AFM76

The business and financing of airline operations

HOLDING HOPE: CARGO AND THE WORLD ECONOMY

PLUS: n FUTURE FREIGHT TECHNOLOGIES n BOMBARDIER ON ITS MISSION TO COMPETE n THE FULL COST OF AVIATION TAX n MRO FOR THE 787

November-December 2011 Issue 76

www.ubmaviationnews.com

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C O N T E N T S

The business and financing of airline operations

November-December 2011 • Issue 76 EDITOR Mary-Anne Baldwin: Mary-Anne.Baldwin@ubmaviation.com Tel: +44 (0) 207 579 4843

NEWS ROUND-UP

TRADING, LEGAL AND FINANCE:

JOURNALIST

3 The latest on deals, mergers appointments and more.

34 Protection versus growth: Bilateral restriction

Alex Derber: aderber@ubmaviation.com

CONTRIBUTORS Chris Kjelgaard, Bernard Fitzsimons, Marjorie Holmes, and Martin Roebuck

DESIGN & PRODUCTION Kalven Davis: Kalven.Davis@ubmaviation.com Tel:+44 (0) 207 579 4851

DISPLAY ADVERTISING Simon Barker: Simon.Barker@ubmaviation.com Alan Samuel: Alan.Samuel@ubmaviation.com Tel: +44 (0) 207 579 4845/46

GROUP PUBLISHER & SALES Anthony Smith: Anthony.Smith@ubmaviation.com Tel:+44 (0) 207 579 4875

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FOCUS: 12 Regional aircraft: Bombardier’s mission to compete ATR and Embraer appear to be cruising at high altitude while Bombardier, the main competitor to both, is cutting production rates amid an apparent dearth of orders. But the Canadian manufacturer is confident that ongoing sales campaigns will soon start to redress the balance. Bernard Fitzsimons talks to the company’s marketing VP, Philippe Poutissou.

FLEET OPERATIONS: 18 Slot Allocation: The rules and schemes explained Europe and the US have taken markedly different approaches to addressing capacity constraints at busy airports. The former has favoured regulation, whereas the latter has taken a largely laissez-faire approach. Now, however, both are seeking a new way to deal with the demands of 21st century travel.

Alex Derber investigates.

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Cover images: Courtesy of Lufthansa

40 Deals News Catch up on the last month of aircraft deals.

AIRPORTS AND ROUTES: 44 Cargo routes and the world economy Following the meltdown in 2008, the global economic recovery was tracked by air freight traffic which improved as exports resumed.

But by late 2011, many regions were again seeing sharp falls in cargo volumes, which, worryingly, can signal an impending recession. Alex Derber investigates whether the development or discontinuation of air cargo routes is a similar barometer for macroeconomic trends and in which regions, if any, growth is occurring.

48 The full cost of aviation tax

Paul Canessa: paul.canessa@ubmaviation.com Tel: +44 (0) 207 579 4873

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Historically, the aviation sector has been characterised by restrictive bilateral agreements between governments, which agree exclusive sovereignty over flights in their own airspace. In the 1980s the focus of bilateral agreements switched from states agreeing to restrict competition in their own airspace, to states agreeing reciprocal access.

Marjorie Holmes, partner, at Reed Smith explains.

22 Future Freight The air cargo business is changing fast and emerging technologies should offer a substantial increase in the industry’s productivity and quality standards.

Chris Kjelgaard learns that freighter aircraft are becoming more efficient and environmentally friendly, but that the biggest drivers of productivity will be information technology and automation.

28 Low-cost airport selection Two airports served by low-cost carriers, France’s Marseille and Romania’s Timisoara, are under scrutiny by the European Commission (EC) for potential abuse of state aid rules. Smaller airports have been exempt on the basis that they help stimulate the economies of less developed regions, but announcing the investigation, Joaquin Almunia, commissioner responsible for competition, pointedly commented: “Some regional airports in Europe are no longer so new or small.” Martin Roebuck reports.

Later this year, the European Commission will publish its package of aviation policies, which will cover such things as noise emissions, ground handling and slots. Considering this, Mary-Anne Baldwin reports the views on the industry from the World Route Development Strategy Summit, which took place at World Routes in Berlin, in October.

MAINTENANCE OPERATIONS: 54 MRO for the 787: The future of maintaining aircraft The perennial battle between OEMs and commercial MRO organisations for aftermarket revenue is entering a new phase with the service entry of the 787 and its associated GoldCare support services.

Bernard Fitzsimons reports.

INDUSTRY DATA: 58 Data including transactions and market, list and lease rates.

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The latest on deals, mergers, appointments and more NEWS ROUND-UP

NEWS HIGHLIGHTS

Fly doubles fleet in portfolio deal

Stakes are high at Qantas

Dublin-based Fly Leasing has completed the purchase of a $1.4bn portfolio of aircraft from Australian lessor Global Aviation Asset Management. The 49 aircraft, mostly 737s and A320s, take Fly’s fleet to a total of 109 aircraft. The acquisition was funded from existing unrestricted cash and the assumption of existing non-recourse debt. Fly Leasing’s portfolio is managed by Babcock & Brown Aircraft Management.

RBS Aviation narrows bidders for next round

The Royal Bank of Scotland (RBS) has shortlisted six potential buyers for the second round of bids on its aviation arm, Dow Jones Newswires has reported, citing a source close to the company. The deal, which is led by Goldman Sachs, is expected to close its second round in early November. A consortium led by Macquarie Group, Air Lease Corp, General Electric and Terra Firma, which owns AWAS, are thought to be among the bidders.

Rather than see a tortuous series of debilitating strikes extend indefinitely, Qantas’ management brought matters to a head over the last weekend in October and grounded the Australian flag carrier’s entire domestic and international fleet. The intention was to force unions back to the negotiating table via government arbiter Fair Work Australia (FWA), who did indeed order an end to industrial action, spurring flights to resume.

The Australian Licenced Aircraft Engineers Association (ALAEA) took industrial action in more than 40 strikes across Australia from August to late October and Qantas estimated that it lost 60,000 manhours of maintenance as a result. The airline cancelled 500 flights in a four-week period and grounded a growing number of its aircraft that could not be maintained.

The warring parties now have a maximum of 42 days to resolve their differences – which centre on Qantas’ plan to offshore much of its international operations – before FWA steps in with compulsory arbitration.

This raises two obvious questions: whether Qantas management expects its actions over the weekend to bring unions to heel; and, if not, how much confidence it has in FWA finding in its favour. It seems highly unlikely that locking out staff without pay over a weekend would hasten compromise. The debate has now become so acrimonious and so polarised – death threats on one side and mass groundings on the other – that concessions from either end appear fantastical.

That leaves compulsory arbitration, but this has traditionally favoured unions in Australia, and it is hard to see a body called Fair Work Australia approving a policy that cuts jobs for Australians. All of this leaves one mystified as to why Alan Joyce, Qantas’ CEO, has taken such a gargantuan gamble, one which potentially jeopardises not only his plans for the airline, but also its reputation with customers at home and abroad. Perhaps we should be asking if it really is win or bust, or whether Joyce is keeping some cards closer to his chest.

The latest vision of the future Flying Vs, pilotless aircraft and travelling five times faster than the speed of sound could all become reality by 2075 – if investment is made now. A new report from the UK’s Institution of Mechanical Engineers (IME), Aero 2075: Flying into a bright future?, serves both to highlight future aircraft innovations and to urge government to ensure the UK is at the forefront of developments. The innovations outlined by the IME are wide-ranging and often radical. Future possibilities could include a large mothership aircraft carrier system with individual units that are released over a destination and then float down as navigated by the passenger – potentially taking you straight to your front door. Meanwhile, ‘flying fuel stations’ would eliminate the need for aircraft to take off with full tanks, thus saving weight. And recent

progress in the development of drone aircraft could eventually translate to pilotless aircraft, according to the IME. More familiar possibilities, such as solarpowered and blended- wing aircraft, are also discussed in the report. The study also notes the potential of supersonic jets flying faster than the speed of sound and even hypersonic aircraft that are capable of travelling more than five times the speed of sound. Aircraft of any speed could be configured in a “V-shaped, echelon formation when at cruise”, according to the IME, with following aircraft enjoying a drag reduction and lift advantage from the airflow generated by the aircraft in front. “Taken directly from nature, the concept is akin to the aerodynamic nature of a flock of geese,” the report states.

Hawaiian Seeks to Trim its Hedges Despite big jumps in sales and operating income, net profit at Hawaiian Airlines dipped in 3Q 2011 to $26m from $30m the year before. Hawaiian exceeded revenue forecasts in the quarter, increasing sales by almost a third to $456m on the back of a 16 per cent rise in capacity. But, having hedged half its fuel requirements at roughly $100 per barrel, the airline was left to rue its bets as the price of WTI crude oscillated around the $90 mark, meaning that the derivative contracts cost it $10m from July to October. Hawaiian has lost $24m in the first nine months of 2011, in contrast to a $40m profit in the same period last year.

Merkel opens fourth Frankfurt runway German Chancellor Angela Merkel has officially opened Frankfurt International Airport’s fourth runway.

Constructed at a cost of €760m ($1.05bn), the runway will boost the airport’s capacity by 50 per cent from 83 takeoffs and landings per hour to a potential 126. This translates to a potential increase in passengers per year from 53 million to 89 million by 2020.

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4 | AFM • ISSUE 76 November-December 2011

NEWS ROUND-UP The latest on deals, mergers, appointments and more ILFC finalises AeroTurbine acquisition

NEWS HIGHLIGHTS

International Lease Finance Corporation (ILFC) has completed its previously announced acquisition of AeroTurbine from AerCap Holdings. AeroTurbine will operate as a wholly owned subsidiary of ILFC. In connection with the transaction, Citigroup Global Markets acted as ILFC’s financial advisor, and Debevoise & Plimpton acted as ILFC’s legal advisor.

Lufthansa counts cost of night ban Lufthansa Cargo has said a recent court ruling banning night flights from its hub at Frankfurt airport will cost it tens of millions of euros. The airline has appealed the decision, but will have to wait until 2012 to see whether that is successful. In the meantime, it has cut two flights a week to China, introduced stopovers in Cologne for flights to China, and moved one freighter to Cologne.

ExpressJet name retained after merger SkyWest subsidiary Atlantic Southeast Airlines is to adopt the ExpressJet Airlines ‘ExpressJet’ name for its combined identity upon completion of the merger between the two companies. The merger is expected to be completed by December 31, 2011, at which time the name would be effective. “Our company-wide vote clearly established the ExpressJet name with the legacy Atlantic Southeast branding as the winner and a brand identity our people can be proud of going forward,” commented Brad Holt, Atlantic Southeast president and COO.

SWA posts shock loss Losses on fuel hedging contracts totalling $227m have driven US budget carrier Southwest Airlines (SWA) to a rare quarterly loss. Without the reverse the airline would have comfortably been in the black for 3Q 2011, although profit was down 37 per cent on the previous year, to $122m.

Including non-cash items meant a net loss of $140m for SWA. Figures from AirTran, which SWA bought this year for $1.7bn, were included for the first time in SWA results: total revenues jumped a third, to $4.3bn, as a result of the purchase.

Major move for ancillaries Airline enthusiasm for ancillary sales is growing stronger, with global ancillary revenues projected to rise by $10bn in 2011. Analysis by IdeaWorks and Amadeus forecasts total ancillary sales of $32.5bn in 2011, with much of the boost coming from US majors, who will almost double non-core sales to $12.5bn in the year. Their ability to do this rests on the sale of frequent flier miles, which constitute half of all ancillary revenues and dwarf baggage fees, which account for only a fifth.

Early converts to the ancillaries model, however, appear to be running out of ideas for new services

and fees. On average, carriers like easyjet, Ryanair and Spirit earned about a fifth of total sales from ancillaries – much the same as in 2010 and 2009.

That said, low-cost carriers worldwide did improve ancillary sales by a third in 2011, up to almost $5bn.

But to discover whether that increase is not merely a function of higher total sales would require a look at changes in per passenger ancillary sales, which the report omits. From 2008 to 2009, for instance, airlines such as Allegiant and Ryanair were driving up per passenger ancillary sales by about four percentage points.

P&W buys Rolls out of IAE venture but creates another Pratt & Whitney (P&W) and Rolls-Royce have agreed a joint venture (JV) to develop new engines for the next generation of mid-size aircraft. On starting the new venture, they close another: P&W is to pay RollsRoyce $1.5bn for its share in International Aero Engines (IAE), which makes the V2500 engine for the A320. Rolls will also receive flight-hour payments on all V2500-powered aircraft for 15 years.

P&W said it intends to offer a portion of these shares to its IAE partners MTU Aero Engines AG (MTU) and Japanese Aero Engines Corporation (JAEC). In addition, Rolls-Royce will make a “modest” investment in the PW1100G-JM for the A320neo programme.

Rolls and P&W will hold an equal share in their new collaboration on engines for 120 to 130-seat passenger aircraft. The venture will focus on highbypass ratio geared turbofan technology. The pair will also collaborate on future studies for nextgeneration propulsion systems, including advanced geared engines, open rotor technology and other advanced configurations.

Rolls has said that the sale of shares will create £140m ($220m) in operating profits next year, though much of the profit is likely to balance the recent acquisition of Tognum for £1.4bn ($2.2bn).

Etihad reports increased revenues for 3Q Etihad Airways has reported “strong profitability” at an EBITDAR level, with the airline moving into monthly profitability. Revenues for 3Q were up 39 per cent on 3Q 2010 to $1.1bn, with passenger numbers up 18 per cent to 2.25m. Seat factor increased by 3.8 per cent to 80.7 per cent. However, operating costs rose by 12 per cent. “Despite the continuing challenges of high fuel prices and economic downturn in many of the markets in which Etihad operates, we are seeing strong growth in all our key commercial indicators,” said CEO, James Hogan. He added that the airline is maintaining “a rigorous focus on costs” and listed breaking even as a “clear target” for 2011.

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6 | AFM • ISSUE 76 November-December 2011

NEWS ROUND-UP The latest on deals, mergers, appointments and more Ferrovial sells stake in BAA Ferrovial is to lower its stake in the airport company BAA to 49.99 per cent, wiping BAA’s debts from its balance sheet – at least for accounting purposes. Ferrovial is to finalise the sale of 5.88 per cent of the group to Alinda Capital Partners in late 2011, after which Ferrovial will no longer be BAA’s majority shareholder. The sale, which will win Ferrovial €325m ($442m), values BAA at $7.43bn – more than double the previous estimate.

NEWS HIGHLIGHTS

Arik Air revealed as 747-8 customer Nigerian airline Arik Air has ordered two 747-8 Intercontinental aircraft from Boeing, in a deal valued at $635m at list prices. The order was previously attributed to an unidentified customer on Boeing’s website.

The airline said the 747-8 fitted “perfectly” into its long-term plans for growth.

Bankruptcy fears for AA American Airlines (AA) stock fell 33 per cent on October 3 on rumours that parent AMR would file for chapter 11 bankruptcy protection. The airline said there was no solid reason for the speculation, which some have attributed to an unusually high number of pilot retirements since August. AA is the only US major never to have entered chapter 11.

Qantas concludes order Qantas Airways has finalised a contract with Airbus for 110 A320s. This figure includes 78 A320neos. The airline said the aircraft would be deployed across the Qantas Group on short-to-medium haul domestic and international operations.

The order confirms a commitment for the A320s that Qantas announced on August 16, 2011. Qantas also confirmed that the A320 would be used to launch its new premium airline in Asia, and said the base for the subsidiary would be in either Singapore or Kuala Lumpur.

MC announces Russian lease MC Aviation Partners, the aircraft leasing arm of Mitsubishi, has arranged the onward lease of two A321s to Russia’s Nordwind Airlines, a charter operator based at Moscow Sheremetyevo. The A321 are the first Airbus types to be operated by Nordwind, which will lease them for six years.

BAA’s sale of Scottish airport pushed forward BAA is to bring forward the sale of either Glasgow International or Edinburgh airport after being granted approval from the UK Competition Commission (CC). The commission had stipulated that BAA first sell Stansted, though this will be delayed by the company’s second appeal against the commission’s decision.

“In view of the real risk of delay arising as a result of this second appeal and also given the fact that BAA is not challenging the Scottish airport sale, the CC has now decided that it would be in the interests of affected passengers and airlines to proceed with the sale of either Glasgow or Edinburgh airport

first,” the commission said in a statement.

After the sale of one of the Scottish airports, BAA will still own Heathrow, Southampton, Aberdeen, either Glasgow or Edinburgh and, for a limited time, Stansted. Colin Matthews, CEO of BAA, stated: “We will continue with our judicial review proceedings against the Competition Commission’s decision requiring BAA to sell Stansted. We believe the South East airports market has changed and BAA has changed since the Competition Commission’s 2009 decision. It is also clearer now than it has ever been that Heathrow and Stansted serve different markets.”

Fuels, flights and facilities – Airbus shows green credentials

The air traffic management procedures included route optimisation so the shortest distance was flown, as well as a continuous descent approach (CDA). CDA avoids the need for level flight prior to the final approach and also needs less engine thrust, resulting in less fuel burn. According to Airbus, overall CO2 emissions were halved to 54g per passenger and kilometre compared with a regular flight – equivalent to fuel efficiency of 2.2 litres of fuel per passenger and 100 kilometres.

Meanwhile, British Prime Minister David Cameron was called upon to officially open Airbus’ new wing factory in Wales, UK, where the 31 metre long composite wings for the A350 XWB will be assembled. As well as the lightweight wings providing fuel savings, the Wales facility is itself labelled environmentally-friendly by Airbus – with the factory in part powered by three large solar tracking arrays and a wood pellet biomass power plant boiler.

An Airbus aircraft has flown what the manufacturer claims was “the world’s greenest commercial flight”, while a £400m ($641m) composite wing manufacturing facility for the A350 has been opened.

The flight, operated by Air France from ToulouseBlagnac to Paris-Orly using an A321, combined the use of biofuels and optimised air traffic management procedures for the first time. The biofuel, derived from used cooking oil, was not used sparingly either – constituting 50 per cent of the fuel in each engine.

However, as has been pointed out before, used cooking oil does not appear to be a long-term fuel solution as availability is a severe problem.

Boeing expects more Dreamliner cancellations Boeing’s VP marketing, Randy Tinseth, has predicted that more customers will scrap their 787 orders after China Eastern cancelled an order for 24 787s and opted for 45 737NGs instead. Analysts have suggested that Chinese carriers might soon cancel 787 orders en masse due to concerns over economic recovery in their longhaul markets of Europe and the US. Meanwhile, China Eastern also committed to 15 new A330s, some of which will replace five A340s that it has put up for sale. Its 787 cancellation was due to delays rolling out the new aircraft. It will pay a similar price for the 45 737s, minus a sum of indemnity to be paid to it by Boeing.

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NEWS ROUND-UP The latest on deals, mergers, appointments and more Cargolux still in dispute with Boeing over 747-8Fs Boeing has been thrown into discussions with Cargolux regarding the delayed delivery of two 747-800 freighters. The aircraft were due to be delivered to Cargolux on September 19 and 21 but the cargo carrier rejected the aircraft due to contractual issues. The pair later resolved the issues and Cargolux accepted delivery of the two freighters on October 12. The airline has an additional 13 747-800Fs on order.

NEWS HIGHLIGHTS Nigeria’s aviation industry to lose concession allowances

SkyWest penalised for load manifest violations The Federal Aviation Administration (FAA) has proposed a civil penalty of $160,000 against SkyWest Airlines for allegedly operating four regional jet aircraft on four revenue passenger flights when they were not in compliance with Federal Aviation Regulations. The FAA alleges SkyWest operated these flights without a load manifest that accurately reflected the weight of the cargo and baggage, when the total weight of the aircraft was not computed under approved procedures, and when the aircraft were not loaded according to an approved load schedule. SkyWest has 30 days from receipt of the civil penalty letter to respond to the FAA.

US sanctions Iranian carrier Privately owned Iranian airline Mahan Air has been hit with sanctions by the US treasury in response to a ‘plot’ to assassinate the Saudi Ambassador, allegedly planned by Iranian security forces. “Mahan Air’s close co-ordination with the [Qods security force] – secretly ferrying operatives, weapons and funds on its flights – reveals yet another facet of the Islamic Revolutionary Guards Corp’s extensive infiltration of Iran’s commercial sector to facilitate its support for terrorism,” said David Cohen of the treasury department.

Mahan assets in the US have been frozen American citizens have been barred from doing business with the airline.

Nigeria’s aviation agencies may be stripped of their allowances as the majority of the country’s concession and lease agreements are failing to deliver dividends. The news was announced by Princess Stella Adaeze Oduah, who was appointed as Nigeria’s Minister of Aviation in mid-2011. “I inherited horrible concession agreements which no developmentoriented administration can sustain,” she told the House of Representatives.

Oduah said she does not intend for the agreements to be maintained unless they start to create revenue for the industry. “There is no reason they should be left untouched as if they are cast in stone. More than 70 per cent of concessions and leases in the sector are not performing and have not given us a premium on the terms of the contracts,” she told lawmakers. “We will review and cancel those agreements and leases that are not yielding the expected dividends.”

On another topic, Oduah said she shared the country’s ambition to have a flag carrying airline but noted the work that must come first. “We must have a national carrier, but we need to have the appropriate framework to drive and actualise this dream,” she said.

European ATM veers off course Europe is falling behind in its attempts to improve air traffic management (ATM). An independent Performance Review Body (PRB) report, as well as draft recommendations from the European Commission, show that European nations are failing to meet legislated targets in improving operational, financial and environmental efficiency.

States are currently committed to improving the cost efficiency of air navigation services by 3.5 per cent annually for between 2012 and 2104, but the International Air Transport Association (IATA) has warned that “inaction” is costing the competitiveness of Europe’s connectivity €256m ($353m) a year. This is on top of the €1bn ($1.4bn) lost by “watering down” the PRB’s originally proposed target of a 4.5 per cent annual gain in cost efficiency.

“When targets are agreed, state leadership must ensure that they are met. This is not the time for

complacency,” said Tony Tyler, IATA’s director general and CEO. “Everybody agrees that high costs, delays, environmental waste and circuitous routings are not acceptable. But the problems are not going to fix themselves.” Tyler said that air navigation service providers (ANSPs) have failed to keep pace with the efficiency improvements offered by new technology and aircraft, adding that it is the “responsibility of states to ensure that their air navigation service providers are delivering what is needed”.

The PRB report shows that 21 of 29 European states failed to make the required contributions to the costefficiency target. “The real story is with the ‘Big Five’ ANSPs – Germany, UK, France, Italy and Spain…

Being responsible for 54 per cent of the costs of air navigation services in Europe, the success of the performance scheme is dependant on these states meeting their share of the required cost reductions.”

Mekong blues

today has only two private airlines, one of which flies purely domestic routes. The Philippines, which has an equivalent population, is home to at least 10 private passenger operators.

Air Mekong, one of Vietnam’s first privatised airlines, only got off the ground last year after an official launch almost a decade earlier, while Jetstar Pacific also encountered problems with Vietnam’s Civil Aviation Authority (VCAA). In both cases, foreign investment – from America’s Skywest for Air Mekong and from Australia’s Jetstar – proved difficult to stomach.

Even after granting a transport license to Jetstar Pacific, the VCAA blocked 10 international routes the carrier wanted to implement, saying it was not allowed to use branding containing the word “JET” and an orange star, or “Jetstar – orange star”. That occurred in 2008, but AirAsia’s problems in 2011 look remarkably similar.

Vietnam’s stuttering climb towards aviation liberalisation has faltered once again with Malaysian AirAsia’s announcement that it has called off its joint venture (JV) with VietJet. The Malaysian stock exchange was told that various conditions of a JV agreement signed in early 2010 had not been satisfied in time. The main problem appears to have been the refusal by Vietnamese authorities to allow AirAsia to use its branding in VietJet AirAsia, of which it was to own 30 per cent. It is little surprise that AirAsia’s JV model – which has seen it set up or prepare subsidiaries in Thailand, Indonesia, the Philippines and Japan – came unstuck in Vietnam, where the communist government, while doing much to encourage privatisation in other industries, remains suspicious of opening up the airline market.

Vietnam, with a population of roughly 90 million,

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The latest on deals, mergers, appointments and more NEWS ROUND-UP

PEOPLE IN THE NEWS Air France ousts Gourgeon

Air Seychelles makes Steller appointment

Air France-KLM has ousted chief executive PierreHenri Gourgeon and appointed Jean-Cyril Spinetta in his place. Spinetta was formerly chief executive of the group and will retake the role in addition to his responsibilities as chairman of Air France-KLM. The airline group has suffered a continued loss of earnings during Gourgeon’s reign, which started in January 2009. Alexandre de Juniac will take Gourgeon’s other role of CEO of the Air France unit.

Leo van Wijk, head of KLM, has been made deputy CEO of Air France-KLM. Philippe Calavia will remain in his position as CFO.

Air Seychelles has hired Bram Steller as its new CEO, effective October 1. Steller, a Dutchman, was previously chief operating officer at Kenya Airways.

He will take over from Maurice Loustau-Lalanne.

Albrecht becomes CEO of Austrian Airlines Jaan Albrecht has been appointed as Austrian Airlines’ new CEO, with effect from November 1, 2011. He joins Andreas Bierwirth and Peter Malanik on the airline’s executive board. “In Jaan Albrecht we are pleased to have won a top manager for Austrian Airlines from the Champions League of our industry. As CEO of the Star Alliance, he made a decisive contribution to shaping the successful development of the world’s largest airline alliance,” said Stefan Lauer, chair of the supervisory board of Austrian Airlines.

Southwest promotes executive personnel Southwest Airlines has announced a number of staff changes. Bob Jordan, Southwest’s current EVP of strategy and planning, has been promoted to EVP and chief commercial officer. He maintains his role as president of AirTran Airways. Jeff Lamb, Southwest’s current SVP of administration and chief people officer, has been promoted to EVP and chief people and administrative officer. Ellen Torbert, Southwest’s current VP of customer support and services, has been promoted to the newly created role of VP of diversity and inclusion.

Hawaiian names new CFO Scott Topping will become CFO of Hawaiian Holdings and its subsidiary Hawaiian Airlines on November 1.

He succeeds Peter Ingram, who has assumed a new role at Hawaiian as chief commercial officer.

Trio join ALC as VPs Air Lease Corporation (ALC) has added Chi Yan, Michael Bai, and Jenny Van Le as VPs. Yan and Bai will work in ALC’s marketing team in China and Asia, while Van Le will cover financing and leasing in the company’s legal department. “Collectively, these executives bring 27 years of experience in aircraft leasing from ILFC to the executive ranks at ALC,” said Grant Levy, EVP at ALC.

Retiring McQuay replaced by Younger man Stan Younger is to take over leadership of Bombardier’s Aircraft Service Centre network replacing Michael McQuay, who is to retire after 40 years in aviation. Younger took up his new position on October 9, 2011. He most recently served as head of Cessna’s 10 company-owned service facilities.

JetBlue CFO steps down JetBlue Airways CFO Ed Barnes has resigned. He joined the airline in 2006 as VP, cost management and financial analysis, and was promoted to CFO in 2008. JetBlue treasurer Mark Powers will serve as interim CFO, effective immediately, while a search for a new CFO is conducted.

Kellner is new Boeing director Boeing has appointed Larry Kellner as a new director.

Kellner is president of private equity firm Emerald Creek, and from 2004 to 2009 was chairman and CEO of Continental Airlines.

Boeing appointments Boeing has appointed Donna Hrinak as president of its Brazil division. Hrinak will start her role from October 14, based in a new Boeing office in Sao Paulo.

Meanwhile, the company has appointed Larry Kellner as a new director. Kellner is president of private equity firm Emerald Creek, and from 2004 to 2009 was chairman and CEO of Continental Airlines.

Boeing has also appointed Matthew Knowles as communications director, UK and Ireland.

