b-60 Trent772b-60 Trent772b-60 Trent772-60 Trent772-60 Trent772-60 Trent970-84
2003-06 2004-11 2004-12 1991-08 1992-01 2008-07 1992-09 1992-09 2008-12 2009-02 2009-03 2009-03 1992-11 2009-04 2009-04 2009-05 2009-09 1993-01 2009-11 2010-02 2010-02 2010-05 2010-08 2011-01 2011-02 2010-11 2011-03 2010-12 2011-02 2011-02 2011-02 2011-02 2011-02 2011-02 2011-02 2011-02 2011-02 2011-02 2011-02 2011-02 2011-02 2011-02 2011-02 2011-02 2011-03 2011-02 2011-02 2011-02 2011-02 2011-02 2011-02 2011-02 2011-02 2011-02 2011-02 2011-03 2011-03 2011-03 2011-03 2011-03 2011-03 2011-03 2003-10 2011-02 1998-01 1998-04 2014-01 2011-02 2000-10 2000-10 2010-02 2011-02 2011-02 2011-02 1996-03 1996-03 2014-02 2010-08
Equipment Leased Leased Returned Leased Sold Returned Leased Sold Returned Returned Sold Leased Sub-Leased Sold Leased Returned Returned Leased Sub-Leased Sub-Leased Returned Returned Returned Delivered Delivered Sale-L/Back Delivered Sale-L/Back Delivered Sold Leased Delivered Sale-L/Back Delivered Sale-L/Back Delivered Sold Leased Delivered Delivered Sold Leased Delivered Sale-L/Back Delivered Delivered Sold Leased Delivered Delivered Leased Delivered Sale-L/Back Delivered Sale-L/Back Delivered Sale-L/Back Sub-Leased Delivered Delivered Sold Leased Cncl-Order Returned Delivered Returned Returned Ordered Delivered Sold Leased Returned Delivered Sale-L/Back Sub-Leased Returned Leased Ordered Delivered
Date 2011.03.02 2011.03.11 2011.03.09 2011.03.01 2011.03.02 2011.03.01 2011.03.18 2011.03.14 2011.03.16 2011.03.16 2011.03.09 2011.03.09 2011.03.12 2011.03.09 2011.03.09 2011.03.16 2011.03.16 2011.03.01 2011.03.01 2011.03.11 2011.03.16 2011.03.16 2011.03.16 2011.03.02 2011.03.09 2011.03.02 2011.03.15 2011.03.02 2011.03.01 2011.03.01 2011.03.01 2011.03.09 2011.03.09 2011.03.09 2011.03.09 2011.03.08 2011.03.08 2011.03.08 2011.03.07 2011.03.01 2011.03.02 2011.03.02 2011.03.03 2011.03.03 2011.03.10 2011.03.17 2011.03.17 2011.03.17 2011.03.18 2011.03.15 2011.03.15 2011.03.16 2011.03.16 2011.03.17 2011.03.17 2011.03.14 2011.03.14 2011.03.14 2011.03.09 2011.03.17 2011.03.17 2011.03.17 2011.03.01 2011.03.01 2011.03.08 2011.03.03 2011.03.01 2011.03.08 2011.03.07 2011.03.04 2011.03.04 2011.03.07 2011.03.15 2011.03.15 2011.03.15 2011.03.04 2011.03.04 2011.03.15 2011.03.15
Source: OAG Fleet iNET, 2011
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AIRPORTS & ROUTES: Regional airports Airports have been blighted by natural hazards and economic crises and just a few of Europe’s regional airports have managed to consistently increase traffic through these hard times. Looking ahead, they are further threatened by national passenger taxes however, some regional airports are managing to hold tight to their market. Bernard Fitzsimons reports on the industry.
REGIONAL AIRPORT SUCCESS STORIES T
HE GOOD NEWS TENDS TO BE PRETTY MARGINAL these days. According to Eurocontrol, European Organisation for the Safety of Air Navigation, the total number of flights in Europe grew last year, but only by 0.8 per cent to 9.49 million – and there were 175,000 cancellations, 100,000 of them a result of airspace closures due to volcanic ash. The Airports Council International (ACI) Europe, however, recorded a drop of 0.2 per cent in movements, though the number of passengers increased by a reasonably robust 4.2 per cent. Association of European Airlines (AEA) members, who had seen their passenger numbers slump from nearly 363 million in 2007 to fewer than 326 million in 2009, enjoyed something of a recovery, but last year’s figure of 335 million passengers was only slightly better than the total for 2005. No doubt the figure would have been better but for the effects of wobbling economies, volcanic eruptions and heavy snow toward the end of the year, compounded by industrial action that the AEA recognises was often a reaction to national austerity measures implemented in response to the recession.
Government support Brussels South Charleroi Airport recorded more than 30 per cent growth in both 2009 and 2010, taking its passenger total from just short of three million in 2008 to nearly 5.2 million last year; traffic in the 1Q of this year was up a further 22 per cent. The airport’s growth has gone hand-in-hand with that of Ryanair, which launched its first route to Dublin in 1997 when the airport handled just 200,000 passengers. The number had grown to 800,000 by 2001 when the Irish carrier made Charleroi its first mainland base. By the start of this year, Ryanair had 13 737-800s based at the airport and Jetairfly another two, along with Wizzair and Jet4you. So how did they do it? David Gering, the airport’s commercial aviation, PR and communication director, points to the new terminal, which opened three years ago and built after careful consultation with the low-cost airlines. The government of French-speaking Wallonia, which owns the airport, wanted a terminal to match their needs, he says, and one that was also pleasant for passengers without undue opulence.
Members of the European Regions Airlines Association (ERAA) “They came up with this shoe-box sized terminal which is very suffered from the same adverse factors. Its airlines carried 73.9 efficient,” Gering says. “If you use web check-in and you don’t million passengers in 2007, but just 70.6 million in 2009, before need to check luggage, you can get from the parking lot in front recovering last year to reach 72.4 million. Passenger numbers at of the terminal to your seat in the aircraft in 15 minutes.” most regional airports told a similar story, making the achievements Operationally, it was designed to support a 25-minute of those that bucked the trend all the more remarkable. turnaround. At the same time, 20 years after deregulation opened the way for low-cost carriers (LCCs) to operate continent-wide, new national taxes are starting to distort the competitive landscape with potentially alarming consequences for those facing cross-border competition from rivals in tax-free jurisdictions. And despite a promising start to the year, with passenger numbers up 7.5 per cent in January and 5.3 per cent in February at the 173 airports it tracks, ACI Europe highlights other challenges to airports’ commercial activities.
The incumbent operators, in turn “offer exactly what the catchment area wants,” he says. “The catchment area for a lowcost airport is about two hours’ drive. Within that two-hour drive zone around Charleroi we have 15 million inhabitants... That gives us a very stable pattern of incoming and outgoing passengers, which is obviously good for airlines. That stimulates them to develop further, and then you get more passengers. We attract the airlines with low rates – thanks, among other things, to the very cost-efficient new terminal – and make sure the airport is very accessible and an easy and pleasant surrounding for passengers so they come back.”
Probably most serious are the political turmoil on the other side of the Mediterranean and the associated escalation in oil prices. Less obvious is the effect of airlines enforcing single-bag rules. Under Noise is unlikely to be a constraint in the future, Gering says, the these guidelines, passengers must pay extra to take airport Walloon government having decided 20 years ago to invest in purchases onboard with consequent damage to airports’ retail Charleroi as a passenger hub while developing Liege for cargo. income. Additionally, despite the pressure to reduce their charges “The government has made sure that the conditions for people to airlines, costs such as security, air traffic and safety are driven living around those airports are acceptable,” he explains. The by regulation, and airports generally have little control over government has spent “huge amounts of money” to either buy these costs. residents’ houses and offer them an alternative place to live, or
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AIRPORTS & ROUTES: Region airports The TUI Group, however: “offers a whole different product than Ryanair, so now we have to adapt to the other side and build a VIP lounge and have personal assistance for people with corporate travel cards. But it’s an interesting development and we’re quite happy to go that way.” One potential cloud on the horizon is passenger taxes. “That is a nightmare scenario which crops up once in a while,” Gering says. “The entire Belgian travel industry, everybody together, stood up and lobbied very fiercely to show the government that it [taxes proposed two years ago] was not a good idea. We had the advantage that we could show them how things went in Scandinavia and in Holland, and in the end they decided not to go ahead.” Recent rumours suggest these proposals may resurface. “It’s definitely something very negative for the development of the airport and if such a tax would be imposed in Belgium then obviously Brussels Charleroi would feel the impact very quickly and very fiercely,” he believes.
Weeze and the great tax debate
Weeze is just one regional airport affected by taxes
insulate them thoroughly. “We have a curfew so during the night we are closed… It will never be a 24 hour operation here.” However, he adds that due to the government, it has had very few issues with local inhabitants. The airport installed a Cat III instrument landing system two years ago. “That was a big improvement for the airport because Charleroi is in a very foggy area,” Gering comments. Plans include an underground railway station offering a 25-minute connection to Brussels Midi, with its Eurostar and Thales international high-speed rail services, plus direct links to Cologne in Germany as well as Liege in Belgium. That is still eight years away, he says: “It’s a huge project because at the beginning of the 20th century this airfield was built in the middle of a swamp, so it’s technically very complicated.” In the meantime, Gering says, Charleroi is adapting to the arrival of less frill-free airlines: “In a way, we are doing the opposite of most major European airports, which have traditional carriers and traditional infrastructure. They have to adapt to welcome LCCs and that is not easy if you don’t have new infrastructure and if you have to modify your whole organisation. We have a terminal, which was designed for LCCs. The people who work here have been used to Ryanair for 10 years, so they know the low-cost way of doing things.”
An example of just how quickly and fiercely can be seen a little over 100 miles to the northwest of Charleroi at Weeze, in the populous and prosperous German state of North Rhine-Westphalia. Weeze is another airport that has seen Ryanair grow its presence and has had a succession of record years with passenger numbers climbing to 2.9 million in 2010. The former Laarbruch military air base, just over 50 miles northwest of Dusseldorf, was acquired by Airport Network, a subsidiary of Netherlands–based Marigot Holding in 2001. It started commercial operations in 2003 with three daily Ryanair flights to London. Marketing manager, Holger Terhorst, says Ryanair is clearly the main reason for the impressive growth of passenger volumes at Weeze. Having launched the first flight in May 2003, the airline started a base operation in 2007, which grew to nine aircraft by 2010. Of the 10.6 million passengers to have used the airport, approximately 9.5 million were Ryanair customers. The carrier currently bases seven based aircraft at the airport and flies to 55 destinations each week. The airport attracts operators with a catchment area of 10 million living within 30-minutes, including the cities of Duisburg and Düsseldorf in Germany plus Arnhem, Nijmegen and Venlo in the Netherlands. “We offer an extremely professional service at a low-cost price level,” Terhorst says. “Our passengers love the atmosphere of a small airport with its short distances from parking to the aircraft.” Ryanair had threatened to pull out of Weeze in 2009 after the state higher administrative court ordered restrictions on its operating hours. That threat was withdrawn when the ruling was overturned. But the passenger tax introduced in Germany at the beginning of the year will hit the airport hard, says Terhorst:
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AIRPORTS & ROUTES: Regional airports The impact of the passenger tax was, of course, compounded by the economic crisis. But originating traffic declined at the main hub, Amsterdam Schipol, while transfer traffic continued to rise. And while the tax had a minimal impact on the supply of flights offered at Groningen and Rotterdam, further to the north and east, Eindhoven saw its growth restricted and Maastricht Aachen Airport, near the borders to both Germany and Belgium, lost a substantial number of flights.
Aalborg airport claims its success is due to knowing the market
“There is no tax at Dutch airports and low-cost tickets are particularly affected by the tax of €8 ($11) per departing passenger. Ryanair has cancelled flights to 13 destinations in response. We anticipate 2.3 million passengers in 2011, which means a significant loss after the 2.9 million we saw in 2010. German politicians say the tax will be re-checked in 2012 – we do hope that the negative economic effects of the tax will lead to its abolition.”
KiM surveyed 3,000 people about their choice of airports. A fifth of them were unaware of the tax’s existence, but 14 per cent said it had changed their travel behaviour, with half cancelling a proposed flight or choosing to travel by car or train and the others opting for foreign airports, the most popular being Düsseldorf, Weeze and Brussels. Although Dutch travellers had already been using those airports in increasing numbers, the institute estimates that the tax saw an additional one million passengers fly from foreign airports. The big question is, will they come back? It is too soon to say, KiM admits the trend toward using German and Belgium airports predated, but was accelerated by the tax, and passengers who have discovered the alternatives and had a good experience are likely to continue using foreign airports. But improved supplies of flights, lower costs and improved accessibility to Dutch airports would encourage them to revert to Dutch airports.
