21 May 2013

A Mil Mi-2 (Registration unknown) being operated by Transkhimavia has crashed near Seversky, Krasnodar Region, Russia on May 21. The helicopter was carrying out field irrigation flights and made a hard landing. The pilot who was the only person on board suffered minor injuries.

For more information:

Click here to find out why Ascend is the world's most respected provider of aircraft accident information.

Ascend Online Fleets subscribers, click here and view the accident menu

18 May 2013

Latest Accident Alert from the Ascend Air Safety team:

Cessna 500 Citation PT-LPZ (msn 500-0015 built 1972) of BFB Leasing SA Arrendadora has sustained damage after it veered off the runway at Campo de Marte Airport, Sao Paulo, Brazil on May 18, and suffered a right main undercarriage collapse. The four occupants of the aircraft were uninjured in the accident. The aircraft was operating a flight from Sorocaba Bertram Luiz leupolz Airport.
 

For more information:

Click here to find out why Ascend is the world's most respected provider of aircraft accident information.

Ascend Online Fleets subscribers, click here and view the accident menu 

How well do you know the assets you are financing or leasing?

Ascend Market Commentaries offer unique valuation tools to help understand opportunities and risks in the market, answering questions such as:

- What is the fleet composition of the aircraft type?
- What is the aircraft’s standing in the competitive marketplace?
- How do the aircraft historical market value trends look?

Download your FREE complete sample of the April 2013 Bombardier Global Family Market Commentary here

In our recent Ascend 2020 Webcast entitled ‘2013 The Year of the Snakes (and Ladders?)’, we invited the over 300 attendees who tuned in from all across the aviation community to ask our expert panel questions. Chris Seymour, Head of Market Analysis and Rob Morris, Senior Analyst give their insight on one of your questions below.

‘Will the North American commercial jet fleet experience growth in the next ten years or will the next decade be one solely of high replacement and minimal growth for this region?’

The passenger airline fleet in North America has stagnated somewhat over the past few years as the Major airlines in the US in particular have finally recognised the virtue of capacity control. Data from Ascend Online Fleets* indicates that the jet fleet at the end of 2012 numbered some 5,800 aircraft, actually 5% fewer than 5 years previously. The average age is 11.5 years, which is only marginally higher than the global average age. With almost all the 900 deliveries in the past five years being for replacement, only 1,277 of the aircraft in North America are now 15-years or older, although another 1,754 are in the 10-14 year old bracket.

Ascend’s fleet forecast model predicts the fleet to grow 15% to around 6,700 units by the end of 2022. There is a current orders backlog of 1,900 and we predict the eventual delivery of around 3,400 new aircraft and retirement of some 2,500 over that same ten year period. So while we are expecting some element of fleet growth to resume, we do expect the larger element (74%) of new deliveries into the region to be replacement aircraft, as capacity discipline continues to be the by-word for airlines in North America.

Want to know more? Click here for more information on Ascend Online Fleets
 

In our recent Ascend 2020 Webcast entitled ‘2013 The Year of the Snakes (and Ladders?)’, we invited the over 300 attendees who tuned in from all across the aviation community to ask our expert panel questions. Les Weal, Director of Valuations, answers one of your questions below…

‘How does Ascend see the value of the A320ceo being affected when the A320neo comes into production?’

We do not envisage any impact on the base values of the A320ceo with the introduction of the Neo. An important assumption is that the OEM obtains a meaningful premium in the pricing of the Neo compared to the Ceo.

New technology is essential to the success of the commercial aviation sector, with the long lead time there is an orderly introduction into service and hence a known and manageable risk to investors in aircraft. Our future value models incorporate a factor to account for the faster depreciation that aircraft built near the tail end of production so we would see no reason to change our base value models.

Click here for more information on Ascend's valuation and appraisal services.

How well do you know the assets you are financing or leasing?

Ascend Market Commentaries offer unique valuation tools to help understand opportunities and risks in the market, answering questions such as:

- What is the fleet composition of the aircraft type?
- What is the aircraft’s standing in the competitive marketplace?
- How do the aircraft historical market value trends look?

Download your FREE complete sample of the Bombardier Global Family Market Commentary here  

This sample from October 2012 will soon be followed by the most recent (April 2013) Market Commentary – allowing you to gain a full picture of past, current and future market activity for the Bombardier Global Family.

Click here for more information on Ascend Market Commentaries

In our recent Ascend 2020 Webcast entitled ‘2013 The Year of the Snakes (and Ladders?)’, we invited the over 300 attendees who tuned in from all across the aviation community to ask our expert panel questions. Rob Morris, Senior Analyst, answers one of your questions below…

'Are the emerging OEMs a serious threat to Airbus and Boeing's duopoly?'

The emerging OEMs are clearly a threat to the Airbus and Boeing duopoly, but the real question is how big a threat? Bombardier’s development of the CSeries, which competes with Airbus and Boeing’s established single-aisle products at the lower end, has already stimulated Airbus and Boeing to launch the re-engined A320neo and 737Max, which in the absence of CSeries may not have occurred. CSeries will also capture some market which in its absence, would probably have gone to Airbus and Boeing. Looking beyond Bombardier, we also have COMAC and Irkut looking to enter the single-aisle market with their C919 and MS-21. Whilst each of these programmes face development and entry into service challenges, it seems likely that both will deliver on their market proposition and some volume of aircraft will be delivered to airlines, albeit most likely in local and adjacent markets. However, in doing so both OEMs will again impact to some extent on Airbus’s and Boeing’s sales of A320 and 737 family aircraft. They will also have gained experience of design, manufacture and delivery of large commercial which they will leverage into their next programmes, either widebody or single-aisle.

Also, let’s not forget that Airbus was once an emerging OEM, faced with a virtual single-aisle duopoly shared by Boeing and McDonnell Douglas. Airbus was forced to innovate with the A320 (FBW, etc) and continued to innovate to achieve the position it shares with Boeing today. McDonnell Douglas failed to innovate and were forced out of the market (through acquisition by Boeing). To a similar extent Bombardier and Embraer “innovated” their way into the regional market and forced the incumbent OEMs to exit.

Finally, these comments seem to suggest that each market sector can only support two OEMs. However, market volumes today are much larger than historically (both in fleet and new delivery terms) and with growth expected to continue we will see ever larger fleets and more deliveries. The overall opportunity is thus much greater and that suggests there may be space for one or more new entrant OEMs to succeed. It’s really just a matter of when, rather than if.
 

Welcome to the latest weekly Aviation 2020 update from the Ascend team, an exclusive to LinkedIn group members. This week’s edition comes from Paul Sheridan, Head of Consultancy Asia.

In June 2012, the McKinsey Global Institute published research showing the centre of gravity of the world economy and how it has been steadily moving eastwards since 1950. They estimated that it is currently somewhere over Russia and would continue to head east as China and India continue to urbanise. Using the Ascend Online Fleets database we can plot a similar chart. It shows how the centre of gravity (calculated by weighting the numbers of commercial jet aircraft flying in each region by their longitude) of the world’s fleet is currently somewhere over North Africa. Between 1976 and 2001 the COG oscillated in a reasonably narrow band but since 2001 it has been moving to the east. Using Ascend’s fleet forecast, this is expected to move more and more in this direction over the next 20 years. By latitude it has stayed remarkably consistent at around 30 degrees north of the equator. The development of the world fleet is still lagging behind direction of the global economy, due in large part to the relative lack of airport and aviation infrastructure in the east but it is hard to see what will stop this trend from continuing.