Adelaide Airport announces new MD Adelaide Airport has appointed Mark Young as its new managing director. Young will take up the position from November 1, moving from his current role as the airport’s CFO. The airport’s chairman, David Munt, said Young “played a key role” in the airport’s expansion and passenger growth, leading a $405m refinancing programme for the airport in 2010.

Boeing’s Bell to retire in April Boeing CFO James Bell is to retire from the company, effective April 1, 2012. He will be replaced by Greg Smith, who is currently corporate controller and finance VP. Smith will take up the role as of February 1, 2012. The pair will work together over the coming months to ensure a smooth transition. Diana Sands, VP of investor relations and financial planning and analysis, has been appointed corporate controller, which is also effective February 1, 2012. Bell has served as CFO since 2003 and was also appointed corporate president in 2008. He served as the company's interim CEO for several months in 2005.

Joseph DiLallo heads aviation finance at Key Joseph DiLallo has been named VP of corporate aviation finance at Key Equipment Finance, a bankheld equipment finance company. DiLallo will oversee finance solutions for all types of new and used corporate aircraft and helicopters for clients in the western US.

China Southern takes first A380 China Southern Airlines has taken delivery of its first A380, becoming the first operator in the country to receive Airbus’ giant, and the seventh globally. The aircraft made its maiden voyage on October 17 on the Beijing-Guangzhou-Beijing route, following test flights over the weekend.

China Southern has ordered five A380s in total, with the second expected to be delivered at the end of this year.

SIA’s long-haul budget airline to fly in April Singapore Airlines (SIA) is to start its new long-haul low-cost carrier in April 2012. SIA will launch the subsidiary using a 777-200 and will later acquire an additional 14 Boeing aircraft, four of which will be delivered by July 2012. The budget airline is to serve Europe, the US, Australia and New Zealand.

India to lift ban on foreign airline investment India’s Civil Aviation Ministry is to allow foreign airlines to buy up to 24 per cent of India’s domestic airlines, according to local news sources. India’s airlines, many of which are suffering sustained financial losses, have been blocked from foreign airline investment, though other types of foreign companies are entitled to buy shares. The aviation ministry is expected to refer its decision to the department of industrial policy and promotion, after which it will move to the cabinet for final approval.

US tax hike will cost jobs, says ATA A hike in US air taxes will do little to improve security and may result in a loss of air services and jobs, the Air Transport Association of America (ATA) has claimed. The US Administration is proposing two new taxes; a $100 departure tax applicable on all flights and a passenger security tax, which would double existing taxes to $5 for each one-way trip in 2012 and triple the tax to $7.50 by 2017.

“Paying more taxes doesn’t mean safer travel. There is no clear plan of how security will be improved, nor is there any accountability for whether the additional resources will be used efficiently or effectively,” said ATA’s CEO, Nicholas Calio, in a speech to the AeroClub, Washington.

AFM76 News_AFM News 04/11/2011 11:24 Page 10

10 | AFM • ISSUE 75 September-October 2011

NEWS ROUND-UP The latest on deals, mergers, appointments and more Ryanair selects Wroclaw as first Polish base Irish budget carrier Ryanair is to open a base in the Polish city of Wroclaw in spring 2012, its first in Poland and 46th across Europe. The airline will initially station a single 737-800 at Wroclaw’s Copernicus Airport from March, boosting its network by more than a third with the addition of six new routes.

The low-cost carrier is already the largest at the facility offering links to 15 destinations in Belgium, Ireland, Italy, Norway, Spain and the UK. It currently offers more than 40 flights per week accounting for a 30 per cent share of the available weekly seats.

The new additions to its network next year comprise Bournemouth, Chania, Malmö, Malta, Paris Beauvais and Venice Treviso. All but one of these destinations are new for Wroclaw, with Wizz Air already providing a three times weekly link to Paris Beauvais.

In addition to this growth, Ryanair revealed that it is considering establishing operations from the new Warsaw Modlin Airport, which is due to open next summer. The former military airfield is currently being converted into a civilian facility for use mainly by lowcost carriers.

Air Algerie boosts links to Montreal Air Algerie is to launch a third weekly rotation on its AlgiersMontreal route this winter, offering a Saturday departure alongside its established Tuesday and Friday services. The new frequency will be introduced in the first week of November and is the airline’s sole link to North America.

In the past year an estimated 67,000 passengers travelled between Algiers and Montreal, a market that has declined by around 18 per cent in the past 12 months.

The airline’s yield has also significantly weakened as average one-way fares have slipped from $390 to $362 and its overall share of the market has declined from 76 to 65 per cent.

Although Air Algerie is the only airline offering a non-stop service, it faces competition from Air France, via Paris Charles de Gaulle, and Royal Air Maroc via Casa-blanca.

The French national carrier has seen its share of the traffic rise 41 per cent in the past year and notably it has a much stronger yield than its North African rivals with average one-way fares of $605. However, these are also down significantly on the performance 12 months earlier.

ROUTES NEWS

AirAsia X launches London Gatwick service LONG-HAUL, LOW-COST CARRIER AIRASIA X HAS LAUNCHED FLIGHTS to London Gatwick, switching its existing Kuala Lumpur-London flight from Stansted Airport from October 24. AirAsia X first launched flights to London in March 2009 and currently offers six flights per week. Its arrival in the UK market has seen passenger traffic to and from Malaysia increase by around a third and in the past year the airline carried around 121,000 passengers on the route, giving it a third of the total Kuala Lumpur-London market.

But, its business model is more than just point-to-point traffic as the route has fast turned Kuala Lumpur into a regional hub connecting three continents, with Australians and New Zealanders regularly flying into the Malaysian capital and connecting on. On the other side British and European travellers are using AirAsia X’s service to Kuala Lumpur and in turn connecting onto AirAsia’s extensive route network to travel throughout South-East Asia, to such popular destinations as Vietnam, Indonesia and Thailand.

AirAsia X says the move to Gatwick will facilitate onward development of the route with additional connecting options thanks particularly to the strong network of easyJet from the airport. It will continue to use an A340-300 with 327 seats on the route and will initially reduce frequencies to three times per week, but will revert to five weekly flights in December and up to six rotations at a later date.

Austrian boosts winter flights to Toronto AUSTRIAN AIRLINES IS TO ADD AN EXTRA WEEKLY ROTATION on its Vienna-Toronto services this winter to meet increasing demand on the route. The European carrier is to offer four weekly flights from October 30, up from its normal three-times-weekly schedule offered during previous winter schedules. The flights will be operated using a 767-300ER. There has been a notable rise in demand for air services between Europe and Toronto with traffic up 9.5 per cent in the past year to approximately three million passengers. Austrian has just a 2.6 per cent share of this traffic, handling an estimated 76,000 passengers in the past year. But despite rising passenger demand Austrian’s market share has slipped slightly due to increasing flights between Toronto and other points across Europe.

Safi Airways set for route growth AFGHANISTAN CARRIER SAFI AIRWAYS IS EXPECTED TO ANNOUNCE A NEW ROUTE into Asia after recently welcoming another A320 into its fleet. The aircraft, configured with 12 business class and 132 economy seats, will initially be used to boost capacity on flights between Kabul and Dubai.

The airline’s COO, Michael McTighe, has confirmed the new arrival will “boost Safi Airways’ plans to develop new routes in the GCC and expand further into Asia”.

Alongside its twice-daily Kabul-Dubai route, Safi Airways currently offers a four times weekly service from the Afghan capital to Delhi. It had previously also operated flights to Europe, but was forced to suspend its services after the European Union added it to its operational blacklist due to safety issues.

The airline is currently the third largest operator in Afghanistan with a 16.9 per cent share of the estimated 1.3 million passengers that travelled to or from the country in the past year. Kam Air dominates this sector with a 27 per cent share of traffic, followed by Ariana Afghan Airlines with an 18 per cent share.

Vladivostok Air launches Singapore service RUSSIAN CARRIER VLADIVOSTOK AIR HAS INAUGURATED A TWICE WEEKLY SERVICE between Vladivostok and Singapore, via Hong Kong, the ninth new route to be introduced at Singapore’s Changi International Airport this year. The airline is using a two-class A320 on the route every Tuesday and Friday.

There are growing trade and tourism ties between Singapore and Russia and since the launch of the RussiaSingapore Business Forum (RSBF) in 2006, bilateral trade between the two countries has more than doubled, reaching S$5.2bn ($4.1bn) in 2010.

Passenger traffic between Singapore and Russia reached an all-time-high of 65,000 in 2010, representing a 31 per cent growth year-on-year. Singapore also welcomed 55,000 Russian visitors in 2010, according to official Tourism Board statistics, an increase of nine per cent compared with 2009. During the first eight months of this year, air traffic movements and visitor arrivals from Russia increased by a further 34 per cent and five per cent, respectively, compared with the same period last year.

EasyJet adds new link to Crete BUDGET CARRIER EASYJET HAS CONFIRMED IT WILL LAUNCH A LINK to Heraklion in Crete from London Luton Airport from April 21, 2012, adding to its existing UK links to the Mediterranean island from Bristol, London Gatwick and Manchester. An estimated 268,000 passengers travelled on scheduled flights between the UK and Heraklion last year and easyJet held a 49 per cent share of this market, with passenger traffic up 3.1 per cent on the previous 12-month period.

The airline will initially offer just a weekly rotation on the route but could boost its schedules subject to customer demand. It presently offers 10 flights per week from London Gatwick, three from Manchester and two from Bristol. It also flies to Crete from its Berlin Schoenefeld base on a twice-weekly basis.

Project3_Layout 1 07/11/2011 12:32 Page 1

FINANCING THE WORLD'S FLEET, ONE AIRLINE AT A TIME Over $3 billion of committed aircraft purchases since 2010

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Acquisition of three Boeing 737-800’s

Sale/leaseback of two 2010 Airbus A319-100’s

Sale/leaseback of seven 2011-2012 Airbus A320-200 deliveries with PDP funding

Sale/leaseback of two 2011 Boeing 737-800 deliveries

Sale/leaseback of one 2010 Airbus A320-200 delivery and one 2010 A319-100 delivery

Sale/leaseback of four Boeing 737-800 deliveries and one 2008 Airbus 319-100

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Sale/leaseback of three 2011 Airbus A320-200 deliveries with PDP funding

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AFM76_Regional Jets new_AFM71 04/11/2011 13:30 Page 12

12 | AFM • ISSUE 76 November-December 2011

FOCUS: Regional jet manufacture ATR and Embraer appear to be cruising at high altitude while Bombardier, the main competitor to both, is cutting production rates amid an apparent dearth of orders. But the Canadian manufacturer is confident that ongoing sales campaigns will soon start to redress the balance. Bernard Fitzsimons talks to the company’s marketing VP, Philippe Poutissou.

Aeroflot’s second SSJ100 entered service in August.

A

FTER THREE DECADES IN THE BUSINESS, REGIONAL turboprop manufacturer ATR is enjoying its best year for sales with a total of 145 aircraft sold by the end of September. Accordingly, production will be ramped up from one per week – the current rate – to 72 throughout next year, 80 in 2013 and 85 in 2014.

Embraer delivered the last two of 890 ERJ145 family aircraft earlier this year and saw its orders for the EJet pass the 1,000 mark just seven years after the first delivery.

Deliveries of around 100 aircraft per year left Embraer with a backlog of 248 aircraft at the end of September, including 160 E190s, 29 E195s, 53 E175s and six E170s.

The trend toward bigger aircraft is clear – most of Embraer’s recent orders have been for the E190, while ATR 72s outnumber 42s by 136 to nine in this year’s order book. This suggests that the mooted 70-seat variants of the Sukhoi Superjet and Mitsubishi Regional Jet may never leave the back burner where they have languished since the early days of their programmes.

Sukhoi Civl Aircraft and its marketing partner, Superjet International, continue to make progress despite slow deliveries and reported technical problems with the three aircraft delivered by mid-October. Adding launch orders for the Sukhoi Business Jet to 2011’s firm orders from airlines and lessors and total orders reach 73. Mitsubishi expects to fly the MRJ next year and start deliveries to its launch customer ANA two years later.

Delivered in August, the first of 30 E190s for China’s CDB Leasing will be operated by China Southern.

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November-December 2011 AFM • ISSUE 76 | 13

FOCUS: Regional jet manufacture

REGIONAL AIRCR AFT: BOMBARDIER’S MISSION TO COMPETE

The first of 18 ATR 72-600s was delivered to TRIP Linhas Aéreas in October.

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14 | AFM • ISSUE 76 November-December 2011

FOCUS: Regional jet manufacture

The first of 15 Q400s for india’s SpiceJet was delivered in August.

Embraer, meanwhile, is evaluating its options ahead of a decision on its next move. Now that both Airbus and Boeing have confirmed re-engining plans for their single-aisle models, the Brazilian manufacturer is finalising its own strategy; anticipated before the end of the year, it is widely expected to involve a bigger jet.

Bombardier’s offerings Bombardier has irons in each of these fires, with its Q400 turboprop, CRJ-700/900/1000 regional jets and all-new CSeries. But, it is cutting production rates for both the Q400 and CRJ next year.

However, Bombardier has delivered around 2,700 regional jets and turboprops.

Philippe Poutissou, the company’s marketing VP, explains that along with both varieties of regional aircraft, Bombardier has two types of customer. “Because we have a large installed base we see continued demand from the existing customer base,” he says.

For example, many airlines are looking to expand their existing fleet – as was the case with Lufthansa’s partner Eurowings, which took additional CRJ900s this year, and established CRJ operators, Brit Air and Air Nostrum, which up-gauged their fleets to the CRJ1000.

Carriers in North America are also likely to grow their fleet, says Poutissou. While he admits that the market has been relatively slow over recent years because of challenges faced by its major

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November-December 2011 AFM • ISSUE 76 | 15

FOCUS: Regional jet manufacture airlines, he still believes that Latin America is a “sound base from which we will see continued demand for the aircraft.”

At the same time, both the Q400 and CRJ continue to find new markets. “On the CRJ, we have a fleet that is being built up in South America,” he says. “Puna in Uruguay ordered three more aircraft at the beginning of this year to add to their growing fleet of CRJ900s.”

Meanwhile, Q400s started operations with three new customers, including Jazz – “the first Q400s that have gone into the Air Canada system” – and two airlines in new growth markets.

India’s SpiceJet has ordered 15 aircraft to expand its network into secondary markets. The first entered service in October: “By all accounts they’re quite pleased with it and in fact they ramped up the utilisation of the aircraft quite quickly,” Poutissou comments.

“We also have just recently delivered the aircraft to Smart Aviation in Egypt, and again that’s a new market for the Q400 so we’re very much looking forward to the aircraft in that area.” The level of marketing activity remains quite high, he adds, both with existing and new customers.

Some are fairly early in understanding what the aircraft can do and others are very heavily engaged to the point of talking commercial terms.”

As with any new programme, “there’s quite a bit of interest in understanding how we’re progressing, so the discussions typically take longer than they would with our established programmes, such as the Q4000 and the CRJ.” One interesting trend Poutissou identifies is growing interest from Latin America and Africa: “It’s no secret that the demand for new aircraft has been shifting from our traditional markets of North America and Europe into the new markets for aircraft or the high growth market for aircraft and aviation, such as Asia and of course China. Something we don’t hear about as often is that there is quite a bit of interest from Latin America as well as Africa, which are areas where demand for air travel is growing at fairly high rates, albeit from a smaller base than the Asian market.”

The CSeries has also continued to attract orders with five new transactions in the 2Q, three with undisclosed customers as well as significant orders from Korean Air and Braathens Aviation, parent of Norwegian regional operator Malmö Aviation. “That certainly was very encouraging for the CSeries programme,” Poutissou comments. “We now have eight customers, 133 firm orders, 119 options and 10 purchase rights, so just over 250 commitments for the aircraft. And our teams are engaged throughout the world with quite a wide range of operators, as well as lessors, who are interested in evaluating the CSeries.

Korean Air has ordered 10 CS300s with 10 options and a further 10 purchase rights.

For an ultra quiet aircraft, it’s making a lot of noise The noise and emission levels of the new Sukhoi Superjet 100 are substantially better than the ICAO rules require. The noise and excitement comes from regional operators around the world who recognise that the Sukhoi Superjet 100 family has the combination of state of the art technology, reliability – plus lower fuel consumption and operating costs – they need to build networks and profitability. Sound good?

Find out more at www.superjetinternational.com

We know where the world’s going

AFM76_Regional Jets new_AFM71 04/11/2011 14:33 Page 16

16 | AFM • ISSUE 76 November-December 2011

FOCUS: Regional jet manufacture

The CRJ1000 entered service with Air Nostrum at the beginning of the year.

Having stretched the CRJ to 100 seats in its latest version, Bombardier is also looking at a bigger Q400. “We certainly have a lot of interest from the media and from customers and so we continue to evaluate how we can take advantage of that interest.”

He adds; “We’re uniquely positioned in that the Q400 today has some growth potential, so we’re looking at what this Q400 could be and how it could meet the customer demand.” However, as a programme has not yet been launched, “we can’t offer any specifics or a firm date for when this aircraft would be available.”

Turboprop demand Demand for turboprops has increased significantly since the 2005 step change in fuel prices and Poutissou expects the trend to continue. “If you look at our forecast for the next 20 years – we’re unique in that we look at turboprop and regional jet demand – we foresee that of the 6,100 aircraft to be delivered in the 20- to 100-seat category, just over 40 per cent of those are expected to be turboprops.” That is a major difference compared with the delivery rates seen at the beginning of the last decade.

“If you look at the delivery rates for all the manufacturers in 2000 to 2005, turboprops represented more like 15 to 20 per cent of the deliveries. But going forward we think it will stabilise at around 40 per cent.”

That is not only because of fuel prices. “A lot of the turboprop fleet that is in service today is older than the regional jet fleet as well, so you have a replacement cycle for turboprops that is likely to come sooner than that for regional jets. If you think of the earlier generation, what I call the classic turboprops, you have a whole bunch of 50-seat turboprops, whether they were Fokkers or ATRs or Saabs or early Dash 8s from Bombardier, that are going to hit their replacement cycle sooner than CRJs and EJets.”

cent better than what we were marketing the aircraft at. So that’s all very attractive. As the airlines will put it, when you take an existing aircraft, you stretch it and you don ‘t increase the fuel consumption by the same percentage; you’re essentially getting free seats. They like that.”

The Q400 One element in ATR’s recent success is the orders it has attracted from lessors. Similarly, Poutissou says leasing companies are taking more interest in the Q400: “We’ve certainly seen with the larger single-aisle aircraft that the lessors have been in the market in a big way. But they’re also looking to own assets that are very liquid; that’s really their business model. They want to be able to own assets that will have good demand when they’re looking to put the aircraft out for lease, but they also want to make sure that it has a life beyond that lease term.”

A number of Q400s are already owned by lessors. “They weren’t necessarily purchased from us by lessors but the lessors have then gone in and done sale and leaseback transactions or assisted in financing aircraft that are placed with existing operators. What they find attractive about an aircraft like the Q400 is that it is very versatile, and not only in the various airline business models – such as the low-fare model, or the hub feeding model, or the high service model we’re seeing with Porter in Canada.”

The aircraft has also found its way into special mission applications with conversions to support fire-fighting missions in France with the Sécurité Civile. “We have a few Q400s that are in corporate as well and we have a few Q400s that have been put into cargo use. So the lessors are looking to make sure that the assets have a good life beyond their current application. The Q400 is fairly unique in the market today – it is the largest, and I like to call it the most productive turboprop, because it provides more payload, more seats and a higher speed than any other turboprop out there. They [lessors] see that as an attractive asset to have for the long-term.

Bombardier’s latest regional jet has had a very good entry into service (EIS) with Air Nostrum and Brit Air, says Poutissou. “We did our CRJ1000 deliveries in December, I think they actually put it into scheduled service right around the new year. Certainly the reports we have are that the aircraft went into service with a higher than expected despatch reliability. It hit 99.4 per cent in the first six months, which was intended in that it’s a common aeroplane to the existing CRJ700 and -900, so there was a lot of learning from those programmes.

“Many lessors are actually looking to diversify their portfolios. Every lessor is of course interested in the very large fleets of 737s and A320s but that’s also where the most competition exists, so they start to look for other assets that are liquid and that have good long-term value. They certainly see that in the large turboprops.”

“But the other pleasant surprise was the reports from our engineers and from the operators that the fuel consumption of the aircraft was actually better than we had anticipated early on. In fact, the number they are now showing is that it was four per

The market is always fluctuating and economic conditions are challenging, as Poutissou accepts. “The best we can do is to make sure we have competitive products out there and we support the operators in their business planning… that’s our mission.”

Project3_Layout 1 07/11/2011 12:36 Page 1

AFM76_Slots_AFM74 04/11/2011 11:04 Page 18

18 | AFM • ISSUE 76 November-December 2011

FLEET OPERATIONS: Slots Europe and the US have taken markedly different approaches to addressing capacity constraints at busy airports. The former has favoured regulation, whereas the latter has taken a largely laissez-faire approach.

Now, however, both are seeking a new way to deal with the demands of 21st century travel. Alex Derber investigates.

SLOT ALLOCATION: THE RULES AND SCHEMES EXPLAINED A

IR TRAVEL HAS BECOME VASTLY MORE AFFORDABLE in the past 20 years. The benefits to consumers of market liberalisation, low-cost carriers (LCCs) and cut-throat competition have progressed from the US to Europe to Asia. But ever-increasing passenger numbers put a strain on infrastructure and increases demand for the limited capacity offered by existing airports.

For airlines, those limits can be defined by slots. The European Commission describes a slot as “a permission given by a coordinator to use the full range of airport infrastructure necessary to operate an air service at a co-ordinated airport on a specific date and time for the purpose of landing or take-off.”

Increasing demand for a limited pool of resources inevitably means that those resources become more expensive. In 2008 British carrier, BMI, boosted its net asset value from £12m ($19m) to £800m ($1,273m) by incorporating its portfolio of slots at London Heathrow into its balance sheet.

Today, BMI’s parent, Lufthansa, is keen to offload the loss-making British carrier, and has valued its slightly diminished holding of 8.7 per cent of Heathrow’s slots at €515m ($717m). However, it would probably have to accept a lower price as any sale would encumber a buyer with a dysfunctional airline as well as the sought-after slots at Heathrow.

Regulatory evolution to slot allocation The European Union (EU) first regulated slot allocation in 1993.

Principally, it declared that an airline which operated a slot in a given scheduling period was entitled to that same slot in the following period. This is commonly known as the ‘use it or lose it’ rule, whereby a carrier – subject to certain exceptions – is liable to forfeit a slot that it has used less than 80 per cent of the time during the previous scheduling period.

Unused slots and newly created ones are placed in a pool. Half of these pooled slots should be distributed first to new entrants, which are defined as those holding a small number of slots in the previous period, while the remainder should be distributed fairly by a fully independent co-ordinator. Each EU member state has its own co-ordinator and no distinction is drawn between slots for international or domestic services.

Oddly enough, given the values ascribed to them, there is little agreement on who owns slots. At the world’s busiest airports, where demand for landing and take-off permissions either constantly or periodically exceeds supply, many airlines still hold slots that they were granted by aviation regulators decades ago, when airport capacity was not an issue. That airlines or their owners should benefit from the sale of those rights, handed out originally for free by public bodies, rankles some.

While European regulation specifies that “slots may be exchanged, one for one, between air carriers”, it is silent on the question of secondary trading – the sale of slots from one airline to another. This occurs in an informal, socalled ‘grey’ market, which can lead to inefficiency, as the commission noted in 2008: “Where there is no transparent market for the scarce resource of slots at congested airports, incumbent air carriers are often not aware of, or confronted with, the full opportunity costs of

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November-December 2011 AFM • ISSUE 76 | 19

FLEET OPERATIONS: Slots

the slots they hold. As a consequence an air carrier may retain a slot even when its market value far exceeds the value that the air carrier generates from retaining and using the slots.”

In Europe the lack of a formal trading regime has led to a grey market where slots allocated by an independent coordinator can then be exchanged for other slots, sold for money or exchanged for other types of consideration.

Regulators tacitly approve of such trading, though they do insist that only aircraft operators ‘own’ slots.

The US, in contrast, has for the most part left slot allocation unregulated and as a result slot trading has evolved differently. Accordingly, slots in the US can be owned by non-airlines, such as banks, often as the result of the slots being put up as security by an airline for a loan.

Generally, there is no slot allocation in the US, and aircraft

gain access to or departure from an airport simply by queuing in the air or on the tarmac. Most US airports publish their runway capacities and airlines schedule their flights accordingly, accepting that they may be subject to holding patterns and substantial delays at busy airports, especially during bad weather when landing and take-off capacity shrinks. Rights to use other airport facilities, such as gates, are negotiated separately.

However, at a handful of very busy airports, such as New York JFK, slots have been allocated to control serious congestion, but the FAA has emphasised that it has the right to withdraw such slots. Airlines in Europe, by contrast, assume that they ‘own’ slots provided that they satisfy the ‘use it or lose it’ rule. As a consequence, US carriers tend to amortise the cost of their slots over seven years, while holders of European slots – despite the theoretical risk of slots being withdrawn for abusive practise – tend to regard them as being owned in perpetuity.

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20 | AFM • ISSUE 76 November-December 2011

FLEET OPERATIONS: Slots airline composition at Europe’s major hubs, where 93 per cent of slots are operated by carriers with historic rights. These airlines will often hang on to slots for several seasons even if the services they operate through them are loss-making.

One solution to this problem is to create a transparent market where slots are bought and sold rather than allocated according to historical use. Mechanisms for sale could be auctions by government or an appropriate independent regulator, the establishment of a formal marketplace for secondary trading between airlines, or a combination of the two. The goal of any market-based system would be to promote the efficient use and distribution of slots.

Limits of the present systems A report published by the commission in 2011 found that European airports could handle 28 million more passengers a year if slot allocation rules were revised. The commission identified four main problems with the current system: suboptimal use of capacity at some airports; the power of incumbent carriers to retain slots at the expense of new entrants at an airport; inadequate operation of slot co-ordination; and lack of consistency with the Single European Sky. To encourage better use of capacity and help new entrants at airports, the commission has proposed changes to the criteria governing minimum use and suggested granting more slots to new entrants. Such changes could make a dramatic difference to

A test bed for this market-based approach is in the US, where slots were first imposed at four highly congested airports – New York JFK, New York La Guardia, Chicago O’Hare and Washington Ronald Reagan – in 1986. Domestic slots were initially allocated according to historical or ‘grandfather’ rights and these, despite the lack of a definitive proprietary interests in them, were then traded in a variety of ways.

A cursory evaluation of airline composition at the four ‘highdensity’ airports suggests that slot trading did little to encourage new players at busy hubs: at all four airports the dominant airlines in 1986 had by 1999 massively increased their presences.

However, others have pointed out that guaranteed slots – as opposed to queues – could have motivated those carriers to rationalise their operations at the big hubs, thereby increasing efficiency.

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AFM76_Slots_AFM74 07/11/2011 11:26 Page 21

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FLEET OPERATIONS: Slots Nonetheless, the FAA wanted to encourage new entrants to the airline market, partly to better serve small communities, and in 2000 it began to ease slot restrictions at the busy hubs where they applied. Congestion at affected airports rocketed and the FAA has since proposed several alternatives, including slot auctions and congestion-based landing fees, whereby it costs an airline more to land at busy periods.

EU slot reform The European Commission is due to report in November 2011 its proposals for reform of slot allocation. Leaked copies of the report suggest that, like in the US, it will favour slot auctions, which has drawn ire from regional airline representatives, who argue that such auctions squeeze out small carriers from big hubs.

“Over time, regional airlines will be driven from hub airports and will lose routes. In turn, regional airports will lose their connections to hubs and people in the regions will suffer reduced mobility and reduced economic flow,” argued Andrew Bray of the European Regions Airline Association (ERAA) in a blog post.