Borderline decisions The Netherlands was the source of 52 per cent of Weeze’s traffic in 2010. But the Dutch, after imposing their own passenger tax of €11.25 ($15.85) on short-haul flights in 2008, dropped it the following year after finding the €300m ($423m) it raised was dwarfed by costs to the overall economy of more than €1bn ($1.41bn). One airport that stands to benefit is Eindhoven, across the Dutch border just 35 miles to the west of Weeze. Ryanair, Wizz Air and Transavia all operate from Eindhoven, which has seen passenger numbers increase from 1.63 million in 2008 to more than 2.14 million last year. The abolition of the passenger tax in 2009 led to the launch of several new routes, and scheduled traffic grew 30 per cent in 2010 as the number of destinations increased from 23 to 32. This year the airport expects to see overall growth of a further 15 per cent. On the other hand, a recent report by the Netherlands Institute for Transport Policy Analysis (KiM), part of the Dutch ministry of infrastructure and the environment, queries whether Dutch travellers who have discovered German airports will return because of the tax. It says the three most important factors influencing passengers’ choice of airport are time spent on preflight transport, frequency of flights and ticket prices. Pre-flight costs such as parking charges and the duration and directness of flights also have an influence. But there are less rational factors as well, such as habitual behaviour, unfamiliarity with possible alternatives, risk aversion behaviour and failure to access all the information regarding alternatives.
Denmark was one of the first countries to implement a passenger tax, but the DKK75 ($15) levy saw Danish passengers defecting to Malmö and Gothenburg, Sweden, and the negative effects on the country’s economy and tourism industry led the government to halve it in 2006 and drop it altogether in 2007. Aalborg Airport in northern Jutland was a prime beneficiary. Aaalborg-Copenhagen is the country’s busiest domestic route, and a resurgence in domestic traffic continued through the recession with traffic growing 7.5 percent in 2009 and another 19.5 per cent in 2010 to exceed 1.34 million. The majority travelled on the 48 daily flights offered by SAS, Cimber Sterling and Norwegian between Aalborg and the capital, and while the number of business travellers remained static last year, the number of leisure travellers doubled. On-line marketing manager, Martin Andersen, says there is a simple reason for Aalborg’s success in recent years, summed up in the ageold saying, “Know your market.” The airport carries out extensive market analysis in co-operation with a polling agency, he says: “This showed us our market potential and gave us a clear idea of the areas where we could maximise our growth with the least amount of resources. We are not quite done picking the lowest-hanging fruits yet, but when we are, market analysis will show us where to continue our marketing efforts and hence our growth strategy.” Aalborg is owned by the six major municipalities in the region. Its goal, Andersen says, is to maintain its position as the third largest airport in Denmark, and to develop its route map to facilitate growth in passenger numbers from 2010’s 1.35 million to two million in 2015. “Later this year, we will start expanding our physical surroundings so that we can handle all the passengers we expect to gain in the coming years,” he adds. When the work is finished, Aalborg will have an annual capacity of around 2.6 million passengers. “We have seen increasing passenger numbers in times that have been characterised by a financial crisis and a subsequent recession,” Andersen adds. “We expect an easier market, when this has passed.” But there is still that inescapable cloud on the horizon: “An increased tax on airline tickets sold in Denmark, which may get passed politically, will have a negative effect on our passenger numbers.”
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AIRPORTS & ROUTES: Route development Regional travel is a major part of Europe’s aviation sector. About 80 per cent of scheduled intraEuropean air passengers start or end their flight at a regional airport. Of these, more than onethird fly between two regional points. Jonathan Naylor, director at the aviation consultancy, AviaSolutions, discusses the market.
GOING LOCAL: REGIONAL ROUTE DEVELOPMENT T
HE GROWTH POTENTIAL OF REGIONAL AIRPORTS IS substantial. Between 2005 and 2011, 57 per cent of new capacity in Western Europe was added at regional airports, primarily small and mid-sized regional airports. Clearly, this segment of the aviation industry warrants close attention. It is important to note that regional airports are those not within the hub city, which is often but not always the capital city. For example, Frankfurt is the hub city within Germany. As such, all German airports except Frankfurt and Hahn are considered regional airports. There is a clear difference in the relative size of various European regional air markets. Germany, Spain and Italy have a decentralised, federal type structure. As a result, regional airports account for 70 per cent or more of overall scheduled capacity. These countries include major regional airports (or airport systems) such as Munich, Dusseldorf, Berlin, Barcelona and Milan – all of which have much in common with some primary airports.
The pros and cons of regional markets In contrast, the regional air market is less prevalent in more centralised countries such as France and the UK (about 40 per cent of the overall scheduled market). Smaller countries also tend to have more limited regional markets as the wider market cannot sustain multiple airports. Exceptions to this include countries where geography makes surface modes of travel uncompetitive, such as Norway.
Regional airports serve their local market in a variety of different ways. They typically undergo a similar evolutionary pattern as their passenger base grows. Firstly, they provide links to the capital city, which in turn offers onward connections. These are often supplemented by charter services to popular sun and ski resorts. Secondly, they secure direct international services to a wider range of primary airports, including alternative hubs. Leisure routes can also be introduced on a more regular, scheduled basis. Lastly, they develop long-haul routes to major cities, for example New York, or places where there are strong cultural links to specific markets. Airlines are attracted to regional markets for numerous reasons. Often, competition from other airlines is relatively limited. However, significant demand may already exist on currently unserved routes – for example, passengers may be travelling via a transfer hub or by road or rail to alternative airports. Additionally, regional airports can typically offer slot availability at all times of the day as they are relatively uncongested airports. This lower level of traffic also means quick turnaround times and low airport charges. However, there are challenges. These include greater seasonality and lower yields compared to primary markets. The power of frequent flier programmes and corporate travel policies also mean some passengers will continue to use indirect routings or travel by road, rail or sea to less convenient airports – particularly in long-haul markets.
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AIRPORTS & ROUTES: Route development A more general challenge for domestic (and other short sector) routes is the combination of improving rail networks (mainly in France, Spain, Germany, Italy and the UK) and additional taxation (notably within the UK, Germany, Austria). Regional airports are often disproportionately impacted as better rail networks have the twin impact of capturing a share of the local travel market and improving access to primary airports, thus impacting other routes. Departure tax on domestic routes is charged at both ends, typically representing a higher proportion of the fare than for international routes. Also, regional airports tend to have a higher proportion of routes where travel by road, rail or sea is a viable alternative.
The role of LCCs Over the last 10 to 15 years, the low-cost carrier (LCC) segment has become an increasingly important player across the European aviation sector. The regional aviation market is no exception. LCCs or hybrid airlines often play a key role in a regional airport’s evolution. It is not generally in a flag carrier’s interest to develop services that bypass their hub and therefore cannibalise existing connecting traffic. Furthermore, flag carriers often lack the aircraft equipment and cost base to profitably serve regional markets with a lower yield. Traditional full-service and regional airlines continue to be a vital part of regional aviation in many parts of Europe. Nevertheless, recent growth has been delivered predominantly by the LCC and hybrid / leisure airline sectors. Hybrid airlines can also be appropriate for regional markets. The mixed full-service / low-cost model has the ability to serve the business market effectively. Depending on the nature of the route, hybrid airlines offer high frequency, some frills (such as lounges and frequent flyer programmes) and tend to avoid less convenient secondary airports. Air Berlin and Flybe are two examples of large hybrid airlines that serve the regional market extensively, competing both on price and convenience for business passengers. With their point-to-point focus, LCCs bring a competitive cost base and brand presence at both ends of the route, as such they are a natural fit for many regional markets. The low fares and strong marketing associated with this sector can lead to substantial stimulation of traffic on new routes. New routes are the principal driver of growth at regional airports and attracting and retaining the right airline for a particular market can be the key differentiator between rapid traffic growth and stagnation. Between 2005 and 2011, the majority of growth came from the introduction of new services, with pre-existing routes providing only 14 per cent of growth. This poses some interesting questions about the relative importance of demand and supply-side factor. Boeing suggests that some 20 to 40 per cent of traffic growth is derived from supply-side factors, and it is likely that the figure for regional markets is higher. Regional airport growth rates tend to be higher than those for primary markets. There is usually significant scope for market stimulation from improved schedule offerings due to new routes, better frequencies or lower fares. Improved schedules also enable the airport to capture more of its local catchment traffic, reducing ‘leakage’ to nearby airports with more developed networks. Better air access can also lead to the development of in-bound tourism.
Opportunities for airlines and airports The key opportunity for airlines looking to develop their regional network is to identify regional markets that are growing For example, cumulative demand growth can lead to a tipping point at which previously unserved routes become commercially viable.
Other opportunities may come from capturing traffic from competing local airports that currently have a stronger route network. Alternatively, there may be potential with the right product and regional stakeholder support, to achieve a stepchange in in-bound tourism. The long-haul market is under-represented at regional airports and for obvious reasons. Nevertheless, long-haul growth has been higher at regional airports than primary ones. New aircraft technology, such as Boeing’s 787, has the potential to transform the economics of long, thin routes. Airports can do much to give themselves the best possible chance to attract the right airlines for their market. Firstly, the airport needs to understand the market potential – and which airlines are best placed to help them exploit it. This can be an uncomfortable process and it may require some difficult and finely judged decisions. For example, in seeking to attract LCCs that may deliver strong traffic growth, there is a risk that existing, full-service and charter airline traffic will be cannibalised. The current airport cost base may not support airport charges at the level needed to secure major LCCs. Once a strategy has been developed, the next step is to approach airlines. The characteristics of specific regional markets are not necessarily clear to airlines. Robust and transparent traffic projections, based on a clear demonstration of the size and quality of existing demand, are essential. The structure and level of airport tariffs and start-up incentives must be aligned with the needs of different airline sectors while making financial sense to the airport. Finally, engagement with local stakeholders can be very powerful. This demonstrates commitment by the region as well as proving potential airlines with practical help. It can be vital in persuading an airline to develop services and, perhaps most importantly, help any subsequent routes to be successful. Such support can include financial aid for the first two to three years of a new route; joint marketing of new routes in conjunction with tourism authorities; commitments from local businesses for a minimum number of seats per flight; surveys of travel patterns for local businesses; and organising dialogue with key travel agents, including corporate travel agencies.
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MAINTENANCE OPERATIONS: MRO Europe European airlines will spend $14bn on MRO this year. But what types of work are they spending the money on and how will the balance of expenditure change over the next 10 years? Bernard Fitzsimons answers these questions.
A
S THE EUROPEAN FLEET GROWS OVER THE NEXT decade, the profile of support will also change. To help MROs and OEMs anticipate requirements in the years ahead, the OAG Fleet and MRO Forecast Suite analyses the continent’s fleet and predicts changes in its composition and the resulting impact on MRO expenditure. The forecast suggests that the turbine-powered commercial aircraft fleet will grow from its current level of just under 6,000 to more than 7,800 by 2020. This year, the fleet will cost $14bn to maintain but growth across the various segments of MRO activity will not be consistent. Engine maintenance, for example, will more than double in value from the 2011 figures but airframe maintenance will decline and other areas will see relatively consistent if modest growth throughout the decade.
Fleet dynamics The 2011 installed base of 5,900 commercial jets is dominated by narrowbodies. The A320 family accounts for around 30 per cent of the total fleet, with 892 A320s, 580 A319s (including 42 corporate jet versions), 313 A321s and 40 A318s (six of which are CJs). The 979 737NGs, 603 737 Classics and 19 business jets amount to another 27 per cent of the total, and there are also 203 757s and 142 MD-80/90s. Substantial regional jet fleets include 176 BAe146s, 175 E135/140/145s, 159 CRJ-100/200s, 133 CRJ-700/900/1000s, 125 E190/195s, 68 Fokker 100s, 65 E170/175s and 40 Fokker 70s. Notable widebody fleets are the 218 A330-200/200F/300s, 188 777s, 184 747-400s plus 26 747 Classics, 177 A340s, 150 767s and 43 MD-11s. This year, fleet growth is expected to reach nearly six per cent and new arrivals will outnumber retired aircraft by 10 times. There will be just 38 aircraft retirements, including 12 MD-80s and no more than a handful of any other type. Two thirds of the new arrivals will be 737NGs (at 145 aircraft) and A320 family members (111). Bombardier will enter about 25 CRJ700/900/1000 25 aircraft; Embraer 22 E190/195s and Sukhoi 12 SSJ-100 Superjets. The number of retirements will rise for the remainder of the decade, apart from a slight dip in 2017, as the number of ageing aircraft grows in line with the rate of deliveries two or three decades earlier. Altogether, says OAG, the 10 years through 2020 will see 1,262 retirements, with the annual number passing 50 next year, 150 in 2015 and 200 in 2019. The 3,198 new deliveries anticipated over the same period will result in a 2020 fleet of 7,836 aircraft, almost one third bigger than today’s. But the distribution of new deliveries will not be spread evenly throughout the decade: while there will be more than 350 deliveries annually in 2011 to 2013, the number falls below 350 in each of the next two years to fewer than 300 in each of the following five.
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MAINTENANCE OPERATIONS: MRO Europe
EUROPEAN
MRO FORECAST 2011-2020 European MRO spend by expense category $ 8,000,000 7,000,000 Engine Maintenance
6,000,000
Airframe Heavy Maintenance
5,000,000
Line Maintenance Modifications
4,000,000
Components (warranty included)
3,000,000 2,000,000 1,000,000 0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: OAG
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MAINTENANCE OPERATIONS: MRO Europe Implications to MRO In terms of expenditure, engine maintenance will account for 34 per cent of Europe’s $14bn total MRO spend, or $4.82bn, in 2011. Line maintenance is worth $3.06bn, components – including warranty work – $2.83bn, airframe heavy maintenance $2.2bn and modifications $1.1bn.