Doing the same analysis for leasing companies would show a similar trend but probably with more of a time lag. Assuming that the ILFC sale closes, 30% of the world’s leased fleet will be owned by Asia Pacific companies by the end of 2013 and this number should keep growing. The question is, if the COG of the world’s fleet by numbers and by ownership keep moving to the east, how long before more leasing companies follow suit?

Welcome to the latest weekly Aviation 2020 update from the Ascend team, an exclusive to LinkedIn group members. This week’s edition comes from Chris Seymour, Head of Market Analysis.

The recent failure of several airlines has added more aircraft to the idle fleet – but how has this affected the overall total? A download from Ascend Online Fleets* shows 190 commercial jets going into storage to date in 2013 (this excludes the 787 situation). These aircraft have an average age of 18 years.

However, the fluid nature of the stored total is highlighted by a net increase of just 21 aircraft –less than 1% - to just over 2,240. Aircraft leaving storage or being parted-out have kept the stored fleet at around 10% of the total airline fleet.

A quarter of those newly parked are 737 Classics, taking the idle fleet past 340 and keeping it firmly in the top spot by type. Many of the recent additions came from Batavia Air in Indonesia, typical of a carrier who in previous years would have been expected to build a fleet with used types like the Classic. But the availability of new or young aircraft has reduced demand for the previous generation. The A320 family saw 35 parked, due to the cessation by Bahrain Air and Spanish charter airlines Orbest Espana, plus cutbacks at several smaller European carriers, yet the net total went down by 5 aircraft to 170. 11 were parted out but there is still a very active leasing market as well.

It is difficult to see much of a future for many of the 220 MD-80s, 144 CRJs or 138 747s which lie idle. Yet what about the 31 Airbus A330s? A type in full-operation until very recently, but which has suffered from airline failures, lease returns and early aircraft being replaced. Some part-outs are now occurring, but will the 787 situation lead to a short term need for interim lift?

* Ascend Online Fleets provides access to real-time premium quality aircraft and industry data. It houses instantly-accessible details for over 100,000 commercial aircraft, ranging from regional jets up to the largest widebody airliners – in addition to over 50,000 business aircraft and 80,000 helicopters.

Click here for more information 
 

Welcome to the latest weekly Aviation 2020 update from the Ascend team, an exclusive to LinkedIn group members. This week’s edition comes from Rob Morris, Senior Analyst.

Air India is reported this week to have narrowed the list of bidders for sale and leaseback financing for its seven Boeing 787s down to three operating lessors, with AerCap and FLY Leasing said to be amongst the candidates. A decision on the purchasers is apparently expected by 15 March. At the same time, significant uncertainty remains over any potential solution to the on-going battery problems for the aircraft, with the FAA reportedly expected to respond to Boeing's proposed solution by early next week. It seems likely that the regulator will take much convincing before it even permits test flights and consequently, a return to airline service appears many weeks away yet. This is reflected in airline scheduling with LOT Polish Airlines not expecting a return to service before October at the earliest, and most other operators not scheduling the aircraft before May or June at least. Meanwhile, Boeing continues to build five aircraft per month, with no certainty about when deliveries may resume.

What does seem certain is that Boeing will find a solution, the aircraft will return to service and new deliveries will resume. There is market demand for an aircraft with the economic and performance efficiency offered by the 787. The response of the market to Air India’s RFP indicates that the operating lessors also remain confident that a solution will be found and the aircraft will resume its success path. The 787 isn’t the first new aircraft to experience entry into service issues. And it surely won’t be the last either!

2012 was a good year from the point of view of both safety and insurance. Fatal accident and passenger fatality rates for the year were the lowest ever and, with no major catastrophes, the estimated cost of incurred hull and liability losses in 2012 only just reached $1 billion.

Ascend conducts an annual review of the previous year from both an insurance and safety perspective. The report includes detailed loss and liability data, as well as accident information and analysis.

Click here to read the full report

Welcome to the latest weekly Aviation 2020 update from the Ascend team, an exclusive to LinkedIn group members. This week’s edition comes from George Dimitroff, Senior Analyst.

The biggest news item in the past week, other than the 787’s on-going troubles and the brilliant suggestion that its battery be encased in a steel box to contain fires, has been the US Airways – American Airlines merger. This has been the talk of the town for quite a while now but US had to patiently wait while it’s bride got her house in order through chapter 11 bankruptcy. With this process now more or less complete, the foundations are in place and an agreement has been reached, in principle.

It makes sense for these two carriers to merge, as it is the best way for them to combat the other two giants (Delta and United) – also products of consolidation, as well as low cost independents and overseas competitors. The hubs of the two airlines are largely complementary, with no overlap, however there will inevitably be a lot of network rationalisation and capacity cutting, which is good news for airline profits, bad news if you’re expecting a cheap ticket or an empty seat next to you next time you fly. It is most likely that some of US airways’ hubs such will see some downsizing to become more like focus cities than proper-hubs, with the merged entity no longer needing to undercut American’s direct services out of large cities like New York or LA by providing connections through places like Charlotte.

There will also likely be some fleet rationalisation, with the two airlines having a Noah’s Ark of aircraft types (although this hasn’t been an issue for Delta in the wake of its merger with Northwest). A lot of 50 seat regional jet flying is likely to be scaled back, as well as the retirement of older types like 737 Classics, 767-200ERs, 757s, as well as American’s infamous MD-80s. And of course there remains the decision about whether to take on American’s new (and not too loved) branding or go for an all new image for the merged entity. Despite retaining the name “American”, the management team will largely be from US airways so their flavour likely to have a strong influence, both in the areas of network, fleet planning and marketing.

Flightglobal Pro will keep subscribers updated with the consequences of the US Airways- American Airlines merger story ahead of their competitors, including the latest fleets, finance and routes data. Click here to find out more > http://bit.ly/WF2LCz

Welcome to the latest weekly Aviation 2020 update from the Ascend team, an exclusive to LinkedIn group members. This week’s edition comes from Peter Morris, Chief Economist.

Aviation 2020 is Ascend’s blueprint for the future. It is our challenge to the aviation industry to address the critical factors influencing the future success of all those involved in commercial aviation – over the next decade and beyond. Click here to view the teams outlook on ‘Emissions’, the ‘Aviation Cycle’, ‘Risk Management’, ‘New Markets’ and the ‘Next Generation’ of aircraft.

Time to Take Stock

February is traditionally the time when aviation gets a moment to take stock about business in the previous calendar year, and catch breath as the new year starts to take shape.

The latest IATA data on Global capacity and traffic trends for 2012 reveals a curate’s egg of a business- good in parts. Overall growth in RPK’(passenger traffic)s stood at 5.3%, with ASK (Passenger capacity) growth at 3.9% versus 2011. In terms of regional markets, the ‘good parts’ were generally seen by the airlines in the Middle East, developing markets and South America / Africa (averaging 7-10% passenger growth), and directly reflecting the GDP growth rates of their economies. By contrast N. America and Europe saw generally lower rates of RPK growth(1%, 5%), and Asia Pacific was solid rather than spectacular at 6% growth over 2011. Air freight globally fell by 1.5% year on year.