As auctions would probably mean the end of the 50 per cent rule for allocating pooled slots to new entrants (or those with only small slot holdings at an airport), one can see why the ERAA is worried. However, providing slots to smaller players could be ensured through different mechanisms. Ideally, that goal would be achieved through the secondary trading of auctioned slots, but a more direct method would be to offer discounts to regional airlines for certain slots at auction.

“

regional airlines will be driven from hub airports and will lose routes. In turn, regional airports will lose their connections to hubs and people in the regions will suffer reduced mobility and reduced economic flow Over time,

Talk of auctions at Europe’s busiest airports, though, may be a distraction, as they would only apply to newly created slots or those given up by established airlines. At an airport like Heathrow, where government has decided there will be no additional runway, capacity is unlikely to increase and 99 per cent of slots are already held by airlines with grandfather rights they would be unwilling to lose. In 2006, 92 per cent of London Gatwick’s slots were retained year to year by an airline. Moreover, the existence of secondary trading means that an airline is far more likely to sell its slot rather than return it to a pool.

”

Market-based measures may well improve the efficient allocation and operation of slots in the long-term, but any new system will inevitably be tacked on to the old rule-based one, where grandfather rights apply. How European and US regulators reconcile the two will be crucial to relieving the strain on airport capacity going forward.

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FLEET OPERATIONS: Future freight The air cargo business is changing fast and emerging technologies should offer a substantial increase in the industry’s productivity and quality standards. Chris Kjelgaard learns that freighter aircraft are becoming more efficient and environmentally friendly, but that the biggest drivers of productivity will be information technology and automation.

FUTURE FREIGHT

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FLEET OPERATIONS: Future freight

Markus Witte, head of technology development Lufthansa Cargo

A

LTHOUGH AIR CARGO VOLUME DROPPED IN THE LATTER half of 2011 from its post-recession peak in the 2Q 2010 (when annual volumes were increasing at a rate of nearly 40 per cent), IATA expects worldwide air cargo revenues this year to reach $67bn. This is $1bn more than in 2010 and $29bn more than in 2002 – which gives a good indication of the growth in air cargo. IATA forecasts that the 1.4 per cent revenue tonnekilometre traffic growth from 2010 to 2011 will bring a total 2011 revenue of $67bn.

Furthermore, despite today’s short-term blips, longer-term projections for the air cargo industry indicate solid growth. For 2012, IATA forecasts cargo traffic growth of 4.2 per cent and the industry will achieve a revenue total of $70bn for the first time, according to Michael Vorwerk, president of IATA Cargo Network Services. However, IATA expects cargo yields to remain flat in the 2011-2012 period as movements in fuel prices and market demand cancel out each other’s effects on yield.

“We expect a continued but slowing growth in airfreight over the long run, averaging between three to four per cent,” says Robert van de Weg, senior VP of sales and marketing for the freight airline, Cargolux.

Lufthansa Cargo’s view is even more optimistic. Markus Witte, Lufthansa Cargo’s head of technology development, says: “We assume annual growth of five per cent per year” as a long-term average. Although growth may dip in a given year, subsequent years of recovery will then see growth of more than five per cent, keeping the average up. Within the overall picture, Lufthansa Cargo sees stronger traffic growth in Asia compensating for average annual growth of just two to three per cent in some developed nations.

Technological development in the near-term The air cargo industry is beginning to embrace a host of new technologies that should allow it to maintain a long-term growth trend while substantially improving the industry’s cost, efficiency and quality. There is good news for the shipper too, according to Marc Baan, VP of communications, marketing and e-freight for Air France-KLM Cargo. IATA’s business case for its e-freight initiative (discussed in more detail later) indicates that shippers will be the main beneficiaries of the efficiency improvements generated by the initiative. “For Air France-KLM Cargo and Martinair Cargo [a subsidiary of AF-KL Cargo] this is important, as this means that air cargo will become more attractive compared to other means of transportation,” says Baan.

There seems a strong consensus on which new technologies will most significantly affect the air cargo business. Most crucial is fuel efficiency and environmental friendliness, both of which must continue to increase. Big changes are being made in this area – of example, Cargolux has recently taken delivery of the first 747-8F, the most capable freighter type ever built.

Air France-KLM Cargo and Cargolux, in particular, say the use of sustainable biofuels – which are being extensively trialled by Air France in their daily operations – will be critical in making air cargo ‘green’ and thus more acceptable to an increasingly environmentally-conscious public. However, the experts agree that in years to come, information technology and cargo-tracking technologies will affect the airfreight business even more than aircraft efficiency.

Information and control are fundamental areas of technological development for the air cargo industry, according to Vorwerk.

“The replacement and/or upgrade of legacy operational airline systems will enable airlines to use modern technologies and messaging standards that will improve significantly the quality of information provided within the supply chain,” he says.

“Introduction of XML-based messaging enables the air cargo supply chain to structure and transmit more business data content, which is required to replace current paper documents and to fulfil increasing regulatory requirements – for example, security.

Technologies such as web services allow the exchange of data and updates between partners in the supply chain in real time.”

Adds Vorwerk: “The intelligent and efficient use of modern, state-of-the-art information technology for process control, process improvement and visibility in air cargo transportation will help establish and maintain more efficient and more robust processes in air cargo operations and ground-handling.

Furthermore, developments in cloud computing and related technologies will make it easier and more cost-effective to use mobile devices and thereby to extend the reach and exchange of required information processes.”

Lufthansa Cargo’s Witte envisages “a basket of technologies. I would call them automatic identification and tracking technologies”, which he believes will have the greatest near-term impact.

Combined with the information-processing power of modern IT, tracking technologies – such as 1D and 2D barcoding, or tagging with radio frequency identification devices (RFIDs) – it’s allowing air cargo shippers, forwarders and carriers to track individual pieces of cargo on a real-time basis. “This will enable us to improve our productivity tremendously,” says Witte.

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FLEET OPERATIONS: Future freight “Mobile devices like iPhones and iPads are definitely changing the way business is transacted all over the world,” says Vorwerk.

“The lower cost of these electronic devices and the use of Wi-Fi and cellular transmissions make them useful on a global basis.

This will change the way air cargo is moved in the future as well, from things like getting up-to-date shipment status, sharing information and providing tools, to managing aircraft loading and weight and balance.”

According to Vorwerk, mobile devices will bring an end to paper process and “put the person on the shed floor in charge.” He adds: “By removing paper from the process, you can re-engineer the handling of the cargo to include cargo verification using barcode information, weigh the cargo with new electronic devices, improve build-up of cargo for better aircraft utilisation and pass on information about the shipment itself electronically.”

IATA’s e-freight initiative, robotics and the Internet of Things

Robert van de Weg, Cargolux sr VP marketing.

Van de Weg says that, along with new aircraft technologies and environmental and sustainability improvements in aviation, “the internet, with its ease of access to communication” is having the greatest impact today on how the air cargo industry conducts business. Likely to have most impact is radio-frequency identification (RFID), which, explains van de Weg, allows “realtime and piece-level tracking of shipments as they pass through the logistics – for example, arrival to warehouse, loading on aircraft or hand-over to consignee.” RFID will be capable of “eliminating human errors and delays because of data input, in contrast to barcodes. This represents a real efficiency gain.”

Vorwerk says widespread introduction of RFID technology is not quite that simple. “RFID is a technology that shares information but has yet to find its niche for any mode of cargo movement. 1D and 2D barcodes are still the most favoured format and these do allow for a large amount of information. Ground handlers also want more data to be sent to them electronically to allow smoother data flows from the customer direct to the forwarder, to the consignee and to government agencies.”

Michael Vorwerk, president, cargo network services, IATA.

IATA’s four-phase e-freight initiative, launched in December 2004, is at the heart of making the air cargo industry paperless. Involving shippers, forwarders, airlines, ground-handling agents and customs authorities, e-freight’s mandate is to use electronic messaging to create a paper-free process that will eventually replace all 32 of the paper documents that currently accompany every piece of cargo. To date, e-freight is live in 44 countries and 380 airports. A commercial vendor community has been established to support IATA’s e-freight vision, pilot programmes and e-messaging quality measurement. IATA has published the e-freight Handbook, a comprehensive guide to e-freight, and has made it available online.

New electronic messaging standards have replaced 20 paper documents for shipments to some airports and in 2011, IATA is targeting e-freight to document 10 per cent of all cargo on live trade lanes globally.

IATA’s goal is that by 2015, e-freight messaging is the sole source of paper documentation for 20 of the 32 shipping documents.

According to IATA, this would save the air cargo industry $4.9bn annually; reduce the average cargo transfer time by 24 hours; eliminate documentation errors caused by manual data-entry and interpretation of paper documents; allow online tracking and tracing of individual pieces of cargo; and eliminate the need for 7,800 tonnes of paper documents each year. That is the equivalent of 80 747 freighters full of paper.

However, notes van de Weg, the use of barcodes can introduce mistakes because of the way data is gathered. This is very unlikely when using RFID tags. On the plus side for barcodes, “as RFID “AF-KL Cargo and Martinair Cargo strongly believe in e-freight and technology becomes more acceptable and less costly, it may be other e-developments to improve efficiency, transparency and used, but driving a barcode instead to the [internet] cloud quality in the air cargo chain,” says Baan. “We have been the through a URL may even provide more capabilities than will RFID,” front-runner in e-freight development from the start and our says Vorwerk. experiences are really positive, but we see that it still is difficult to get the critical masses to adopt e-freight.”

Air France-KLM Cargo agrees that the implementation of RFID “on a large scale seems challenging,” but it also believes the technology will have a big impact. “We have… been conducting pilots with RFID chips at our Schiphol hub,” says Baan. One such pilot programme involved co-operation with DHL Forwarding, TNT, Schiphol Airport and the Amsterdam seaport. “We continue to investigate possibilities on how RFID can support our processes and foresee [an] impact especially for special products, like pharma [pharmaceuticals] and valuables. Before the end of this year, we will start a project to evaluate the value of RFID on pharma flows in co-operation with one of our global freight forwarders. For the highly sensitive and expensive pharma flows, it is crucial to maintain temperature. Using RFID can allow us to react more rapidly to any deviation in temperature from acceptable parameters.”

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FLEET OPERATIONS: Future freight

“Modality

grasping, manipulating and moving objects of different sizes and shapes. Hence robotics will be of considerable interest to the air cargo industry.

is basically a decision made by the

shipper – it’s a matter of

managing the supply

Air cargo is just one to two per cent of total [world cargo] volume, but in value it’s

chain.

about 30 per cent

Marc Baan, VP communications and e-freight, Air France KLM cargo.

”

There is still much work to do on the e-freight initiative, believes Baan. “The paperless challenge is a long-term one. The IATA e-freight project allows us to currently replace 12 documents in the supply chain for 44 countries. Next to that, we have a standard for eight other paper documents, which is not applicable in all those countries. We still need to define a standard for the 12 remaining documents in order to be able to really go paperless in the airfreight supply chain. This is a longterm challenge, for which the whole industry needs to push. AFKL Cargo is working together with the different authorities and other key players in the chain to adopt a paperless way of working. We believe that e-freight is the future, and it is our ambition to remain front-runner in this development.”

Beyond even current tracking technologies and the e-freight initiative, Witte sees other technologies ‘on his radar’, which he believes will ultimately have a huge impact on the way the air cargo industry does business. One is the ‘Internet of Things’, a concept that envisages the use of current tracking technologies – such as RFID and 1D or 2D barcoding, as well as future sensing technologies yet to be developed – to uniquely identify every object in the world and create a virtual representation of it online.

By doing so, the possibilities for making logistics more efficient are vast.

Lufthansa Cargo is also closely following the evolution of automatically-guided ground vehicles. Large numbers of such vehicles now exist and are in use at some airports. London Heathrow Airport has recently introduced automated pod-cars to shuttle individual passengers or small groups between terminals on special roadways, replacing more than 80 CO2-emitting bus runs between terminals each day. However, Witte says they are still too expensive for routine use in cargo-handling. Vehicles with drivers still make more sense economically, but this may not remain the case for long.

Quantifying benefits and identifying essential skills It is not easy to quantify how much efficiency these technological advances will deliver. Nor is it easy to decide what performance metrics will be needed to measure these improvements. But one things is clear, says Witte: these emerging technologies will impact the airfreight business and change how people work and the skills they need to do so. There is still a great deal of manual labour involved in today’s cargo handling and documentation. In the future, as automation of cargo handling and digitising of documentation becomes prevalent, workers in the air cargo business will need to acquire certain skills, particularly those needed to manage the ‘human/machine interface’.

Van de Weg has his own view on how much the emerging technologies can improve the efficiency and productivity of air cargo. He suggests they may have an effect similar to that achieved by “giving the warehouse floor a ruggedised, hand-held [wireless computer] that allows for a five to 10 per cent resource reduction in office functions that normally also deal with data input arising from a paper-based warehouse administration.”

Vorwerk notes that “costs can [be] and are measured, if companies develop internal measurement standards”. For instance, “Cargo 2000, ISO and other standards are key if they are followed. Simple things however, can be measured with just some simple observations. How many times a day does a person re-key in data? How many files are pulled? How much time is spent making phone calls when the information could be pushed to the customer electronically via e-mail, text-messaging or other electronic devices? Simple time-study measurements will show value.” However, “Something that is harder to measure is how much money will you make?”

Witte says that Lufthansa Cargo is performing high-level research with other organisations – particularly the FraunhoferGesellschaft, Europe’s largest applied-research organisation – to Where the likely effects of new technologies on the air cargo investigate how the Internet of Things could influence the industry can be measured, the numbers look very encouraging. airfreight industry. Lufthansa Cargo wants to understand how the Internet of Things could affect the air cargo industry’s internal “Detailed studies done by IATA and others show significant improvements in process time, reducing warehousing cost and logistics within the warehouse, its external logistics in terms of cycle times in the movement of cargo,” says Vorwerk. interlining cargo shipments between airlines, and how it could streamline the process of consigning, forwarding, shipping, Although air cargo is becoming more efficient, van de Weg points inspecting and delivering airfreight. out that other modes of transport such as sea freight are becoming more efficient too, so it is not clear whether air cargo Another emerging technology on Witte’s radar is robotics. While can take significant market share from any other transport mode. the science of robotics is taking rapid strides, it is still functionally But this is not a problem, believes Witte. “Modality is basically a far from adequate for routine use by the air cargo industry, says decision made by the shipper – it’s a matter of managing the Witte. But its potential regarding the automation the entire air supply chain.” He adds: “Air cargo is just one to two per cent of cargo-handling process is clear. Today’s robots that are designed total [world cargo] volume, but in value it’s about 30 per cent,” to pick up objects tend to have one grasping arm and are capable and air cargo should be able to retain its high-value nature. of repetitively picking up and moving objects of a uniform size and shape. However, this is not very useful for the airfreight business, which deals with a vast number of differently sized and “I estimate that the introduction of new technologies will help us defend our position”, says Witte. That is a reassuring message for differently shaped objects. However, according to Witte, future the air cargo industry from one of its leading technologists. generations of robots will have multiple limbs capable of

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AFM76_LCC Airports_AFM74 04/11/2011 11:59 Page 28

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FLEET OPERATIONS: LCC airport selection Two airports served by low-cost carriers, France’s Marseille and Romania’s Timisoara, are under scrutiny by the European Commission (EC) for potential abuse of state aid rules. Smaller airports have been exempt on the basis that they help stimulate the economies of less developed regions, but announcing the investigation, Joaquin Almunia, commissioner responsible for competition, pointedly commented: “Some regional airports in Europe are no longer so new or small.” Martin Roebuck reports.

LOW-COST AIRPORT SELECTION Check-in time with Norwegian at Gatwick is now down to 43 seconds.

T

HE EC IS CONCERNED ABOUT THE REDUCED CHARGES Marseille offered incumbent airlines and discounts for new route launches after it received €7.6m ($10.5m) towards the construction of its MP2 low-cost terminal in 2005 to 2007.

The commission questions whether the aid was “proportionate to the objectives pursued” and is also investigating aid given to Wizz Air at Timisoara, as well as support for infrastructure development at a number of German airports.

Despite previous run-ins with the European authorities over subsidies, Ryanair is not under investigation at this time. With most airlines (even low-cost carriers) looking to provide multiple daily frequencies to capital cities and large regional centres in the search for higher-yielding business passengers, Ryanair is now almost alone in pursuing smaller, more remote destinations – “flying into the forest”, as the strategy was memorably described during the recent World Low Cost Airlines Congress in London.

The carrier exacts a high price in return for its business. It has acquired a reputation for forcing down airport charges and

demanding marketing support from their regional owners or local tourist authorities.

Discussing the difficult trading climate at the congress, Ken O’Toole, the carrier’s director of new route development, said: “The challenge for airports in dealing with Ryanair becomes even greater in sharing some of the growth we can bring. Passengers will only fly if the fare is cheap enough to stimulate their interest.

We will continue to look for cost reduction from airports.

“We’re tough, we have Ryanair interests at heart but [the commercial benefit] has to be two ways. The majority of our bases have been with us since inception. There is one to two per cent attrition per year,” O’Toole claimed.

Data compiled by analyst Ralph Anker suggests a much greater year-to-year churn. Ryanair was flying 1,148 routes in September 2010 and over the last year has launched 289 services, more than the next seven airlines combined. But it also terminated 170 routes, around 15 per cent of its total.

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FLEET OPERATIONS: LCC airport selection

Several of Europe’s fastest growing airports in 2010 could attribute much of their passenger growth to the ‘Ryanair effect’, including Kaunas, which rose 77.3 per cent; Trapani, which rose 57.5 per cent; and Brindisi, which climbed 47.2 per cent.

Conversely, Ryanair’s withdrawal of flights from Reus, Lübeck and Shannon left them among the biggest losers.

But O’Toole insisted: “It is not in our interest to drop a route without giving it an opportunity to develop. We are prepared to lose money for up to 18 months if we see forward progression on the fare. If we’re still losing money then, it’s not in our interest – or the airport’s.”

Typical of Ryanair’s hardball approach was its announcement that it would cut its 11 aircraft based at Alicante down to two from October 2011, and reduce weekly flights by more than twothirds. Its CEO, Michael O’Leary, said he had no choice because state-owned Spanish airport operator Aena was forcing him to pay more than €2m ($4.15m) a year for “unnecessary facilities” such as airbridges.

He claims this equates to a cost of 32 cents per passenger, and delays turnaround because boarding is only possible through the front door. “Ryanair is an efficient low-cost carrier and we have many other alternatives across Europe if Alicante doesn’t want to provide low-cost facilites,” O’Leary said.

The carrier has since rescinded its immediate threat and will not cut Alicante services until November 2012. However, it has held meetings with the new Corvera airport 50km away, scheduled to open next summer. Corvera, owned by the regional government of Murcia, is outside Aena control and may have greater flexibility.

Listening to the customer BAA’s sale of London Gatwick to Global Infrastructure Partners (GIP) two years ago, which was enforced under a UK competition ruling, illustrates the benefits that airports under separate ownership can deliver to passengers, says Simon Edwards, the airport’s airline business development manager. Gatwick’s capital programme has neared £1bn ($1.58bn) since GIP took charge and includes developments that were not previously under

(Inset photo) Budapest Airport welcomed the five millionth passenger to fly there with Wizz Air. Lucky traveller Gergely Tatár was greeted by Balázs Varró, head of communications Wizz Air (left), and Patrick Bohl, head of airline development and strategy for the airport (right).

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FLEET OPERATIONS: LCC airport selection consideration, such as a streamlined security system. Other work was already in the pipeline, but the new owner was careful to consult its customers on their most important priorities. Edwards claims that BAA’s previous attitude was to tell carriers: “This is how it works.”

In August, the airport introduced special assistance lanes to immigration in its South Terminal complementing similar lanes in outbound security. The lanes are designed for passengers with young families, and Gatwick is the only UK airport to offer this facility.

Kam Jandu says Budapest Airport has kept passenger charges at its low-cost terminal well below those of the main terminal and of rival Vienna.

Such initiatives appear to be bearing fruit. August passenger numbers increased by 3.6 per cent year-on-year and aircraft load factor improved by 1.4 percentage points to 88.4 per cent, Gatwick’s highest ever figure. To keep the momentum going, the airport took the radical decision to eliminate landing charges for the winter season, when flights halve from summer levels.

Historically, these charges have made up 15 per cent of winter aviation revenue.

Around 43 per cent of the population in Gatwick’s catchment area, south of London, is of the highest socio-economic ranking (groups A and B), yet perhaps counter-intuitively, LCCs are responsible for much of its recent increase in traffic.

EasyJet now has 49 aircraft based there and has introduced flexible fares as it targets business travellers. “We’re talking to them about the potential use of business lounges and our premium security lanes,” Edwards says.

Norwegian Air Shuttle, which now offers 90 departures a week from Gatwick, achieved a 20 per cent yield improvement after migrating from Stansted. The carrier wanted to replicate the completely self-service check-in system that it operates in Scandinavia, and has whittled check-in time down to just 43 seconds.

For Malaysia’s longhaul LCC, AirAsia X, which is also switching from Stansted after just two years there, Gatwick’s catchment and the prospect of higher yields were again important criteria, along with the airport’s superior rail connections to London.

Pegasus was able to dictate terms at Istanbul’s formerly quiet Kürtkoy Sabiha Gökçen Airport.

The Gatwick Express takes passengers rapidly and frequently to the city of London for business or to the West End for the shopping, and AirAsia X opted for the South Terminal specifically because of the direct rail link (it could also have chosen the North Terminal as Gatwick does not concentrate LCCs in a single facility).

Domestic air connections were also a factor as AirAsia X plans to double its weekly UK services to six from mid-December and will be shipping 327 passengers on each A340-300 flight. Eleven UK airports can be reached from Gatwick and Edwards also expects AirAsia X passengers to fly back out to Europe. “We don’t have the frequencies offered by Heathrow, but we serve a wider range of destinations,” he says.

The contrasting fortunes of Gatwick and Stansted’s dedicated low-cost and cargo operation are becoming clearer by the day.

Stansted is an efficient airport designed for 30 million passengers, yet is likely to fall below 18 million this year, 30 per cent down on its 2007 peak. Despite its earlier disposal of Gatwick, BAA has also been ordered by the UK government to sell Stansted. It is seeking a judicial review, but the long-running dispute is unhelpful for an airport that depends on Ryanair and easyJet for 90 per cent of its passenger traffic.

A 1.2 per cent decline in passenger numbers for the first seven months of 2011 underlines the vulnerability of secondary airports such as Stansted, BAA has admitted. Strategy director Andrew Macmillan said LCCs were “moving their planes around Europe in search of cheaper landing fees”.

Underlining the point, easyJet will transfer three A319s from Stansted when it sets up at London Southend next April. The carrier will launch 10 European destinations from Southend, its 11th UK base, which is completing a multi-million pound upgrade of its passenger terminal and has already opened a new railway station.

Up to eight trains per hour are promised to the main Olympic venue and central London. EasyJet claims passengers will be able to get from the aircraft to the train in 15 minutes.

Where capitals fight for traffic Eastern Europe is structured differently and international hubs still have much low-cost business to compete for. Kam Jandu, director of aviation at Budapest Airport, says 22 per cent of passengers flying from there are non-Hungarian.

Travellers from Romania, Bulgaria, Croatia, Serbia, Bosnia and Ukraine are prepared to drive hundreds of kilometers because they have so few direct connections from their own countries.

They helped Budapest grow nine per cent in the first eight months of 2011.

There is little rival infrastructure within Hungary, according to Jandu. “Vienna is our biggest competitor and stole a lot of traffic from us in the past when we were less proactive”.

Budapest’s dedicated LCC facility is Terminal 1, the oldest part of the airport, while the newer Terminals 2a and 2b host full-service carriers. The terminals are 6km apart, so budget passengers, who account for 24 per cent of overall traffic, do not directly benefit from Budapest’s new SkyCourt shopping and catering facility, which links Terminals 2a and b.

Low-cost traffic is mainly origin and destination (O&D), so few passengers need to transfer from Terminal 1. It’s a “limited product” with few retail outlets, no business lounges and no airbridges, Jandu says, but passengers can get kerbside to airside within 15 minutes if they wish.

The terminal’s rail link to central Budapest benefits those on short leisure stays, but the commercial proposition to carriers is the real clincher. Charges are €5 ($7) per passenger lower than at Terminal 2 and €8 ($11) less than at Vienna, a sufficient incentive to attract easyJet, Wizz Air, Jet2.com, Germanwings and Norwegian to Budapest.

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AFM76_LCC Airports_AFM74 04/11/2011 12:01 Page 32

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FLEET OPERATIONS: LCC airport selection Azul now connects 40 cities. It has opened 21 new domestic routes this year and hopes to repeat this in 2012, using secondary locations where main airports are full or the required slots are unavailable.

This has encouraged bus travellers to go by air for the first time.

Urbahn claims the number of air journeys in Brazil overtook interstate bus trips for the first time in August. “It’s what happened in the US 40 years ago. Long-distance bus journeys are going to disappear.”

For example, only 35 passengers a day were travelling from Campinas to Salvador, because it used to take four and a half hours to transit via Sao Paulo. With flying time now down to one hour and 45 minutes, numbers have swelled to 600.

“We offer an enormous number of city pairs that were not available before. We have broken rule number one in the lowcost rulebook by offering big connectivity,” Urbahn says.

Azul has redrawn the aviation map in Brazil, introducing point-to-point services at prices competitive with longdistance buses.

Wizz Air introduced Forli, Italy, and Târgu Mure in central Romania for the summer season, and increased flights from two to three services per day to London Luton. Jet2.com meanwhile added a second UK service, three times a week to Edinburgh, to its existing daily Manchester schedule.

Turkish LCC Pegasus Airlines demonstrated the power of a major anchor tenant when it decided to operate from Kürtkoy Sabiha Gökçen, a little-used former military airport on the Asian side of Istanbul, and lobbied successfully for a change of name. “No one has ever heard of Kürtkoy,” says Pegasus’ president and CEO Sertaç Haybat. “Sabiha Gökçen serves Istanbul.”

The airport was handling one million passengers a year, had no public transport and offered just 150 parking spaces – more than enough, Pegasus was initially told, because passengers’ wives would drive them there.

The airport moved into private ownership in 2008 and the new management has been more realistic, rebuilding the terminal (with space for 5,700 cars) and successfully attracting new business. Pegasus accounted for half of the 11.6 million passengers who flew through Sabiha Gökçen last year. Land is available for a second runway, which could be built in five years.

Haybat claims the airport could eventually overtake Istanbul’s main international hub, Atatürk in the European half of the city.

Pegasus operates to 19 domestic and 13 international destinations. “We mostly fly to major cities but if we can negotiate a good deal at a secondary airport, we will use them,” Haybat says. “You can get attractive terms but the price of fuel can be very high.”

Aircraft overtake the bus Azul Brazilian Airlines, an LCC founded only three years ago has revitalised the Brazilian market by re-establishing a country-wide network of point-to-point connections.

However, with only one per cent of existing routes carrying more than 150 people per day, he claims the 737s and A320s that GOL and TAM operate are too big. Azul’s fleet of 40 E195s, E190s and ATR72s enables it to penetrate markets its rivals cannot. “The ATRs enable us to test new routes of less than 500km where small jets are not feasible,” Urbahn says. “With 70-seat turboprops you can build routes and operate cost-effectively two or three times a day.”

The potential bonus is exclusivity. On more than half of its routes, Azul is the sole carrier. Yet out in the rural areas, even given a market that’s growing at 25 per cent a year, Azul has found it difficult to win support from civic leaders, except in locations such as Iguazu where tourist boards are more proactive.

“You have to work hard even to convince local authorities to invest in basic facilities such as adequate fire cover,” Urbahn says. “We visit the mayor and the civic associations to work out what the travel patterns are and where service has been lacking. They don’t have perfect information, so there is risk in entering a new market.

But in such an under-served market, you can afford to go in small.”