250
200
Going forward, the OAG figures suggest that the amount spent on engine maintenance will grow in each of the next two years to reach $5.8bn in 2013. A dip in 2014 will be followed by further strong growth to reach a peak of $7.6bn in 2018, then another decline over the next two years will reduce the spend to $7.2bn in 2020, representing a compound annual growth rate of 4.8 per cent.
150
100
50
0
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Source: OAG
For the PW4000 that powers the 747-400 for example, there are four different shop visit intervals, Chen says: “The first one could be 17,000 flight hours and the next three may be every 15,000 flight hours. Depending on how utilisation changes over the next 10 years and the age of the aircraft, you will see ups and downs in the planning horizon.”
450 400 350 300 250 200 150 100 50 0
Yen-Pu Paul Chen, OAG Aviation’s business development director, explains that it is natural for the engine and airframe spend to fluctuate over the years. “We forecast on the basis of events such as engine overhauls and airframe heavy maintenance visits, and each model of airframe or engine has different intervals.”
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
The age of aircraft is another factor, he says. “Typically, during the last year of an aircraft’s service, airlines and operators don’t do any engine overhaul for that aircraft. That’s one of the factors we put in when we model this forecast.” Another factor is the interval between an aircraft’s delivery and the need for heavy maintenance or engine overhaul: “Typically, if there’s a delivery peak of certain aircraft then five or six years later there will be a peak in terms of engine maintenance.” So, the anticipated spike in deliveries of the 737NG and A320 around 2012 to 2013 will be followed by a peak in engine maintenance costs in 2018.
Source: OAG
On top of that, Chen points out, every airline is different. “Not all airlines go by the same maintenance intervals recommended by the OEM,” he says. To account for the variations, OAG Aviation relies on a group of OEMs and maintenance providers. “They provide their input according to their experience in terms intervals, shop visits and the cost of labour and materials. Then we compile this input, decide which numbers we want to use and put them into the model.”
Size doesn’t matter. Service does.
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AFM73_MRO_AFM71 18/05/2011 11:50 Page 56
56 | AFM • ISSUE 73 May-June 2011
MAINTENANCE OPERATIONS: MRO Europe
The forecast covers 20 ATA chapters, he says, and in western Europe the largest expense will come from ATA 32 (wheels and brakes) followed by ATA 49 (auxiliary power units), ATA 73 (engine fuel and control), in-flight entertainment components (which have no chapter), ATA 78 (thrust reverser) and ATA 34 (navigation). Together, these six account for just over half of all components spending. “Growth in expenditure on components should be pretty constant,” Chen says. The value of modifications will fluctuate as it trends upward, demonstrating a modest CAGR of 1.4 per cent. “In terms of modifications we cover five areas,” Chen says. The biggest is interior modifications, with avionic and system modifications the second largest.
Line maintenance, the OAG forecast suggests, will grow gradually from its current level of $3bn to reach $3.9bn by 2020. That more or less reflects the 33 per cent growth in the overall fleet size, Chen says, as line maintenance costs are typically carried out inhouse and include many minor events rather than the occasional major effort required for airframe or engine overhaul.
“Interiors are pretty pricey,” Chen comments. “Some first class seats could be $100,000 a piece, so interior modifications account for the largest share of all the modifications.” Not all airlines upgrade their cabins on a regular basis, so the forecast accounts for variations in airline policy, he says: “We segment the airlines and we look at each individually to predict when they’re going to do it next.” Avionics modifications are usually the result of regulatory mandates, and are consequently a function of the number of aircraft in service.
“In line maintenance we cover the transit or turn checks, the daily overnight checks, the weekly checks and the A checks,” Chen says. “Line maintenance typically has the highest share of inhouse [work] as opposed to being outsourced, because it is still considered a core activity among airlines.”
Then comes either in-flight entertainment (IFE) installation or passenger to freighter conversion (P2F), both of which vary from year to year. “P2F is based on demand,” Chen says, whereas IFE upgrades tend to happen every few years depending on individual airline policy. The final modifications activity is painting, which represents a relatively small spend.
The cost is a function of utilisation, he says, “and the intervals are so short that it’s not going to cause any major ups and downs. For an A320, the C check is every 18-20 months, whereas A checks are roughly every 500 hours, which is about every month to six weeks, so you’re not going to see any major fluctuations.”
OAG’s clients use the forecast primarily for strategic planning, Chen says. “Some are MRO providers, some are airframe, systems or component OEMs, and they use the forecast for their strategic planning typically once a year. They look at the future trends and see where the opportunities may be or where the risks may be.”
As well as the number of aircraft, line maintenance requirements are affected by fleet utilisation, he adds: “If the airplanes are not flying enough then you don’t have a lot of A checks. As long as it’s flying you’re going to have overnight and weekly checks, the calendar-based checks are going to be there no matter what, but the frequency of flight hour-based checks will depend on utilisation – the more you fly the sooner you will incur the flight hour-based line maintenance activities such as A checks and transit or turn checks.”
He cites the hypothetical example of a company maintaining CF6 engines for the DC-10: “The DC-10 is going to retire pretty soon. So if this company is an MRO provider that only does DC-10 maintenance then they’re going to have to look to the future to see how rapidly DC-10s are going to retire, how soon they’re going to lose their business and, when that happens, what they are going to do about it. Are they going to look for other opportunities close to their current capability, or expand their current capability to something else so that they can maintain their revenue streams?”
Utilisation of older types such as the MD-80, DC-9 and ERJ is falling, and the 50-seat regional jets are also flying less. But given equal utilisation there is little variation in the cost of line maintenance for older or newer types, Chen says: “The overnight checks and turn checks are a small amount of money, A checks across the board are at similar intervals. There are just a lot of activities.”
Components and modifications The value of component work, including warranty work, will grow at a higher rate, exhibiting a compound annual growth rate (CAGR) of 3.9 per cent to overtake that of line maintenance by 2019. The OAG forecast looks at components by Air Transport Association (ATA) chapter (ATA numbers provide a common referencing standard for all commercial aircraft documents) and considers work outside scheduled checks, so the spend is a function of reliability. Chen says: “Every once in a while it’s going to break and you’re going to have to fix it, it’s all based on probability.”
Western Europe is the second largest region after North America in terms of MRO spend, he adds, but it has some distinctive characteristics. “The European airlines, their operation and their behaviours have differences from North America and Asia, but overall the trends are very similar. The fleet composition may be different, but overall the maintenance activities are quite similar.” The most striking difference is the cost structure, he says. “If you look at airlines that do their own maintenance, the cost is the highest in the world,” he says. “If you go to some of the major MRO providers in Asia, they all have a lot of business that comes from Europe and North America, whereas I don’t think a lot of airlines in the US would outsource their maintenance work to Europe because of its cost structure. If you look at $40-50 per man-hour in Asia, you’re looking at $80 per man-hour in Europe. Nobody’s going to come to Europe for that.”
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AFM73_Data_AFNM 18/05/2011 09:38 Page 58
58 | AFM • ISSUE 73 May-June 2011
INDUSTRY DATA: FLEET FINANCE, FIRM ORDERS, AIRCRAFT TRANSACTIONS, LIST PRICES AND LEASE RATES AIRCRAFT TRANSACTIONS – Boeing, Airbus, ATR, and Bombardier. 16 Feb to 18 Apr 2011 Contract Date 16/02/2011 16/02/2011 16/02/2011 16/02/2011 16/02/2011 16/02/2011 16/02/2011 16/02/2011 16/02/2011 16/02/2011 17/02/2011 17/02/2011 17/02/2011 17/02/2011 17/02/2011 17/02/2011 17/02/2011 17/02/2011 17/02/2011 17/02/2011 17/02/2011 18/02/2011 18/02/2011 18/02/2011 18/02/2011 18/02/2011 18/02/2011 18/02/2011 18/02/2011 21/02/2011 21/02/2011 22/02/2011 22/02/2011 22/02/2011 22/02/2011 22/02/2011 22/02/2011 22/02/2011 22/02/2011 22/02/2011 23/02/2011 23/02/2011 23/02/2011 23/02/2011 23/02/2011 24/02/2011 24/02/2011 24/02/2011 24/02/2011 24/02/2011 24/02/2011 24/02/2011 24/02/2011 24/02/2011 24/02/2011 24/02/2011 24/02/2011 24/02/2011 24/02/2011 24/02/2011 24/02/2011 25/02/2011 25/02/2011 25/02/2011 25/02/2011 25/02/2011 25/02/2011 25/02/2011 25/02/2011 25/02/2011 25/02/2011 25/02/2011 28/02/2011 28/02/2011 28/02/2011 28/02/2011 28/02/2011 28/02/2011 28/02/2011 28/02/2011 28/02/2011 28/02/2011 28/02/2011 28/02/2011 28/02/2011 28/02/2011 28/02/2011 28/02/2011 28/02/2011 28/02/2011
S/N 4594 41039 28901 28901 21790 7028 7029 561 14500978 DC-868B 4605 4456 4589 4603 E2200 23375 23375 25138 37252 20279 UE-395 12300 22947 25841 27204 27204 19010 120160 120195 4584 25534 4570 48486 49658 53467 39046 39412 633 3165 UC-121 4595 49643 49761 49764 49765 729 2918 1195 20175 49555 49556 49557 53246 53297 7119 110399 110451 AC-617 UE-142 UE-229 UE-229 0376 45826 49401 49423 53486 53460 53524 26555 4024 454 3160 4606 4609 1201 414 45966 46074 47291 49786 24538 27830 29083 32423 24399 7500 7500 554 3058 11371