Looking in to 2013 the expectation of on growth trends appears to be ‘more of the same’, with high fuel prices and weak GDP growth in the western economies expected to last in to 2014, and perhaps beyond. The business stresses that this will place on the fragmented European industry will continue to bring a number of casualties and mergers. Meanwhile the consolidation of the US industry reaches its final stages for the traditional majors, with a AA-US tie up imminent. This US consolidation is likely to see minimal capacity growth and increased airline profitability in 2013.This profitability is certainly urgently needed given their urgent and escalating need for fleet renewal. Where Low Cost competitors round the globe continue to enjoy a competitive cost base, the chances are that they will continue to take market share and stay profitable themselves.

An interesting study by PwC just published estimates that the current level of UK APD is actually costing the country 0.5% of GDP and 60,000 jobs, as passengers and tourists are both deterred by the increased ticket prices, and find strategies such as flying via European hubs to avoid the higher rates. A spectacular own goal.

Chris Seymour, Head of Market Analysis, recently provided his outlook on the business jet market as part of the Forecasting Panel at the International Corporate Jet Finance 2013 conference.

Key themes focused on:

• Deliveries by Region
• Emerging Markets
• Delivery Trends
• New Models

Click here to read the presentation

Paul Hayes, Director of Air Safety, Ascend* discusses the context for the exceptional safety record of 2012.

In 1943 the Curtiss-Wright Corporation delivered a secret report to the U.S. Government on the expected development of commercial aviation after the end of World War II. The report was extremely positive and foresaw very considerable growth in air transport in the coming years. The only negative the company saw was the airline industry’s poor level of safety. It concluded that ‘if the accident rate remains the same as in the 1930s, the expected growth in commercial aviation after the War will result in an unacceptable number of accidents. This will, ultimately, limit this growth.’

In the late 1930s the US airline passenger fatality rate was about one per 50,000 passengers carried (the world passenger fatality rate at this time was probably closer to one per 10,000 passengers carried).

US (and world) airline safety did begin to improve after the War and, by 1950, when US airlines, including major airlines like American, Eastern, Northwest, TWA etc, suffered 15 fatal accidents in which 31 crew and 182 passengers died, the passenger fatality rate was twice as good as in the late 1930s - one passenger fatality per 100,000 carried.

Globally in 1950 there were at least 43 fatal accidents on revenue passenger flights resulting in some 831 passenger fatalities. In 2012 there were just 10 fatal accidents on revenue passenger flights world wide resulting in 362 passenger fatalities. None of the accidents in 2012 involved a US airline, ‘major’ or otherwise. In fact none of the airlines involved in the 2012 accidents is probably known outside the markets it serves.

Airline safety has continued to improve since 1950 and has not only managed to keep up with the huge expansion of air travel but has also got ahead of it, actually reducing the frequency of fatal accidents. In the immediate post-War years, typically, there may have been 40 to 50 fatal accidents involving revenue passengers each year but this has now more than halved to between 10 and 20 a year. Curtiss-Wright’s fear that the public would be driven away from flying by increasing numbers of accidents has thankfully not been realized although, of course, there are still people who are scared of flying.

Last year, 2012, the estimated passenger fatality rate had reached a high of one per 9.9 million passengers carried. This makes 2012 the safest year ever and some 20% better than 2011 when the passenger fatality rate was one per 8.2 million passengers carried; 2011 had itself previously been called ‘the safest year ever.’

Although there were still 10 fatal accidents on revenue passenger flights and 362 passenger fatalities in 2012 and I am sure the general media, as always, ran ‘thoughtful’ stories questioning global airline safety, it will be noted that the passenger fatality rate last year was 100 times better than in 1950 and perhaps 1,000 times better than in the 1930’s.

These numbers probably do not carry much impact by themselves – what, after all, do 100 or 1,000 times better mean in reality? However, put simplistically, without this 100 fold improvement in the passenger fatality rate, 2012 traffic levels, if still exposed to 1950 levels of safety, might have given rise to 1,000 fatal accidents – almost 20 per week or three every single day of the year - killing more than 36,000 passengers.

Would this accident frequency and death toll have limited the industry’s growth or would fatal air crashes have simply ceased to be news? After all a similar number of people are killed on US or EU roads every year and road traffic accidents only get reported by the media in exceptional cases.

However, unfortunately, we do not believe that the world’s airlines have become this much safer this quickly and 2012’s accident rate, perhaps, should be considered currently to be more of a fluke than the new norm. We believe that the underlying global passenger fatality rate is probably about one per six million passengers carried – about three times better than during the 1990s but ‘only’ perhaps 60 times better than the 1950s. Nevertheless, airline safety is continuing to improve rapidly. The industry, on average, probably becomes twice as safe about every 10 years while traffic growth globally is only forecast to be between perhaps 3 and 4% per year over the same period. So, on average, we might expect about 30% fewer fatal accidents a year by 2023.

Meanwhile, 2012’s accident rate has set the air safety bar very high and it may well be that this year (2013) will fall short with a worse rate and more accidents than last year but that would not mean that airlines have suddenly become less safe.

Would people agree that, despite the huge and continuing improvement in airline safety, the general public's perception of the industry is that its level of safety has not improved and that, in some sectors, it has got a lot worse?

Welcome to the latest weekly Aviation 2020 update from the Ascend team, an exclusive to LinkedIn group members.

Aviation 2020 is Ascend’s blueprint for the future. It is our challenge to the aviation industry to address the critical factors influencing the future success of all those involved in commercial aviation – over the next decade and beyond. Click here to view the teams outlook on ‘Emissions’, the ‘Aviation Cycle’, ‘Risk Management’, ‘New Markets’ and the ‘Next Generation’ of aircraft > http://bit.ly/X5DFyh

Flightglobal Pro* reported this week that Pratt & Whitney has completed the airworthiness certification programme for the PW1524G engine that will power the Bombardier CSeries. Once the formal Transport Canada paperwork is finalised, engine certification will be completed and a major milestone for the CSeries programme will be achieved. With pictures of the first flight test aircraft also emerging this week, Bombardier are well on the way to the aircraft’s long awaited first flight, currently scheduled for some time in June.

For Ascend, CSeries remains something of a conundrum. On paper, the performance and economic proposition presented by the 100-130 seat aircraft family appears pressing. Our most recent aircraft demand forecast predicts a significant volume of deliveries for the aircraft over the next 20 years based on this. Yet to date the sales performance appears poor, with the Ascend Online Fleets database showing “only” 173 firm orders from 11 customers. This performance is being judged in the context of the A320neo and 737MAX families, which respectively have more than 1,700 and 1,050 firm orders presently despite being launched quite a while later than CSeries. Balancing this, three months prior to its own first flight in 1987, the A320’s orderbook was remarkably similar to Cseries’ today, with 136 aircraft ordered from 12 customers. Of course, the size and shape of the industry back then was quite different but Airbus at that time was in a similar position to Bombardier today, with no established single-aisle customer base. Once the aircraft has flown, actual performance will become evident and interest from prospects should start to convert into more firm orders.