China’s first LCC, Spring Airlines, has generated greater enthusiasm. “Regional governments are offering land to encourage us in and stimulate local economies,” spokesman Zhang Wuan told the London conference. This has enabled Spring to open up northern cities such as Shenyang and Shijiazhuang that were previously overshadowed by Beijing.

The carrier has extended the same philosophy to its international services and is operating to smaller Japanese airports such as Ibaraki and Takamatsu from its Shanghai hub.

Thai Smile, an LCC that is to be launched by Thai Airways next year, will serve five domestic destinations initially but could replace the parent airline from 2013 on routes to regional destinations such as Penang in Malaysia, and Hyderabad in India.

Woranate Laprabang, MD of the Thai airline, explains that the new subsidiary could reintroduce services previously suspended

by Thai, including Surabaya, Indonesia and Kaohsiung, Taiwan. It will also look for secondary destinations the group has never served, including Cochin and Ahmedabad in India, Da Nang in Vietnam, and Kota Kinabalu in Malaysia.

Trey Urbahn, chief commercial officer at Azul, says that former flag carrier, Varig, and three or four large competitors formerly operated from up to 200 commercial airports across the country.

He estimates that no more than 120 are fully operational today.

GOL and TAM, the survivors of a major shake-out in the aviation “We’re also interested in opening up the Chinese tourist market through secondary airports such as Shenzhen and Hangzhou,” sector, built hub-and-spoke systems that left travellers unable to says Laprabang. “But they’re mainly state-owned airports in this fly directly between cities with populations of a million or over – part of the world, so it’s difficult to negotiate rates.” such as Curitiba, Campinas, Vitoria and Salvador.

check_FPA:AFNM57

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15:39

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AFM76_Bilateral_AFM74 04/11/2011 10:55 Page 34

34 | AFM • ISSUE 76 November-December 2011

TRADING, LEGAL & FINANCE: Bilateral restriction Historically, the aviation sector has been characterised by restrictive bilateral agreements between governments, which agree exclusive sovereignty over flights in their own airspace. In the 1980s the focus of bilateral agreements switched from states agreeing to restrict competition in their own airspace, to states agreeing reciprocal access. Marjorie Holmes, partner, at Reed Smith explains.

PROTECTION VERSUS GROWTH: BILATERAL RESTRICTION

T

HE DEREGULATION OF EUROPE’S AVIATION SECTOR in the 1990s led to the mandatory inclusion of a clause in all European Union (EU) bilateral air service agreements.

The clause extended the benefit of an agreement to all EU member states. Among the backdrop of these developments, airlines have continued to agree co-operation through different types of agreements including slot allocation, the joint operation of routes, codesharing, co-operative joint ventures, and the co-ordination of schedules.

Joint operation of routes The joint operation of routes by two airlines within the European Union (EU) is one of the most common types of agreement between airlines. This typically covers the creation of joint programmes and schedules, the sharing of cost and revenue, co-operation on the sale of capacity, and the joint operation of flights.

AFM76_Bilateral_AFM74 04/11/2011 10:56 Page 35

November-December 2011 AFM • ISSUE 76 | 35

TRADING, LEGAL & FINANCE: Bilateral restriction

Where they were of limited duration, these agreements used to enjoy a block exemption (under Regulation 1617/93). However, this exemption expired in 1999 and was not renewed.

Until 2004, it was possible to seek an individual exemption from the national competition authorities of EU member states. This was an unusual procedure in relation to most other sectors that affect trade across Europe, as individual exemption would be sought from the European Commission. This difference highlights the unique aspect of the aviation industry in the sense that an airline must first agree access to slots with the national regulator of the aviation sector (the Civil Aviation Authority in the UK) in order to fly to destination airports within that nation.

Joint operation agreements are therefore now subject to the prohibition on anti-competitive agreements and the prohibition of the abuse of a dominant position as provided for by the Treaty on the Functioning of the European Union (TFEU). This means that joint operation agreements that where previously automatically permitted by the block exemption, are now subject to the scrutiny of competition law and now require self-assessments (also known as Article 1EC Regulation 1/2003) to claim exemption.

Joint operation agreements may now qualify for exemption where they result in over-riding benefits to consumers. This is the case between Maersk Air and Deutsche Lufthansa (1991), where

the joint operation agreement involved marketing or financial assistance by a larger airline to a smaller airline for a limited period to allow the smaller airline a commercial position on a new route.

Another scenario in which an exemption may be claimed is when two smaller airlines agree joint operation on a route in order to compete with a larger airline, which had previously dominated that route. Pre-2004, when the commission granted individual exemptions, it granted Finnair and Maersk Air a six-year exemption in relation to such an agreement.

Conversely, joint operation agreements which do not provide benefits (such as those described above), for example where two airlines agree to co-operate on a route in which they already enjoy significant market power, are now be likely to be prohibited on the basis that they are anti-competitive.

Codeshare agreements under the spotlight Another common type of co-operative agreement between airlines is the codesharing agreement. Codeshare agreements allow seats on a flight operated by one carrier to be offered for sale by another carrier, under its own code and flight number. The carrier operating the flight is known as the ‘operating carrier’, while the carrier marketing the flight under its own code is known as the ‘marketing carrier’.

AFM76_Bilateral_AFM74 04/11/2011 10:58 Page 36

36 | AFM • ISSUE 76 November-December 2011

TRADING, LEGAL & FINANCE: Bilateral restriction Codeshare agreements often involve an underpinning set of operational and commercial agreements relating to access to, and prices for, seat inventory.

Codeshare agreements have been categorised for competition law purposes. In a report written for the commission and published in January 2007, it defines codeshares in its three forms; parallel operation on a trunk route, which is “where two airlines fly the same route and have a reciprocal codesharing agreement whereby airline X sells seats on airline Y’s flight and vice versa.”

Also, where there is unilateral operation on a trunk route, which is “when airline X has a codesharing agreement with airline Y, for X to sell seats on airline Y, in relation to a route that only airline Y flies.”

And lastly, ‘behind and beyond’ routes –“where airline X, flies between points A to B and airline Y flies between points B to C, and airline X has a codesharing agreement with airline Y to sell seats on airline Y’s flight between B to C.” In the 1990s, through a series of three civil aviation liberalisation packages in the EU, a single european aviation market was created, guaranteeing that airlines within the EU are entitled to operate under the same conditions. Bilateral air service agreements between an EU member state and another country must now include an EU designation clause, which recognises that the terms of the agreement apply equally to all EU airlines.

The European Court of Justice (ECJ) in its 2002 Open Skies Judgement confirmed this position. As such, where a country now agrees slots with a particular airline in a particular EU member state, it must also allow slots for airlines in other EU member states. This deregulation within the EU led to an increase in the popularity of codeshare agreements.

The commission and commentators have recognised that codeshare agreements can provide benefits to passengers such as quality and frequency of service, but the commission has nevertheless expressed concern about their potentially anticompetitive effect.

The 2007 Report found that, “in many cases, routes with codeshares have shown increasing capacity and decreasing fares, although the evidence appears to suggest that in some cases, codeshare partners on parallel operated routes do not compete as much as occurs on similar routes without such arrangements.”

The report also found that in general, codeshares to behind and beyond points are seen by industry stakeholders (including user groups and the travel trade) as advantageous to customers as they provide “increased destinations and connectivity” and that “airlines commonly cite greater network extent and customer reach as their primary motivation for entering into codeshare agreements.”

However, conversely, the report found that “parallel operation codeshares are perceived as potentially more of an issue, in that they may deter entry by competitors, although on relatively thin routes airlines contend that they provide better departure time (and consequent connection) opportunities for customers.”

Competition and the Office of Fair Trading In 2002, before individual exemptions were abolished, the Office of Fair Trading (OFT) decided that an airline alliance agreement between British Midland and United Airlines, which included unilateral codeshare agreements, would provide benefits to consumers that outweigh its anti-competitive effects.

The OFT considered that, although the agreement would in principle infringe the prohibition against anti-competitive agreements, the requirements for an individual exemption under Article 101 were met because the alliance would create customer benefits including new and improved connecting and non-stop services.

The decision recognised the network effects that characterise the aviation industry and examined the outcome of the agreement in terms of networks. In particular, it looked at the effect of other airlines to obtaining feed traffic from British Midland’s European network from Heathrow and competition between the Star Alliance and other alliances. The decision noted that network effects may also exist in the form of competition for corporate

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AFM76_Bilateral_AFM74 04/11/2011 10:58 Page 38

38 | AFM • ISSUE 76 November-December 2011

TRADING, LEGAL & FINANCE: Bilateral restriction deals or for members of frequent flyer programmes where the customer or member’s choice of airline for a particular flight may be influenced by the network of the carriers as well as the service on the particular route.

However, the decision related to an alliance expansion agreement involving the co-operation between two airlines on route, schedule and price co-ordination, and codesharing, joint marketing and revenue sharing. The decision does not therefore consider the anti-competitive effect or benefit to customers that may be achieved by codesharing in isolation of the overall alliance expansion agreement.

Although cases in this area have generally considered codeshare agreements in combination with other types of co-operative agreements, the commission has recently placed codeshares in the spotlight. Two investigations into parallel codeshare agreements on trunk routes were launched in February 2011, in one case, between Deutsche Lufthansa and Turkish Airlines and the other between TAP Portugal and Brussels Airlines.

The investigations involve parallel codeshare agreements where the airlines agree to sell seats on each others’ flights on the Germany-Turkey routes (in the case of Lufthansa/Turkish Airlines), and on the Belgium-Portugal routes (TAP Portugal/Brussels Airlines), where each party to the agreement already operates their own flights between their own airport hubs. The codeshare agreements also permit carriers to sell as many seats on their partner’s flights on a free-flow basis, whereby they can sell as many as they want so long as seats are available.

The commission has indicated that it considers that free-flow, parallel codeshare agreements of the type under scrutiny in these cases may have an anti-competitive effect leading to higher prices and less service quality for customers on the relevant routes. Given that the airlines already operate their own flights between the hubs, the commission believes that they should be competing with each other to sell seats on these routes.

It is notable that the commission launched the investigations on its own initiative and not as a result of a complaint. It seems likely that the investigations were, in part, prompted by the findings of the 2007 Report, which highlighted that codeshare agreements on parallel routes may be more susceptible to anti-competitive practices.

In conclusion, it is clear that codeshare agreements can be viewed as both beneficial and harmful to competition. Whether the parties in a codeshare both operate flights on the routes within that agreement, appears to have a significant impact on whether the competition authorities view the codeshare negatively or positively.

Codeshare agreements operated on a unilateral basis, on a trunk route, or on a behind and beyond route, are more likely to be seen to increase competition as they allow one airline to compete on a route that it does not already operate. Otherwise they are individually exempt from competition prohibitions as it provides a benefit to consumers.

In contrast, the commission’s on-going investigations suggest that parallel codeshare agreements are likely to attract scrutiny from the regulator. This may be the case where there is no limit to the number of seats that may be sold by the marketing carrier on the operating carrier’s flight. The commission considers that these types of codeshare agreements may have an anticompetitive effect as they remove the competition that would otherwise be present between two airlines.

In sectors with low barriers to entry, if two parties have an agreement which restricts competition and as a result increases prices, a third party can enter the market and introduce competitive pressure. This is difficult in the aviation sector as airlines must first be given take off and landing slots by national aviation regulators. Given that the volume of available slots is limited, both by airport capacity and airspace, there is a unique constraint on decreasing barriers to entry in the aviation sector.

Other barriers to the sector include the higher frequencies enjoyed by larger airlines and their position at hub airports.

As a result of the unique dynamics at play in the aviation sector, the commission should be careful to avoid imposing a blanket prohibition on parallel codeshare agreements as this could lead to an unnecessary reduction in services offered to the consumer.

Instead, the commission should follow the Department of Justice’s (DoJs) lead and require parties in parallel codeshares to agree conditions that prohibit collusion on fares or otherwise reduce competition.

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AFM76_Deals _AF&NM Special Feature 04/11/2011 11:27 Page 40

40 | AFM • ISSUE 76 November-December 2011

AIRCRAFT DEALS REPORT

FLEET FINANCE – Deals report Aircraft Transactions September 1 – October 1, 2011 Equipment Model

New Owner/ Operator

Previous Owner/ Operator

Boeing 727-212 737-230 737-219 737-229c 737-347 737-347 737-33a 737-33a 737-3b7 737-3s3 737-3s3 737-3s3 737-3y0 737-3y0 737-3l9 737-3l9 737-35b 737-35b 737-35b 737-35b 737-322 737-3y0 737-3m8 737-306 737-36n 737-4k5 737-476 737-406 737-406 737-406 737-4h6 737-430 737-59d 737-59d 737-5k5 737-5k5 737-530 737-522 737-55s 737-55s 737-524(W) 737-524(W) 737-7ax 737-7ax 737-7q8(W) 737-7h4(W) 737-7h4(W) 737-7k2(W) 737-7k2(W) 737-85p 737-8as(W) 737-883 737-86j(W) 737-8q8(W) 737-823(W) 737-823(W) 737-823(W) 737-8as(W) 737-8as(W) 737-8as(W) 737-8as(W) 737-8as(W) 737-8eh(W) 737-8eh(W) 737-8eh(W) 737-86n(W) 737-86n(W) 737-86n(W) 737-86n(W) 737-86j(W) 737-86j(W) 737-86j(W) 737-86j(W)

Unknown MFP Aeronautics Santaco Airlines Nolinor Aviation Aersale Sky King Air Batumi RPK Capital I Nordic Aviation Deutsche Bank Deutsche Bank Mountain Capital Pembroke A.J. Walter Pembroke A.J. Walter Pembroke A.J. Walter Pembroke A.J. Walter Midamerican Southern Aircraft Consultancy Aerosur Equatorial Congo Airlines Celestial TUI Samair SLF KLM AG JetLeasing .

Willis Lease AAR Int. Flightlease NBB BMA Lease Tag Aviation TUI Babcock & Brown Classic 500 Merpati Airline Armavia Slovakian Airlines Continental Airlines Utair Aviation Aramco Aar Parts Trading ILFC Australia .

Southwest Airlines Southwest Airlines KLM KLM Lombard Utair Aviation German Sky Airlines Macquarie Aircraft Miami Air Int. American Airlines American Airlines American Airlines Ryanair Ryanair Ryanair Ryanair Ryanair GOL GOL GOL GECAS Jet Airways GECAS Royal Air Maroc Air Berlin ICBC China Southern Air Berlin

Broken Wing Bank Of Utah Star Air Cargo Laserline Lease Finance Aersale Aersale Alba Star Alba Star Vision Air Int. US Airways US Airways Wells Fargo Germania Pembroke Germania Pembroke Germania Pembroke Germania Pembroke Aircraft N380ua JMV Aviation ACG Privatair Shenzhen Airlines Jet4you Bank Of Utah KLM SLF KLM AG Jet Leasing .

MAS Sky Airlines Georgian Airways NBB BMA Lease Jetairfly TUI Lufthansa Orix Geofly Armavia Wells Fargo BLF Aramco Aramco Virgin Australia Boeing Boeing Boeing Boeing Air Europa RBGermic Aviation Sky Airline Air Berlin Tui Airlines Boeing Wells Fargo Boeing Boeing Boeing Boeing Boeing Boeing Transavia Airlines Boeing Transavia Airlines Boeing GECAS Boeing GECAS Boeing Air Berlin ICBC Boeing

Serial No. or No. of (Orders)/(Options)

Engine Model

Date of Manf or First Exp Deliv

Equipment

Date

21348 23158 23470 21738 23440 23440 23628 23628 23700 23712 23733 23733 23921 23921 24221 24221 24237 24237 24238 24238 24655 24681 25071 27421 28555 24125 24439 24530 24530 24530 26460 27004 24694 24694 24927 24927 25270 26704 28471 28471 28899 28900 30183 30183 30707 36677 36966 38634 39257 28384 29936 30194 30570 30670 31129 31129 33220 34988 34989 34990 34991 34992 35831 35852 36596 36825 36825 36826 36826 36877 36877 36877 36886

JT8d-17 JT8d-15 JT8d-15a JT8d-17 CFM56-3b1 CFM56-3b1 CFM56-3b1 CFM56-3b1 CFM56-3b2 CFM56-3b2 CFM56-3b2 CFM56-3b2 CFM56-3c1 CFM56-3c1 CFM56-3b2 CFM56-3b2 CFM56-3b2 CFM56-3b2 CFM56-3b2 CFM56-3b2 CFM56-3c1 CFM56-3b1 CFM56-3b2 CFM56-3b1 CFM56-3c1 CFM56-3c1 CFM56-3c1 CFM56-3c1 CFM56-3c1 CFM56-3c1 CFM56-3c1 CFM56-3c1 CFM56-3c1 CFM56-3c1 CFM56-3b1 CFM56-3b1 CFM56-3b1 CFM56-3c1 CFM56-3c1 CFM56-3c1 CFM56-3c1 CFM56-3c1 CFM56-7b20 CFM56-7b20 CFM56-7b24 CFM56-7b24e CFM56-7b24e CFM56-7b22e3 CFM56-7b22e3 CFM56-7b26 CFM56-7b24 CFM56-7b26 CFM56-7b26 CFM56-7b26 CFM56-7b26e CFM56-7b26e CFM56-7b26e CFM56-7b24e CFM56-7b24e CFM56-7b24e CFM56-7b24e CFM56-7b24e CFM56-7b27 CFM56-7b27e CFM56-7b27 CFM56-7b26e CFM56-7b26e CFM56-7b26e CFM56-7b26e CFM56-7b26e CFM56-7b26e CFM56-7b26e CFM56-7b26e

1977-07 1985-01 1985-12 1979-05 1986-03 1986-03 1986-10 1986-10 1987-09 1986-12 1987-01 1987-01 1988-01 1988-01 1988-08 1988-08 1988-09 1988-09 1988-09 1988-09 1990-01 1990-09 1991-04 1993-02 1996-12 1989-02 1992-03 1989-08 1989-08 1989-08 1993-09 1992-07 1990-03 1990-03 1990-11 1990-11 1991-08 1993-07 1997-04 1997-04 1997-07 1997-07 2000-10 2000-10 2001-09 2011-08 2011-09 2011-08 2011-08 1999-10 2002-10 2000-08 2001-06 2004-03 2011-08 2011-08 2011-08 2011-08 2011-09 2011-09 2011-08 2011-08 2010-01 2011-08 2010-01 2011-08 2011-08 2011-08 2011-08 2011-09 2011-09 2011-09 2011-08

Sold Sold Sub-Leased Sold Sold Leased Returned Returned Returned Returned Returned Sold Returned Sold Returned Sold Returned Sold Returned Sold Sold Sold Leased Leased Returned Returned Leased Returned Sold Sold Returned Returned Returned Sold Returned Sold Sold Leased Leased Sub-Leased Lease-Buyout Leased Returned Sold Returned Delivered Delivered Delivered Delivered Returned Leased Sub-Leased Returned Returned Delivered Sale-Leaseback Delivered Delivered Delivered Delivered Delivered Delivered Returned Delivered Returned Delivered Leased Delivered Leased Delivered Sold Leased Delivered

2011.09.07 2011.09.23 2011.09.16 2011.09.16 2011.09.22 2011.09.30 2011.09.02 2011.09.02 2011.09.14 2011.09.30 2011.09.21 2011.09.21 2011.09.15 2011.09.15 2011.09.15 2011.09.15 2011.09.15 2011.09.15 2011.09.15 2011.09.15 2011.09.21 2011.09.08 2011.09.26 2011.09.08 2011.09.21 2011.09.30 2011.09.08 2011.09.29 2011.09.29 2011.09.29 2011.09.21 2011.09.08 2011.09.28 2011.09.28 2011.09.18 2011.09.18 2011.09.22 2011.09.04 2011.09.02 2011.09.20 2011.09.15 2011.09.15 2011.09.29 2011.09.29 2011.09.08 2011.09.14 2011.09.27 2011.09.06 2011.09.28 2011.09.14 2011.09.14 2011.09.28 2011.09.20 2011.09.05 2011.09.09 2011.09.14 2011.09.29 2011.09.26 2011.09.29 2011.09.29 2011.09.27 2011.09.26 2011.09.23 2011.09.01 2011.09.16 2011.09.12 2011.09.12 2011.09.16 2011.09.16 2011.09.26 2011.09.26 2011.09.26 2011.09.21

AFM76_Deals _AF&NM Special Feature 04/11/2011 11:27 Page 41

November-December 2011 AFM • ISSUE 76 | 41

AIRCRAFT DEALS REPORT Equipment Model

New Owner/ Operator

Previous Owner/ Operator

737-8eh(W) 737-86j(W) 737-8v3(W) 737-8v3(W) 737-8v3(W) 737-8v3(W) 737-84p(W) 737-81b(W) 737-8jp(W) 737-87l(W) 737-8fz(W) 737-8fz(W) 737-838(W) 737-838(W) 737-81d(W) 737-81d(W) 737-8kn(W) 737-8kn(W) 737-8kn(W) 737-823(W) 737-823(W) 737-8zq(W) 737-800(W) 747-446 747-446 747-446 747-446 747-446 747-438 747-438 747-438 747-4h6 747-412 747-4h6 747-4h6 747-412 747-412 747-444 747-444 747-444 747-419 747-446 757-2g5 757-2g5 757-236 757-28a 757-258 757-258 757-256 757-28a(Etops) 757-23n(W) 767-222 767-222 767-246 767-266er 767-201er 767-201er 767-201er 767-201er 767-201er 767-201er 767-23ber 767-201er 767-201er 767-224er 767-383er 767-383er 767-338er 767-3y0er 767-3y0er 767-304er 767-304er 767-3w0er 767-3w0er 767-3bger 767-3bger 767-33aer 767-316er 777-212er

GOL RBS Aerospace BOC Aviation Copa Airlines ACG Copa Airlines Hainan Airlines China Southern NAS Shenzhen Airlines Babcock & Brown MAS Qantas Airways Qantas Airways AWAS Garuda Indonesian Flydubai Avolon Flydubai American Airlines American Airlines Tassili Airlines Utair Aviation Aersale Atlas Air Aersale 25260 Air Atlanta Icelandic Biman h Airlines Qantas Airways RIL Aviation Ojr A.J. Walter Garuda Indonesian Garuda Indonesian Penerbangan Malaysia Wells Fargo Garuda Indonesian Wells Fargo Wells Fargo Wells Fargo Transaero Airlines ILFC Transaero Airlines East Trust-Sub 2 Federal Express Federal Express Thomas Cook Mk Aviation S.A. Federal Express Comtel-Air Mint Airways Rak Airways Boeing Company Boeing Company Jet Asia Airways Executive Jet Wells Fargo US Airways Wells Fargo US Airways Wells Fargo US Airways Saudi Arabian Wells Fargo US Airways Northwestern Insurance Pacific Airfinance Business Air Qantas Airways Euro Atlantic National Air Services Saudi Arabian Saudi Arabian Air LeaseCorp Orient Thai Airlines Crane Aviation Ethiopian Airlines AWMS LAN Airlines Air Madagascar

Transavia Airlines Air Berlin Boeing BOC Aviation Boeing Aviation Capital Group Boeing Boeing Boeing Boeing Boeing Babcock & Brown Boeing Qf B738 Boeing AWAS Boeing Boeing Company Avolon Boeing Wilmington Trust Boeing Boeing Aersale Aersale Aersale Aersale Air Atlanta TJT Leasing Qantas Airways RIL Aviation Ojr Pullmantur Air Pullmantur Air MAS Penerbangan Malaysia Pullmantur Air Singapore Airlines South African Airways Wells Fargo Wells Fargo Air New Zealand SB Leasing Ireland Euro Atlantic Airways East Trust Pals I Mint Airways El Al Mk Aviation S.A. Privilege Style Thomas Cook Jet2 Wells Fargo Wells Fargo Dynamic Jetlease Executive Usa Wells Fargo Wells Fargo Wells Fargo Wells Fargo Wells Fargo Wells Fargo Air Italy Wells Fargo Wells Fargo Continental Airlines Muzun Leasing Pacific Airfinance Ril Aviation Sunwing Airlines Euro Atlantic Airways Air Italy Air Italy China Eastern Airlines Air LeaseCorp Deutsche Structured Finance Crane Aviation Partners Hawaiian Airlines Boeing Euro Atlantic Airways

Serial No. or No. of (Orders)/(Options) 37600 37754 37959 37959 38100 38100 38145 38913 39009 39150 39321 39321 39358 39358 39416 39416 40248 40248 40248 40766 40766 40887 (33) 24423 24784 25260 25260 25260 25315 25547 25547 25703 26549 27044 27044 27178 28028 29119 29119 29119 29375 29899 24176 24176 24371 24544 24884 24884 26241 26276 27973 21874 21875 23214 23178 23900 23900 23901 23901 23902 23902 23974 26847 26847 30436 25088 25088 25363 25411 25411 28039 28041 28148 28148 30566 30566 33424 40798 28513

Engine Model CFM56-7b27 CFM56-7b26 CFM56-7b26e CFM56-7b26e CFM56-7b26e CFM56-7b26e CFM56-7b26e CFM56-7b26e CFM56-7b26e CFM56-7b26e CFM56-7b26e CFM56-7b26e CFM56-7b24e CFM56-7b24e CFM56-7b26e CFM56-7b26e CFM56-7b26e CFM56-7b26e CFM56-7b26e CFM56-7b26e CFM56-7b26e CFM56-7b26e CFM56-7b26 CF6-80c2b1f CF6-80c2b1f CF6-80c2b1f CF6-80c2b1f CF6-80c2b1f RB211-524g RB211-524g RB211-524g PW4056 PW4056 PW4056 PW4056 PW4056 PW4056 RB211-524g/H2-T RB211-524g/H2-T RB211-524g/H2-T CF6-80c2b1f CF6-80c2b1f RB211-535e4 RB211-535e4 RB211-535e4 RB211-535e4 RB211-535e4 RB211-535e4 RB211-535e4 RB211-535e4 RB211-535e4 JT9d-7r4d JT9d-7r4d JT9d-7r4d JT9d-7r4e CF6-80c2b2f CF6-80c2b2f CF6-80c2b2f CF6-80c2b2f CF6-80c2b2f CF6-80c2b2f CF6-80c2b4 CF6-80c2b2f CF6-80c2b2f CF6-80c2b4f PW4062-3 PW4062-3 CF6-80c2b6 PW4060 PW4060 CF6-80c2b7f CF6-80c2b7f RB211-524h RB211-524h PW4062 PW4062 PW4060 CF6-80c2b7f Trent892b

Date of Manf or First Exp Deliv

Equipment

Date

2010-02 2010-05 2011-08 2011-08 2011-08 2011-08 2011-08 2011-08 2011-09 2011-08 2011-08 2011-08 2011-08 2011-08 2011-08 2011-08 2011-08 2011-08 2011-08 2011-08 2011-08 2011-09 2015-11 1989-08 1990-05 1991-08 1991-08 1991-08 1991-09 1992-08 1992-08 1994-03 1994-04 1994-08 1994-08 1993-12 2001-03 1998-10 1998-10 1998-10 1999-08 1999-03 1988-03 1988-03 1989-03 1990-03 1990-10 1990-10 1993-07 1996-02 1996-10 1983-01 1983-01 1985-06 1984-06 1987-09 1987-09 1987-11 1987-11 1988-04 1988-04 1988-03 1993-03 1993-03 2001-03 1991-02 1991-02 1991-10 1991-11 1991-11 1996-03 1996-04 1996-06 1996-06 2000-10 2000-10 2003-02 2011-08 1998-05