A/C Model Airbus A320 BAE SYSTEMS (Jetstream) Jetstream 41 Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 737 (JT8D) Bombardier (Canadair) CRJ RJ Bombardier (Canadair) CRJ RJ Bombardier (de Havilland) Dash 8 Embraer ERJ-135 Fairchild (Swearingen) Metro Airbus A319 Airbus A320 Airbus A320 Airbus A320 BAE SYSTEMS (HS) 146 Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 737 (NG) Fokker 50 Hawker Beechcraft 1900 Boeing (McDonnell-Douglas) DC-3 Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 757 Boeing 757 Bombardier (Canadair) CRJ1000 RJ Embraer EMB-120 Brasilia Embraer EMB-120 Brasilia Airbus A320 Boeing 767 Airbus A321 Boeing (McDonnell-Douglas) MD-11 Boeing (McDonnell-Douglas) MD-80 Boeing (McDonnell-Douglas) MD-80 Boeing 737 (NG) Boeing 737 (NG) Bombardier (de Havilland) DHC-6 TO Fairchild/Dornier 328JET Hawker Beechcraft 1900 Airbus A320 Boeing (McDonnell-Douglas) MD-80 Boeing (McDonnell-Douglas) MD-80 Boeing (McDonnell-Douglas) MD-80 Boeing (McDonnell-Douglas) MD-80 Airbus A300 Airbus A318 Airbus A330 Boeing (McDonnell-Douglas) DC-3 Boeing (McDonnell-Douglas) MD-80 Boeing (McDonnell-Douglas) MD-80 Boeing (McDonnell-Douglas) MD-80 Boeing (McDonnell-Douglas) MD-80 Boeing (McDonnell-Douglas) MD-80 Bombardier (Canadair) CRJ RJ Embraer EMB-110 Bandeirante Embraer EMB-110 Bandeirante Fairchild (Swearingen) Metro Hawker Beechcraft 1900 Hawker Beechcraft 1900 Hawker Beechcraft 1900 Airbus A320 Boeing (McDonnell-Douglas) DC-9 Boeing (McDonnell-Douglas) MD-80 Boeing (McDonnell-Douglas) MD-80 Boeing (McDonnell-Douglas) MD-80 Boeing (McDonnell-Douglas) MD-90 Boeing (McDonnell-Douglas) MD-90 Boeing 747 Bombardier (de Havilland) Dash 8 Bombardier (de Havilland) Dash 8 Fairchild/Dornier 328JET Airbus A320 Airbus A320 Airbus A330 Airbus A340 Boeing (McDonnell-Douglas) DC-8 Boeing (McDonnell-Douglas) DC-8 Boeing (McDonnell-Douglas) DC-9 Boeing (McDonnell-Douglas) MD-80 Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 737 (NG) Boeing 737 (NG) Boeing 747 Bombardier (Canadair) CRJ RJ Bombardier (Canadair) CRJ RJ Bombardier (de Havilland) Dash 8 Fairchild/Dornier 328 Fokker 100
Variant 210 (CFM)
Reg No OE-LEH G-MAJP 500 Winglets N17640 500 Winglets N17640 200 Advanced ZS-SIT 200LR N403SW 200LR N405SW 300MPA JA728A Legacy 600 P4-KUL 23 N654AR 130 (IAE) CC-BCC 210 (CFM) B-6737 210 (CFM) F-HBAO 230 (IAE) VT-IEA 200 G-BTVT 300 Winglets N14324 300 Winglets N14324 300 N552MS 800 Winglets D-ATUI PK-ECD D C-GWWK BT-67 C-GVKB 300 N307SW 400 ZS-OTH 200 (P&W) N410JR 200 (P&W) N410JR 1000EL NextGen F-HMLF ER N919EM N109EM 230 (IAE) ZK-OJQ 300ER (P&W) V8-RBH 230 (IAE) PT-MXH Freighter (M) (P&W) 83 (MDC) N873GA 83 (MDC) N877GA 800 Winglets LN-DYK 800 Winglets LN-NOR 300 N6161Q PKC-1 ZS-PKX 230 (IAE) N607NK 83 (MDC) N874GA 88 N401NV 88 N403NV 88 N404NV 620R (P&W) N3729 110 (CFM) F-GUGN 340HGW (RR) G-VSXY C-47TP N145RD 83 (MDC) N416NV 83 (MDC) N862GA 83 (MDC) N861GA 83 (MDC) N408NV 81 N821TH 200LR C-GGDW P1 N64CZ P1 N36AN III N617BT D EP-828 D N10675 D N10675 230 (IAE) N376BV 15RC (stg 3 Hkits) N229DE 83 (MDC) N884GA 83 (MDC) N891GA 83 (MDC) N879GA 30 HB-JID 30 B-2251 400 (P&W) 4X-ELH 400 5Y-VVZ 200 N454YV N821MW 210 (CFM) D-ABFP 230 (IAE) VT-IEB 340HGW (RR) G-VKSS 310 (CFM) OE-IAN 73CF N866UP 73F (M) N874UP 33F (Stg 3 Hkits) N933AX 83 (MDC) N860GA 300 N369UA 400 N198SF 700 Winglets OY-JTZ 700 Winglets N423AM 200SF (GE) EK200ER VQ-BJZ 200ER VQ-BJZ 300 N837CA 100 N570EF N371MX
Owner Name GE Capital Corp Eastern Airways BLF Continental Airlines Outsourcing for Africa Bombardier Bombardier Sojitz Avisys Cortal Limited EP Aviation Bandurria Leasing ICBC Leasing Celestial Aviation ORIX Aviation BAE Systems AS&L Continental Airlines Trans Air Congo Amentum Capital Sky Aviation West Wind Aviation Kenn Borek Air Infinity Trading & Solutions Newshelf 1083 Brickell Asset Management Aerolease Constellation Phoenix Phoenix ALC Pennylane Nomura Babcock & Brown N643FE Sunrise Asset MGMT Sunrise Asset MGMT JSA International AWAS Twin Otter Support Services Aero North International Plenthan Investments BOC Aviation Sunrise Asset MGMT Sunrise Asset MGMT Sunrise Asset MGMT Sunrise Asset MGMT Aircraft Solutions (Offshore) FI Maple Limited AerCap Priority Air Charter Sunrise Asset MGMT Sunrise Asset MGMT Sunrise Asset MGMT Sunrise Asset MGMT Grandmax Group Bombardier Piper East Piper East Career Aviation Co Peruvian Army Antrak Air Ghana Rangeflyers Undisclosed Sierra American Corp Sunrise Asset MGMT Sunrise Asset MGMT Sunrise Asset MGMT SAS Delta Air Lines El Al Blue Bird Aviation ASL Lux Aircraft Trust Geshaft Und Starke Asset GE Capital Corp Avolon Aerospace AerCap AMES-CAMO AerSale AerSale Kalitta Charters II Sunrise Asset MGMT Brickell Asset MGMT Speed Star Elviria Leasing MASL Aerospace Consortium AK Bars Aero Magpie Aviation Leasing Global Pripal US Air Force Jetran
Operator Name Niki Eastern Airways BLF Continental Airlines Africa Charter Airline Bombardier Services Corp Bombardier Services Corp Japan Coast Guard PremierAvia EP Aviation LAN Airlines China Southern Airlines Aigle Azur IndiGo Airlines BAE Systems AS&L Continental Airlines Trans Air Congo TUIfly Sky Aviation West Wind Aviation Kenn Borek Air Infinity Trading & Solutions Kulula Brickell Asset MGMT Aerolease International Brit Air Evernham Motorsports Evernham Motorsports Air New Zealand Aerospace MGMT Capital TAM Linhas Aereas FedEx Allegiant Air Allegiant Air Norwegian Norwegian Twin Otter Support Services Aero Nusantara Indonesia CemAir Spirit Airlines Allegiant Air Allegiant Air Allegiant Air Allegiant Air Universal Asset MGMT Air France Virgin Atlantic Airways Priority Air Charter Allegiant Air Allegiant Air Allegiant Air Allegiant Air Orient Thai Airlines Bombardier Wiggins Airways Wiggins Airways Career Aviation Co Peruvian Army Antrak Air Ghana Antrak Air Ghana Undisclosed Sierra American Corp Allegiant Air Allegiant Air Allegiant Air Hello China Southern Airlines El Al Blue Bird Aviation ASL Lux Aircraft Trust Petra Aviation airberlin IndiGo Airlines Virgin Atlantic Airways Iberia AerSale AerSale Kalitta Charters II Allegiant Air Brickell Asset MGMT Speed Star Jet Time Macquarie Airfin Veteran Avia AK Bars Aero AK Bars Aero Global Pripal fin Company US Air Force Jetran International
Event Remarks Purch'd - sale/l.back on del Purch'd off lease/fin term comp. Purch'd. Park'd Purch'd. Park'd Purch'd off lease/fin term comp. Purch'd. Park'd Purch'd. Park'd Purch'd Purch'd Purch'd Purch'd - sale/l.back on del Purch'd - sale/l.back on del Purch'd - sale to SPC by lessor on del Purch'd - sale/l.back on del Purch'd. Park'd Purch'd. Park'd Purch'd. Park'd Purch'd. Park'd Purch'd - sale/l.back on del Purch'd Purch'd Purch'd off lease/fin term comp. Purch'd. Park'd Purch'd - subject to lease Purch'd. Park'd Purch'd. Park'd Purch'd - sale/l.back on del Purch'd - subject to lease Purch'd - subject to lease Purch'd - sale/l.back on del Purch'd. Park'd Purch'd - sale/l.back on del FedEx Purch'd. Park'd Purch'd - sale/l.back Purch'd - sale/l.back Purch'd - sale/l.back on del Purch'd - sale to SPC by lessor on del Purch'd Purch'd Purch'd Purch'd - sale to SPC by lessor on del Purch'd - sale/l.back Purch'd - sale/l.back Purch'd - sale/l.back Purch'd - sale/l.back Purch'd. Park'd Purch'd - sale/l.back Purch'd - sale/l.back on del. Park'd Purch'd Purch'd - sale/l.back Purch'd - sale/l.back Purch'd - sale/l.back Purch'd - sale/l.back Purch'd - subject to lease. Park'd Purch'd. Park'd Purch'd. Park'd Purch'd. Park'd Purch'd. Park'd Purch'd Purch'd. Park'd Purch'd - sale/l.back. Park'd Purch'd - subject to lease. Park'd Purch'd Purch'd - sale/l.back Purch'd - sale/l.back Purch'd - sale/l.back Purch'd off lease/fin term comp.Park'd Purch'd - sale/l.back Purch'd. Park'd Purch'd. Park'd Purch'd. Park'd Purch'd - sale/l.back Purch'd - sale/l.back on del Purch'd - sale/l.back on del Purch'd - sale to SPC by lessor on del. Park'd
Purch'd - subject to leasePark'd Purch'd. Park'd Purch'd. Park'd Purch'd. Park'd Purch'd - sale/l.back Purch'd. Park'd Purch'd. Park'd Purch'd - subject to leasePark'd Purch'd. Park'd Purch'd. Park'd Purch'd. Park'd Purch'd - sale/l.backPark'd Purch'd. Park'd Purch'd. Park'd Purch'd. Park'd
AFM73_Data_AFNM 18/05/2011 09:38 Page 59
May-June 2011 AFM • ISSUE 73 | 59
INDUSTRY DATA: FLEET FINANCE, FIRM ORDERS, AIRCRAFT TRANSACTIONS, LIST PRICES AND LEASE RATES AIRCRAFT TRANSACTIONS – Boeing, Airbus, ATR, and Bombardier. 16 Feb to 18 Apr 2011 Contract Date 28/02/2011 01/03/2011 01/03/2011 01/03/2011 01/03/2011 01/03/2011 01/03/2011 01/03/2011 01/03/2011 01/03/2011 01/03/2011 01/03/2011 02/03/2011 02/03/2011 02/03/2011 02/03/2011 02/03/2011 02/03/2011 02/03/2011 03/03/2011 03/03/2011 03/03/2011 03/03/2011 03/03/2011 03/03/2011 03/03/2011 03/03/2011 03/03/2011 03/03/2011 04/03/2011 04/03/2011 04/03/2011 04/03/2011 04/03/2011 06/03/2011 07/03/2011 07/03/2011 07/03/2011 07/03/2011 07/03/2011 07/03/2011 08/03/2011 08/03/2011 08/03/2011 08/03/2011 08/03/2011 08/03/2011 09/03/2011 09/03/2011 09/03/2011 09/03/2011 09/03/2011 09/03/2011 09/03/2011 09/03/2011 09/03/2011 09/03/2011 09/03/2011 09/03/2011 09/03/2011 10/03/2011 10/03/2011 10/03/2011 10/03/2011 11/03/2011 11/03/2011 11/03/2011 11/03/2011 11/03/2011 11/03/2011 11/03/2011 11/03/2011 11/03/2011 12/03/2011 14/03/2011 14/03/2011 14/03/2011 14/03/2011 14/03/2011 14/03/2011 14/03/2011 15/03/2011 15/03/2011 15/03/2011 15/03/2011 15/03/2011 15/03/2011 15/03/2011 15/03/2011 15/03/2011
S/N UE-155 4599 19391 22015 30617 37253 40867 129 434 436 590 493 0295 3906 49623 7114 7114 114 UE-229 3846 4614 49660 49667 29053 30735 30735 535 553 11375 47925 47929 7011 7038 11348 020 27452 30620 27645 176 766 11285 4613 641 39005 29053 11336 UE-135 3831 3885 4601 4604 503 510 606 22080 24877 120215 120296 3066 11347 730 23212 8073 11305 49477 37884 25622 24075 24080 25583 27111 3066 11304 29206 0369 4631 53461 24250 31478 3162 24 1485 1556 4507 1206 307 49857 21960 22632 40131
A/C Model Hawker Beechcraft 1900 Airbus A320 Boeing 727 Boeing 727 Boeing 737 (NG) Boeing 737 (NG) Boeing 737 (NG) Bombardier (de Havilland) Dash 8 Bombardier (de Havilland) Dash 8 Bombardier (de Havillandd) Dash 8 Bombardier (de Havilland) Dash 8 Bombardier (de Havilland) DHC-6 TO Airbus A320 Airbus A320 Boeing (McDonnell-Douglas) MD-80 Bombardier (Canadair) CRJ RJ Bombardier (Canadair) CRJ RJ Bombardier (de Havilland) DHC-6 TO Hawker Beechcraft 1900 Airbus A320 Airbus A320 Boeing (McDonnell-Douglas) MD-80 Boeing (McDonnell-Douglas) MD-80 Boeing 747 Boeing 757 Boeing 757 Bombardier (de Havilland) Dash 8 Bombardier (de Havilland) DHC-6 TO Fokker 100 Boeing (McDonnell-Douglas) DC-10 Boeing (McDonnell-Douglas) DC-10 Bombardier (Canadair) CRJ RJ Bombardier (Canadair) CRJ RJ Fokker 100 ATR ATR 42 Boeing 737 (CFMI) Boeing 737 (NG) Boeing 747 Bombardier (de Havilland) DHC-6 TO Bombardier (de Havilland) DHC-6 TO Fokker 100 Airbus A320 BAE SYSTEMS (Jetstream) Jetstream 31 Boeing 737 (NG) Boeing 747 Fokker 100 Hawker Beechcraft 1900 Airbus A320 Airbus A320 Airbus A320 Airbus A320 ATR ATR 42 ATR ATR 42 ATR ATR 42 Boeing 727 Boeing 737 (CFMI) Embraer EMB-120 Brasilia Embraer EMB-120 Brasilia Fairchild/Dornier 328 Fokker 100 Airbus A300 Boeing 767 Bombardier (Canadair) CRJ RJ Fokker 100 Boeing (McDonnell-Douglas) MD-80 Boeing 737 (NG) Boeing 757 Boeing 767 Boeing 767 Boeing 767 Boeing 767 Fairchild/Dornier 328 Fokker 100 Boeing 737 (CFMI) Airbus A320 Airbus A320 Boeing (McDonnell-Douglas) MD-90 Boeing 737 (CFMI) Boeing 777 Fairchild/Dornier 328JET General Dynamics (Convair) 580 Airbus A319 Airbus A319 Airbus A320 Airbus A330 ATR ATR 72 Boeing (McDonnell-Douglas) MD-80 Boeing 737 (JT8D) Boeing 737 (JT8D) Boeing 737 (NG)