2013 is a seminal year for CSeries. We look forward to more good news as the year rolls on…………

* Flightglobal Pro puts a wealth of global intelligence at your fingertips, from fleets to finance, routes to regulation and much more. Our global team of specialist editors and data researchers are dedicated around the clock to uncovering the information that really matters to you and your business. Click here for more information > http://bit.ly/WF2LCz

UK airport capacity: current position and future demand

Peter Morris

Chief Economist, Ascend, a Flightglobal Advisory Service

In acknowledgement of the 200th anniversary of the publication of Pride and Prejudice, I must say that it is a truth universally acknowledged that a country seeking to compete in the global economy must be in need of an efficient and viable airport infrastructure.

Universally maybe, but not in Britain. We do things differently here.

Extraordinarily that insular attitude has also meant that we have created or rather perhaps allowed the creation, of one of the most efficient and successful aviation countries in the world over the period 1980- 2000. This saw in the UK a globally competitive growth of passengers, cargo, profitable airlines, privatised airports, new and expanded air routes, and indeed many linked aviation businesses such as my own which specialises in information and consultancy. It was almost magic, since the Public Sector in reality contributed financially very little, and indeed collected billions for the public purse from sales of aviation assets. You had the feeling that when or if various Government players noticed this vibrant sector there was actually disbelief that just by letting go, and by encouraging a liberalisation of airlines and airports there was a successful market result. In this way even the white elephant investment in Stansted was soon forgotten as people congratulated themselves on yet again Britain had apparently got ‘something for nothing’ by simply moving the furniture.

The reality was that the industry efficiency gains were real, prices fell in real terms, routes expanded, customer choice both inbound and outbound soared, and aviation profited as well as the UK economy. Apart from the US, from whose mistakes we learned, I believe we pretty much got there first across the whole field of aviation.

There were however two problems with this revolution.
The first problem was that the basic airport runway infrastructure in London had not really changed, so more and more traffic was squeezed in to finite assets. Scarce assets, such as early morning slots at LHR spiralled in value, if they were available at all. Any spare capacity – moving out to Southend even - started to be used up, and the vexed question of ‘what next’ started to arise. Such a question needed a strategy and investment. In perhaps true UK style the fundamental question of future airport infrastructure has been on the cards, and unanswered, since the 1970’s. Symbolised for me by the fact that over the last decades the average tenure of UK Minister of Transport has been less than a year.

The next problem perhaps echoes the cycle of UK success in the industrial revolution. Other countries learned from the UK model and refined it in a more focussed way. Liberalisation of both air transport and tourism has spread. At the same time that the UK started to look at this air traffic growth as a problem, and to tax and restrict aviation, other countries woke up to the economic benefits of a range of strategies from attracting airlines and traffic to offering multi country Schengen visas to tourists. You might say they learned from us, just as we started stumble and watch other European hubs become much more competitive.

When we look at the proposed topic- ‘a third runway for Heathrow?’, I am reminded of a Buddhist response which is ‘But that is not the question’. What to me is the question we should address here is to define a realistic strategy to accommodate the growth in air traffic (aircraft and people) in London and the South East to 2030 and beyond. It needs to be realistic and efficient in terms of all the stakeholders- investors, air passengers, market trends, airlines, employees, local residents and the airport operator to name but a few.

A very quick look at the numbers. The most recent DfT forecast projects an entirely realistic 2% central growth rate in to the future for UK passengers.

This is driven by economic growth and price trends, and compares with nearly four percent average over past decades. The Department has then heroically attempted to allocate traffic under the constraints imposed by capacity and policy, and the result is shown below.

Growth in London and SE is stifled, and the two passenger and airline preferred airports, Heathrow and Gatwick, spend the last twenty to thirty years of the period rearranging their furniture. That is not a strategy for a market based economy.

So I would use the prerogative of being the first speaker to suggest a few basic precepts:

1. Learn from Others: In such a global business there are plenty of examples both good and bad. One particular benchmark I recall is Montreal Mirabel where the international aircraft were spirited 56km away from the city in 1979. At the time it had the biggest airport land area in the world. After twenty years an airport liked neither by passengers or airlines closed.

2. Keep it feasible: Aviation is largely commercial public transport whose ownership in the UK has been privatised. There is no ‘public money’ so the plan must work for the stakeholders- investors operators and users.

3. We start from here: Nobody would now I think start to build an airport on the SW side of London, with prevailing SW winds. But we did and there is a lot of linked human and physical capital tied up in SW London- from the pilots to the petrol pump attendant, shop worker or teacher, to the businesses that rely on LHR access.

4. Some of us are going to have to agree to differ: I favour evidence based policy, rather than policy based evidence, and I appreciate that some folks believe that aircraft are noisier nowadays, and do not care about economic benefits.

5. There is a real problem here: There is already an estimated level of damage to the economy of around GBP1Bn pa through the inefficiency of the London airport infrastructure . We have had decades in which inefficiency has been repeatedly layered in to schedules for passengers and airlines, and still further delays occur.

So having started with Jane Austen and History, I feel I ought to bring things rather more up to date with a lyric from a song by the Eagles. It is entitled ‘Do something’. The lyric is ‘Do something, It's not over No, it's never too late’. Let us hope so.
 

Hear the Ascend Consultancy Team’s thoughts on the medium and long term outlook for the 737 family.

Download your sample copy of the B737-800 Market Commentary from the Ascend Consultancy team.

Click here to read the sample report > http://bit.ly/SInJoe

Keep on top of the latest changes and developments in the market with Ascend's suite of Market Commentary reports. 

For more information visit > http://bit.ly/UrkEG8

An Agusta 109 has crashed after apparently colliding with the top of a 770ft tall jib crane at Vauxhall, Central London. After the collision the helicopter fell into the street below, reportedly hitting two cars, and was destroyed by fire. It is believed the pilot, the only person on board the helicopter, died in the accident. It has also been confirmed that 2 people have died so far. Photos of the crash site show the top of the crane extending into the base of the low cloud.

We will be realising more information once more is known.

Paul Hayes, Director of Air Safety, Ascend
Ascend – A Flightglobal Advisory Service

Welcome to the latest weekly Aviation 2020 update from the Ascend team, an exclusive to LinkedIn group members.

Aviation 2020 is Ascend’s blueprint for the future. It is our challenge to the aviation industry to address the critical factors influencing the future success of all those involved in commercial aviation – over the next decade and beyond. Click here to view the teams outlook on ‘Emissions’, the ‘Aviation Cycle’, ‘Risk Management’, ‘New Markets’ and the ‘Next Generation’ of aircraft > http://bit.ly/X5DFyh

The early days of January requires the Ascend Valuation team to update our Market value opinions for all of the ‘in production’ aircraft types, as we introduce the market values for the new year of build and the consequential impact on the other vintages particularly those built in the previous few years. One of the most notable traits we have been witnessing for 20 plus years is the lack of inflation in new aircraft values. This trend can be observed by accessing the Ascend Values* analyser and construct 0 constant age charts for any aircraft with a reasonable production run. During downturns the market values for new aircraft are impaired but even in bull markets the upside appears to be limited.