Returned Returned Delivered Leased Delivered Leased Delivered Delivered Delivered Delivered Delivered Leased Delivered Sale-Leaseback Delivered Leased Delivered Sold Leased Delivered Sale-Leaseback Delivered Ordered Sold Sold Sold Leased Sub-Leased Lease-Buyout Returned Sold Sub-Leased Leased Returned Sold Leased Sold Sold Sold Leased Returned Leased Returned Sold Sold Sub-Leased Returned Sold Leased Returned Sub-Leased Sold Sold Leased Sold Sold Leased Sold Leased Sold Leased Sub-Leased Sold Leased Returned Sold Leased Lease-Buyout Returned Sub-Leased Sub-Leased Sub-Leased Sold Leased Sold Leased Returned Delivered Leased

2011.09.30 2011.09.27 2011.09.22 2011.09.22 2011.09.01 2011.09.01 2011.09.26 2011.09.21 2011.09.29 2011.09.21 2011.09.21 2011.09.21 2011.09.12 2011.09.12 2011.09.19 2011.09.19 2011.09.12 2011.09.12 2011.09.12 2011.09.20 2011.09.22 2011.09.28 2011.09.26 2011.09.27 2011.09.22 2011.09.15 2011.09.16 2011.09.21 2011.09.30 2011.09.20 2011.09.20 2011.09.28 2011.09.29 2011.09.08 2011.09.08 2011.09.29 2011.09.21 2011.09.23 2011.09.30 2011.09.30 2011.09.30 2011.09.27 2011.09.22 2011.09.22 2011.09.19 2011.09.23 2011.09.01 2011.09.01 2011.09.30 2011.09.23 2011.09.30 2011.09.02 2011.09.02 2011.09.09 2011.09.20 2011.09.01 2011.09.01 2011.09.01 2011.09.01 2011.09.01 2011.09.01 2011.09.24 2011.09.01 2011.09.01 2011.09.16 2011.09.03 2011.09.03 2011.09.02 2011.09.12 2011.09.28 2011.09.23 2011.09.24 2011.09.01 2011.09.02 2011.09.01 2011.09.02 2011.09.24 2011.09.27 2011.09.18

AFM76_Deals _AF&NM Special Feature 04/11/2011 11:28 Page 42

42 | AFM • ISSUE 76 November-December 2011

AIRCRAFT DEALS REPORT Equipment Model

New Owner/ Operator

Previous Owner/ Operator

Serial No. or No. of (Orders)/(Options)

Engine Model

Date of Manf or First Exp Deliv

Equipment

Date

777-2q8er 777-2dzlr 777-35rer 777-35rer 777-3dzer 777-31her 777-31her 777-3fxer 777-3f2er 777-312er 777-300er 787-881 Airbus A300b4-622r A300b4-622r A300b4-622r A300b4-622r A300b4-622r A310-304 A310-304 Acj318-100 A319-111 A319-111 A319-111 A319-132 A319-132 A319-132 A319-132 A319-132 A319-112 A319-112 A319-112 A319-111 A319-112 A319-115 Acj319-115 Acj319-100 A320-211 A320-231 A320-211 A320-231 A320-211 A320-211 A320-214 A320-212 A320-232 A320-232 A320-232 A320-232 A320-232 A320-232 A320-214 A320-231 A320-214 A320-214 A320-214 A320-231 A320-231 A320-216 A320-216 A320-232 A320-232 A320-214 A320-214 A320-214 A320-214 A320-214 A320-232 A320-232 A320-232 A320-232 A320-214 A320-214 A320-214 A320-214 A320-214 A320-214 A320-214 A320-233

Aircraft Qatar Airways Jet Airways Jet Airways Qatar Airways Emirates Emirates Etihad Airways Turk Hava Yollari Singapore Airlines Unknown ANA

Air Austral Boeing Turk Hava Yollari Turk Hava Yollari Boeing Boeing JSA Aircraft Boeing Boeing Boeing Boeing Boeing

29908 41061 35159 35162 38248 38987 38987 39683 40797 (8) (1) 34488

PW4090 GE90-110b1l GE90-115b GE90-115b GE90-115b GE90-115b GE90-115b GE90-115b GE90-115b GE90-115b GE90-115b Trent1000

1999-06 2011-08 2007-06 2007-08 2011-08 2011-08 2011-08 2011-08 2011-08 2013-04 2015-04 2009-11

Returned Delivered Returned Returned Delivered Delivered Sale-Leaseback Delivered Delivered Ordered Ordered Delivered

2011.09.09 2011.09.30 2011.09.15 2011.09.11 2011.09.13 2011.09.20 2011.09.20 2011.09.14 2011.09.22 2011.09.14 2011.09.30 2011.09.25

Wells Fargo Wells Fargo Wells Fargo Wells Fargo Unknown White Airways National Air Services Unknown Brussels Airlines Oh Aircraft Skyexpress Wells Fargo US Airways Wells Fargo US Airways TAM Deucalion Air Namibia Deucalion Easyjet Lufthansa Tibet Airlines UAE Government Unknown Astraeus Airlines Wells Fargo ANA Evergreen Trade Smartlynx Airlines ANA Goair Fly Aruba Wilmington Trust Qantas Airways Jetstar Airways Wilmington Trust Qantas Airways Jetstar Airways Air Arabia ACG China Eastern China Eastern China Eastern Orix PB Leasing Airasia Thai Airasia Qatar Airways Tiger Airways Jackson Square Wells Fargo Virgin America GECAS Spring Airlines AWAS Royal Jordanian Indigo Indigo Air France Air France Avianca Aircol 22 Avianca GECAS Saudi Arabian Volaris

Japan Airlines Wells Fargo Japan Airlines Japan Airlines Bank Of Utah Whitejets Hi Fly Airbus Celestial Aviation Easyjet Oh Aircraft Wells Fargo Wells Fargo Wells Fargo Wells Fargo ILFC Air Berlin Deucalion Air Berlin Airbus Airbus Airbus Airbus Airbus Dubrovnik Airlines Wells Fargo NBB Brand Wilmington Trust Company Travel Service Airlines NBB Meadow Orbest Orizonia Airlines Wells Fargo CIT Leasing Wilmington Trust Jetstar Airways CIT Leasing Wilmington Trust Jetstar Airways Air Arabia Maroc Wells Fargo Airbus Airbus Airbus Thomas Cook Wilmington Trust Airbus Airasia Airbus Airbus Airbus Airbus Wells Fargo Airbus GECAS Airbus AWAS Airbus Dunlewy Aviation Airbus Aderry Aviation .

Airbus Airbus Aircol 22 Airbus GECAS Airbus

670 670 683 783 838 494 495 (1) 2196 2224 2224 2669 2669 2690 2690 2784 3346 3346 3586 4837 4841 (2) 4822 (1) 136 164 245 292 310 365 3933 407 4257 4257 4257 4303 4303 4303 4310 447 4711 4722 4729 476 476 4807 4807 4810 4812 4814 4814 4814 4816 4816 4817 4817 4818 4818 4820 4820 4821 4821 4821 4823 4823 4828

PW4158 PW4158 PW4158 PW4158 PW4158 CF6-80c2a2 CF6-80c2a2

1992-10 1992-10 1993-01 1998-01 2002-08 1988-11 1989-02 2013-07 2004-03 2004-04 2004-04 2006-01 2006-01 2006-02 2006-02 2006-05 2007-12 2007-12 2008-07 2011-09 2011-09 2013-06 2011-08 2013-09 1990-10 1991-07 1991-09 1992-01 1992-03 1992-09 2009-05 1993-02 2010-03 2010-03 2010-03 2010-05 2010-05 2010-05 2010-05 1993-09 2011-08 2011-08 2011-09 1994-04 1994-04 2011-08 2011-08 2011-07 2011-08 2011-08 2011-08 2011-08 2011-08 2011-08 2011-09 2011-09 2011-08 2011-08 2011-09 2011-09 2011-09 2011-09 2011-09 2011-09 2011-09 2011-09

Sold Sold Sold Sold Leased Returned Sub-Leased Ordered Leased Returned Leased Sold Leased Sold Leased Leased Returned Leased Returned Delivered Delivered Ordered Delivered Ordered Returned Sold Lease-Buyout Sold Returned Lease-Buyout Sub-Leased Leased Sold Leased Sub-Leased Sold Leased Sub-Leased Returned Sold Delivered Delivered Delivered Returned Sold Delivered Leased Delivered Delivered Delivered Sold Leased Delivered Leased Delivered Leased Delivered Sale-Leaseback Delivered Sale-Leaseback Delivered Sold Leased Delivered Leased Delivered

2011.09.01 2011.09.22 2011.09.08 2011.09.16 2011.09.30 2011.09.29 2011.09.27 2011.09.25 2011.09.01 2011.09.16 2011.09.16 2011.09.01 2011.09.02 2011.09.01 2011.09.02 2011.09.28 2011.09.16 2011.09.16 2011.09.19 2011.09.09 2011.09.19 2011.09.01 2011.09.29 2011.09.14 2011.09.01 2011.09.28 2011.09.22 2011.09.01 2011.09.29 2011.09.22 2011.09.03 2011.09.12 2011.09.23 2011.09.23 2011.09.23 2011.09.23 2011.09.23 2011.09.23 2011.09.16 2011.09.28 2011.09.11 2011.09.28 2011.09.30 2011.09.20 2011.09.20 2011.09.01 2011.09.01 2011.09.01 2011.09.22 2011.09.29 2011.09.29 2011.09.29 2011.09.27 2011.09.27 2011.09.21 2011.09.21 2011.09.12 2011.09.12 2011.09.23 2011.09.26 2011.09.30 2011.09.30 2011.09.30 2011.09.30 2011.09.30 2011.09.29

CFM56-5b5/P CFM56-5b5/P CFM56-5b5/P V2524-A5 V2524-A5 V2524-A5 V2524-A5 V2524-A5 CFM56-5b6/3 CFM56-5b6/3 CFM56-5b6/3 CFM56-5b5/3 CFM56-5b6/3 CFM56-5b7/3 CFM56-5b7/3 CFM56-5a1 V2500-A1 CFM56-5a1 V2500-A1 CFM56-5a1 CFM56-5a1 CFM56-5b4/3 CFM56-5a3 V2527-A5 V2527-A5 V2527-A5 V2527-A5 V2527-A5 V2527-A5 CFM56-5b4/3 V2500-A1 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b4/3 V2500-A1 V2500-A1 CFM56-5b6/3 CFM56-5b6/3 V2527-A5 V2527-A5 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b4/3 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 V2527e-A5

AFM76_Deals _AF&NM Special Feature 04/11/2011 11:28 Page 43

November-December 2011 AFM • ISSUE 76 | 43

AIRCRAFT DEALS REPORT Equipment Model

New Owner/ Operator

Previous Owner/ Operator

Serial No. or No. of (Orders)/(Options)

Engine Model

Date of Manf or First Exp Deliv

A320-233 A320-233 A320-214 A320-233 A320-233 A320-233 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 A321-211 A321-211 A321-232 A321-231 A321-231 A321-231 A321-231 A321-211 A330-243 A330-243 A330-202 A330-202 A330-202 A330-202 A330-243 A330-243 A330-243 A330-202 A330-202 A330-202 A330-202 A330-202 A330-202 A330-202 A330-243 A330-243 A330-243 A330-243 A330-223 A330-243 A330-243 A330-322 A330-343e A330-343e A330-343e A340-311 A340-312 A380-841 A380-861 A380-841 October 767-346 777-35rer 787-86d 787-89p A319-112 A319-111 A319-112 Acj319-133 A320-216 A320-231 A320-232 A320-214 A320-232 A320-214 A320-214 A320-214 A320-214 A320-214

Wells Fargo Volaris Air China Volaris Wells Fargo Volaris BOC Aviation Aeroflot LAN Airlines LAN Airlines Shenzhen Airlines Air Arabia BOC Aviation Vueling Airlines RBS Aerospace Wells Fargo Virgin America Cebu Pacific Air GECAS China Southern Blade Leasing Fukurokuju .

Air China US Airways US Airways US Airways Sichuan Airlines Atlasjet Hi Fly Garuda Indonesian Cayenne Aviation Alitalia Cayenne Aviation Alitalia Aircastle Advisor .

South African MTAD CIT Leasing Qantas Airways Jetstar Airways Air LeaseCorp ALC Blarney.

Alitalia Hi Fly Garuda Indonesian Garuda Indonesian Garuda Indonesian Garuda Indonesian Saudi Arabian Garuda Indonesian Garuda Indonesian Saudi Arabian Garuda Indonesian Garuda Indonesian Singapore Airlines GMTHoldings Hi Fly Singapore Airlines Korean Air Lines Singapore Airlines

Equipment

Date

Airbus Wells Fargo Airbus Airbus Airbus Wells Fargo Airbus BOC Aviation Airbus Jrq 2 Trust Airbus Airbus Airbus BOC Aviation Airbus Airbus Wells Fargo Airbus Airbus GECAS Turk Hava Yollari Blade Leasing Airbus Airbus Airbus Airbus Airbus Dgvr Alpha Xl Airways France Hi Fly Airbus Financial Services Cayenne Aviation Airbus Financial Services Cayenne Aviation Airbus Aircastle Advisor .

Airbus Airbus CIT Leasing Airbus Airbus Airbus ALC Blarney Castle Monarch Airlines Thomas Cook Air Transat Thomas Cook Atlasjet Air Transat Air Transat Onur Air Orbest Orizonia Airlines Orbest Airbus Virgin Atlantic Squadron Leasing Airbus Airbus Airbus

4828 4828 4829 4832 4832 4832 4835 4835 4839 4839 4845 4848 4849 4849 4851 4851 4851 4852 4854 4854 1219 1219 4834 4843 4847 4850 4856 675 1008 1008 1123 1123 1135 1135 1249 1249 1250 1251 1251 1251 1252 1252 1252 211 265 266 271 301 364 369 480 087 1097 833 (15) 002 133 065 068 071

V2527e-A5 V2527e-A5 CFM56-5b4/3 V2527e-A5 V2527e-A5 V2527e-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 CFM56-5b3/P CFM56-5b3/P V2530-A5 V2533-A5 V2533-A5 V2533-A5 V2533-A5 CFM56-5b3/P Trent772b-60 Trent772b-60 CF6-80e1a4b CF6-80e1a4b CF6-80e1a4b CF6-80e1a4b Trent772b-60 Trent772b-60 Trent772b-60 CF6-80e1a4b CF6-80e1a4b CF6-80e1a4b CF6-80e1a4b CF6-80e1a4b CF6-80e1a4b CF6-80e1a4 Trent772b-60 Trent772b-60 Trent772b-60 Trent772b-60 PW4168a Trent772b-60 Trent772b-60 PW4168 Trent772b-60 Trent772b-60 Trent772b-60 CFM56-5c2 CFM56-5c3/F Trent970-84 GP7270 Trent970-84

2011-09 2011-09 2011-09 2011-08 2011-08 2011-08 2011-09 2011-09 2011-08 2011-08 2011-09 2011-09 2011-09 2011-09 2011-09 2011-09 2011-09 2011-09 2011-09 2011-09 2000-04 2000-04 2011-08 2011-09 2011-09 2011-09 2011-09 1997-05 2009-03 2009-03 2010-05 2010-05 2010-07 2010-07 2011-07 2011-07 2011-08 2011-09 2011-09 2011-09 2011-08 2011-08 2011-08 1998-03 1999-02 1999-06 1999-03 1999-10 2000-10 2000-11 2002-05 1995-03 2010-02 2007-03 2013-05 1992-02 1996-11 2010-09 2011-03 2010-11

Sold Leased Delivered Delivered Sold Leased Delivered Leased Delivered Sale-Leaseback Delivered Delivered Delivered Leased Delivered Sold Leased Delivered Delivered Leased Returned Sold Delivered Delivered Delivered Delivered Delivered Leased Returned Sub-Leased Sold Leased Sold Leased Delivered Leased Delivered Delivered Leased Sub-Leased Delivered Sold Leased Leased Sub-Leased Sub-Leased Sub-Leased Leased Sub-Leased Sub-Leased Sub-Leased Sub-Leased Sub-Leased Sub-Leased Ordered Returned Leased Delivered Delivered Delivered

2011.09.29 2011.09.29 2011.09.27 2011.09.08 2011.09.08 2011.09.08 2011.09.13 2011.09.13 2011.09.14 2011.09.14 2011.09.21 2011.09.29 2011.09.29 2011.09.29 2011.09.30 2011.09.30 2011.09.30 2011.09.29 2011.09.29 2011.09.29 2011.09.16 2011.09.16 2011.09.09 2011.09.23 2011.09.22 2011.09.29 2011.09.29 2011.09.26 2011.09.01 2011.09.27 2011.09.28 2011.09.28 2011.09.28 2011.09.28 2011.09.06 2011.09.06 2011.09.27 2011.09.28 2011.09.28 2011.09.28 2011.09.15 2011.09.15 2011.09.15 2011.09.15 2011.09.30 2011.09.30 2011.09.30 2011.09.30 2011.09.26 2011.09.30 2011.09.28 2011.09.23 2011.09.27 2011.09.28 2011.09.15 2011.09.01 2011.09.15 2011.09.29 2011.09.07 2011.09.14

Orient Thai Airlines Thai Airways Int. Shanghai Airlines China Eastern Airlines Bh-Air RBS Aerospace Air Namibia Rizon Jet Air LeaseCorp Aircraft Holdings Network AWAS BOC Aviation Qatar Airways Gulf Air Avianca Aircol Virgin America Wells Fargo

Japan Airlines Jet Airways Boeing Boeing Air Namibia Iberia Deucalion Capital Airbus Iberia PB Leasing Airbus Airbus Airbus Airbus Airbus Airbus Airbus Airbus

23961 35159 (-9) (-15) 3139 3255 3586 4842 3203 476 4853 4855 4858 4860 4862 4862 4867 4867

JT9d-7r4d GE90-115b Genx-1b64 Genx-1b64 CFM56-5b6/P CFM56-5b5/P CFM56-5b6/3 V2527m-A5 CFM56-5b6/P V2500-A1 V2527-A5 CFM56-5b4/3 V2527-A5 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b4/3 CFM56-5b4/3

1987-10 2007-06 2007-06 2007-09 2008-07 2011-09 2007-07 1994-04 2011-09 2011-09 2011-09 2011-09 2011-09 2011-09 2011-09 2011-09

Sold Sub-Leased Cncl-Order Cncl-Order Returned Returned Leased Delivered Sold Sold Delivered Delivered Delivered Delivered Delivered Sold Delivered Sold

2011.10.01 2011.10.01 2011.10.01 2011.10.01 2011.10.01 2011.10.01 2011.10.01 2011.10.01 2011.10.01 2011.10.01 2011.10.01 2011.10.01 2011.10.01 2011.10.01 2011.10.01 2011.10.01 2011.10.01 2011.10.01

Source: OAG Fleet iNET, 2011

AFM76_Cargo routes new pics_AFM74 04/11/2011 11:00 Page 44

44 | AFM • ISSUE 76 November-December 2011

AIRPORTS & ROUTES: Cargo routes Following the meltdown in 2008, the global economic recovery was tracked by air freight traffic which improved as exports resumed. But by late 2011, many regions were again seeing sharp falls in cargo volumes, which, worryingly, can signal an impending recession. Alex Derber investigates whether the development or discontinuation of air cargo routes is a similar barometer for macroeconomic trends and in which regions, if any, growth is occurring.

CARGO ROUTES AND THE WORLD ECONOMY G

LOBAL AIR FREIGHT HAS TRADITIONALLY BEEN USED as an indicator of approaching growth or decline in the global economy. The fortunes of cargo airlines are intimately tied those of the economies they serve. From 2002 to 2007 the sector grew continuously, from 35 million freight tonne kilometres (FTKs) to 47 million. But in July 2008, two months prior to the collapse of Lehman Brothers, the International Air Transport Association (IATA) reported a “sharp dip” in growth, and by the end of that year, global FTKs were down compared to 2007. In December 2008 alone, cargo volumes slumped an unprecedented 23 per cent.

A recovery only began in 2010, but only by 2012 does IATA expect global freight to reach its pre-recession high. That forecast, however, may be revised as IATA subsequently reported that freight volumes had peaked in July 2010. Ominous to those fearing a double-dip recession, by mid-2011 the air freight market had contracted by six per cent from its post-recession high. That decline continued into September 2011, causing IATA to state: “The decline in air freight volumes in the past two months looks to be an early indication of a further decline in world trade and economic conditions.”

Regional route growth and contraction While monthly data on global freight volumes is readily available, similar information about air cargo route growth and decline is more elusive. OAG provides the most useful data, though its figures exclude the operations of FedEx, UPS, DHL and TNT, which change their frequencies and routings too often to track effectively.

“There does seem to be a very simple correlation between new route development in cargo and the world economy,” says Tony Griffin SVP of ASM, which tracks passenger and cargo route development.

OAG data clearly shows the massive impact of the recession in the US on air cargo routes: from a high of 854 intra-North America cargo routes at the start of 2007, the market shed more than half in the next five years, with an astonishing 289 routes axed in 2010 alone.

Europe suffered less, gaining a net 13 routes from 2007 to 3Q 2011, although there were cuts as the financial crisis hit the world export market in 2008. Worryingly, in 2011 20 more routes have been cut than implemented – more even than in the dark days of 2008.

No wonder Ivor Llewellyn, cargo associate at ASM feels that “there’s not a great deal of growth at the moment”. He adds: “In terms of new routes it’s all been fairly flat, but the growth markets have been South America, maybe Central America and some of the African countries.”

If one examines new route creation, the data does not support Llewellyn’s point, as cargo connections from Europe and North America to Africa and South America have either stayed at 2007 levels or declined since then. The picture is very different, though, if one examines frequencies: in the last five years freight frequencies between Europe and South America have more than doubled, and those to Africa have risen by a quarter. Routes between Asia and Africa, meanwhile, rose from 37 to 50 in 2007, no doubt driven by China’s huge spending on the continent.

Asia-Pacific has also fared well, despite feeling some of the industrywide blip in 2008. A net 24 intra-Asia cargo routes were lost that year, but the region now boasts 591 routes, up from 570 in 2007.

Cargo frequencies increased by 10 per cent during the same period. The number of air freight connections to North America and Europe, though, has declined somewhat, perhaps reflecting a growing reliance on local rather than Western consumer demand.

AFM76_Cargo routes new pics_AFM74 04/11/2011 11:01 Page 45

November-December 2011 AFM • ISSUE 76 | 45

AIRPORTS & ROUTES: Cargo routes

Internal cargo routes changes by region 1000 North America

800

600

Asia-Pacific

Factors in route selection It does not necessarily follow that cargo route development and contraction tracks gross domestic product (GDP) as precisely as freight volumes. After all, a route can remain in place even if freighters are flying with lighter loads or reduced frequencies.

Nonetheless, OAG data does show that there is a broad correlation between frequency and route changes over time and where markets are sufficiently developed (i.e. where there are more than a handful of routes in operation).

Almost always, the size of a market will lead airline decisions on route development, but other factors are also significant. For example, Europe’s multi-mode transport infrastructure allows a carrier to consolidate several cargo hubs on the continent into one, and then use feeder services – be they road, rail or smaller aircraft – for onward transport.

400 Europe

“Routes might also be cut when the balance of inbound or outbound cargo makes it non-viable,” says Griffin. “That’s particularly true of countries that are big exporters like China.

There’s not a lot that goes back to China from the UK, but there’s a lot that goes in.”

200

source: OAG

0 2007

2008

2009

2010

2011

This imbalance was not always a problem, according to Llewellyn: “Freighter operators into the UK used to say that the rate that was achieved on the in-bound leg virtually paid for the return leg and anything they could put on the return leg was a bonus.”

Such largesse was not to last, however, as air cargo rates softened due to competition from faster shipping and falling demand.

Figures from the US Bureau of Labour Statistics show rates falling from mid-2008 to a nadir in late 2009. “Shipping tends to bite into air cargo when there’s a lack of capacity and airlines increase rates to the point where people look for an alternative mode of transport,” says Llewellyn.

To counter inbound and outbound imbalances, freighter operators sometimes implement triangular routes. Others such as Evergreen Air go further, offering worldcircling services that can operate from the East Coast of the US to the West, onto Africa, onto Asia and back to the airline’s Oregon headquarters.

AFM76_Cargo routes new pics_AFM74 04/11/2011 11:03 Page 46

46 | AFM • ISSUE 76 November-December 2011

AIRPORTS & ROUTES: Cargo routes oversight of security “inhibits their potential to serve those markets quite severely”.

Griffin agrees that poor processes and infrastructure restrict growth, but points out that in spite of such issues, “those types of market tend to be higher yielding for both passenger and cargo operations, so an airline wouldn’t necessarily be put off”.

Future trade lane development At the October 2011 World Route Development Forum several senior industry figures stated that the passenger sector was reaching a limit for the creation of new routes. “There really isn’t something out there that hasn’t been tried,” said Alex de Gunten, executive director of ALTA, the Latin America and Caribbean air transport association.

Fortunately for cargo carriers, that argument probably does not Griffin points out that triangular or multi-leg routes are not hold for freight, due to both emerging markets and new aircraft restricted to cargo operators. “It is sometimes mirrored on the technology. passenger side, though it’s not that common these days,” he says.

“KLM, for instance, operates Amsterdam to Kilimanjaro and then “The fact that there are orders for cargo-only aircraft suggests that onto Dar es Salaam and back to Amsterdam. That’s because the the airline world doesn’t think cargo routes are saturated and market to Kilimanjaro spends time there, but then moves there must be new opportunities, particularly when you look at elsewhere else, like Nigeria, before flying back to Europe.”

GDP growth in markets such as Brazil, China and India. Are we actually just scratching the surface at the moment? There could Dedicated cargo flights operate lower frequencies than passenger be huge pent-up demand around the corner for products within services, though both can be used to transport freight. For express those countries,” says Griffin. delivery of small items, or for integration into some logistics chains, the seven-days-a-week utility of scheduled passenger connections “In some regions of Africa, once they get certain facilities or can be ideal. But for bulky items, or those reliant on swift delivery, policies in place there could be a lot of new markets or one-stop dedicated freight services are far more suitable. markets converting into non-stop markets,” adds Clarkson.

“Most of [cargo airline] route planning tends to be towards the end of the week because manufacturers usually produce during the week and start shipping products out towards the end. That’s not changed – the heaviest utilisation of freight aircraft is over the weekend,” says Griffin.

Perhaps surprisingly, the ease of loading goods is not a decisive factor in route selection. Airside infrastructure in many parts of Africa, for example, is sub-standard, yet European freighter operators added 1,000 flights to the region between 2007 and 2011. “It’s so demand-rich that they just can’t ignore it because they know a competitor will come in and do it instead,” says Mark Clarkson, VP of consulting services at ASM. Clarkson has personal experience of the problems caused by poor infrastructure – both technical and bureaucratic – at Lagos airport in Nigeria. Though he knows that carriers try to overcome these difficulties, he acknowledges that a lack of proper processes and

New, long-range cargo aircraft should be crucial to opening up some of those markets. However, orders for the 747-8 Freighter have so far been light and Airbus has indefinitely suspended a freighter variant of the A380. The world cargo fleet is still dominated by converted passenger aircraft that are two-decadesold, all of which calls into question operators’ appetite for new technology and, by extension, new types of route.

Nonetheless, Llewellyn believes demand will surface and points to the European Unions Emission Trading Scheme (EU ETS) and the price of fuel as motivations for cargo airlines to invest in new, fuel-efficient aircraft types.

“If those efficiencies can be made,” concludes Griffin, “there is the potential for operators to go to places where previously they couldn’t, perhaps bringing more secondary destinations into view.” He adds: “World trade is increasing all the time so I believe the demand for new freighter aircraft will be there.”

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AFM76_World Routes_AFM76 04/11/2011 11:41 Page 48

48 | AFM • ISSUE 76 November-December 2011

AIRPORTS & ROUTES: Routes update Later this year, the European Commission will publish its package of aviation policies, which will cover such things as noise emissions, ground handling and slots. Considering this, Mary-Anne Baldwin reports the views on the industry from the World Route Development Strategy Summit, which took place at World Routes in Berlin, in October.