Variant D 210 (CFM) 100 (stg 3 Hkits) 200F(M)Adv.(stg3Hk) 700 800 Winglets 800 Winglets 100 200 200 300 300 230 (IAE) 210 (CFM) 83 (MDC) 200LR 200LR 100 D 210 (CFM) 230 (IAE) 83 (MDC) 83 (MDC) 400F (GE) 200 (RR) 200 (RR) 300 300
Reg No N155ZV N599AV N502MG N899AA N126AM G-FDZU LN-DYL C-FDND N434YV N436YV PK-TUB CM-ABDB EI-DTF N405NV VQ-BGH VQ-BGH N129PM 9G-HNH EI-DTD VT-IEC N894GA N895GA N582UP TF-FIC TF-FIC LN-WFS C-GIGZ N375MX 30F (M) N605GC 30F (M) N606GC 100ER N912CA 100ER N932CA N348MX 300 PR-TTG 300 N270AE 800 Winglets VH-VOA 400 (GE) N921MM 200 (Floats) N137JR 300 N67SA N285MX 210 (CFM) B-6775 LN-SVZ 800 Winglets LN-DYM 400F (GE) N582UP N336MX D VH-EKG 210 (CFM) EI-DTC 210 (CFM) EI-DTE 210 (CFM) F-HBNC 210 (CFM) F-HBND 500 PP-PTV 500 PP-PTW 500 I-ADLQ 200F(M)Adv.(stg3 Hk) HS-SCK 500 N487AE ER ZS-STR ER ZS100 HB-AER N347MX 620R (P&W) N4730 200 (P&W) N769DA Challenger 850 OY-NNA N305MX 82 (MDC) N451AA 800 Winglets LN-NOJ 200 (RR) N 300 (GE) N125DL 300 (GE) N130DL 300ER (P&W) C-FMWP 300ER (P&W) N184DN 100 HB-AER N304MX 400 OE-IAP 230 (IAE) N369MX 210 (CFM) HB-JOZ 30 HB-JIE 300 N346UA 200ER (RR) N761AJ ZS-AAK (SCD) XACJ (CFM) VQ-BKK CJ (CFM) 6V-ONE 210 (CFM) B-6738 340HGW (RR) B-18391 200 OM-VRC 83 (MDC) UR-CJE 200 Adv.(stg 3 Hkits) 4L-NAL 200 Adv.(stg 3 Hkits) 4L-NAM 800 Winglets 9M-MXD
Owner Name Skyline Enterprise Celestial Aviation Roush Air Cargo Aircraft MGMT CIT Leasing Corp Amentum Capital SMFL Aircraft Capital Corp Regional 1 Airlines Manuf. & Traders Trust Co Manuf. & Traders Trust Co Travira Air 402677 Alberta Undisclosed AWAS I Sunrise Asset MGMT UTair PL Panorama Leasing Freefall Adventures Antrak Air Ghana AWAS Ireland Leasing Five MCAP Europe Sunrise Asset MGMT Sunrise Asset MGMT UPS Airlines Airco Ehf Icelandair Siemens Financial Services AB Erwin Aero International Jetran Intl Trading Comp. Yukon Intl Trading Comp. Yukon Avmax Aircraft Leasing Avmax Aircraft Leasing Jetran MAP Linhas Aereas Aircraft & Engine Support CIT Leasing Corp SB Leasing Ireland J R S Sky Unity Group Jetran ICBC Leasing Bromma Air Sales SMFL Aircraft Capital Corp CC & EI Jetran Chrishine Nominees Pty ORIX Aviation ORIX Aviation ALC A320 4601, ALC A320 4604, Nordic Aviation Capital Nordic Aviation Capital Oberbank Aircraft Leasing Transmile Air Aircraft & Engine Support Runway Asset Management Unconfirmed S.African Operator Zweite Asset Investment Jetran Aircraft Solutions (Offshore) AU7 A & NN Aviation Limited Jetran AeroTurbine Brookdell Guggenheim Aviation Partners Fly-Z/C Aircraft Fly-Z/C Aircraft Fly-Z/C Aircraft Fly-Z/C Aircraft Centaurium AG Jetran Celestial Aviation SASOF TR-37 Celestial Aviation SAS MidAmerican Aerospace GAIF II Investment Seventy-Six Avex Air Unconfirmed Mexican Operator Genting Singapore Aviation Government of Senegal ICBC Leasing Co AerCap Vip Wings Khors Air Georgian Star International Georgian Star International Undisclosed
Operator Event Name Remarks Skyline Enterprise Corp Purch'd. Park'd Avianca Purch'd - sale to SPC by lessor on del Roush Air Purch'd Capital Cargo International Purch'd off lease/fin term comp. CIT Aerospace Purch'd. Park'd Thomson Airways Purch'd - sale/l.back on del Norwegian Purch'd - sale/l.back on del Regional 1 Airlines Purch'd Mesa Airlines Purch'd - subject to lease Mesa Airlines Purch'd - subject to lease. Park'd Travira Air Purch'd Ashe Aircraft Enterprises Purch'd. Park'd Undisclosed Purch'd. Park'd Alitalia Purch'd - subject to lease Allegiant Air Purch'd - sale/l.back UTair Purch'd. Park'd UTair Purch'd - sale/l.back. Park'd Freefall Adventures Purch'd Antrak Air Ghana Purch'd off lease/fin term comp. Alitalia Purch'd - subject to lease IndiGo Airlines Purch'd - sale/l.back on del Allegiant Air Purch'd - sale/l.back Allegiant Air Purch'd - sale/l.back UPS Airlines Purch'd. Park'd Icelandair Purch'd - sale/l.back. Park'd Icelandair Purch'd. Park'd Wideroe Purch'd - sale/l.back Erwin Aero International Purch'd. Park'd Jetran International Purch'd. Park'd Intl Trading Co. Yukon Purch'd. Park'd Intl Trading Co. Yukon Purch'd. Park'd Avmax Aircraft Leasing Purch'd. Park'd Avmax Aircraft Leasing Purch'd. Park'd Jetran International Purch'd. Park'd MAP Linhas Aereas Purch'd Aircraft & Engine Support Purch'd. Park'd CIT Aerospace Purch'd. Park'd Sberbank Leasing Purch'd. Park'd J R S Sky Purch'd. Park'd Unity Group Purch'd. Park'd Jetran International Purch'd. Park'd ICBC Leasing Purch'd Bromma Air Sales Purch'd. Park'd Norwegian Purch'd - sale/l.back on del UPS Airlines Purch'd - sale/l.back. Park'd Jetran International Purch'd. Park'd Shine Aviation Purch'd Alitalia Purch'd - subject to lease Alitalia Purch'd - subject to lease Air France Purch'd - sale/l.back on del Air France Purch'd - sale/l.back on del TRIP Purch'd - subject to lease TRIP Purch'd - subject to lease Oberbank Aircraft Leasing Purch'd. Park'd Transmile Air Purch'd Aircraft & Engine Support Purch'd. Park'd Runway Asset Managment Purch'd. Park'd Unconfirmed S.African Operator Purch'd. Park'd Zweite Asset Investment Purch'd Jetran International Purch'd. Park'd Universal Asset MGMT Purch'd. Park'd AU7 Purch'd. Park'd ExecuJet Europe Purch'd Jetran International Purch'd. Park'd AeroTurbine Purch'd. Park'd Norwegian Purch'd - subject to lease Guggenheim Aviation Partners Purch'd. Park'd Delta Air Lines Purch'd - subject to lease Delta Air Lines Purch'd - subject to lease Air Canada Purch'd - subject to lease Delta Air Lines Purch'd - subject to lease SkyWork Airlines Purch'd - subject to lease Jetran International Purch'd. Park'd GECAS Purch'd. Park'd Apollo Aviation Group Purch'd. Park'd Belair Airlines Purch'd - sale/l.back on del Hello Purch'd off lease/fin term comp. Park'd MidAmerican Aerospace Purch'd. Park'd American Airlines Purch'd - sale/l.back Avex Air Purch'd Unconfirmed Mexican Operator Purch'd. Park'd TAG Aviation Asia Purch'd. Park'd Government of Senegal Purch'd China Southern Airlines Purch'd - sale/l.back on del China Airlines Purch'd - sale/l.back on del Confort Airlines Purch'd off lease/fin term comp. Khors Air Purch'd. Park'd Nasair Purch'd - subject to lease Nasair Purch'd - subject to lease Malaysia Airlines Purch'd - sale/l.back on del
AFM73_Data_AFNM 18/05/2011 09:39 Page 60
60 | AFM • ISSUE 73 May-June 2011
INDUSTRY DATA: FLEET FINANCE, FIRM ORDERS, AIRCRAFT TRANSACTIONS, LIST PRICES AND LEASE RATES AIRCRAFT TRANSACTIONS – Boeing, Airbus, ATR, and Bombardier. 16 Feb to 18 Apr 2011 Contract Date 15/03/2011 15/03/2011 15/03/2011 15/03/2011 15/03/2011 15/03/2011 15/03/2011 15/03/2011 15/03/2011 15/03/2011 15/03/2011 15/03/2011 16/03/2011 16/03/2011 16/03/2011 16/03/2011 16/03/2011 16/03/2011 17/03/2011 17/03/2011 17/03/2011 17/03/2011 17/03/2011 17/03/2011 17/03/2011 17/03/2011 17/03/2011 17/03/2011 18/03/2011 18/03/2011 18/03/2011 21/03/2011 21/03/2011 21/03/2011 21/03/2011 22/03/2011 22/03/2011 22/03/2011 22/03/2011 22/03/2011 22/03/2011 22/03/2011 23/03/2011 23/03/2011 23/03/2011 23/03/2011 23/03/2011 23/03/2011 23/03/2011 23/03/2011 24/03/2011 24/03/2011 24/03/2011 24/03/2011 24/03/2011 25/03/2011 25/03/2011 25/03/2011 25/03/2011 25/03/2011 28/03/2011 28/03/2011 28/03/2011 28/03/2011 29/03/2011 29/03/2011 29/03/2011 29/03/2011 29/03/2011 30/03/2011 30/03/2011 30/03/2011 30/03/2011 30/03/2011 30/03/2011 30/03/2011 30/03/2011 30/03/2011 31/03/2011 31/03/2011 31/03/2011 31/03/2011 01/04/2011 02/04/2011 02/04/2011 04/04/2011 04/04/2011 04/04/2011
S/N 25214 30024 10322 4262 19000177 11253 11254 11256 20118 UE-143 UE-267 325 4621 41014 49258 26346 485 UE-74 4628 4641 39006 40243 25620 19012 585 585 19000416 14501102 30671 25214 28138 E1252 893 37254 8102 4637 28160 38407 7119 7119 7130 357 4638 455 48485 53462 24643 23212 26935 409 1208 1211 40868 17000150 8085 0373 603 E3162 24519 24540 25226 21069 25212 494 23371 23371 26966 31477 20277 0354 0354 4630 25126 35542 033 077 343 AC-649 0325 4657 53528 39413 39973 546 19000424 25189 32796 24836
A/C Model Boeing 747 Boeing 767 Bombardier (Canadair) CRJ700 RJ Bombardier (de Havilland) Dash 8 Embraer 190 Fokker 100 Fokker 100 Fokker 100 Fokker 50 Hawker Beechcraft 1900 Hawker Beechcraft 1900 Saab 340 Airbus A320 BAE SYSTEMS (Jetstream) Jetstream 41 Boeing (McDonnell-Douglas) MD-80 Boeing 747 Bombardier (de Havilland) Dash 8 Hawker Beechcraft 1900 Airbus A320 Airbus A320 Boeing 737 (NG) Boeing 737 (NG) Boeing 757 Bombardier (Canadair) CRJ1000 RJ Bombardier (de Havilland) DHC-6 TO Bombardier (de Havilland) DHC-6 TO Embraer 190 Embraer ERJ-135 Boeing 737 (NG) Boeing 747 Boeing 767 BAE SYSTEMS (Avro) RJ Avroliner BAE SYSTEMS (Jetstream) Jetstream 31 Boeing 737 (NG) Bombardier (Canadair) CRJ RJ Airbus A320 Boeing 757 Boeing 777 Bombardier (Canadair) CRJ RJ Bombardier (Canadair) CRJ RJ Bombardier (Canadair) CRJ RJ Saab 340 Airbus A321 ATR ATR 72 Boeing (McDonnell-Douglas) MD-11 Boeing (McDonnell-Douglas) MD-90 Boeing 737 (CFMI) Boeing 767 Boeing 777 Saab 340 Airbus A330 Airbus A330 Boeing 737 (NG) Embraer 170 Fairchild/Dornier 228 Airbus A320 ATR ATR 42 BAE SYSTEMS (HS) 146 Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 737 (JT8D) Boeing 747 Bombardier (de Havilland) Dash 8 Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 757 Boeing 777 Fokker 50 Airbus A320 Airbus A320 Airbus A320 Boeing 747 Boeing 777 Bombardier (de Havilland) Dash 7 Bombardier (de Havilland) Dash 7 Bombardier (de Havilland) Dash 8 Fairchild (Swearingen) Metro Airbus A320 Airbus A320 Boeing (McDonnell-Douglas) MD-90 Boeing 737 (NG) Boeing 777 ATR ATR 42 Embraer 190 Boeing 737 (CFMI) Boeing 737 (NG) Boeing 747
Variant 400D (GE) 300ER (P&W) Challenger 870 NG 400 Lineage 1000
Reg No N897DB N668UA N872DC P2-PXS PT-SDD ZSZSZSFreighter (LCD) SED ZS-SSX D 5YB VH-KDQ 230 (IAE) HA-LWH SX-SEH 82 (MDC) N246AA 400 (GE) N346AS 300 C-FIAI D ZS-OKM 230 (IAE) HA210 (CFM) N209FR 800 Winglets LN-DYN 800 Winglets A6-FDP 200 (RR) N701AX 1000EL NextGen F-HMLG 300 Vista Liner N226SA 300 Vista Liner N226SA LR OH-LKP Legacy 600 G-PGRP 800 Winglets N858AM 400D (GE) N897DB 300ER (P&W) TJ-CAC RJ70 VTSuper N479UE 800 Winglets G-FDZW Challenger 850 B-3570 230 (IAE) VT-IEE 200 (P&W) 09-0016 300ER (GE) ZK-OKO 200LR VQ-BGI 200LR VQ-BGI 200LR C-GGEV B ZK-VAB 230 (IAE) B-6753 200F Bulk Freighter VT-DEA Freighter (M) (P&W) N642FE 30 HB-JIF 400 LN-BRE 200 (P&W) N769DA 200ER (P&W) N789UA B AEW 240 (RR) N974AV 320HGW (P&W) HL7795 800 Winglets LN-DYO LR OE-LMK 200 N402VA 230 (IAE) N304ML 500 SP-EDG 300 G-UKAG 400 EI-CZK 300 N371UA 400 N196SF 200 Advanced N583CC 400 (GE) HS200 N801VA 300 N14320 300 N14320 200 (RR) G-LSAM 200ER (RR) N760AN PK230 (IAE) N354BV 230 (IAE) N354BV 230 (IAE) VT-IED 400 (GE) 300ER (GE) F-GZNC CC100 LN-WIV III N649KA 210 (CFM) EY-622 230 (IAE) CC-BAL 30 N958DN 800 Winglets VH-YFC 300ER (GE) F-GZNI 500 D-BMMM AR VH-ZPR 500 JA351K 800 Winglets N859AM 400 (GE)