Constant age value charts by removing an element of depreciation allow values to be seen against the underlying market conditions particular economic growth and fuel prices, the former of which has been distinctly anaemic in the developed world and leading traffic generating regions since the ‘lehman crisis’ over 4 years ago. The US avoiding the ‘fiscal cliff’ and cargo traffic in late 2012 showing signs of life potentially bodes well for improved economic growth in 2013. As such this may herald a change in direction for lease rates and values during the year, though it is important to remember that even a 5% market value increase is a minimum needed to offset annual Base value depreciation for the strongest assets.

* Ascend Online Values provides dynamic values data from the industry’s foremost appraiser. This intuitive online online service lets you tailor searches by specific serial number of aircraft type, bolstered by around a thousand updates every month. Choose the value of a single aircraft or engine, or specific or generic aircraft, all easily downloaded by our Enquiry Service into several formats. Click here for more information > http://bit.ly/ZATbSl 

 Welcome to the first in the series of weekly Aviation 2020 updates from the Ascend team, an exclusive to LinkedIn group members.

Aviation 2020 is Ascend’s blueprint for the future. It is our challenge to the aviation industry to address the critical factors influencing the future success of all those involved in commercial aviation – over the next decade and beyond. Click here to view the teams outlook on ‘Emissions’, the ‘Aviation Cycle’, ‘Risk Management’, ‘New Markets’ and the ‘Next Generation’ of aircraft > http://bit.ly/X5DFyh

The ‘Aviation Cycle’ implies that certain events or situations will come round full circle and repeat themselves.  The airline profit and loss cycle is one good example, with the fluctuation from good years to bad years and then back again, illustrating the airline world’s sensitivity to the global economy, fuel prices, market trends and evolving traffic patterns.   Alitalia, having arisen from the ashes of a difficult restructuring in 2008 is, according to the Repubblica daily, back on the verge of bankruptcy, with daily losses of over €600,000 a day adding to a 730 million euro deficit accumulated over four years under private ownership.  Under such circumstances the airline is a candidate for some serious restructuring, possibly through a deal with Air France-KLM, which already owns 25% of Alitalia.  According to Ascend Online Fleets* data, Alitalia’s fleet of 137 active jet aircraft is relatively modern and fuel efficient, being on average only eight years old (with another 30 on order).  The airlines problems therefore don’t appear to lie with the fleet.  And it’s not just Alitalia.  LOT Polish Airlines, which lost $348 million between 2008 and 2011, has just received a $130million loan from the Polish Government to see it through the winter season.  LOT, the first European airline to take delivery of a Boeing 787, will present a ‘rescue plan’ by the end of the first quarter.  Further afield, on the back of seven straight years of losses, PIA of Pakistan has sought a third round of Government assistance, asking for $313 million, partly to help fund 12 new aircraft leases.  But as Alitalia has shown, fleet replacement alone will not turn around the fortunes of an airline.  Meanwhile, at another point in the ‘Aviation Cycle’, Emirates has announced the addition of a second daily flight by Airbus A380 from Dubai to both New York and Paris, in response to ‘customer demand’.  The strong grow stronger…       

* Ascend Online Fleets allows users to analyse the aviation market with instant access to real-time, premium quality aircraft and industry data. The world’s leading aviation companies, including the top 20 lessors, use Ascend Online to understand the market and manage their expose to the aviation cycle. Click here for more information: http://bit.ly/9SgVx1

As uncertainty continues to prevail over global economies, airlines have seemingly been able to defy gravity again with global passenger traffic growth in excess of 5%. With traffic growth still ahead of capacity, load factors continue to grow. Although fuel prices are still high, they are at least stable and IATA now predict breakeven or net profits at an aggregate level for every global region this year. Demand for new aircraft has remained strong, and with a couple more weeks remaining in December our Ascend Online Fleets database indicates that Airbus and Boeing have already delivered more than 1,100 new aircraft this year with another 40 or so to follow by year end. Add in Bombardier and Embraer and we expect around 1,300 new jets in total to be delivered in 2012. However, the same source shows nearly 2,150 new aircraft orders to date in 2012 and with further announcements like the Pegasus A320 order for 75 A320neo not included, the total could yet grow further. Consequently, the firm order backlog which opened the year at 8,780 aircraft, equivalent to 43% of the operating fleet, has grown further and at the current 9,435 aircraft, represents 44% of the operating fleet. The stored aircraft fleet still appears significant, having grown by around 100 aircraft through the year to 2,555 units, but most of these are ageing, economically redundant aircraft which we do not expect to see return to service. In that context, we have already recorded the permanent retirement of more than 500 jet aircraft this year and nearly 50 of these were less than 15 years old when they “met their maker”. The overall average age of these permanent retirements is 26.7 years, although when adjusted for storage prior to retirement this reduces to 24.4 years. Back in 2008 the average age of permanent retirement was 31.5 years. There seems to be clear evidence that the average economic life of commercial jet aircraft is presently reducing. Whether this is a cyclical or structural trend remains to be seen, but we are sure this is a debate that will run for some time yet.

So what of the outlook for 2013? IATA predicts traffic will continue to increase, although passenger traffic growth of 4.5% is slightly below this year’s figures. Although yields are expected to reduce slightly, they still see global net profits increasing from $6.7 billion this year to $8.4 billion. With uncertainty over global economies continuing, there must be some risk to this forecast and for now 2013 looks like “more of the same”. Ditto for.... to read further please click here to download >

What impact has neo had on the A320 orderbook?

Are market lease rates as weak as pundits are suggesting, or are they actually increasing (net of interest rates)?

How have values trended since 2010?

What is the immediate future for low specification, early build A320 'classics'?

Is the Asian market really bigger than North America and Europe combined for the A320?
 

Ascend's Market Commentaries are specialist reports exploring global market trends and recent transactions.  They contain expert opinion from our respected advisory team, who also reflect on anticipated future activities for each aircraft programme.

Download your complimentary copy of the A320-200 market commentary here

News services have been alive in the past few days and weeks with concerns over the future of Kingfisher Airlines, culminating with reports that the Indian Directorate General of Civil Aviation (DGCA) has issued an audit of the airline indicating that it should be wound up. Although this seems unlikely in the immediate future, reports continue to surface of concerns over the airline’s financial health and it does seem likely that some element of fleet downsizing will be necessary over the next few months to support the airline’s survival.

According to the Ascend Online Fleets database Kingfisher currently operates a fleet of three Airbus A319, 21 A320, eight A321 and five A330 aircraft alongside a regional fleet of two ATR42s and 23 ATR72s. In addition the airline holds firm orders for 68 A320s, 15 A330s, five A350s and five A380s. There was also an order for 38 ATR72s but ATR reported earlier this week that it has removed those commitments from its orderbook, describing the airline as an “unreliable customer”. So should we be concerned that a failure of the airline might create an immediate capacity surplus at a time of general market uncertainty for the global airline industry?

