Premium #203 – The Impact of Fuel Price and the Benefits of Re-Engined Aircraft

One of the major attractions of the next generation of aircraft is fuel efficiency. But as the spot price of fuel has dropped in recent years from a high of about $3.25 per gallon to today’s level of $1.05, as shown here, the differential in operating economics narrow considerably.

There are two types of new aircraft being introduced to the market – re-engined models of existing aircraft, such as the A320neo and 737MAX, and all new aircraft, such as the CSeries, MC-21 and MRJ, that will also offer improved aerodynamics and weight savings. How much of a premium will an airline pay for a new model over an older model, and will that require even further discounting by OEMs since lower fuel prices are expected to continue in a market with new supply eclipsing new demand? To examine that, we’ve looked at the new re-engined narrow-bodies from Airbus and Boeing.