Owner Name CF6-80 Parts United Airlines RBS Asset fin Air Niugini Embraer Undisclosed Undisclosed Undisclosed Amapola Flyg AB Awesome Flight Logistics Global Air Connection Regional Express Holdings Hong Kong Aviation Capital Sky Express Airlines Air Capital Group AerSale Air Inuit Lefito Turbine Services Hong Kong Aviation Capital AWAS Aviation Trading DY2 Leasing General Electric Capital Corp European Air Transport Constellation Finance Seaplane Holdings Reed Group Finnair Aircraft Finance ECC Leasing Aircraft 73B-30671 Aircraft Solutions Airframe 2010 Camair MDLR Airlines ADA - Aerolinea de Antioquia Aviation Capital Group Asia United Business Aviation ORIX Aviation US Air Force BBAM PL Panorama Leasing UTair Bombardier Vent Aviation Aircastle Investment Deccan 360 FedEx SAS Wood Creek Aircraft Holding Dynamic JetLease T7 Aviation Leasing UAE Air Force GE Capital Corp AerCap Ireland DY2 Leasing Altenrhein Luftfahrt Vision Asset Co Jetran Undisclosed Aviation Capital Solutions Verto Aviation Apollo Aviation Group Fast Brilliant Investment OH Capital assets Unconfirmed Thai Airline Dynamic Aviation Group AS&L Continental Airlines Sunrise Asset MGMT GAIF II Investment Seventy-Eight Sky Aviation AeroTurbine Airfinancial MGMT HKAC Leasing Undisclosed ALC Trans Capital Air Trans Capital Air Wideroe JODA Eastok Aviation Bandurria Leasing Delta Air Lines AWAS Jackson Square Aviation Blue Islands Undisclosed ANA - All Nippon Airways unknown Undisclosed
Operator Name TES Aviation Group United Airlines Dow Chemical Air Niugini Embraer AirQuarius Aviation AirQuarius Aviation AirQuarius Aviation Amapola Flyg Awesome Flight Services Global Air Connection Rex - Regional Express Wizz Air Sky Express Airlines Air Capital Group AerSale Air Inuit Air Ghana Wizz Air Frontier Airlines Norwegian FlyDubai European Air Transport Brit Air Seaplane Holdings Reed Group Finnair ECC Leasing ILFC Universal Asset MGMT Camair MDLR Airlines ADA - Aerolinea de Antioquia Thomson Airways Asia United Business Aviation IndiGo Airlines US Air Force Air New Zealand UTair UTair Bombardier Vent Aviation China Eastern Airlines Deccan 360 FedEx Hello SAS Dynamic Aviation Group T7 Aviation Leasing UAE Air Force Avianca Asiana Airlines Norwegian People's Vienna Line Vision Airlines Jetran International EuroLOT Aviation Capital Solutions Transaero Apollo Aviation Group Fast Brilliant Investment OH Capital assets Unconfirmed Thai Airline Dynamic Aviation Group AS&L Continental Airlines Allegiant Air American Airlines Sky Aviation AeroTurbine Airfinancial Management IndiGo Airlines Undisclosed Air France Trans Capital Air Trans Capital Air Wideroe JODA Eastok Aviation FZE LAN Airlines Delta Air Lines Virgin Blue Airlines Air France Blue Islands Virgin Blue Airlines ANK - Air Nippon ILFC Undisclosed
Event Remarks Purch'd. Park'd Purch'd off lease/fin term comp. Purch'd - sale/l.back on del Delivered - purchase of used/demo. Purch'd off lease/fin term comp. Park'd Purch'd. Park'd Purch'd. Park'd Purch'd. Park'd Purch'd off lease/fin term comp. Park'd Purch'd. Park'd Purch'd. Park'd Purch'd - subject to lease Purch'd - sale/l.back on del Purch'd Purch'd. Park'd Purch'd. Park'd Purch'd Purch'd - subject to lease Purch'd - sale/l.back on del Purch'd - sale to SPC by lessor on del Purch'd - sale/l.back on del Purch'd - sale/l.back on del Purch'd. Park'd Purch'd - sale/l.back on del Purch'd. Park'd Purch'd. Park'd Purch'd - sale/l.back on del Purch'd. Park'd Purch'd. Park'd Purch'd. Park'd Purch'd. Park'd Purch'd. Park'd Purch'd. Park'd Purch'd - sale/l.back on del Purch'd. Park'd Purch'd - sale/l.back on del Purch'd. Park'd Purch'd - sale/l.back on del Purch'd - sale/l.back. Park'd Purch'd. Park'd Purch'd. Park'd Purch'd. Park'd Purch'd - sale/l.back on del Purch'd. Park'd Purch'd. Park'd Purch'd off lease/fin term comp. Pkd Purch'd - subject to lease Purch'd. Park'd Purch'd. Park'd Purch'd Purch'd - sale/l.back on del Purch'd - sale to SPC by lessor on del Purch'd - sale/l.back on del Purch'd Purch'd - subject to lease Purch'd. Park'd Purch'd Purch'd. Park'd Purch'd - subject to lease Purch'd. Park'd Purch'd. Park'd Purch'd. Park'd Purch'd. Park'd Purch'd Purch'd. Park'd Purch'd. Park'd Purch'd. Park'd Purch'd - sale/l.back Purch'd Purch'd. Park'd Purch'd. Park'd Purch'd - sale/l.back on del Purch'd. Park'd Purch'd - sale/l.back Purch'd. Park'd Purch'd. Park'd Purch'd Purch'd. Park'd Purch'd. Park'd Purch'd - sale/l.back on del Purch'd. Park'd Purch'd - sale to SPC by lessor on del Purch'd - sale/l.back on del Purch'd. Park'd Purch'd - sale/l.back on del Purch'd off lease/fin term comp. Park'd Purch'd. Park'd Purch'd. Park'd
AFM73_Data_AFNM 18/05/2011 09:43 Page 61
May-June 2011 AFM • ISSUE 73 | 61
INDUSTRY DATA: FLEET FINANCE, FIRM ORDERS, AIRCRAFT TRANSACTIONS, LIST PRICES AND LEASE RATES AIRCRAFT TRANSACTIONS – Boeing, Airbus, ATR, and Bombardier. 16 Feb to 18 Apr 2011 Contract Date 05/04/2011 05/04/2011 06/04/2011 06/04/2011 06/04/2011 07/04/2011 07/04/2011 07/04/2011 07/04/2011 07/04/2011 07/04/2011 08/04/2011 10/04/2011 11/04/2011 11/04/2011 11/04/2011 12/04/2011 12/04/2011 12/04/2011 12/04/2011 12/04/2011 13/04/2011 14/04/2011 15/04/2011 15/04/2011
S/N 29588 3019 39093 28480 110201 711 724 740 235 369 848 062 120280 1215 21958 40721 40877 24784 14 120330 AC-756 26273 49945 059 38706
A/C Model Boeing 777 Fairchild/Dornier 328 Boeing 737 (NG) Boeing 757 Embraer EMB-110 Bandeirante Airbus A300 Airbus A300 Airbus A300 Bombardier (de Havilland) DHC-6 TO Saab 340 Viking Air DHC-6 Twin Otter Airbus A380 Embraer EMB-120 Brasilia Airbus A330 Boeing 727 Boeing 737 (NG) Boeing 737 (NG) Boeing 747 Bombardier (de Havilland) DHC-6 TO Embraer EMB-120 Brasilia Fairchild (Swearingen) Metro Boeing 757 Boeing (McDonnell-Douglas) MD-80 Airbus A330 Boeing 777
Variant 200ER (RR) 100 800 Winglets 200 (P&W) P2 620R (P&W) 620R (P&W) 620R (P&W) 300 B 400 (Floats) 840 (RR) ER 340HGW (RR) 200F(M)Adv.(stg3Hk) 800 Winglets 800 Winglets 400 (GE) 100 ER III 200 Winglets (P&W) 83 (MDC) 300 (GE) 300ER (GE)
Reg No N784AN D-CSUE OO-JAD N592SH VH-OZF N7151 N1724 N3637 TFVH-EKH C-FPPL VH-OQJ ZS-TAA B-18392 CXTC-AHP TC-AIP N287AS N121PM N393SW CN556CM N787TW EI-ORD F-GZNJ
Owner Name Undisclosed Tec Aircraft Leasing Aviation Capital Group FedEx Aerolink Air Services European Air Transport European Air Transport European Air Transport Unconfirmed Icelandic Airline Regional Express Holdings Planes & Parts QF ECA Undisclosed AerCap Unconfirmed Uruguay Airline GE Capital Corp GE Capital Corp AerSale Freefall Adventures CB Aviation Unconfirmed Canadian Operator Cargo Aircraft MGMT Sierra American Corp GECAS Asset MGMT Avolon Aerospace
Operator Name American Airlines Tec Aircraft Leasing JetAir Fly FedEx Aerolink Air Services European Air Transport European Air Transport European Air Transport Unconfirmed Icelandic Airline Rex - Regional Express Trans Maldivian Airways Qantas TAB Charters China Airlines Unconfirmed Uruguay Airline Pegasus Airlines Pegasus Airlines AerSale Freefall Adventures CB Aviation Unconfirmed Canadian Operator Cargo Aircraft MGMT Sierra American Corp GECAS Asset Management Air France
Event Remarks Purch'd - sale/l.back Purch'd. Park'd Purch'd - sale/l.back on del Purch'd. Park'd Purch'd off lease/fin term comp. Park'd Purch'd. Park'd Purch'd. Park'd Purch'd. Park'd Purch'd. Park'd Purch'd off lease/fin term comp. On order - sale/l.back arranged Purch'd - sale/l.back on del Purch'd Purch'd - sale/l.back on del Purch'd. Park'd Purch'd - sale/l.back on del Purch'd - sale/l.back on del Purch'd. Park'd Purch'd Purch'd. Park'd Purch'd. Park'd Purch'd. Park'd Purch'd. Park'd Purch'd. Park'd Purch'd - sale/l.back on del
FIRM ORDERS – 16 Feb – 18 Apr 2011 Mfr & Type
Variant
Customer
Airbus A319 110 (CFM) Aircraft Purchase Fleet Ltd Airbus A319 CJ (Engines Unannounced) Unannounced non-commercial customer Airbus A320 210 (CFM) Star Flyer Airbus A320 200 (Engines Unannounced) AerCap Airbus A321 230 (IAE) Turkish Airlines (THY) Airbus A330 340HGW (RR) Cathay Pacific Airbus A330 200F (Engines Unannounced) Turkish Airlines (THY) Airbus A330 240 (RR) AirAsia X Airbus A380 800 (Engines Unannounced) Skymark Airlines Boeing 737 (NG) 800 Winglets Turkish Airlines (THY) Boeing 737 (NG) 800 Winglets Unannounced commercial customer Boeing 737 (NG) 900ER Turkish Airlines (THY) Boeing 737 (NG) 900ER El Al Boeing 737 (NG) 800 Winglets ILFC Boeing 737 (NG) 900ER Unannounced commercial customer Boeing 747 8F (GE) Korean Air Boeing 767 200ER Tanker (Engines Unannounced) US Air Force Boeing 777 300ER (GE) Unannounced commercial customer Boeing 777 300ER (GE) GECAS Boeing 777 300ER (GE) Unannounced commercial customer Boeing 777 300ER (GE) Qatar Airways Boeing 777 300ER (GE) Unannounced commercial customer Boeing 777 300ER (GE) Cathay Pacific Boeing 777 200ER (GE) Aeroflot Russian Airlines Boeing 777 300ER (GE) Aeroflot Russian Airlines Boeing 777 300ER (GE) TAM Linhas Aereas Bombardier CL-415 Unannounced non-commercial customer Bombardier Dash 8 400 NextGen Porter Aviation Holdings Embraer 190 CDB Leasing Company Embraer 190 LR Hebei Airlines Embraer 190 ST KLM cityhopper Embraer 190 Lineage 1000 South African Air Force Embraer 190 LR TRIP Lockheed Hercules C-130J-30 Israel Air and Space Force Lockheed Hercules C-130J-30 US Air Force
Order date 15/03/2011 01/03/2011 15/04/2011 15/03/2011 08/03/2011 15/03/2011 08/03/2011 28/02/2011 17/02/2011 31/03/2011 31/03/2011 31/03/2011 22/03/2011 07/03/2011 02/03/2011 18/03/2011 07/03/2011 31/03/2011 30/03/2011 25/03/2011 17/03/2011 17/03/2011 09/03/2011 28/02/2011 28/02/2011 25/02/2011 28/03/2011 29/03/2011 12/04/2011 12/04/2011 04/04/2011 03/04/2011 01/03/2011 08/04/2011 31/03/2011
Order/ Number Type Swap Type Swap 2 Order 1 Order 2 Type Swap 1 Order 10 Order 15 Order 3 Order 3 Order 4 Order 10 Order 2 Order 5 Order 4 Order 33 Order 11 Order 2 Order 4 Order 1 Order 10 Order 2 Order 2 Order 2 Order 10 Order 2 Order 6 Order 2 Order 4 Order 2 Order 10 Order 10 Order 5 Order 2 Order 3 Order 1 Order 1
Engines at Order CFM56-5B6/3 Unannounced
CFM56-5B4/3 Unannounced
V2500-2533-A5 Trent-772B-60EP Unannounced
Trent-772B-60EP Unannounced
CFM56-7B26/3 CFM56-7B26/3 CFM56-7B26/3 CFM56-7B26/3 CFM56-7B26/3 CFM56-7B26/3 GEnx-2B67 Unannounced
GE90-115BL GE90-115B GE90-115BL GE90-115B GE90-115BL GE90-115BL GE90-90B GE90-115BL GE90-115B PW100-123AF PW100-150A CF34-10E5 CF34-10E5 CF34-10E5 CF34-10E7-B CF34-10E5A1 AE 2100-D3 AE 2100-D3
Variant at delivery 110 (CFM) CJ (Engines Unannounced) 210 (CFM) 200 (Engines Unannounced) 230 (IAE) 340HGW (RR) 240F (RR) 240 (RR) 800 (Engines Unannounced) 800 Winglets 800 Winglets 900ER 900ER 800 Winglets 900ER 8F (GE) 200ER Tanker (Engines Unannounced) 300ER (GE) 300ER (GE) 300ER (GE) 300ER (GE) 300ER (GE) 300ER (GE) 200ER (GE) 300ER (GE) 300ER (GE) 400 NextGen LR ST Lineage 1000 LR C-130J-30 C-130J-30
Engines at delivery CFM56-5B6/3 Unannounced
CFM56-5B4/3 Unannounced
V2500-2533-A5 Trent-772B-60EP Trent-772B-60EP Trent-772B-60EP Unannounced
CFM56-7B26/3 CFM56-7B26/3 CFM56-7B26/3 CFM56-7B26/3 CFM56-7B26/3 CFM56-7B26/3 GEnx-2B67 Unannounced
GE90-115BL GE90-115B GE90-115BL GE90-115B GE90-115BL GE90-115BL GE90-90B GE90-115BL GE90-115B PW100-123AF PW100-150A CF34-10E5 CF34-10E5 CF34-10E5 CF34-10E7-B CF34-10E5A1 AE 2100-D3 AE 2100-D3
Data supplied courtesy of Ascend Online Fleets / Ascend V1 database.