Looking first at the operating fleet, all 37 aircraft are owned by a diverse group of operating lessors including AerCap, Air Lease Corporation, AWAS, Aviation Capital Group, BBAM, BOC Aviation, DAE Capital, ILFC, Pembroke Group, RBS Aviation Capital and Volito Aviation Services. The single-aisle exposure is greatest at ILFC with six A320s and one A321, and AWAS with one A320 and four A321s but no single lessor currently carries significant exposure in the event of a sudden airline failure. A quick check of current aircraft availability advertised in the Airfax monthly newsletter shows there are presently 23 A319s, 23 A320s and seven A321s offered for near term sale or lease. Although the addition of the entire Kingfisher single-aisle fleet to this inventory would be an unwelcome event, the numbers do not appear significant enough to make an impact on the market by themselves. The position is similar with the A330-200s with three aircraft currently leased from DAE Capital and two from Pembroke Group. A330-200 availability is currently very limited with only one aircraft offered for lease in June this year, so the industry should have no problem with absorbing this additional capacity if it were to arrive on the market.

The backlog may appear more of a problem for Airbus, but the database indicates that only three of the A320s are scheduled for delivery in 2012 and with no serial number allocations yet evident, production is possibly not scheduled as yet. So Airbus should have no issue with reallocating these slots, particularly in view of their current backlog which today still includes another 1,560 A320 aircraft (excluding NEO variants) of which 341 are scheduled to be delivered in the remainder of 2012. The remainder of the A320 backlog is scheduled from 2013 through to 2018, so while the loss of these 67 orders would not be welcome, the impact will not be immediate and Airbus will have plenty of time to mitigate the loss of the order. Likewise, the first A330 delivery is not scheduled until 2014,the first A380 in 2017 and the first A350 in 2019, but there would be plenty of opportunity to mitigate these order losses.

On first impressions, the potential failure of an airline of the stature of Kingfisher Airlines may cause concerns in the market and will certainly cause some issues for particular leasing companies in the short-term, yet the longer-term impact on the commercial aircraft supply side does not appear significant.

Debris from failed Soyuz launch of the Meridian 5 communications satellite (see headline) caused a bit of damage as it fell back to Earth.  Parts of the satellite and launch vehicle which survived re-entry included a 5kg titanium pressure vessel which reportedly smashed a hole through the roof of a house in the village of Vagaitsevo, 100 kilometers from the city of Novosibirsk in Siberia.

The homeowner, Andrei Krivorukov, whose family lived at the house was intent on making a claim against Russian Space Forces or Roscosomos but could not wait for them to repair the hole in his roof – well it is jolly cold in a Russian winter – so he did it himself.  By the way, what was the launch-damaged house’s apt address?  No 5A Cosmonaut Street.

Every generation has a moment where people can ask 'Where were you when you heard?'

The generation before mine always remember where they were when they heard that JFK was shot, and the generation after mine always remember where they
were when they heard that Princess Diana had died.

But there is one event that eclipses both these events, and crosses all generations; the horrific events of September 11th 2001.

I'd just arrived back from a long weekend plane spotting in Stockholm when I heard. I'd dropped my bags and made myself tea when I turned on the TV to watch the live coverage unfold in front of me. I sat in stunned silence, the tea almost dropping from my hands as I sat motionless for several hours, my mouth aghast, unable to properly process what was happening.

A friend of mine, a fellow plane spotter, was in Los Angeles at the time, having arrived the day before for a few days plane spotting before flying off to the NBAA in New Orleans.

He remembers waking up in a hotel around the airport perimeter to silence, an usual thing for a major international airport. Looking outside he could see the airport was at a standstill. Thinking something might be up he went downstairs into the hotel lobby to find a mass of people huddled around the only TV available. Some were crying, others just stood in shock, but nobody could believe what was happening.

Another friend of mine, now working in the airline industry, was 19 at the time and on a college trip outside of her native Manila when she heard. Her thoughts echoed that of so many others; worrying about her family and whether it was the start of another world war.

And we were at war, but this time we were at war with an unseen enemy.

In the days, weeks, months and even years following, aviation went through many changes. The US Department of Homeland Security created the much maligned TSA; the agency responsible for security at airports, and for putting Air Marshalls on-board aircraft. All around the world security tightened, not only at airports, but also at ports and offices; the world we knew it had changed forever.

On September 11th 2001 we all stood still and watched as the world around us changed. A total of 2,977 innocent people lost their lives in the attacks, including 411 true heroes from the NYFD, NYPD, Port Authority Police Department and EMT's who bravely and courageously tried to rescue people and fight fires.

This coming Sunday, marks the 10 year anniversary of those horrific attacks, and I hope you’ll join us all in observing a moments silence at 08:46 EST / 13:46 BST to remember those that were so tragically lost.

9/11 touched us all in many ways, and everybody has a different story to tell about where they were and we’d love to hear from you in the comments box below about where you were on that day and how you found out

Keep on track of Paris Air Show orders and activity with live updates from the Ascend team... 

 View pictures live from the air show > www.flickr.com/photos/ascendaviation 

Airbus continues to see unprecedented interest in its A320 New Engine Option (NEO) aircraft on the third day of the Paris Air show. A day of incessant rain did little to discourage the stream of orders coming in. Boeing's European rival signed a memorandum of understanding (MOU) with recently-merged AviancaTaca for 51 A320s, including 33 A320NEOs today. The agreement will result in the largest NEO order in Latin America. The choice of engines will be decided upon shortly.

Chilean carrier LAN Airlines, meanwhile, became the first airline in the region to sign a firm order for the A320NEO. Engine selection will be announced by the airline at a later date. The purchase agreement brings LAN’s total Airbus orders to more than 170 aircraft and follows on the heels of LAN’s purchase of 50 A320 family aircraft last December.

Republic Airways Holdings, Inc. has also become a launch customer for the A319NEO, with its MOU for 80 A320NEOs, comprising 40 A320NEOs and 40 A319NEOs. The parent company of US-based Frontier Airlines selected CFM International’s LEAP-X engine for all 80 new aircraft.

ALAFCO, the Kuwait-based leasing group, signed an agreement for 30 A320NEOs today, following the placing of an earlier firm order for six A350-900s. The Kuwaiti airline has already ordered 26 A320s of which 25 have been delivered.

Finally, Airbus has seen IndiGo firm up the orders it placed in January 2011 for 30 A320s and 150 A320NEOs. Worth USD 16.2bn at list prices, the deal is largest single aircraft order in history. The A320s will be delivered until 2015, while the NEOs will arrive from 2015 until 2024.

Russian airline UTair sealed a deal with Boeing to purchase 40 Boeing 737NGs, comprising 33 737-800s and seven Boeing 737-900ERs. Deliveries will are slated to take place from 2013 until 2016. The deal will be financed through a consortium of commercial banks and EXIM Bank.

ATR brought Ecuadorian airline TAME on board as a new client. The South American group signed an order for three ATR 42-500s at ATR’s chalet in the Air Show grounds this morning. The deal was valued at USD 54m and will be financed by the Ecuadorian government, which has full ownership of TAME. Deliveries will occur in September and October this year, culminating in February 2012.

Minutes later, NAC chairman Martin Møller signed for 10 ATR 72-600s, with options for an additional 10 aircraft. More details on the deal can be found in the article released earlier today on Aviation Exchange.

Metz-based French manufacturer GECI Aviation saw Indonesian group PT Sky Aviation sign an MOU for 10 Skylander SK-105s, with a further 10 options.

Privately-owned Thai airline Kan Air, meanwhile, signed an MOU for two Skylander SK-105s, with three options.

Malaysian airline group Transasia Resources made a firm order for eight Skylander SK-105s and a further four options.