THE FULL COST OF AVIATION TAX P

ASSENGER TAXES COST AIRLINES AN ADDITIONAL $3.6bn in 2010, according to Athar Husain Khan, deputy secretary general of the Association of European Airlines (AEA) and the UK’s air passenger duty (APD) is to rise and extra nine per cent in November.

Olivier Jankovec, director general of ACI Europe noted that the rate of a country’s financial recovery, critical in this time of time recession, bares direct correlation to the amount it pays in tax.

The UK, for example, has 8.5 per cent higher charges than the average for Europe and is struggling to boost its GDP growth amidst concerns of a double dip.

Vijay Poonoosamy, VP of international public affairs at Etihad quoted a recent study by InterVISAS, an aviation consultant, which showed that every 10 per cent of growth in aviation results in a 0.7 per cent growth in gross domestic product (GDP). He then argued that conversely, a drop in air travel would result in lower GDP.

The need for investment

Poonoosamy noted that the Netherlands dropped plans to charge its national aviation industry €312m ($417m) in taxes because it would have slashed €1.2bn ($1.7bn) from its GDP. Put simply, aviation equals business; put a constraint on one and you put a constraint on the other.

Husain Khan argued that should proceeds from these taxes – some of which are labeled ‘environmental’ – be used to pay for more efficient air traffic management (ATM) systems it could save 16 million tons of CO2 emissions each year. Such calculations, coupled with no assurance from governments that they will make such investments, lead many to believe that the charges are a ‘tax grab’ and a means to buoy national deficits.

One airline feeling the effect is Vueling. Its senior manager of network planning, Javier Suarez, commented at the summit that airport taxation in particular “puts a lot of pressure on us”. He noted that the airline can not offer €19 ($27) flights if there is a €25 ($35) tax. “It has an amazing affect on our operation.”

Jankovec noted the “pure hypocrisy” of environmental taxes carrying such a moniker as the proceeds do not go towards the environment but to such things as hospitals and schools. Though these are worthy causes, they are not the responsibility of the aviation industry.

TWEETS FROM WORLD ROUTES FOLLOW EVENTS AS THEY HAPPEN AT AIRLINEFLEETMAG ////////////////////////////////////////////// Emirates is “happy to look at any opportunity” for route development. //////////////////////////////////////////////////////// ////////////////////////////////// Instead of having a ‘doomsday perspective’ on aviation growth, Emirates sees “unrestrained potential that needs to be tapped” ///////////////////////// ////////////////// easyJet’s new base in Southend, UK, will bring new routes especially in corporate catchment areas. “It’s actually a regional airport for London.” /////////////////

AFM76_World Routes_AFM76 04/11/2011 11:42 Page 49

November-December 2011 AFM • ISSUE 76 | 49

AIRPORTS & ROUTES: Routes update

From left to right: Prashant Sukul, joint secretary ministry of civil aviation for India; Olivier Jankovec, director general, ACI Europe; Athar Husain Khan, deputy secretary general, AEA; Folasade Odutola, director Air Transport Bureau, ICAO; Vijay Poonoosamy, VP public affairs, Etihad.

Coupled with the lack of investment in ATM, the European Commission intends to impose stricter slot allocation rules believing the industry is responsible for airport congestion. AEA’s Husain Khan says: “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 or airport authorities to invest in essential aviation infrastructure. It is in no way the result of weakness in the regulation.”

////////////////

Egypt’s tourism is rebounding The number of tourists visiting Egypt will be back to average levels by the end of 2011, the Egyptian minister for tourism, Mounir Fakhry Abdel Nour, told attendees of World Routes. Tourism figures dropped 80 per cent as a result of the country’s uprising which saw president Hosni Mubarak pulled from his post.

The Egyptian government is offering a per-seat financial incentive capped at $5,000 per flight.

AirBerlin postpones deliveries and hints at canceled routes

Alex de Gunten, executive director of ALTA notes a similar trend in Latin America. According to him, 14 out of Latin America’s 16 airports will be congested by 2014 and airlines hoping to move into the region will find it near impossible to access slots because of a lack of government investment into infrastructure. “About 50 per cent of all the taxes go to general government and the industry loses that investment,” says de Gunten. He argued that although it is a growth region there is no ‘easy money’ as only airlines that invested in the region years ago will reap rewards tomorrow.

AirBerlin told delegates at World Routes that it would announce within the next four weeks whether it would cancel more routes. The airline has already scrapped flights servicing Münster-Osnabrück, flights from cologne and Bonn to Valencia, Stansted, Vienna and Sylt and various flights to Morocco. Following the event, airBerlin announced that it will to postpone the delivery of 11 A320 and eight 737 aircraft in order to ease its debt. The airline will now receive 31 aircraft through 2012 to 2013 but will delay the delivery of 19 aircraft, the last of which will arrive in 2016.

One charge that would cover the cost of environmental improvements is in addition to those already discussed. The Stoltenberg Report has proposed that $100bn in additional taxes will be spent to lower carbon emissions in developing countries; $16bn of which would come from the aviation sector.

SriLankan Airlines suggested it may purchase an additional six widebody aircraft to replace its A340s and A300s. Kapila Chandrasena, the airline’s CEO said that it will look to own 25 per cent of these new aircraft, the rest of which will be leased with deliveries starting in 2014. SriLankan aims to “roughly double” its fleet in the next five years.

///////////////

//////////////

THE NEWS FROM WORLD ROUTES

SriLankan announces fleet expansion plans

AFM76_World Routes_AFM76 04/11/2011 11:44 Page 50

50 | AFM • ISSUE 76 November-December 2011

AIRPORTS & ROUTES: Routes update Icelandair to open Reykjavik-Denver route Icelandair is to open a new route between Reykjavik to Denver May 11, 2012, connecting Denver to over 20 Scandinavian destinations. The airline will operate four weekly flights using a 757 aircraft.

Emirates to increase capacity on Dallas-Fort Worth route Emirates has said it may increase capacity on its Dallas-Fort Worth route – three months ahead of its first flight on the new service. Emirates will start its service on February 6 flying a 777-200LR. Emirates already has an interline agreement with American Airlines on flights to New York and it flies to Houston, San Franciso and Los Angeles. Seattle will be added on March 1.

Ecuador’s tourism minster seeks authorisation to build access to Manta Freddy Ehlers, minister for tourism in Ecuador said he has been in discussions with airlines about making Manta the “main gateway into South America and Asia” and is seeking authorisation to fly from Asia, through Tahiti to South America.

Regarding the European Union’s Emission Trading Scheme (EU ETS), due to come into effect in January 2012, de Gunten remarked: “It’s an outrageous and ridiculous proposal… it’s an easy way out for politicians” and claimed the aviation industry has been “singled out”.

Folasada Odutola, director of the Air Transport Bureau, ICAO, commented that ICAO is in support of charges that are in relation to the cost of services, particularly when the proceeds go back to the industry, but it has little means to enforce this. The body does have a policy to support these beliefs yet Odutola notes that it is merely a “gentleman’s agreement” and by no means a law.

The effect on growth According to Jankovec, tax and in particular, the ETS are two key issues affecting European air travel. He warns that as a result Europe’s airports are likely to miss the opportunities offered by growth economies such as Latin America and Asia.

Peter Harbison, excusive chairman of the Centre for Asia Pacific Aviation (CAPA), noted China’s growth potential and that it is in a “brilliant position” for connective flights. The real growth potential is at the bottom of the pyramid – the mass of economy travelers. Additionally, China’s airlines, most of which are inherently low-cost, are also expanding outward.

According to Harbison, the Northern triangle – Northern China, Korea and Japan – could yield an additional 200 million passengers if regulatory restraints were removed and Japan, which will become a playground for premium carriers, “is starting to become much more liberal.”

But countering the positive effects of liberalisation, the ETS will make it considerably more expensive for those in emerging economies to trade with or travel to the EU. “It’s going to be up to Europe to set policies that make investors feel they want to invest in the European airport sector,” Jankovec commented.

//////////////////////////////////////// No plans for Finnair to push its brand in the UK, it will use BA to bolster its UK sales. //////////////////////////////////////// ////////////////////////////////////////////////// easyJet has no plans to offer loyalty scheme. “We don’t want to come across the same pitfalls as other airlines.” ////////////////////////////////////////////////

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AFM76_World Routes_AFM76 04/11/2011 11:48 Page 52

52 | AFM • ISSUE 76 November-December 2011

AIRPORTS & ROUTES: Routes update Copa’s new route signals looser restrictions Copa Airlines’ forthcoming service between Panama City and Monterrey airport, both in Mexico, is the result of looser bilateral restrictions, Pablo Cosme, president of air service development at the Mexican airport group, OMA, said at World Routes. The easing of rules was itself a result of the demise of Mexicana, which favoured flying over its Mexico City. Copa will operate a 737-700 on the service from December 2011.

EasyJet to start Gatwick-Kefalonia route EasyJet will start a thrice-weekly service from London Gatwick to Kefalonia, Greece starting April 28. The flights are scheduled only for a summer service.

Arik Air announces Abu Dhabi-Lagos route Arik Air has announced its new service to Abu Dhabi, which will commence November 29. The airline will fly three non-stop weekly flights from Lagos to the UAE capital. Arik currently flies to 25 destinations in 19 cities from Lagos.

Resolution Governments across the globe view the aviation industry as resilient and therefore ripe for taxing. Passenger and cargo travel is an undisputed necessity, therefore demand will remain, but airlines exist on tiny profit margins that are then chiseled by high fuel prices, a poor economy, natural disasters and of course taxes.

Governments must be convinced that the few extra dollars or euros a tax adds to a ticket price have a significant impact on an airline’s bottom lines.

John Hanlon, secretary general for ELFAA warned that the industry must “sensitise” the customer to tax and what it costs them. Indeed, a consensus across the panels was that the public must be made aware of the charges they are forced to incur by governments, why they incur them and where that money goes.

The hope is that the public can force a change in tax, even if the industry is unable.

The UK’s ‘Hands off our holiday Mr Tax man’ scheme, urges people to email their MP and take part in a Twitter or Linked-In debate to oppose the Chancellor’s budget plans to increase UK APD by double inflation next year.

Its aim is not only to educate the public on the costs they incur (since 2007, the UK’s APD for short-haul routes has increased by 140 per cent to EU countries and for long-haul routes by 325 per cent for example, to Australia) but to build public pressure against government. The scheme has so far resulted in 30,000 emails sent to MDs but it is unclear whether letters, be they from the public or national officials, will be enough to protect the industry.

Aaron Heslehurst, BBC news anchor and summit moderator.

Left to right: Peter Harbison, chairman, CAPA with Olivier Jankovec, director general, ACI Europe.

“The impact is devastating,” says Prashant Sukul, joint secretary, ministry of aviation for India, in particular noting the effect on regional airports. “We see this as one of the main problems for airport growth in Europe.”

Agreement comes from far and wide. Just prior to the strategy summit, Sukul, who claims that the ETS includes “shades of discrimination”, joined industry leaders from across the globe to discuss the scheme. Sukul told delegates that during this meeting 25 countries including China, Brazil, Russia and India wrote a joint declaration opposing the ETS. The letter will be sent to the EU, after which a further meeting will be held in Norway. This, he argued, will have more effect that the legal proceedings taken by American Airlines, which he believes is unlikely to win.

Yet those opposing the scheme will not stop at a strongly worded letter. “People are talking about retaliatory measures,” he warned. “The whole thing is going to become messy.”

////////////////////// Southwest will fly to Mexico by 2013, said its director John Kirby at World Routes Development Strategy Summit. /////////////////// ////////////////////// Oneworld’s Michael Blunt refers to rival alliances as like McDonald’s – they have a larger market share but “you don’t want to eat there everyday”. ////////////////////

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AFM76_MRO_AFM71 04/11/2011 11:14 Page 54

54 | AFM • ISSUE 76 November-December 2011

MAINTENANCE OPERATIONS: MRO for the 787 The perennial battle between OEMs and commercial MRO organisations for aftermarket revenue is entering a new phase with the service entry of the 787 and its associated GoldCare support services.

Bernard Fitzsimons reports.

MRO FOR THE 787:

THE FUTURE OF MAINTAINING AIRCRAFT I

T HAS BEEN A LONG TIME COMING. IT WAS SEVEN YEARS ago that Boeing started work on a revolutionary lifecycle support programme for its new airliner, but the 787s protracted development left it with nothing to support. Now the aircraft is in service and the choice between GoldCare or traditional support arrangements has moved from the theoretical to the real.

Last year, Boeing secured its first GoldCare customer, TUI Travel.

Boeing announced earlier this year that the service would include the 737NG. The manufacturer’s VP of fleet management, Bob Avery, said the company was also evaluating extending the programme to cover the 777 and 747-8.

However, Boeing will not maintain the aircraft itself. Much of the design and manufacture of the 787 was outsourced to a global network of partners, likewise GoldCare relies on existing MROs, both independent and airline-affiliated, to carry out any work that is required. But the OEM aims to co-ordinate that support itself, monitoring electronic logbook information in real-time, identifying problems and pre-positioning parts and personnel so that unscheduled maintenance is reduced and aircraft availability is maximised.

One GoldCare supplier believes this is the inexorable future.

Amsterdam-based Nayak Aircraft Services became a GoldCare partner in October and its MD, Patrick Morcus, is convinced that Boeing’s concept is “the future of maintaining aircraft.” He believes OEMs will take more responsibility regarding their operations, and will take more of the after-sales market.

What makes GoldCare different is Boeing’s firm commitment to airlines, says Morcus. Signing the service agreement will assure airlines of a good service. “Boeing is the first one [OEM] really guaranteeing its customers that they can run their operation and do it smoothly. With good quality, reliable partners you are able to get more out of your operation.”

Outsourcing MRO Morcus believes that in-house MRO “is already difficult and will get even more difficult in the future.” Many airlines have

downsized their technical departments and their operations may be negatively impacted if MRO is not outsourced.

Not everybody will recognise this yet, says Morcus. “But I’ve been out there with Boeing, I’ve talked to the team.” According to Morcus, Boeing has an expert team who has talked with numerous airlines to find out how best to run its operation. “I think that’s a big advantage over other MROs. They are focusing on an element such as components or line maintenance, but Boeing is going a step further and really putting everything together.

“Boeing is saying, ‘give me your flight schedule and I will arrange it fully, including warranties and so on, and if you are not flying we will compensate you.’ With the 787 they are fully confident that they are the only ones getting the maximum out of the aircraft.”

Delays to the aircraft may have made GoldCare difficult to sell, Morcus acknowledges, but momentum has built ahead of the first delivery: “I think it’s a starting point. They will be aggressively going onto the market and starting to compete with the large MROs.” Outsourcing is a philosophy well known to Nayak as line maintenance represents 70 per cent of its operations. It business has been profitable and has grown every year since a management buyout in 2000, a fact Morcus attributes to a focus on quality: “The standard discussion is about quality and pricing, and we are really focusing on quality rather than the lowest price.”

With 23 line stations and the ability to handle almost any aircraft type, Morcus says that Nayak is the biggest independent line maintenance provider in Europe. Its major customers each have their own maintenance organisations or third-party contracts, “but we are always contracted separately for the line maintenance.”

The focus for Nayak is on punctual flight operations. The penalties on airlines for late departures and schedule disruption mean there is increasing pressure to get aircraft out on time.

Airlines no longer have spare aircraft, so if an aircraft cannot fly there is “a domino effect,” says Morcus.

Flexibility is another consideration.”Airlines are trying new routes; they need to have relatively flexible line maintenance. That is our core business. We move people around and often if they want to change to a different route, we are already there. We offer flexible pricing and we are more flexible than their own solutions.

Nayak also has contracts with business aircraft OEMs, Dassault Aviation and Embraer, to provide line maintenance support for their customers’ aircraft. “The customers pay by the flight hour and then we take care of the work.”

However, the arrangement with Boeing is different. Under GoldCare, Nayak will provide the full scope of work including Cchecks. In line with Boeing’s ideas, it will be a flexible concept.

“You sign up with Boeing and they organise it according to the flight schedule,” he explains. “We said, ‘you have a customer request, we will sit together and make a project plan and wherever it is on the planet, we will go there.’ So it can be line maintenance within our current route network on the 23 stations we have, but if they would like us to start up something in China then we will go to China and we will set it up there. That’s the philosophy.”

Another aspect of the flexible approach is the use of customers’ premises: “If we go to an existing airline that already has a hangar we will set up facilities there and make sure that we can use their facilities instead of bringing aircraft to our main base for maintenance in Cologne. So we use existing infrastructures to provide the wider scope of work.”

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November-December 2011 AFM • ISSUE 76 | 55

MAINTENANCE OPERATIONS: MRO for the 787

Nayak’s 23 line stations make it Europe’s biggest line maintenance provider

Nobody knows how successful GoldCare will be, Morcus acknowledges, but it could spell significant growth for Nayak: “We already had big growth the last five years but it could be another challenging five years to come.”

Other offerings Boeing is not the only airframer seeking to extend its support beyond the factory gate. Airbus has built a 16-strong MRO Network, which includes many of the biggest maintenance providers and has half a dozen customers for its flight hour services (FHS). Singapore Airlines, China Southern and British Airways have each signed FHS contracts covering components for their A380s.

But Hamilton Sundstrand, the 787’s largest system supplier with nine major systems and more than 1,300 parts on each aircraft, has its own aftermarket programme and supplier network for the aircraft. It previously licensed Mubadala Aerospace to provide 787 integrated component solutions through the Abu Dhabi enterprise’s ADAT, SR Technics and Sanad Aero Solutions subsidiaries. And it has its own 10-year contracts to provide both All Nippon Airways and JAL with total supply chain maintenance solutions that include inventory support, repairs, logistic support and technical co-operation on the electric power, air management, nitrogen generation, emergency power and primary and remote power distribution systems. Hamilton Sundstrand says the JAL deal is worth an estimated $350m if the option of a 10-year extension is exercised.

At the same time, established MROs are far from conceding the market for maintenance of the 787. Once its A380 support was up and running, Lufthansa Technik announced plans to start providing technical services for the both the 787 and the 747-8.

For the Dreamliner, the company said it would develop a concept specific to the aircraft that would extend from the world-wide, short-notice supply of spare parts to the maintenance and repair of materials and systems. It has invested in test procedures and facilities to enable it to maintain systems such as the 5,000 psi (pound square inch) hydraulics, and develop test and repair procedures for the composite structure.

The first business to result from this was a 10-year deal to provide total component support for the 35 787s ordered by Japan Airlines (JAL). Lufthansa Technik has also agreed a long-term contract with Hamilton Sundstrand, one of the early members of Boeing’s GoldCare team, to provide MRO services on its 787 components, including its innovative bleedless air system and liquid cooling technology.

Boeing 787 maintenance training

AFM76_MRO_AFM71 04/11/2011 11:16 Page 56

56 | AFM • ISSUE 76 November-December 2011

MAINTENANCE OPERATIONS: MRO for the 787

Nayak Aircraft Services founders and MDs, Herbert Busch, (left) and Germán Larrabe, (right) formalise the Boeing GoldCare partnership with Boeing Commercial Airline Services fleet management VP, Jay Maloney, and supplier MD, Diane Hein.

Air France Industries KLM Engineering & Maintenance (AFI KLM E&M) is also developing what it has called a deliberately ambitious support offering for the 787. It plans to offer pool access, maintenance services on power-by-the-hour or time-andmaterials terms and logistic services, while its Epcor subsidiary will offer support for the Hamilton Suundstrand APS 5000 auxiliary power unit.

In January, work started on what was originally planned as a second JV, this time with Air India in Nagpur. The result was a $100m investment tied to Air India’s purchase of 787s. Due to open in 2013, the Nagpur facility will be financed and built by Boeing but operated by Air India, which already has hangars at Delhi, Mumbai and Trivandrum. The airline plans to move its MRO division with around 11,000 staff into a separate subsidiary.

“We want to play a significant role in this promising segment,” explains Gijs van Rooijen, AFI KLM E&M’s product support director for components. Another aim, he says, is to “contribute to restoring balance to a market generally catered to by the OEMs. With our experience as an airline operator and for that of our repair and overhaul centres, we are able to make a difference by curbing surging prices, which have already seen maintenance costs rocket relative to the time when the first aircraft were sold.”

More recently, Airbus and India’s biggest shipbuilder, Pipavav, agreed to an MRO JV at a location yet to be selected. Airbus’ parent EADS will have a minority stake in the project.

Joint enterprises Both main airframers, meanwhile, are investing directly in new hangars. Boeing already has an MRO joint venture (JV) at Shanghai’s Pudong airport, where Shanghai Aviation Services opened a new hangar in 2009.

ANA instructor, Tatsuo Yanagisawa, (left) and maintenance manager, Koichi Sato complete component identification exercises during the first 787 maintenance training class.

The potential of the Indian market is encouraging airline-affiliated MROs and OEMs to get involved. Last November, AFI KLM E&M clinched a strategic partnership agreement with Max Aerospace to establish Max MRO Services, intended to provide component support to local operators. MAS-GMR Aerospace Engineering, a JV between Malaysia Airlines’ subsidiary Malaysian Aerospace Engineering and Hyderabad airport operator, GMR, was due to start operations at Hyderabad in October.

The size and complexity of the $40bn-plus air transport MRO business means no single business model or approach is likely to dominate in the short-term. As the big MRO providers continue to expand, the relationships become ever more inter-dependent.

Another recent agreement has seen AFI KLM E&M take on component support for Malaysia Airlines’ 737-800s as part of the 737 component services programme it operates in partnership with Boeing.

And there is still much for all parties to learn. Nayak’s Morcus, for example, has commissioned a study to investigate whether there is a relationship between spending on line maintenance and airline performance. “The performance of a fleet and an aircraft is growing more important than ever before,” he affirms. “I know from experience with a lot of airlines that nobody is really making this connection, the technical issues are still independent of the commercial operation. It looks like nobody really investigates how airlines are dealing with it today and how they should consider doing it.”

AFM76_Data revision_AFNM 29/11/2011 12:45 Page 58

58 | AFM • ISSUE 76 November-December 2011

INDUSTRY DATA: FLEET FINANCE, FIRM ORDERS, AIRCRAFT TRANSACTIONS, LIST PRICES AND LEASE RATES AIRCRAFT TRANSACTIONS – Western built jets and turboprops 16 Aug to 5 Oct 2011 Contract Date 16/08/2011 16/08/2011 16/08/2011 17/08/2011 17/08/2011 17/08/2011 17/08/2011 17/08/2011 17/08/2011 17/08/2011 18/08/2011 18/08/2011 19/08/2011 19/08/2011 19/08/2011 19/08/2011 19/08/2011 19/08/2011 19/08/2011 19/08/2011 19/08/2011 20/08/2011 21/08/2011 22/08/2011 22/08/2011 22/08/2011 22/08/2011 22/08/2011 22/08/2011 22/08/2011 23/08/2011 23/08/2011 23/08/2011 23/08/2011 24/08/2011 24/08/2011 24/08/2011 24/08/2011 24/08/2011 24/08/2011 24/08/2011 24/08/2011 24/08/2011 24/08/2011 25/08/2011 25/08/2011 25/08/2011 26/08/2011 26/08/2011 26/08/2011 26/08/2011 26/08/2011 26/08/2011 26/08/2011 26/08/2011 26/08/2011 29/08/2011 29/08/2011 29/08/2011 30/08/2011 30/08/2011 30/08/2011 30/08/2011 30/08/2011 30/08/2011 30/08/2011 30/08/2011 30/08/2011 30/08/2011 30/08/2011 30/08/2011 31/08/2011 31/08/2011 31/08/2011 31/08/2011 31/08/2011 31/08/2011 31/08/2011 31/08/2011 31/08/2011 31/08/2011 31/08/2011 31/08/2011 31/08/2011 31/08/2011 31/08/2011 31/08/2011 31/08/2011 31/08/2011

S/N E3123 39115 UE-162 838 4813 E2077 49323 21278 805 3055 21598 7348 602 1169 641 25248 26341 519 145223 AC-696 AC-696 105 7364 22951 23357 23358 23368 28397 4144 4146 1939 2017 7056 7056 4815 299 E3381 33219 36119 39255 27648 25088 565 8156 4800 53529 589 423 2041 2044 2056 47843 49459 23777 19000462 20150 24445 4377 4378 666 741 771 28471 28471 34193 40765 20349 15124 15126 589 589 737 4827 24681 24681 28647 23961 7034 7034 1852 1852 1907 1907 1911 1911 1926 1926 145204 145212

A/C Model Variant BAE SYSTEMS (HS) 146 300 Boeing 737 (NG) 800 Winglets Hawker Beechcraft 1900 D Airbus A300 620R (P&W) Airbus A320 230 (IAE) BAE SYSTEMS (HS) 146 200 Boeing (McDonnell-Douglas) MD-80 82 (MDC) Boeing 737 (JT8D) 200Adv (Sge3Hkits) Bombardier (de Havilland) DHC-6 Twin Otter Fairchild/Dornier 328 100 Boeing 737 (JT8D) 200Adv (Sge3Hkits) Bombardier (Canadair) CRJ Regional Jet 100ER Airbus A300 620R (P&W) Airbus A330 200 (GE) BAE SYSTEMS (Jetstream) Jetstream 31 Boeing 737 (CFMI) 400 Boeing 747 400 (GE) Bombardier (de Havilland) Dash 8 300 Embraer ERJ-145 LR Fairchild (Swearingen) Metro III Fairchild (Swearingen) Metro III Bombardier (de Havilland) Dash 8 100 Bombardier (Canadair) CRJ Regional Jet 100ER Boeing 737 (CFMI) 300 Boeing 737 (CFMI) 300 Boeing 737 (CFMI) 300 Boeing 737 (CFMI) 300 Boeing 777 300 (P&W) Bombardier (de Havilland) Dash 8 400 Bombardier (de Havilland) Dash 8 400 Airbus A318 110 (CFM) Airbus A318 110 (CFM) Bombardier (Canadair) CRJ Regional Jet 200LR Bombardier (Canadair) CRJ Regional Jet 200LR Airbus A320 210 (CFM) ATR ATR 72 200 BAE SYSTEMS (Avro) RJ Avroliner RJ100 Boeing 737 (NG) 800 Winglets Boeing 737 (NG) 800 Winglets Boeing 737 (NG) 700 Winglets Boeing 747 400 (GE) Boeing 767 300ER (P&W) Bombardier (de Havilland) Dash 8 300 Fairchild/Dornier 228 200 Airbus A320 210 (CFM) Boeing (McDonnell-Douglas) MD-90 30 Bombardier (de Havilland) Dash 8 300 Airbus A300 600R (GE) BAE SYSTEMS (HS) ATP Freighter (LFD) BAE SYSTEMS (HS) ATP Bulk Freighter BAE SYSTEMS (HS) ATP Freighter (LFD) Boeing (McDonnell-Douglas) DC-10 30F (M) Boeing (McDonnell-Douglas) MD-80 82 (MDC) Boeing 737 (CFMI) 300 Embraer 195 LR Fokker 50 Boeing 737 (CFMI) 400 Bombardier (de Havilland) Dash 8 400 NextGen Bombardier (de Havilland) Dash 8 400 NextGen BAE SYSTEMS (Jetstream) Jetstream 31 BAE SYSTEMS (Jetstream) Jetstream 31 BAE SYSTEMS (Jetstream) Jetstream 31 Boeing 737 (CFMI) 500 Boeing 737 (CFMI) 500 Boeing 737 (NG) 800 Winglets Boeing 737 (NG) 800 Winglets Boeing 747 100F (M) Bombardier (Canadair) CRJ900 Regional Jet 900ER Bombardier (Canadair) CRJ900 Regional Jet 900ER Bombardier (de Havilland) Dash 8 300 Bombardier (de Havilland) Dash 8 300 Airbus A300 620R (P&W) Airbus A320 210 (CFM) Boeing 737 (CFMI) 300 Boeing 737 (CFMI) 300 Boeing 737 (NG) 800 Boeing 767 300 (P&W) Bombardier (Canadair) CRJ Regional Jet 200LR Bombardier (Canadair) CRJ Regional Jet 200LR Bombardier (Shorts) SC.7 Skyvan 3 Bombardier (Shorts) SC.7 Skyvan 3 Bombardier (Shorts) SC.7 Skyvan 3 Bombardier (Shorts) SC.7 Skyvan 3 Bombardier (Shorts) SC.7 Skyvan 3 Bombardier (Shorts) SC.7 Skyvan 3 Bombardier (Shorts) SC.7 Skyvan Skyliner Bombardier (Shorts) SC.7 Skyvan Skyliner Embraer ERJ-145 LR Embraer ERJ-145 LR