AFM73_Data_AFNM 18/05/2011 09:43 Page 62
62 | AFM • ISSUE 73 May-June 2011
INDUSTRY DATA: FLEET FINANCE, FIRM ORDERS, AIRCRAFT TRANSACTIONS, LIST PRICES AND LEASE RATES HISTORICAL STORED AIRCRAFT BY EQUIPMENT TYPE as of May 11, 2011 Equipment Type
Jun 2010
Jul 2010
Aug 2010
Sep 2010
Oct 2010
Nov 2010
Dec 2010
Jan 2011
Feb 2011
Mar 2011
Apr 2011
May 2011
A300 A320 A330 A380 ATP ATR B707 B717 B727 B737 B747 B757 B767 B777 B787 BAE146 BAE3100 BAE4100 BD100 BERIEV20 BN2 C46 CITATION CRJ DC10 DC8 DC9 EMB110 EMB120 EMB145 ERJ170 F27 F28 FALCON10 FALCON20 FALCON50 IAI1125 IL114 IL18 IL62 IL76 IL86 IL96 L1011 L188 L382 L410 LEARJET
76 56 36 1 15 38 8 7 52 291 94 40 49 4 13 71 28 11 1 1 18 4 12 76 39 31 331 11 31 79 5 31 75 2 15 1 1 2 2 3 21 14 2 12 3 28 22 45
70 52 31 1 15 37 8 7 51 287 93 41 47 4 15 72 28 11 1 1 17 4 12 76 43 33 331 10 30 76 5 31 75 2 14 1 1 3 2 3 21 14 2 12 3 28 22 41
66 87 30 1 15 37 9 7 51 286 82 45 44 4 17 71 27 11 1 1 16 4 11 88 42 31 332 10 29 109 5 32 85 2 14 1
65 88 30 1 15 34 9 7 50 280 74 46 47 4 17 69 27 11 1 1 16 4 11 92 39 28 327 10 28 106 4 34 80 2 14 1
66 91 27 1 14 31 10 7 50 272 69 44 48 4 20 70 26 10
67 90 25 1 13 26 10 5 48 264 69 41 42 2 20 70 25 10
69 81 25 1 12 24 8 14 46 244 64 38 40 2 20 70 25 10
70 83 25 1 11 24 7 23 46 250 63 38 38 2 19 66 25 10
71 81 24 1 11 23 8 23 46 254 60 35 35 2 19 66 21 10
73 66 24 1 11 22 7 23 44 253 60 33 33 1 19 65 20 10
69 58 21 1 11 23 7 23 43 252 62 34 30 1 19 64 20 10
69 58 21 1 11 23 7 23 43 252 62 34 30 1 19 63 20 9
1 17 4 11 98 37 28 327 10 28 105 4 30 82 2 14 1
1 19 4 11 102 37 24 328 10 28 101 3 39 81 2 14 1
1 19 4 10 101 37 24 329 10 27 101 3 35 79 2 14 1
1 19 4 9 100 34 22 321 10 26 102 3 36 75 2 13 1
1 20 4 5 98 33 20 318 18 25 100 3 33 74 2 13 1
1 19 4 5 95 32 18 316 18 24 98 3 33 64 2 3 1
1 17 4 8 93 32 18 313 18 24 98 3 33 61 2 3 1
1 17 4 8 92 32 18 312 18 24 98 3 32 60 2 3 1
3 2 3 21 14 2 12 2 27 22 41
3 2 3 21 14 2 12 2 27 21 41
3 2 3 18 14 2 11 2 27 21 40
3 2 3 17 14 2 11 1 27 20 38
3 2 3 17 14 2 9 1 29 20 37
3 2 3 17 20 2 9
3 2 3 17 20 2 9
3 2 3 17 20 2 9
3 2 3 17 20 2 9
3 2 3 17 20 2 9
29 20 37
28 20 35
28 20 35
27 20 39
27 20 39
Data supplied courtesy of OAG iNET
ENGINE DATA CHANGES 15 Feb to 18 Apr 2011 Type B737-300 B737-400 B737-500 A321-200 A319-100 A340-300 B737-600 B737-700 B737-800 B737-900ER CRJ-200 CRJ-700 E170 B767-200ER A300-600R MD-11 A330-200 B777-300ER A320-200 MD-82 B747-400 B767-300ER A310-300 B757-200 Fokker 100 A340-600 A330-300 B777-200ER ERJ-145 ER B717-200
Engine CFM56-3B1 CFM56-3B2 CFM56-3C1 CFM56-5B3/P CFM56-5B5/P CFM56-5C4/P CFM56-7B22 CFM56-7B24 CFM56-7B26 CFM56-7B27 CF34-3B1 CF34-8C1 CF34-8E5 CF6-80A2 CF6-80C2A5 CF6-80C2D1F CF6-80E1A3 GE90-115B V2527-A5 JT8D-217C PW4056 PW4060 PW4152 RB211-535E4 RB183 Tay 650-15 Trent 556-61 Trent 772B-60 Trent 895 AE3007-A1P BR715A
15 Feb 2011 18 Apr 2011 Full-life value Full-life value % mkt value mkt value change $2.33m $2.53m $2.93m $8.19m $6.49m $7.25m $6.81m $7.11m $7.51m $7.96m $2.05m $3.85m $4.33m $4.69m $7.13m $7.91m $14.07m $26.77m $7.32m $1.70m $7.34m $7.69m $6.84m $7.52m $2.50m $13.38m $13.78m $20.29m $2.50m $3.33m
$2.18m $2.38m $2.58m $8.19m $6.49m $7.25m $6.81m $7.11m $7.51m $7.96m $2.05m $3.85m $4.33m $4.69m $7.13m $7.91m $14.07m $26.77m $7.32m $1.70m $7.34m $7.69m $6.84m $7.52m $2.50m $13.38m $13.78m $20.29m $2.50m $3.33m
-6.4% -5.9% -11.9% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
15 Feb 2011 Current half-life rate
18 Apr 2011 Current half-life % rate change
$0.80m $1.00m $1.40m $6.20m $4.50m $5.00m $4.90m $5.20m $5.55m $6.00m $1.00m $2.20m $2.68m $1.50m $3.75m $4.40m $9.35m $20.70m $5.20m $0.60m $3.75m $4.10m $2.80m $3.90m $1.40m $8.14m $8.60m $14.00m $1.40m $2.00m
$0.70m $0.90m $1.10m $6.20m $4.50m $5.00m $4.90m $5.20m $5.55m $6.00m $1.00m $2.20m $2.68m $1.50m $3.75m $4.40m $9.35m $20.70m $5.20m $0.60m $3.75m $4.10m $2.80m $3.90m $1.40m $8.14m $8.60m $14.00m $1.40m $2.00m
15 Feb 2011 Mkt lease rate
18 Apr 2011 Mkt lease rate
% change
-12.5% $0.030m $0.030m 0.0% -10.0% $0.032m $0.032m 0.0% -21.4% $0.035m $0.035m 0.0% 0.0% $0.075m $0.075m 0.0% 0.0% $0.055m $0.055m 0.0% 0.0% $0.058m $0.058m 0.0% 0.0% $0.059m $0.059m 0.0% 0.0% $0.062m $0.062m 0.0% 0.0% $0.065m $0.065m 0.0% 0.0% $0.067m $0.067m 0.0% 0.0% $0.020m $0.020m 0.0% 0.0% $0.027m $0.027m 0.0% 0.0% $0.033m $0.033m 0.0% 0.0% n/a n/a 0.0% n/a $0.050m n/a 0.0% $0.070m $0.070m 0.0% 0.0% n/a n/a 0.0% $0.210m $0.210m 0.0% 0.0% $0.058m $0.058m 0.0% 0.0% $0.023m $0.023m 0.0% 0.0% $0.060m $0.060m 0.0% 0.0% $0.065m $0.065m 0.0% 0.0% $0.055m $0.055m 0.0% 0.0% $0.050m $0.050m 0.0% 0.0% $0.026m $0.026m 0.0% 0.0% $0.110m $0.110m 0.0% 0.0% $0.120m $0.120m 0.0% 0.0% $0.155m $0.155m 0.0% 0.0% $0.030m $0.030m 0.0% 0.0% $0.045m $0.045m 0.0% Data supplied courtesy of Ascend Online Fleets / Ascend V1 database
AFM73_Data_AFNM 18/05/2011 09:44 Page 63
May-June 2011 AFM • ISSUE 73 | 63
INDUSTRY DATA: FLEET FINANCE, FIRM ORDERS, AIRCRAFT TRANSACTIONS, LIST PRICES AND LEASE RATES STORED AIRCRAFT 18 Apr 2011 Mfr & type
Fleet Stored
Total Fleet
Fleet Stored %
Seats Stored
ATR ATR 42 ATR ATR 72 Aerospatiale 262 Airbus A300 Airbus A310 Airbus A318 Airbus A319 Airbus A320 Airbus A321 Airbus A330 Airbus A340 Airbus A380 Avcraft 328JET BAE SYSTEMS (Avro) RJ Avroliner BAE SYSTEMS (BAC) One-Eleven BAE SYSTEMS (HS) 146 BAE SYSTEMS (HS) 748 BAE SYSTEMS (HS) ATP BAE SYSTEMS (Jetstream) Jetstream 31 BAE SYSTEMS (Jetstream) Jetstream 41 Boeing 707 Boeing 717 Boeing 720 Boeing 727 Boeing 737 (CFMI) Boeing 737 (JT8D) Boeing 737 (NG) Boeing 747 Boeing 757 Boeing 767 Boeing 777 Boeing (McDonnell-Douglas) C-17 Boeing (McDonnell-Douglas) DC-10 Boeing (McDonnell-Douglas) DC-3 Boeing (McDonnell-Douglas) DC-8 Boeing (McDonnell-Douglas) DC-9 Boeing (McDonnell-Douglas) MD-11 Boeing (McDonnell-Douglas) MD-80 Boeing (McDonnell-Douglas) MD-90 Bombardier (Canadair) 580 Bombardier (Canadair) CL-415 Bombardier (Canadair) CL-44 Bombardier (Canadair) CRJ Regional Jet Bombardier (Canadair) CRJ700 Regional Jet Bombardier (Canadair) CRJ900 Regional Jet Bombardier (Shorts) 330 Bombardier (Shorts) 360 Bombardier (Shorts) SC.5 Belfast Bombardier (Shorts) SC.7 Skyvan Bombardier (de Havilland) DHC-5 Buffalo Bombardier (de Havilland) DHC-6 Twin Otter Bombardier (de Havilland) Dash 7 Bombardier (de Havilland) Dash 8 CASA 212 CASA C-295 CASA CN-235 Carstedt Aviation CJ600 Embraer 170 Embraer 190 Embraer 195 Embraer EMB-110 Bandeirante Embraer EMB-120 Brasilia Embraer ERJ-135 Embraer ERJ-145 Fairchild F-27 Fairchild (Swearingen) Metro Fairchild/Dornier 228 Fairchild/Dornier 328 Fairchild/Dornier 328JET Fokker 100 Fokker 50 Fokker 70 Fokker F.27 Fokker F.28 General Dynamics (Convair) 580 Gulfstream Aerospace Gulfstream I Handley Page Jetstream (HP/Scottish) Harbin Embraer Aircraft Industry ERJ-145 Hawker Beechcraft 1900 Hawker Beechcraft 99 Hindustan Aeronautics 748 Hindustan Aeronautics Saras Indonesian Aerospace 212 Indonesian Aerospace CN-235 Israel Aerospace Industries Arava Lockheed Galaxy Lockheed Hercules Lockheed L-1011 TriStar Lockheed L-188 Electra NAMC YS-11 Saab 2000 Saab 340
35 29 11 87 39 8 35 126 12 24 25 2 2 38 3 76 20 17 80 28 47 27 1 159 277 220 77 189 90 84 7 1 37 14 49 177 6 281 50 1 20 1 141 1 11 4 13 1 10 15 66 6 65 57 2 8 1 7 6 1 66 62 59 52 3 53 31 21 59 58 45 5 34 54 15 17 3 1 44 8 1 1 11 8 15 4 193 14 8 15 2 100
356 496 14 370 191 68 1,281 2,533 639 774 370 49 2 163 12 167 66 54 247 93 196 155 1 437 1,763 485 3,590 944 1,006 932 924 230 202 75 90 296 192 946 108 2 70 1 1,034 339 248 47 105 1 61 51 547 57 958 248 78 187 1 187 345 72 264 266 309 683 3 487 180 100 109 231 188 47 131 94 70 46 3 40 620 144 65 1 68 48 73 111 1,543 28 20 39 58 405