By Fay Sanders, with additional reporting from James Mellon and Marc Payne

How times change. The business aviation market seems to be hitting recovery mode, judging by the party atmosphere across both exhibit halls at EBACE’s Geneva Palexpo Centre. A general buzz surrounded stands staffed by OEMs such as Bombardier and Hawker-Beechcraft right through to charter operators and MRO companies. A larger attendance than previous years joined the 60 odd business aircraft on display in the static park, with representation by all manufacturers and models.

While not hosting high-profile new aircraft announcements that NBAA did last October, there were some new aircraft developments with Dassault launching their Falcon 2000S variant, a shorter-range and lower list price -2000LX. The aircraft has been in development for ‘1 to 1.5 years’, and continues to put-back launch of the new-build super mid-size ‘SMS’ model. The aircraft aims to compete with Bombardier’s Challenger 300. According the Ascend Online Fleets Database, there are 447 Falcon 2000 aircraft in service today (227 base-2000s, 4 -DXs, 26 –Exs, 119 –EX EASys, 70 –LXs, and 1 -S). During 2010, 29 Falcon 2000 aircraft (all LXs) were delivered, compared to just two deliveries in Q1 2011,

Meanwhile, the Canadian manufacturer Bombardier was also busy launching the new Global Vision cockpit, to become standard on the Global Express XRS (now re-named the Global 6000). Eight of the popular type were delivered in Q1 2011 and 40 throughout the whole of 2010. Today, there are 279 Global Express aircraft in service (6 –ASTORs, 133 –XRSs, 1 -6000, and 139 –base models).

Post-EBACE, attendees have alluded to the success of the event, but some feel there is still just a lot of ‘positive talk and spin’. For many, the real recovery will be underway when the light, to medium segments of the market follow the example of the top-end, which will see values recover as the significant numbers of business jets available for sale begin to trade.

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Stay tuned for specialist Ascend insight videos and interviews with Cessna, Hawker Beechcraft and Embraer from the EBACE show.

The first ISTAT China conference was a sound success attracting more interest than the organisers have hoped. Some 250 delegates represented Chinese lessors, banks and law firms as well as Western banks, lessors, appraisers and OEMs. Only a handful of airlines attended and none of the Chines OEMs were present.  

Please follow this link to access real time news on the aviation industry: http://www.ascendworldwide.com/news-and-events/aviation-exchange-news/

Aircastle, the global leasing firm, has just closed on the acquisition of a Boeing 747-400 which it will convert into a freighter, two sources close to the matter told this news service.

Dublin-based Orix Aviation was acting on behalf of the unnamed seller of the aircraft, both sources confirmed.

It is understood that the transaction was paid for entirely with cash, with the possibility of debt financing being sought at a later stage. 

By Fay Sanders, Editor

 

When we set up Ascend some five years ago, we set out to create a company that had a different kind of relationship with its clients.  We set out to be explicitly client led and innovation driven.  In recent months you’ve told us about the challenge of finding relevant, credible opinion about the stories that count in our industry – stories about the companies, the deals and the people who make them happen.  Increasingly our world of blogs, twitter feeds, newsletters and websites resembles a news experience akin to drinking from a firehose – it’s possible, but its overwhelming.  We face the same issue at Ascend – we surf a dozen sites and sift through a maddeningly increasing pile of news litter to find nuggets of value.  In response to your requests we set out to create a different kind of news coverage – one based around community.

Ours is a business built on community.  A few years ago we asked you about the drivers for change you cared about.  Your responses led to the creation of Aviation 2020; our manifesto for the aviation industry.  You wanted us to cover emissions legislation, the aviation cycle, risk management, new geographies and new aircraft types.  We used your advice as the template for our company’s strategy, opening offices in Asia, launching a risk advisory practice and providing increasingly sophisticated advice on how to manage through the aviation cycle.  We also looked at new ways to build our community, reaching out through webinars, social media, global business briefings, Beer and Bangers events in London, our lunchtime lecture series in New York, and more one to one interactions with our global network of over 5,000 customers.  Our news coverage is an extension of community – extending our ability to comment on the stories that matter to you.  We comment on the aviation 2020 agenda and the people who make things happen.  It’s not the stuff that sells advertising.  It’s the stuff that moves markets.  It’s what you’ve always come to Ascend for.

We are acutely conscious however, that we occupy a unique position of trust with you, our customers.  The very first statement of our company’s values statement says it all: “to betray our customer’s confidence is unthinkable”.  To maintain the confidentiality of our customer relationships, yet to be able to provide you with the news that matters to you we set up an independent, central London-based news team headed by Fay Sanders, an experienced hard charging journalist from the innovative mergermarket stables (now part of the FT group); the folks who revolutionised news reporting in the M&A markets.  Her stories appear here on our blog pages. The market has already heard her voice and she is fast picking up a loyal following.  I love to hear what you think.  Read her blogs and let me know. 

Obviously the large amount of data held by Ascend in the ASO database does not get there by itself. The data team work in their respective work areas (we tend to split by aircraft class or OEM) going through hundreds of documents daily to capture ownership changes, finance transactions, leases, upgrades and much more. We also get out from behind the computer visiting trade shows, OEM’s, agencies and customers.

Recently I had the chance to travel to Switzerland to visit Pilatus and look at the PC12 program in some detail. One advantage of being based at Heathrow is the ease with which you can plan such trips. An early start saw me getting the first flight of the day down to Zurich, followed by a train trip to meet my contact and make our way to the factory.

Two Pilatus owned aircraft on the ramp, one used for avionics development, the other in use as a crew trainer

Pilatus are a major player in the GA field now, the PC12 is well established in the market and continues to sell very well. The smaller PC6 is still a firm favorite with operators who need a utility type and it has recently sold well into new markets in Asia.

I had the chance to talk over the PC12 is some detail, gaining a good insight into matters such as new aircraft prices, secondhand values and the opinion of Pilatus on the secondhand market for the PC12 and other types, production and delivery rates. All this is fed into the ASO database and used to inform our opinions on the aircraft and the GA market in general. I also had the chance to take a walk around the production line and saw aircraft being checked prior to customer delivery.

We also talked about Pilatus projects in work at the moment, sketchy details as yet but look out for a bigger, clean sheet of paper aircraft soon, we may get some clearer details as soon as 2011.

Going back to the PC12, let’s take an overview of the type.

First flight of the prototype was on May 31st 1991, and deliveries to customers started in 1994.

Some 1034 aircraft have been built so far. 72 delivered in 2010.

Of these 12 aircraft have been lost as the result of accidents.

Main uses for the aircraft are Business/Corporate, but it is also very popular as an Aero Medical platform. The large cabin size and generous freight door also make it a very adaptable aircraft and is used by a number of police forces and military air arms.

Visits such as these are all part of gathering the data, we follow all and any angles to ensure the very best data is available to you through the ASO platform. What you see here only scratches the surface, much more analysis can be done with full access.

Jackson Square Aviation (JSA) has closed a USD 400m secured credit facility with a term-out feature that extends to late 2018. The facility, which has been equally split between its agent DVB Bank SE and joint underwriters Credit Agricole CIB, BNP Paribas and KfW IPEX-Bank, provides the availability to draw down through to mid-2012.