Reg No 9G-SBB B-5593 N162ZV N836AC VT-IEI ZS-SOV N412AA N464AT 300 OE-LKH YV502T N798CA N4602 VH-EBO HI JA8932 N349AS C-GPAR ZS-BBI ZS-JAM N227LD 5Y-BZI N807CA HS-AAV HS-AAS HS-AAR HS-AAQ JA8945 ZS-YBR ZS-YBT N801FR N803FR N409SW N409SW CC-BAP SP-EFK HB-IYS N872NN EI-UNK PH-BGM N920UN HS-BIE OY-EDK CCF-HBNH N959DN N589AW N91050 LX-WAV SE-MAY LX-WAF G-CGXU N440AA N155AW SP-LNC 9M-MGA EXVT-SUC VT-SUD N525PA N539PA N529PA EK-73771 EK-73771 VH-VZR N870NN N682UP N326MS N329MS N589AW N589AW N4737 A9C-AM N554MS N554MS HL7567 JA8265 N407SW N407SW N50DA N50DA N754BD N754BD N549WB N549WB N114LH N114LH N644AE N645AE

Owner Name Riva Investments China Aircraft Leasing Royal Bank of Canada Aerostar Asset Mgmt Dunlewy Aviation Leasing Freedom Air Magnum AirDynamics Sky King N42729 Welcome Air Venezolana Sky Swallows Aircraft Solutions AWAS Unconfirmed Japan TransOcean Air Atlas Air Provial Airlines Acia Investments Joint Aid-Mgmt Aviation Services of America ALS Sky Swallows FL Technics FL Technics FL Technics FL Technics Japan Airlines Rand Merchant Bank Rand Merchant Bank Insignia Insignia Bombardier Capital SkyWest Airlines Avolon Aerospace EuroLOT Triangle Regional Leasing Aerfunding SJK Aircraft Sofia Leasing Pembroke Exchanges Pacific AirFinance Nordic Aviation Contractors Unconfirmed MSN 4800 Delta Air Lines Bombardier Services Apollo Aviation Group European Turboprop Mgmt European Turboprop Mgmt European Turboprop Mgmt Turbine Motor Works Magnum AirDynamics OH Capital Assets Zuma Leasing Werner Aero Service Sayegh Group Aviation Maple Leaf Financing Maple Leaf Financing Salsa America Pan Am Clipper Pan Am Clipper Armavia Mika QF B738 2011 NAS Investments Stewart Industries Int. Undisclosed Undisclosed US Department of State TKC Aerospace European Air Transport MC Aviation/Mitsubishi JMV Aviation SARL Aerovista Global Knafaim Leasing Japan Airlines AAR Parts Trading Mesa Airlines North Star Air Cargo Whitehorse Flight Center Whitehorse Flight Center North Star Air Cargo Whitehorse Flight Center North Star Air Cargo Whitehorse Flight Center North Star Air Cargo American Airlines American Airlines

Operator Name Riva Investments Shandong Airlines Royal Bank of Canada Aerostar Asset Mgmt IndiGo Airlines Freedom Air Magnum AirDynamics Sky King CAAMS Welcome Air Venezolana Sky Swallows Universal Asset Qantas Unconfirmed Japan TransOcean Air Atlas Air Provial Airlines Solenta Aviation Joint Aid-Mgmt Aviation Services of America ALS Sky Swallows FL Technics FL Technics FL Technics FL Technics Japan Airlines Rand Merchant Bank Rand Merchant Bank Frontier Airlines Frontier Airlines SkyWest Airlines SkyWest Airlines LAN Airlines EuroLOT Swiss European Air Lines American Airlines Jackson Square Aviation KLM Royal Dutch Airlines Transaero Pacific AirFinance Nordic Aviation Capital Unconfirmed Air France Delta Air Lines Bombardier Services Apollo Aviation Group West Air Luxembourg West Air Europe West Air Luxembourg Turbine Motor Works Magnum AirDynamics OH Capital Assets LOT - Polish Airlines Werner Aero Service Sayegh Group Aviation SpiceJet SpiceJet Salsa America Pan Am Clipper Pan Am Clipper Armavia Armavia Qantas American Airlines Stewart Industries Int. Undisclosed Undisclosed US Department of State TKC Aerospace European Air Transport Gulf Air JMV Aviation SARL Aerovista Korean Air Japan Airlines AAR Parts Trading Mesa Airlines North Star Air Cargo Whitehorse Flight Center Whitehorse Flight Center North Star Air Cargo Whitehorse Flight Center North Star Air Cargo Whitehorse Flight Center North Star Air Cargo American Eagle American Eagle

Event Remarks Purchased - parked Pur'd - sale leaseback on del Pur'd - parked Pur'd - parked Pur'd - sale leaseback on del Pur'd - parked Pur'd - parked Pur'd off lease/term comp-pkd CAAMS Pur'd - parked Pur'd Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - subject to lease Pur'd - parked Pur'd off lease/term complete Pur'd - parked Pur'd Pur'd Pur'd - parked Pur'd - parked Pur'd Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - parked Pur'd off lease/term complete Pur'd - parked Pur'd - parked Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - subject to lease Pur'd off lease/term complete Pur'd - sale leaseback on del Pur'd Pur'd - subject to lease Pur'd - sale leaseback on del Pur'd - parked Pur'd - sale leaseback on del Pur'd - sale leaseback- parked Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - sale leaseback on del Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - subject to lease Pur'd off lease/term complete Pur'd off lease/term complete Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - sale leaseback on del Pur'd - parked Pur'd - parked Pur'd - sale leaseback on del Pur'd - sale leaseback on del Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - sale leaseback- parked Pur'd - sale leaseback on del Pur'd - sale leaseback on del Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - sale leaseback on del Pur'd - parked Pur'd - parked Pur'd - subject to lease Pur'd off lease/term complete Pur'd - parked Pur'd Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - parked Pur'd Pur'd Pur'd - sale leaseback Pur'd - sale leaseback

AFM76_Data revision_AFNM 29/11/2011 12:45 Page 59

November-December 2011 AFM • ISSUE 76 | 59

INDUSTRY DATA: FLEET FINANCE, FIRM ORDERS, AIRCRAFT TRANSACTIONS, LIST PRICES AND LEASE RATES AIRCRAFT TRANSACTIONS – Western built jets and turboprops 16 Aug to 5 Oct 2011 Contract Date 31/08/2011 31/08/2011 01/09/2011 01/09/2011 01/09/2011 01/09/2011 01/09/2011 01/09/2011 01/09/2011 02/09/2011 02/09/2011 02/09/2011 02/09/2011 02/09/2011 02/09/2011 02/09/2011 02/09/2011 02/09/2011 02/09/2011 05/09/2011 06/09/2011 06/09/2011 06/09/2011 06/09/2011 07/09/2011 08/09/2011 08/09/2011 08/09/2011 08/09/2011 08/09/2011 08/09/2011 08/09/2011 08/09/2011 08/09/2011 08/09/2011 08/09/2011 08/09/2011 08/09/2011 08/09/2011 08/09/2011 08/09/2011 08/09/2011 08/09/2011 08/09/2011 08/09/2011 08/09/2011 08/09/2011 09/09/2011 09/09/2011 09/09/2011 09/09/2011 09/09/2011 09/09/2011 09/09/2011 09/09/2011 09/09/2011 09/09/2011 09/09/2011 12/09/2011 12/09/2011 12/09/2011 12/09/2011 12/09/2011 12/09/2011 12/09/2011 12/09/2011 13/09/2011 13/09/2011 13/09/2011 13/09/2011 13/09/2011 13/09/2011 13/09/2011 14/09/2011 14/09/2011 14/09/2011 14/09/2011 14/09/2011 15/09/2011 15/09/2011 15/09/2011 15/09/2011 15/09/2011 15/09/2011 15/09/2011 15/09/2011 2011-09-15 2011-09-15 2011-09-15

Owner S/N A/C Model Variant Reg No Name 145234 Embraer ERJ-145 LR N649PP American Airlines AC-641 Fairchild (Swearingen) Metro III VH-SEF Commonwealth Bank of Australia 670 Airbus A300 620R (P&W) N2670 Aircraft Solutions 177 ATR ATR 72 200 F-GKPD Airlinair 24884 Boeing 757 200 (RR) N964FD FedEx 32954 Boeing 767 200ER (GE) P4-CLA Comlux Aviation 19015 Bombardier (Canadair) CRJ1000 Regional Jet 1000EL NextGen F-HMLJ Constellation Finance 145709 Embraer ERJ-145 LR SE-RAG Goiania Comercio E Servicos AT-513/AC-513 Fairchild (Swearingen) Metro III VH-TAO M/V Purchasing 4711 Airbus A320 210 (CFM) B-6799 Nomura Babcock & Brown 521 ATR ATR 72 500 N521NA Avitra Aviation 21874 Boeing 767 200 (P&W) N613UA Boeing 21875 Boeing 767 200 (P&W) N614UA Boeing 25363 Boeing 767 300ER (GE) VH-OGL Qantas 352 Bombardier (de Havilland) Dash 8 300 N8300L Aircraft Lease Finance Corp 352 Bombardier (de Havilland) Dash 8 300 N8300L Dynamic Aviation Group 145059 Embraer ERJ-145 LR N605KS American Airlines 145081 Embraer ERJ-145 LR N613AE American Airlines 145172 Embraer ERJ-145 LR N638AE American Airlines 20178 Fokker 50 HP-1605PST Air Panama 24655 Boeing 737 (CFMI) 300 N380RP RPK Capital 145048 Embraer ERJ-145 LR N602AE American Airlines 145062 Embraer ERJ-145 LR N606AE American Airlines 145101 Embraer ERJ-145 LR N619AE American Airlines 21348 Boeing 727 200Adv (Sge3Hkits) XAUnconfirmed 683 Airbus A300 620R (P&W) N2683 Aircraft Solutions 4832 Airbus A320 230 (IAE) N507VL JSA Aircraft 4832 228 ATR ATR 42 300F Bulk Freighter ZS-XCD Solenta Aviation 571 ATR ATR 42 500 OY-EDL Nordic Aviation 521 ATR ATR 72 500 N521NA Nordic Aviation 21931 Boeing 727 200F(M)Adv (Sge3HK) ZS-IRE SKA SA Aircraft Leasing 23642 Boeing 737 (CFMI) 300 N301UA Universal Asset Mgmt 23643 Boeing 737 (CFMI) 300 N302UA Universal Asset Mgmt 23644 Boeing 737 (CFMI) 300 N303UA Universal Asset Mgmt 23665 Boeing 737 (CFMI) 300 N304UA Universal Asset Mgmt 23666 Boeing 737 (CFMI) 300 N305UA Universal Asset Mgmt 23667 Boeing 737 (CFMI) 300 N306UA Universal Asset Mgmt 23668 Boeing 737 (CFMI) 300 N307UA Universal Asset Mgmt 23669 Boeing 737 (CFMI) 300 N308UA Universal Asset Mgmt 23670 Boeing 737 (CFMI) 300 N309UA Universal Asset Mgmt 23671 Boeing 737 (CFMI) 300 N310UA Universal Asset Mgmt 27044 Boeing 747 400 (P&W) N420AC Aircastle Advisor 29307 Boeing 757 200 (RR) TC-OGS Hagondale 145102 Embraer ERJ-145 LR N620AE American Airlines 145115 Embraer ERJ-145 LR N625AE American Airlines 145121 Embraer ERJ-145 LR N627AE American Airlines 145132 Embraer ERJ-145 LR N630AE American Airlines 27143 Boeing 737 (CFMI) 400 SX-BMC Safair Aviation 31129 Boeing 737 (NG) 800 Winglets N874NN Aerfunding 29308 Boeing 757 200 (RR) TC-OGT Hagondale 145097 Embraer ERJ-145 LR N618AE American Airlines 145139 Embraer ERJ-145 LR N631AE American Airlines 145143 Embraer ERJ-145 LR N632AE American Airlines 145158 Embraer ERJ-145 LR N635AE American Airlines 145193 Embraer ERJ-145 LR N642AE American Airlines UE-237 Hawker Beechcraft 1900 D N237YV MTW Aerospace UE-294 Hawker Beechcraft 1900 D 5YUnconfirmed 300 Saab 340 B N370PX C&L Aerospace 4818 Airbus A320 230 (IAE) VT-IEJ Avolon 39358 Boeing 737 (NG) 800 Winglets VH-VZS QF B738 2011 40248 Boeing 737 (NG) 800 Winglets A6-FDV Avolon 38707 Boeing 777 200LRF (GE) N892FD FedEx 145124 Embraer ERJ-145 LR N628AE American Airlines 145191 Embraer ERJ-145 LR N641AE American Airlines 145213 Embraer ERJ-145 LR N646AE American Airlines 3013 Fairchild/Dornier 328 100 N335PH Berry Aviation 4839 Airbus A320 210 (CFM) CC-BAQ AWAS 4184 Bombardier (de Havilland) Dash 8 400 C-GARX Skyservice Business Aviation 14500926 Embraer ERJ-145 LR N941LT American Airlines 145105 Embraer ERJ-145 LR N621AE American Airlines 145109 Embraer ERJ-145 LR N623AE American Airlines 145744 Embraer ERJ-145 LR N657AE American Airlines 145778 Embraer ERJ-145 LR N663AR American Airlines 14500801 Embraer ERJ-145 LR N674RJ American Airlines 14500807 Embraer ERJ-145 LR N676AE American Airlines 14500833 Embraer ERJ-145 LR N683AE American Airlines 145170 Embraer ERJ-145 LR N637AE American Airlines 145762 Embraer ERJ-145 LR N659AE American Airlines 2669 Airbus A319 130 (IAE) N839AW Archway Aviation 2690 Airbus A319 130 (IAE) N840AW Archway Aviation 0290 Airbus A320 210 (CFM) C-FKCR Undisclosed 3299 Airbus A320 210 (CFM) HS-ABB Avolon 3394 Airbus A320 210 (CFM) HS-ABD Avolon 1707 Airbus A321 230 (IAE) G-OZBE CIT Aerospace 1763 Airbus A321 230 (IAE) G-OZBF CIT Aerospace 2234 Airbus A321 230 (IAE) G-OZBI CIT Aerospace 1283 Airbus A330 200 (GE) EI-EJL Air Lease Corporation 47707 Boeing (McDonnell-Douglas) DC-9 34CF 5Y-UAE J&V Aviation 48512 Boeing (McDonnell-Douglas) MD-11 Freighter (M) (GE) OH-LGC M48512

Operator Name American Eagle Commonwealth Bank of Australia Universal Asset Mgmt Airlinair FedEx Comlux Aviation Brit Air City Airline Brindabella Airlines China Eastern Airlines Avitra Aviation Boeing Boeing Qantas Aircraft Lease Finance Corp Dynamic Aviation Group American Eagle American Eagle American Eagle Air Panama RPK Capital Mgmt American Eagle American Eagle American Eagle Unconfirmed M Universal Asset Mgmt Volaris Solenta Aviation Nordic Aviation Capital Nordic Aviation Capital AirQuarius Aviation Universal Asset Mgmt Universal Asset Mgmt Universal Asset Mgmt Universal Asset Mgmt Universal Asset Mgmt Universal Asset Mgmt Universal Asset Mgmt Universal Asset Mgmt Universal Asset Mgmt Universal Asset Mgmt Aircastle Advisor Saudi Arabian Airlines American Eagle American Eagle American Eagle American Eagle Aergo Capital American Airlines Saudi Arabian Airlines American Eagle American Eagle American Eagle American Eagle American Eagle MTW Aerospace Unconfirmed C&L Aerospace IndiGo Airlines Qantas FlyDubai FedEx American Eagle American Eagle American Eagle Berry Aviation LAN Airlines Skyservice Business Aviation American Eagle American Eagle American Eagle American Eagle American Eagle American Eagle American Eagle American Eagle American Eagle American Eagle US Airways US Airways Air Canada Thai AirAsia Thai AirAsia Monarch Airlines Monarch Airlines Monarch Airlines Alitalia Aircraft Traders Nordic Global Airlines

Event Remarks Pur'd - sale leaseback Pur'd - parked Pur'd - parked Pur'd off lease/term complete Pur'd - parked Pur'd Pur'd - sale leaseback on del Pur'd Pur'd - subject to lease Pur'd - sale leaseback on del Pur'd - parked Pur'd - parked Pur'd - parked Pur'd off lease/term complete Pur'd - parked Pur'd - parked Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - parked Pur'd - parked Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - parked Pur'd - parked Pur'd - sale leaseback on del Pur'd Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - subject to lease Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - parked Pur'd - sale leaseback on del Pur'd - subject to lease Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - parked Pur'd Pur'd - parked Pur'd - sale leaseback on del Pur'd - sale leaseback on del Pur'd - sale leaseback on del Pur'd Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd off lease/term complete Pur'd - sale leaseback on del Pur'd - parked Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - subject to lease Pur'd - subject to lease Pur'd - subject to lease Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback On order-sale leaseback arranged Pur'd - parked Pur'd - subject to lease

AFM76_Data revision_AFNM 29/11/2011 12:46 Page 60

60 | AFM • ISSUE 76 November-December 2011

INDUSTRY DATA: FLEET FINANCE, FIRM ORDERS, AIRCRAFT TRANSACTIONS, LIST PRICES AND LEASE RATES AIRCRAFT TRANSACTIONS – Western built jets and turboprops 16 Aug to 5 Oct 2011 Contract Date 2011-09-15 2011-09-15 2011-09-15 2011-09-15 15/09/2011 15/09/2011 15/09/2011 15/09/2011 15/09/2011 15/09/2011 15/09/2011 15/09/2011 15/09/2011 15/09/2011 15/09/2011 15/09/2011 16/09/2011 16/09/2011 16/09/2011 16/09/2011 16/09/2011 16/09/2011 16/09/2011 16/09/2011 16/09/2011 16/09/2011 16/09/2011 19/09/2011 19/09/2011 19/09/2011 19/09/2011 19/09/2011 19/09/2011 19/09/2011 20/09/2011 20/09/2011 20/09/2011 20/09/2011 20/09/2011 20/09/2011 20/09/2011 20/09/2011 20/09/2011 20/09/2011 20/09/2011 20/09/2011 20/09/2011 20/09/2011 21/09/2011 21/09/2011 21/09/2011 21/09/2011 21/09/2011 21/09/2011 21/09/2011 21/09/2011 21/09/2011 22/09/2011 22/09/2011 22/09/2011 22/09/2011 22/09/2011 22/09/2011 22/09/2011 22/09/2011 22/09/2011 22/09/2011 22/09/2011 22/09/2011 22/09/2011 23/09/2011 23/09/2011 23/09/2011 23/09/2011 23/09/2011 23/09/2011 23/09/2011 23/09/2011 23/09/2011 23/09/2011 23/09/2011 23/09/2011 23/09/2011 23/09/2011 26/09/2011 26/09/2011 26/09/2011 26/09/2011 26/09/2011

S/N 48513 21952 30566 547 120196 14500814 14500820 14500824 14500826 14500843 145317 145349 145352 145377 145470 UC-103 783 21738 4350 4366 120268 14500810 14500868 145087 145766 145793 3213 E2261 14500907 145086 145150 145783 145794 3106 53530 25270 25547 38987 238 145707 145734 14500813 14500836 14500894 14500895 UC-92 UE-167 UE-368 49472 36886 28028 14500874 14500897 14500912 14500918 14500923 145777 670 4725 E3382 40766 24784 24176 19016 145235 145283 145692 145722 145754 145784 4820 584 959 49473 49474 49475 49926 23158 29119 14500806 145055 145160 145760 145797 34 49611 34988 34992 36877

A/C Model Variant Reg No Boeing (McDonnell-Douglas) MD-11 Freighter (M) (GE) OH-LGD Boeing 727 200F(M)Adv(Sge3HK) PR-MTJ Boeing 767 300ER (P&W) ET-AMG Bombardier (de Havilland) Dash 8 200 5N-GRS Embraer EMB-120 Brasilia ZS-PSB Embraer ERJ-145 LR N679AE Embraer ERJ-145 LR N680AE Embraer ERJ-145 LR N681AE Embraer ERJ-145 LR N682AE Embraer ERJ-145 LR N686AE Embraer ERJ-145 LR B-3040 Embraer ERJ-145 LR B-3041 Embraer ERJ-145 LR B-3042 Embraer ERJ-145 LR B-3043 Embraer ERJ-145 LR B-3045 Hawker Beechcraft 1900 C-1 N205CA Airbus A300 620R (P&W) N5783 Boeing 737 (JT8D) 200QCAd (Sge3HK) C-GNRD Bombardier (de Havilland) Dash 8 400 NextGen ZS-YBW Bombardier (de Havilland) Dash 8 400 NextGen ZS-YBX Embraer EMB-120 Brasilia ER N286AS Embraer ERJ-145 LR N677AE Embraer ERJ-145 LR N693AE Embraer ERJ-145 LR N615AE Embraer ERJ-145 LR N661JA Embraer ERJ-145 LR N671AE Fairchild/Dornier 328JET OY-NCT BAE SYSTEMS (Avro) RJ Avroliner RJ85 JU-9915 Embraer ERJ-145 LR N923AE Embraer ERJ-145 LR N614AE Embraer ERJ-145 LR N634AE Embraer ERJ-145 LR N665BC Embraer ERJ-145 LR N672AE Fairchild/Dornier 328 100 09-3106 Boeing (McDonnell-Douglas) MD-90 30 N960DN Boeing 737 (CFMI) 500 D-ABJA Boeing 747 400 (RR) VH-OJR Boeing 777 300ER (GE) A6-EGF Bombardier (de Havilland) DHC-4A Turbo Caribou N238PT Embraer ERJ-140 LR N847AE Embraer ERJ-140 LR N851AE Embraer ERJ-145 LR N678AE Embraer ERJ-145 LR N685AE Embraer ERJ-145 LR N906AE Embraer ERJ-145 LR N907AE Hawker Beechcraft 1900 C-1 CNHawker Beechcraft 1900 D TZHawker Beechcraft 1900 D CBoeing (McDonnell-Douglas) MD-80 82 (MDC) N446AA Boeing 737 (NG) 800 Winglets D-ABKY Boeing 747 400 (P&W) N747WV Embraer ERJ-145 LR N696AE Embraer ERJ-145 LR N908AE Embraer ERJ-145 LR N931AE Embraer ERJ-145 LR N933JN Embraer ERJ-145 LR N939AE Embraer ERJ-145 LR N662EH Airbus A300 620R (P&W) N2670 Airbus A320 230 (IAE) G-EUYL BAE SYSTEMS (Avro) RJ Avroliner RJ100 HB-IYR Boeing 737 (NG) 800 Winglets N873NN Boeing 747 400 (GE) N287AS Boeing 757 200 (RR) N962FD Bombardier (Canadair) CRJ1000 Regional Jet 1000EL NextGen F-HMLK Embraer ERJ-135 LR N711PH Embraer ERJ-135 LR N721HS Embraer ERJ-140 LR N846AE Embraer ERJ-140 LR N850AE Embraer ERJ-140 LR N858AE Embraer ERJ-145 LR N667GB Airbus A320 210 (CFM) F-HBNI ATR ATR 42 500 PR-TKH ATR ATR 72 500 OH-ATN Boeing (McDonnell-Douglas) MD-80 82 (MDC) N447AA Boeing (McDonnell-Douglas) MD-80 82 (MDC) N448AA Boeing (McDonnell-Douglas) MD-80 82 (MDC) N449AA Boeing (McDonnell-Douglas) MD-80 88 N382MS Boeing 737 (JT8D) 200Adv (Sge3Hkits) N127EA Boeing 747 400 (RR) ZS-SAZ Embraer ERJ-145 LR N675AE Embraer ERJ-145 LR N603KC Embraer ERJ-145 LR N636AE Embraer ERJ-145 LR N658AE Embraer ERJ-145 LR N673AE A.S.T.A. (GAF) Nomad N24A VH-XGZ Boeing (McDonnell-Douglas) MD-80 87 N532PT Boeing 737 (NG) 800 Winglets EI-ESL Boeing 737 (NG) 800 Winglets EI-ESM Boeing 737 (NG) 800 Winglets B-5598

Owner Name M48513 Air Brasil Linhas Aereas Crane Aircraft Partners Govt, Cross River State, Nigeria Summerset Charters American Airlines American Airlines American Airlines American Airlines American Airlines Hebei Airlines Hebei Airlines Hebei Airlines Hebei Airlines Hebei Airlines Corporate Air Aircraft Solutions Nolinor Aviation Rand Merchant Bank Rand Merchant Bank Deborah C Aharon American Airlines American Airlines American Airlines American Airlines American Airlines Sun-Air of Scandinavia Eznis Airways American Airlines American Airlines American Airlines American Airlines American Airlines US Air Force Special Ops Delta Air Lines Classic 500 A J Walter Aviation Jackson Square Aviation Aughrim American Airlines American Airlines American Airlines American Airlines American Airlines American Airlines Unconfirmed Malian Aero Company Unconfirmed Air Capital Group Avolon Undisclosed American Airlines American Airlines American Airlines American Airlines American Airlines American Airlines European Air Transport BBAM Triangle Regional Leasing NAS Investments Atlas Air FedEx Constellation Finance American Airlines American Airlines American Airlines American Airlines American Airlines American Airlines Aderry Aviation TRIP Finnair Aircraft Finance Air Capital Group Air Capital Group Air Capital Group AeroTurbine MFP Aeronautics Midair American Airlines American Airlines American Airlines American Airlines American Airlines GippsAero Sunrise Asset Mgmt Avolon Avolon ICBC Leasing

Operator Name Nordic Global Airlines Air Brasil Linhas Aereas Ethiopian Airlines Govt, Cross River State, Nigeria Summerset Charters American Eagle American Eagle American Eagle American Eagle American Eagle Hebei Airlines Hebei Airlines Hebei Airlines Hebei Airlines Hebei Airlines Corporate Air Universal Asset Mgmt Nolinor Aviation Rand Merchant Bank Rand Merchant Bank Deborah C Aharon American Eagle American Eagle American Eagle American Eagle American Eagle Sun-Air of Scandinavia Eznis Airways American Eagle American Eagle American Eagle American Eagle American Eagle US Air Force Special Ops Delta Air Lines Automatic A J Walter Aviation Emirates Airline Aughrim American Eagle American Eagle American Eagle American Eagle American Eagle American Eagle Unconfirmed Malian Aero Company Unconfirmed Air Capital Group airberlin Transaero American Eagle American Eagle American Eagle American Eagle American Eagle American Eagle European Air Transport British Airways Swiss European Air Lines American Airlines Atlas Air FedEx Brit Air American Eagle American Eagle American Eagle American Eagle American Eagle American Eagle Air France TRIP FinnComm Airlines Air Capital Group Air Capital Group Air Capital Group AeroTurbine MFP Aeronautics Midair American Eagle American Eagle American Eagle American Eagle American Eagle GippsAero Allegiant Air Ryanair Ryanair ICBC Leasing