9.83 5.85 78.57 23.51 20.42 11.76 2.73 4.97 1.88 3.10 6.76 4.08 100.00 23.31 25.00 45.51 30.30 31.48 32.39 30.11 23.98 17.42 100.00 36.38 15.71 45.36 2.14 20.02 8.95 9.01 0.76 0.43 18.32 18.67 54.44 59.80 3.12 29.70 46.30 50.00 28.57 100.00 13.64 0.29 4.44 8.51 12.38 100.00 16.39 29.41 12.07 10.53 6.78 22.98 2.56 4.28 100.00 3.74 1.74 1.39 25.00 23.31 19.09 7.61 100.00 10.88 17.22 21.00 54.13 25.11 23.94 10.64 25.95 57.45 21.43 36.96 100.00 2.50 7.10 5.56 1.54 100.00 16.18 16.67 20.55 3.60 12.51 50.00 40.00 38.46 3.45 24.69
1,556 1,820 53 17,253 5,215 754 3,140 19,452 2,451 6,444 5,138 924 20 3,495 70 6,851 344 456 1,335 815 1,903 2,644 0 8,821 35,352 23,125 8,655 43,343 14,567 14,154 1,743 0 3,054 493 68 10,693 100 40,379 7,598 0 0 0 6,461 70 860 0 346 0 54 0 1,135 248 3,418 940 0 168 0 460 592 108 759 1,798 1,864 2,585 44 652 480 632 1,733 5,532 2,110 354 1,106 3,440 43 151 18 50 816 43 0 14 221 254 19 0 0 3,131 89 399 100 3,259
Total Seats
Seats Stored%
13,735 11.33 30,327 6.00 53 100.00 40,629 42.46 23,257 22.42 6,348 11.88 165,224 1.90 402,930 4.83 120,404 2.04 210,351 3.06 98,266 5.23 23,130 3.99 20 100.00 14,878 23.49 315 22.22 12,143 56.42 713 48.25 716 63.69 4,262 31.32 2,583 31.55 5,584 34.08 17,716 14.92 0 15,820 55.76 222,447 15.89 47,992 48.19 553,069 1.56 207,874 20.85 154,489 9.43 177,680 7.97 272,562 0.64 0 6,801 44.91 2,748 17.94 161 42.24 20,145 53.08 5,143 1.94 136,002 29.69 15,934 47.68 0 0 0 48,334 13.37 22,949 0.31 20,178 4.26 60 0.00 1,001 34.57 0 129 41.86 38 0.00 8,224 13.80 2,364 10.49 50,494 6.77 3,272 28.73 0 470 35.74 0 13,558 3.39 33,467 1.77 8,375 1.29 1,753 43.30 7,126 25.23 7,037 26.49 33,390 7.74 44 100.00 5,094 12.80 2,084 23.03 3,070 20.59 3,029 57.21 22,647 24.43 8,416 25.07 3,577 9.90 3,473 31.85 5,957 57.75 437 9.84 366 41.26 18 100.00 2,000 2.50 9,738 8.38 321 13.40 96 0.00 14 100.00 828 26.69 406 62.56 116 16.38 0 244 0.00 5,196 60.26 89 100.00 399 100.00 2,712 3.69 11,745 27.75 Data supplied courtesy of Ascend Online Fleets / Ascend V1 database
AFM73_Data_AFNM 18/05/2011 09:44 Page 64
64 | AFM • ISSUE 73 May-June 2011
INDUSTRY DATA: FLEET FINANCE, FIRM ORDERS, AIRCRAFT TRANSACTIONS, LIST PRICES AND LEASE RATES LIST PRICES AND LEASE RATES Manufacturer
Average List Price
Type
Oldest
CMV Newest
Airbus 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 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 Bombardier Bombardier Embraer Embraer Embraer Embraer Embraer Embraer Fokker Fokker ATR ATR
$120.15m $57.00m $81.50m $62.50m $77.70m $85.00m $56.00m $99.70m $200.80m $222.50m $127.50m $228.00m $261.80m $275.40m $236.60m $267.60m $375.30m $40.00m $40.00m $44.00m $34.50m $56.90m $67.90m $80.80m $71.75m $85.80m $250.00m $317.50m $79.80m $144.10m $164.30m $186.50m $232.30m $262.40m $222.00m $284.10m $185.20m $119.10m $34.25m $37.80m $39.80m $30.25m $38.60m $39.40m $24.20m $35.57m $40.81m $15.70m $15.70m $28.85m $17.14m $22.25m $34.18m $34.20m $38.00m $40.10m $24.50m $31.60m $16.90m $20.50m
A300-600R A310-200 A310-300 A318-100 A319-100 A320-200 A321-100 A321-200 A330-200 A330-300 A340-200 A340-300 A340-500 A340-600 A350-800 A350-900 A380-800 B717-200 B737-300 B737-400 B737-500 B737-600 B737-700 B737-800 B737-900 B737-900ER B747-400 B747-8 B757-200 B767-200ER B767-300ER B777-200 B777-200ER B777-200LR B777-300 B777-300ER B787-8 MD-11 MD-81 MD-82 MD-83 MD-87 MD-88 MD-90 CRJ-100/200 CRJ-700/705 CRJ-900 Q200 Q300 Q400 ERJ-135ER ERJ-145ER E170 LR E175 LR E190 LR E195 LR Fokker 70 Fokker 100 ATR42-500 ATR72-500
$7.00m $2.00m $4.50m $12.00m $11.80m $5.40m $11.95m $19.20m $43.00m $27.00m $18.00m $20.00m $56.00m $61.00m $146.00m $7.90m $2.50m $4.00m $2.70m $11.00m $15.30m $19.50m $18.90m $32.90m $19.00m $6.00m $4.50m $9.50m $22.00m $42.00m $90.00m $44.00m $86.00m $11.70m $0.50m $1.00m $1.60m $2.00m $1.70m $5.00m $3.00m $10.80m $14.30m $3.70m $3.70m $8.50m $4.70m $4.80m $13.80m $15.90m $19.50m $21.10m $3.50m $3.15m $5.20m $5.30m
$13.50m $2.00m $8.00m $24.50m $31.10m $38.90m $18.75m $43.10m $84.00m $92.75m $18.00m $59.75m $79.50m $91.00m $185.00m $11.45m $6.45m $7.55m $5.50m $19.50m $32.10m $40.50m $23.05m $44.40m $59.25m $20.60m $14.50m $58.90m $38.25m $117.75m $135.00m $65.50m $147.00m $13.10m $1.00m $2.30m $3.40m $2.00m $2.95m $5.00m $8.65m $22.05m $25.55m $8.50m $15.40m $18.80m $5.25m $8.70m $23.05m $24.75m $29.00m $30.60m $3.50m $4.00m $14.60m $18.25m
%Change 0.0% 0.0% 0.0% -11.9% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% -5.8% 0.0% 0.0% 4.9% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 17.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Dry Lease Rate Oldest Newest $0.140m $0.070m $0.100m $0.125m $0.125m $0.070m $0.150m $0.195m $0.440m $0.330m $0.320m $0.275m $0.525m $0.575m $1.450m $0.105m $0.055m $0.090m $0.055m $0.150m $0.160m $0.235m $0.190m $0.310m $0.350m $0.120m $0.160m $0.205m $0.350m $0.560m $0.810m $0.575m $0.860m $0.190m $0.025m $0.025m $0.040m $0.030m $0.040m $0.090m $0.040m $0.110m $0.150m $0.055m $0.055m $0.130m $0.050m $0.060m $0.150m $0.165m $0.210m $0.215m $0.055m $0.060m $0.065m $0.070m
$0.180m $0.070m $0.120m $0.185m $0.265m $0.320m $0.180m $0.375m $0.755m $0.835m $0.320m $0.580m $0.760m $0.835m $1.745m $0.145m $0.090m $0.120m $0.075m $0.200m $0.280m $0.350m $0.220m $0.375m $0.670m $0.230m $0.230m $0.520m $0.430m $0.995m $1.045m $0.705m $1.285m $0.190m $0.030m $0.045m $0.060m $0.030m $0.050m $0.090m $0.080m $0.225m $0.245m $0.085m $0.130m $0.210m $0.050m $0.085m $0.230m $0.235m $0.260m $0.275m $0.055m $0.070m $0.130m $0.180m
Seating* %Change (Typical C+Y) 0.0% 0.0% 0.0% -15.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 11.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
267 210 210 108 124 150 185 185 250 300 280 295 280 350 270 314 525 117 134 144 104 103 134 160 180 215 412 467 188 158 190 313 313 313 382 350 243 285 144 144 144 109 144 144 50 70 86 37 50 70 37 50 70 82 98 108 79 108 48 70
Data supplied courtesy of Ascend Online
WORLDWIDE FLEET SUMMARY BY REGION — March to May 2011 Region Undisclosed Africa Asia-Pacific Central America Europe Middle East North America South America
Net Orders 2 4 88 NA 33 34 163 8
Delivered new
Leased
Purchased 2nd hand
3 5 62 5 87 23 100 13
NA 16 59 15 135 26 122 29
7 20 64 26 106 6 349 25
Fleet as of 6 May 2011 44 2572 7410 1268 8089 2018 17605 3196 Source: OAG Fleet iNET, May 2011
The certified and experienced technicians at Delta TechOps have proven they’ll let nothing come between your planes and our commitment to keep those planes in the air. Today, their dedication spans our Complete Fleet™ capabilities, including Airbus and Boeing airframes, 12 engine types, plus component and line maintenance services. This means we’ll never stop rising to the occasion to make your confidence soar.
For an inside look at the advantages Delta TechOps brings to your aircraft maintenance, visit TechOpsMRO.com or call +1-404-773-5192.
Agency: BKV Client: Delta TechOps Publication: Airline Fleet Management May Ad size: trim: 10.95 x 8.27 bleed: 8.5 x 11.18 Color: CMYK
It’s about a lease that lasts five years and a relationship with no expiration date. It’s about more than the plane.
To us, each transaction builds a relationship. And it’s these long relationships that provide stability and predictable performance for our customers, financial partners and suppliers. After all, if we make the deal work for everyone today, we’ll all look forward to doing the next one tomorrow. Learn more at www.aviationcapital.com Operating Leases • Asset Management • Aviation Investment Main Office: Newport Beach +1 949 219 4600 • Regional Offices: London, Santiago, Seattle, Shanghai, Singapore
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