Ernest S. Arvai
The recent history for the business jet market has not been robust, particularly at the low end of the market. The following chart shows deliveries over the last 15 years based on data from GAMA, and AirInsight’s estimate for 2013. The downward trend has continued since the record deliveries in 2008. The question is whether the rapid ramp up from 2004-2008 was a bubble that burst, or an indication of where demand should normally fall? Continue reading
Airbus and Rolls-Royce have combined on a program to enhance the residual values and market viability of the A340-500 and -600, which have been removed from many airline fleets due to unfavorable economics. Rolls-Royce has stepped up with a “four for the price of two” program in which they will guarantee engine maintenance costs at the same level for maintaining two GE90s on a Boeing 777-300ER. This will help bring the economics of the A340-500/600, which suffers from unfavorable engine maintenance costs, in line with two-engined competitors.
In addition, Airbus is certifying the A340-600 to a maximum of 475 seats in all economy seating, in an effort to become a viable replacement for the 747-400 for many carriers currently operating that type, making the aircraft more attractive to ULCC and charter operators. Continue reading
Airlines over time build up reputations for superior service and garner passenger preference. But over time, consumer preferences change, and once they do, carriers must adapt to the more competitive environment.
Singapore Airlines has for years had the highest ratings for customer service in the industry from a variety of rating sources, and for many years was considered the preferred choice for business and leisure travelers who wanted a little extra. That customer preference resulted in the ability of the airline to earn slightly higher yields than most carriers, as it did not have to discount as high a proportion of its fares to fill its seats. Continue reading
The massive aircraft orders at the Dubai Air Show underscored the power shift in the airline industry to the Gulf, as the three large carriers, Emirates from Dubai, Etihad from Abu Dhabi, and Qatar Airways from Qatar, continue to expand and erode the traditional business of European and Asian carriers.
Several factors led to this power shift. First, the immense wealth and ready investment capital created after Richard Nixon took the US off of the Gold Standard for international settlements in 1971 and precipitated the first “oil embargo” that raised prices for energy and resulted in a financial bonanza for the Gulf oil producers, and second, the foresight to take advantage of a geographic position between East and West to diversify from an oil-based economy through massive investments in airlines, aircraft and connecting hubs. The results have been phenomenal, and concern about the growth of these airlines has spread from Europe and Asia, where most of their traffic has derived, to the United States, which appears to be the next target for expansion. Continue reading
Abu Dhabi Aviation, which provides support for oil projects in the Middle East, has ordered 2 Q400s to add to its fleet, which already includes one Q400, one Q300 and two Q200 aircraft. Nadir al Hammadi, their Chairman stated “our operation of Bombardier commercial aircraft spans over 20 years and the acquisition of the Q400 NextGen turboprop, with its exceptional performance and superior payload capability in our challenging operating environment will allow us to serve our customers effectively.”
This order joins orders from Air Cote d’Ivorie, lessor Palma Holding for Ethiopian, and Nok Air for Q400s and Iraqi Airways for a commitment for CSeries.
Airbus & MRO
Companies are often forced to rethink their strategies based on externalities, and we’ve seen a couple of examples of this in the aviation markets this week, at Airbus and SkyWest.
Airbus quietly announced that it was dismantling its MRO network, which it had initially begun some years ago to ensure that some of the best MROs in the world had the capabilities to maintain Airbus aircraft. Their network had 17 members, who have all now been notified that the network was being disbanded.
The operation was not commercial in nature, as Airbus never made any commitments to give work to the network members, but instead it was a process to exchange data and establish benchmarks for maintenance performance. The members of the network, a who’s who of maintenance providers, included Lufthansa Technik, HAECO, SR Technics, ST Aerospace. Of course, since they all compete with… Continue reading