Event Remarks Pur'd - subject to lease Pur'd - parked Pur'd - subject to lease Pur'd - parked Pur'd Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd off lease/term complete Pur'd off lease/term complete Pur'd Pur'd Pur'd Pur'd - parked Pur'd - parked Pur'd Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - parked Pur'd Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - sale leaseback on del Pur'd Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd Pur'd Pur'd - parked Pur'd - parked Pur'd - sale leaseback on del Pur'd - parked Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - parked Pur'd - sale leaseback on del Pur'd - subject to lease Pur'd - sale leaseback on del Pur'd - parked Pur'd - parked Pur'd - sale leaseback on del Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback on del Pur'd Pur'd - sale leaseback on del Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - parked Pur'd - parked Pur'd - sale leaseback on del Pur'd - sale leaseback on del Pur'd

AFM76_Data revision_AFNM 29/11/2011 12:46 Page 61

November-December 2011 AFM • ISSUE 76 | 61

INDUSTRY DATA: FLEET FINANCE, FIRM ORDERS, AIRCRAFT TRANSACTIONS, LIST PRICES AND LEASE RATES AIRCRAFT TRANSACTIONS – Western built jets and turboprops 16 Aug to 5 Oct 2011 Contract Date 26/09/2011 26/09/2011 26/09/2011 26/09/2011 26/09/2011 26/09/2011 26/09/2011 26/09/2011 26/09/2011 27/09/2011 27/09/2011 27/09/2011 27/09/2011 27/09/2011 27/09/2011 27/09/2011 27/09/2011 28/09/2011 28/09/2011 28/09/2011 28/09/2011 28/09/2011 28/09/2011 28/09/2011 28/09/2011 28/09/2011 28/09/2011 28/09/2011 28/09/2011 29/09/2011 29/09/2011 29/09/2011 29/09/2011 29/09/2011 29/09/2011 29/09/2011 29/09/2011 29/09/2011 29/09/2011 29/09/2011 29/09/2011 29/09/2011 29/09/2011 29/09/2011 29/09/2011 30/09/2011 30/09/2011 30/09/2011 30/09/2011 30/09/2011 30/09/2011 30/09/2011 30/09/2011 30/09/2011 30/09/2011 30/09/2011 01/10/2011 01/10/2011 01/10/2011 01/10/2011 01/10/2011 03/10/2011 03/10/2011 03/10/2011 03/10/2011 03/10/2011 03/10/2011 03/10/2011 03/10/2011 03/10/2011 03/10/2011 03/10/2011 04/10/2011 04/10/2011 04/10/2011 04/10/2011 04/10/2011 04/10/2011 04/10/2011 04/10/2011 04/10/2011 04/10/2011 04/10/2011 05/10/2011 05/10/2011 05/10/2011 05/10/2011 05/10/2011 05/10/2011

S/N 153 145736 145742 145743 145079 145093 145182 145200 UE-74 49325 34991 145710 145748 145752 14500849 145740 145788 1123 1135 E2136 24694 29730 145044 145058 145074 145108 145111 145117 145148 277 0164 4814 4828 24530 30183 34989 34990 3742 145685 14500853 14500883 14500902 14500906 14500911 145069 4821 24655 36802 23719 36199 145064 145068 145222 145225 145764 145785 230 23778 24219 25300 23961 0234 957 145629 145631 145647 145656 145422 145432 145433 145437 045 2014 24858 25310 145425 14500835 14500846 14500858 14500866 14500869 145092 145417 49927 145469 145471 145487 145521 145525

A/C Model Bombardier (de Havilland) DHC-6 TO Embraer ERJ-140 Embraer ERJ-140 Embraer ERJ-140 Embraer ERJ-145 Embraer ERJ-145 Embraer ERJ-145 Embraer ERJ-145 Hawker Beechcraft 1900 Boeing (McDonnell-Douglas) MD-80 Boeing 737 (NG) Embraer ERJ-140 Embraer ERJ-140 Embraer ERJ-140 Embraer ERJ-145 Embraer ERJ-145 Embraer ERJ-145 Airbus A330 Airbus A330 BAE SYSTEMS (HS) 146 Boeing 737 (CFMI) Boeing 747 Embraer ERJ-145 Embraer ERJ-145 Embraer ERJ-145 Embraer ERJ-145 Embraer ERJ-145 Embraer ERJ-145 Embraer ERJ-145 Airbus A300 Airbus A320 Airbus A320 Airbus A320 Boeing 737 (CFMI) Boeing 737 (NG) Boeing 737 (NG) Boeing 737 (NG) Bombardier (Shorts) 360 Embraer ERJ-140 Embraer ERJ-145 Embraer ERJ-145 Embraer ERJ-145 Embraer ERJ-145 Embraer ERJ-145 Embraer ERJ-145 Airbus A320 Boeing 737 (CFMI) Boeing 737 (NG) Boeing 747 Boeing 777 Embraer ERJ-145 Embraer ERJ-145 Embraer ERJ-145 Embraer ERJ-145 Embraer ERJ-145 Embraer ERJ-145 Airbus A330 Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 757 Boeing 767 Airbus A320 BAE SYSTEMS (Jetstream) Jetstream 31 Embraer ERJ-140 Embraer ERJ-140 Embraer ERJ-140 Embraer ERJ-140 Embraer ERJ-145 Embraer ERJ-145 Embraer ERJ-145 Embraer ERJ-145 Saab 2000 BAE SYSTEMS (HS) ATP Boeing 737 (CFMI) Boeing 737 (CFMI) Embraer ERJ-140 Embraer ERJ-145 Embraer ERJ-145 Embraer ERJ-145 Embraer ERJ-145 Embraer ERJ-145 Embraer ERJ-145 Embraer ERJ-145 Boeing (McDonnell-Douglas) MD-80 Embraer ERJ-140 Embraer ERJ-140 Embraer ERJ-140 Embraer ERJ-140 Embraer ERJ-140

Owner Variant Reg No Name 200 CUnconfirmed LR N852AE American Airlines LR N853AE American Airlines LR N854AE American Airlines LR N612AE American Airlines LR N617AE American Airlines LR N639AE American Airlines LR N643AE American Airlines D ZS-OKM Pavati Trading 82 (MDC) ZS-SUH Gryphon Airlines 800 Winglets EI-ESN Avolon LR N848AE American Airlines LR N856AE American Airlines LR N857AE American Airlines LR N688AE American Airlines LR N656AE American Airlines LR N669MB American Airlines 200 (GE) EI-EJG Cayenne Aviation 200 (GE) EI-EJH Cayenne Aviation 200 N145FF Tronosjet Maintenance 500 G-THOC TAG Aviation 400F (RR) 4K-SW888 Silk Way Airlines LR N600BP American Airlines LR N604AE American Airlines LR N611AE American Airlines LR N622AE American Airlines LR N624AE American Airlines LR N626AE American Airlines LR N633AE American Airlines F4-200 (GE) N277EF Undisclosed 230 (IAE) N164CG AeroTurbine 210 (CFM) N843VA Jackson Square Aviation 230 (IAE) N506VL JSA Aircraft 400 N530WL Willis Lease Finance 700 N739A AAR Parts Trading 800 Winglets EI-ESO Avolon 800 Winglets EI-ESP Avolon 300 N742CC N974AA LR N845AE American Airlines LR N689EC American Airlines LR N699AE American Airlines LR N918AE American Airlines LR N922AE American Airlines LR N928AE American Airlines LR N609DP American Airlines 210 (CFM) N821AV Soundair 300 N380RP MidAmerican Aerospace 800 B-5519 Undisclosed 400 (P&W) N661US Crane Aircraft Partners 200LRF (GE) D-AALG Nomura Babcock & Brown LR N607AE American Airlines LR N608LM American Airlines LR N647AE American Airlines LR N648AE American Airlines LR N660CL American Airlines LR N668HH American Airlines 220 (P&W) OY-GRN Air Greenland 300 N156AW Undisclosed 300QC G-ZAPW Aircraft 24219 200 Winglets (RR) N666A Aircraft Solutions 300 (P&W) HS-BKB Orient Thai Airlines 210 (CFM) F-HGNT Snecma Super EP C-FPSJ Pascan Aviation LR N833AE American Airlines LR N834AE American Airlines LR N837AE American Airlines LR N840AE American Airlines LR N651AE American Airlines LR N652RS American Airlines LR N653AE American Airlines LR N654AE American Airlines AEW 10-045 Pakistan Air Force Freighter (LFD) G-BTPG Atlantic Airlines 400 PH-BDW Willis Lease Finance 500 D-ABJE Classic 500 LR N800AE American Airlines LR N684JW American Airlines LR N687JS American Airlines LR N690AE American Airlines LR N692AE American Airlines LR N694AE American Airlines LR N616AE American Airlines LR N650AE American Airlines 88 N379MS AeroTurbine LR N801AE American Airlines LR N802AE American Airlines LR N804AE American Airlines LR N809AE American Airlines LR N810AE American Airlines

Operator Name Unconfirmed American Eagle American Eagle American Eagle American Eagle American Eagle American Eagle American Eagle Air Ghana Gryphon Airlines Ryanair American Eagle American Eagle American Eagle American Eagle American Eagle American Eagle Alitalia Alitalia Tronos TAG Aviation Silk Way Airlines American Eagle American Eagle American Eagle American Eagle American Eagle American Eagle American Eagle Undisclosed AeroTurbine Virgin America Volaris Willis Lease Finance AAR Parts Trading Ryanair Ryanair Air Cargo Carriers American Eagle American Eagle American Eagle American Eagle American Eagle American Eagle American Eagle Avianca MidAmerican Aerospace Air China Delta Air Lines AeroLogic American Eagle American Eagle American Eagle American Eagle American Eagle American Eagle Air Greenland US Airways Titan Airways American Airlines Orient Thai Airlines Snecma Pascan Aviation American Eagle American Eagle American Eagle American Eagle American Eagle American Eagle American Eagle American Eagle Pakistan Air Force Atlantic Airlines Willis Lease Finance Automatic American Eagle American Eagle American Eagle American Eagle American Eagle American Eagle American Eagle American Eagle AeroTurbine American Eagle American Eagle American Eagle American Eagle American Eagle

Event Remarks Pur'd - parked Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - subject to lease Pur'd Pur'd - sale leaseback on del Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - subject to lease Pur'd - subject to lease Pur'd - parked Pur'd - parked Pur'd - parked Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - parked Pur'd - parked On order-sale leaseback arranged Pur'd - sale leaseback on del Pur'd - parked Pur'd - parked Pur'd - sale leaseback on del Pur'd - sale leaseback on del Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback on del Pur'd - parked Pur'd - subject to lease Pur'd - subject to lease Pur'd - subject to lease Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd off lease/term complete Pur'd - subject to lease Pur'd - subject to lease Pur'd - subject to lease Pur'd - parked Pur'd - parked Pur'd Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd Pur'd off lease/term comp-parked Pur'd - parked Pur'd - parked Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - parked Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback Pur'd - sale leaseback

AFM76_Data_AFNM 04/11/2011 10:26 Page 62

62 | AFM • ISSUE 76 November-December 2011

INDUSTRY DATA: FLEET FINANCE, FIRM ORDERS, AIRCRAFT TRANSACTIONS, LIST PRICES AND LEASE RATES FIRM ORDERS – 16 August to 14 October 2011 Mfr & Type

Variant

Customer

Airbus A318 ACJ (Engines Unannounced) Unannounced non-commercial customer Airbus A319 110 (CFM) Aircraft Purchase Fleet Ltd Airbus A319 110 (CFM) Aviation Capital Group Airbus A319 ACJ (Engines Unannounced) Unannounced non-commercial customer Airbus A319 110 (CFM) Tibet Airlines Airbus A320 200 neo (Engines Unannounced) Jetstar Airbus A320 200 (Engines Unannounced) Jetstar Japan Airbus A320 200 (Engines Unannounced) Qantas Airbus A320 210 (CFM) Lao Airlines Airbus A321 200 (Engines Unannounced) Aviation Capital Group Airbus A321 230 (IAE) Aviation Capital Group Airbus A321 210 (CFM) Nouvelair Tunisie Airbus A330 200F (Engines Unannounced) Avianca Airbus A330 340HGW (RR) Singapore Airlines ATR ATR 72 500 Nordic Aviation Capital ATR ATR 72 600 Air Lease Corporation ATR ATR 72 600 EVA Air ATR ATR 72 600 TRIP Boeing 737 (NG) 800 Winglets UTair Boeing 737 (NG) 900ER UTair Boeing 737 (NG) 900ER Delta Air Lines Boeing 777 300ER (GE) Unannounced commercial customer Boeing 777 200LRF (GE) Unannounced commercial customer Boeing 777 300ER (GE) Unannounced commercial customer Boeing 777 200LRF (GE) Ethiopian Airlines Boeing 777 300ER (GE) Unannounced commercial customer Bombardier (de Havilland) Dash 8400 NextGen Luxair - Luxembourg Airlines Embraer 190 LR GECAS Embraer 195 LR Air Dolomiti Embraer ERJ-135 Legacy 650 Minsheng Financial Leasing Co. Ltd Hindustan Aeronautics Saras Indian Air Force

Order date

Order/ Number Type Swap

Engines at Order

Variant at delivery

Engines at delivery

25/09/2011 15/09/2011 15/09/2011 14/09/2011 02/09/2011 06/10/2011 06/10/2011 06/10/2011 26/08/2011 15/09/2011 15/09/2011 15/09/2011 27/09/2011 15/09/2011 29/09/2011 15/09/2011 09/09/2011 09/09/2011 26/09/2011 26/09/2011 24/08/2011 30/09/2011 22/09/2011 14/09/2011 06/09/2011 19/08/2011 16/08/2011 06/10/2011 29/09/2011 10/10/2011 15/09/2011

Order Type Swap Type Swap Order Order Order Order Order Order Type Swap Type Swap Type Swap Order Order Order Order Order Order Order Order Order Order Order Order Order Order Order Order Order Order Order

Unannounced-Unannounced

ACJ (Engines Unannounced) 110 (CFM) 110 (CFM)

Unannounced-Unannounced

ACJ (Engines Unannounced)

Unannounced-Unannounced

1 3 1 1 2 78 8 24 2 3 7 1 4 15 2 2 10 9 33 7 100 1 6 8 4 2 4 6 5 13 15

CFM56-5B5/3 CFM56-5B6/P Unannounced-Unannounced

CFM56-5B7/3

CFM56-5B5/3 CFM56-5B6/P

110 (CFM) CFM56-5B7/3 200 neo (Engines Unannounced) Unannounced-Unannounced 200 (Engines Unannounced) Unannounced-Unannounced 200 (Engines Unannounced) Unannounced-Unannounced 210 (CFM) CFM56-5B4/3 200 (Engines Unannounced) Unannounced-Unannounced 230 (IAE) V2500-2533-A5SelectOne 210 (CFM) CFM56-5B3/3 200F (Engines Unannounced) Unannounced-Unannounced 340HGW (RR) Trent-772B-60EP 500 PW100-127M 600 PW100-127M 600 PW100-127M 600 PW100-127M 800 Winglets CFM56-7B26E 900ER CFM56-7B26E 900ER CFM56-7B26E 300ER (GE) GE90-115B 200LRF (GE) GE90-110B1L 300ER (GE) GE90-115B 200LRF (GE) GE90-110B1L 300ER (GE) GE90-115B 400 NextGen PW100-150A LR CF34-10E5 LR CF34-10E5A1 Legacy 650 AE 3007-A2 PT6A-67A

Unannounced-Unannounced Unannounced-Unannounced Unannounced-Unannounced

CFM56-5B4/3 Unannounced-Unannounced

V2500-2533-A5SelectOne CFM56-5B3/3 Unannounced-Unannounced

Trent-772B-60EP PW100-127M PW100-127M PW100-127M PW100-127M CFM56-7B26E CFM56-7B26E CFM56-7B26E GE90-115B GE90-110B1L GE90-115B GE90-110B1L GE90-115B PW100-150A CF34-10E5 CF34-10E5A1 AE 3007-A2 PT6A-67A

ENGINE DATA CHANGES 15 August to 14 October 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 Aug 2011 Current mkt full-life value

14 Oct 2011 Current mkt full-life value

% change

15 Aug 2011 Current mkt half-life value

14 Oct 2011 Current mkt half-life value

% change

15 Aug 2011 Current mkt lease rate

14 Oct 2011 Current mkt lease rate

% change

$2.18m $2.38m $2.98m $7.94m $6.24m $6.60m $7.01m $7.36m $7.76m $8.21m $2.05m $3.67m $4.15m $4.19m $6.88m $7.26m $14.07m $26.82m $7.23m $1.70m $6.59m $7.09m $6.54m $7.60m $2.50m $13.29m $14.06m $20.61m $2.50m $3.33m

$2.18m $2.38m $2.98m $8.05m $6.35m $6.67m $7.07m $7.42m $7.82m $8.27m $2.05m $3.67m $4.15m $4.19m $6.88m $7.26m $14.07m $26.12m $7.23m $1.70m $6.59m $7.09m $6.54m $7.60m $2.50m $13.29m $14.06m $20.61m $2.50m $3.33m

0.0% 0.0% 0.0% 1.4% 1.8% 1.0% 0.9% 0.8% 0.8% 0.7% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% -2.6% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

$0.70m $0.90m $1.50m $5.85m $4.15m $4.35m $4.90m $5.20m $5.55m $6.00m $1.00m $2.20m $2.68m $1.00m $3.50m $3.75m $9.35m $20.70m $5.00m $0.60m $3.00m $3.50m $2.50m $3.90m $1.40m $7.80m $8.60m $14.00m $1.40m $2.00m

$0.70m $0.90m $1.50m $5.85m $4.15m $4.35m $4.90m $5.20m $5.55m $6.00m $1.00m $2.20m $2.68m $1.00m $3.50m $3.75m $9.35m $20.00m $5.00m $0.60m $3.00m $3.50m $2.50m $3.90m $1.40m $7.80m $8.60m $14.00m $1.40m $2.00m

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% -3.4% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

$0.025m $0.027m $0.030m $0.070m $0.050m $0.052m $0.059m $0.062m $0.065m $0.067m $0.020m $0.027m $0.033m n/a $0.050m $0.070m n/a $0.210m $0.058m $0.023m $0.060m $0.065m $0.055m $0.050m $0.026m $0.110m $0.120m $0.155m $0.030m $0.045m

$0.025m $0.027m $0.030m $0.070m $0.050m $0.052m $0.059m $0.062m $0.065m $0.067m $0.020m $0.027m $0.033m $0.000m $0.050m $0.060m $0.000m $0.210m $0.058m $0.023m $0.060m $0.065m $0.055m $0.050m $0.026m $0.110m $0.120m $0.155m $0.030m $0.045m

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% n/a 0.0% -14.3% n/a 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%

Data supplied courtesy of Ascend Online Fleets / Ascend V1 database.

AFM76_Data_AFNM 04/11/2011 10:27 Page 63

November-December 2011 AFM • ISSUE 76 | 63

INDUSTRY DATA: FLEET FINANCE, FIRM ORDERS, AIRCRAFT TRANSACTIONS, LIST PRICES AND LEASE RATES STORED AIRCRAFT 14 October 2011 Mfr & type

Fleet Stored

Total Fleet

Fleet Stored %

Seats Stored

Total Seats

Seats Stored%

A.S.T.A. (GAF) Nomad ATR ATR 42 ATR ATR 72 Aerospatiale 262 Airbus A300 Airbus A310 Airbus A319 Airbus A320 Airbus A321 Airbus A330 Airbus A340 Airbus A380 Alenia C-27J Spartan 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 (HP/Scottish) BAE SYSTEMS (Jetstream) Jetstream 31 BAE SYSTEMS (Jetstream) Jetstream 41 Boeing 707 Boeing 717 Boeing 727 Boeing 737 (CFMI) Boeing 737 (JT8D) Boeing 737 (NG) Boeing 747 Boeing 757 Boeing 767 Boeing 777 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) CL-415 Bombardier (Canadair) CL-44 Bombardier (Canadair) CRJ 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 F.27 Fokker F.28 General Dynamics (Convair) 580 General Dynamics (Convair) 600 Gulfstream Aerospace Gulfstream I Handley Page Jetstream (HP/Scottish) 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

9 31 35 4 70 36 25 87 12 24 28 2 1 2 46 4 68 25 17 2 69 22 37 26 136 249 213 53 142 66 66 11 32 9 34 176 4 245 59 9 1 140 15 2 20 1 12 13 62 9 68 55 1 9 1 8 12 1 53 61 58 65 3 48 29 20 58 67 40 28 24 14 1 10 1 51 4 2 1 14 4 14 9 204 16 8 16 3 104

68 356 518 5 350 181 1,310 2,656 668 808 367 61 45 2 162 12 161 65 54 2 237 92 185 155 386 1,728 439 3,780 904 995 931 961 191 68 73 278 192 890 108 73 1 1,025 255 45 105 1 60 51 542 56 980 248 82 188 1 187 382 81 253 260 315 682 3 476 174 100 108 227 186 118 63 69 1 37 1 617 140 65 1 68 46 70 111 1,553 28 20 37 58 402

13.24 8.71 6.76 80.00 20.00 19.89 1.91 3.28 1.80 2.97 7.63 3.28 2.22 100.00 28.40 33.33 42.24 38.46 31.48 100.00 29.11 23.91 20.00 16.77 35.23 14.41 48.52 1.40 15.71 6.63 7.09 1.14 16.75 13.24 46.58 63.31 2.08 27.53 54.63 12.33 100.00 13.66 5.88 4.44 19.05 100.00 20.00 25.49 11.44 16.07 6.94 22.18 1.22 4.79 100.00 4.28 3.14 1.23 20.95 23.46 18.41 9.53 100.00 10.08 16.67 20.00 53.70 29.52 21.51 23.73 38.10 20.29 100.00 27.03 100.00 8.27 2.86 3.08 100.00 20.59 8.70 20.00 8.11 13.14 57.14 40.00 43.24 5.17 25.87

30 1,420 2,090 53 13,156 4,182 2,110 13,346 2,355 6,243 5,756 924 0 20 4,152 147 5,656 426 456 0 1,149 612 1,144 2,539 6,653 31,302 21,929 3,851 31,526 10,841 11,599 2,871 1,425 327 58 11,793 100 34,914 8,678 0 0 6,404 1,188 0 382 0 35 0 1,077 392 3,292 910 0 128 0 532 972 108 602 1,770 1,847 3,227 87 593 447 589 1,713 6,384 1,916 792 1,612 95 0 103 18 950 30 0 14 275 111 19 0 100 3,131 89 252 150 3,312

139 13,747 31,637 79 35,650 21,112 169,093 422,708 125,984 218,347 97,030 28,602 0 20 14,711 315 11,550 669 716 0 4,111 2,517 4,825 17,700 12,525 216,827 42,947 585,149 195,259 151,241 177,006 282,192 5,515 2,452 201 19,248 5,143 127,876 16,221 0 0 47,979 20,910 30 1,001 0 129 38 8,212 2,310 52,251 3,246 0 430 0 13,380 37,246 9,429 1,573 6,980 7,104 33,348 87 4,913 2,050 3,070 3,029 22,292 8,316 2,899 4,038 437 0 337 18 9,674 292 96 14 828 299 116 0 244 5,196 89 316 2,712 11,581

21.58 10.33 6.61 67.09 36.90 19.81 1.25 3.16 1.87 2.86 5.93 3.23 100.00 28.22 46.67 48.97 63.68 63.69 27.95 24.31 23.71 14.34 53.12 14.44 51.06 0.66 16.15 7.17 6.55 1.02 25.84 13.34 28.86 61.27 1.94 27.30 53.50

13.35 5.68 0.00 38.16 27.13 0.00 13.11 16.97 6.30 28.03 29.77 3.98 2.61 1.15 38.27 25.36 26.00 9.68 100.00 12.07 21.80 19.19 56.55 28.64 23.04 27.32 39.92 21.74 30.56 100.00 9.82 10.27 0.00 100.00 33.21 37.12 16.38 40.98 60.26 100.00 79.75 5.53 28.60

Data supplied courtesy of Ascend Online Fleets / Ascend V1 database

AFM76_Data_AFNM 04/11/2011 10:27 Page 64

64 | AFM • ISSUE 76 November-December 2011

INDUSTRY DATA: FLEET FINANCE, FIRM ORDERS, AIRCRAFT TRANSACTIONS, LIST PRICES AND LEASE RATES LIST PRICES AND LEASE RATES Manufacturer

Type

Average List Price

CMV Oldest

Dry Lease Rate Newest %Change

Oldest

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

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

$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

$7.00m $2.00m $4.50m $12.00m $11.00m $4.00m $11.95m $19.50m $42.00m $25.00m $15.00m $18.00m $54.00m $60.00m $147.00m $7.90m $2.50m $4.00m $2.70m $11.00m $15.30m $19.70m $18.90m $32.90m $18.50m $6.50m $4.50m $9.00m $21.80m $42.00m $90.00m $43.50m $86.00m $10.00m $0.50m $1.00m $1.50m $2.00m $1.60m $5.00m $2.25m $10.00m $13.80m $3.70m $3.70m $8.50m $4.70m $4.80m $14.00m $16.20m $19.80m $21.10m $3.50m $3.00m $5.30m $5.60m

$12.50m $2.00m $8.00m $24.50m $30.00m $38.65m $18.75m $43.40m $83.75m $97.25m $15.00m $50.25m $76.00m $90.00m $186.00m $11.45m $5.75m $7.55m $5.50m $19.50m $32.10m $40.75m $23.05m $44.40m $54.25m $20.60m $14.50m $58.40m $37.05m $117.75m $135.00m $64.00m $147.00m $105.00m $10.00m $0.90m $2.00m $2.90m $2.00m $2.40m $5.00m $6.60m $21.20m $23.55m $8.50m $15.40m $18.80m $5.25m $8.70m $23.25m $25.05m $29.30m $30.60m $3.50m $3.70m $14.60m $18.50m

$0.140m $0.070m $0.100m $0.125m $0.125m $0.060m $0.150m $0.195m $0.450m $0.330m $0.320m $0.225m $0.525m $0.575m $1.450m $0.105m $0.055m $0.090m $0.055m $0.150m $0.165m $0.235m $0.190m $0.310m $0.350m $0.120m $0.160m $0.205m $0.350m $0.560m $0.810m $0.575m $0.860m $0.150m $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 $0.310m $0.180m $0.375m $0.765m $0.870m $0.320m $0.475m $0.760m $0.835m $1.745m $0.145m $0.090m $0.120m $0.075m $0.200m $0.285m $0.350m $0.220m $0.375m $0.670m $0.230m $0.230m $0.520m $0.430m $0.995m $1.045m $0.705m $1.285m $0.150m $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

0.0% 0.0% 0.0% 0.0% -5.2% -10.8% 0.0% 0.5% -1.3% 0.0% 0.0% -12.9% -2.9% -0.6% 0.6% 0.0% -5.4% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% -4.1% 0.0% 0.0% -3.1% 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%

Seating* %Change (Typical C+Y) 0.0% 0.0% 0.0% 0.0% 0.0% -8.7% 0.0% 0.0% 0.0% 0.0% 0.0% -18.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 2.5% 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%

267 240 240 100 124 150 185 185 250 269 250 269 258 322 250 280 555 117 134 144 104 103 134 154 172 215 347 467 188 158 190 313 313 313 382 350 220 285 144 144 144 109 144 144 50 70 86 37 50 70 37 50 70 82 100 108 80 108 48 70

Data supplied courtesy of Ascend Online

WORLDWIDE FLEET SUMMARY BY REGION — August to October 2011 Region

Net Orders

Delivered new

Leased

Purchased 2nd hand

Undisclosed Africa Asia-Pacific Central America Europe Middle East North America South America

56 14 189 0 179 0 108 4

3 11 80 8 39 21 94 18

0 24 60 9 55 13 220 14

6 31 45 22 67 4 492 22

Fleet as of 24 October 2011 NA 2596 7626 1279 8169 2063 17624 3271 Source: OAG Fleet iNET, October 2011

Project3_Layout 1 07/11/2011 12:12 Page 1

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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