The structure differs from warehouse credit facilities in other recent aviation deals, which have tended to involve two years of availability with two years to refinance. “The banks agreed to extend the refinancing period and to shorten the availability from 24 months to 18, after we identified which specific aircraft we wanted to be financed through the facility,” explained Scott Weiss, JSA’s COO and executive vice president of capital markets.

Mayer Brown is acting as legal adviser to JSA in the deal, while Vedder Price is representing the banks.

Around half of the facility will be used to finance aircraft that JSA currently owns or is under firm commitment to purchase. The group has already committed to purchase 35 aircraft between now and mid-2012 comprising 737-800s, A319s and A321-200s, according to Weiss. JSA also purchases widebodies and is understood to have A330s and Boeing 777s in its pipeline. Altogether, the leasing firm has over USD 1.5 bn in aircraft owned or under firm commitment to purchase through to 2012.

This remainder of the facility will be used to finance new deliveries of next-generation Airbus and Boeing aircraft with major airlines around the world. The San Francisco-headquartered group is set to acquire 30-50 narrowbodies in 2011, Weiss remarked. 
 

Just because it's Christmas doesn't mean that there won't be any accidents. See below for some selected ‘seasonal’ accident reports, extracted from the Ascend Online General Aviation database…

15/Nov/2010 Hughes 369D N155PH
The helicopter crashed under unknown circumstances while lifting Christmas trees as an underslung load. The pilot suffered serious injuries in the accident which happened in daylight (1330L).

18/Nov/2009 Bell 206BIII N16869
The helicopter was being used to sling load Christmas trees to a nearby drop site and had completed several loads over a period of about 15 minutes. The pilot reported that, as he was manoeuvering to deliver another load, the helicopter began to settle with power. He attempted to recover the situation but without success and the helicopter touched down hard on the rear of its skids. The accident happened in daylight (1030L).

22/Nov/2006 Hughes 369E N1611W
The helicopter was being used to sling load Christmas trees. About five minutes after departure one of the two slings holding the load failed and the trees fell out causing the second sling to fly up into the helicopter's main rotor head. Reportedly both cyclic and collective control was lost. The 'fell to the ground' and came to rest on its right side. The accident happened in daylight (1500L) and in VMC.

25/Nov/1997 Bell UH-1E N8160G
The helicopter was being used to sling load Christmas trees. While positioning between operating sites the helicopter suddenly went out of control. The pilot apparently regained some control and carried out a forced landing. Witnesses later reported seeing a sling line fly away from the helicopter and apparently impact its tail. The subsequent inspection of the recovered long line found small fragments from a rotor blade inbeded in the hook. The NTSB determined the probable cause of the accident to be the pilot's excessive airspeed resulting in the long-line hook impacting the tail rotor.

09/Nov/1997 Bell 206BIII N101LF
The helicopter was being used to sling load Christmas trees, however, as it approached a planned pick up point it suddenly went out of control and crashed into the trees. The helicopter was destroyed by impact and post impact fire. Witnesses reported that as the helicopter decelerated in a nose down attitude, its long line was seen to swing forwards and upwards towards the main rotors. Immediately after this there was a bang and parts of the rotors seemed to break away. A subsequent inspection of the wreckage discovered evidence of a cable strike on the main and tail rotors.

18/Nov/1996 Bell 206BIII N921RB
Whilst sling loading Christmas trees with a 25ft. line, shortly after picking up a load, as the helicopter began a left turn it began to rotate to the left. The helicopter completed 1 to 1.5 turns before impacting the ground and rolling over onto its left side. The point of impact was some 200 to 300ft. from where the helicopter had picked up its load. The accident happened in daylight (1608L) but in poor weather with a 2,500ft. overcast and visibility 4sm. in rain being reported at Salem, 20 miles away. The load weighed 1,050 lb.

19/Nov/1994 FH1100 N4258V
During 'long-line' sling load operations near Yamhill, while the helicopter was hovering waiting for the ground crew to attach the next load (bundles of Christmas trees), the cargo hook became caught up in one of the bundles. The helicopter then moved to one side causing the line to become taught and then suddenly to come free. The line flew up into the helicopter's main rotor damaging the blades. The helicopter entered an uncontrolled descent and crashed. The accident happened in daylight (1325L) and in poor weather with one mile visibility in rain.
 

Accidents will happen, and not only to airliners.

Sadly the General Aviation world is not immune from accidents, either. But is it at any more risk than the airliners?
 

The new millennium has had more than its fair share of shocks to the markets. Looking at new fixed wing aircraft deliveries it is easy to plot these events and their effects. We can clearly see the way the market dampened down after the 9-11 attacks in New York, it took some 4-5 years before shipments returned consistently to a level comparable to those before the attacks. The collapse of the financial markets in late 2007 through 2008 has resulted in the biggest cut back in deliveries since the years after 9-11. 

As with any statistics, spikes can be found. Each year there is a spike as the end of year inventory is delivered before year end. Large fleet deliveries such as the Beech 350’s for the US Military starting in 2009 are another example.

Looking at aftermarket sales though, these have remained strong throughout. There is a contraction to be seen through 2008 and into 2009, but it looks to returning to more usual activity levels. We can see from the transaction data in ASO GA fleets that many of these aftermarket sales are the result of existing operators trading in older aircraft to buy new. This places older aircraft on the market for new owners to enter the turboprop market. In years to come these owners will look to buy new or newer.

A vibrant market in pre-owned aircraft is important to the whole market. Aircraft have to trade - and at good prices. Certain types have remained strong through the market changes and some early signs are there that new aircraft deliveries are picking up from only a year ago, helped and lead by a strong market in used sales.

Data from the ASO Fleets GA module.
Data available for GA transactions include deliveries made, sales, leases, lease returns and more.
 

After much negotiation between the U.S. Senate and House of Representatives, the NASA authorization bill was passed in late September and has now been signed by President Obama.

Over 500 Industry Executives converged on Munchen last Sunday for the 2010 European ISTAT Conference, to meet, greet, finalise transactions, hear presentations and sample the world famous Munich hospitality.

Ryanne Woltz, Relationship Manager in Ascend USA, provides an update on the Southwest and AirTran merger...

On September 27th it was announced that Orlando, Florida based AirTran Airways has agreed to be bought by Dallas based Southwest Airlines in a $1.4 billion deal which will result in AirTran shareholders receiving a combination of cash and Southwest stock in exchange for their shares.

Seventy years ago in the summer of 1940, thousands of gallant men fought and died in the skies above England. The battle was a true change in the fortunes of war. Without the 'few' – those Royal Air Force (RAF) pilots who fought so hard, Britain would probably have lost the war and the world may have succumbed to Nazi domination. In the Battle of Britain, both the German Luftwaffe and the RAF had excellent and poor aircraft types. Both sides had both excellent and poor strategies and tactics. Both sides made large and small mistakes. So how exactly did the RAF win? David Todd analyses and celebrates this battle and explains the twists and turns of fortune that may have changed the result of World War II.

Read More

Mexicana went into administration overnight. We have collated a brief summary of the airlines fleet and lessors.

Finally Farnborough is here, and the Ascend team will be there in force to bring you all the news.

There has long been a tradition of utility aircraft working hard in communities worldwide. Proven hardy types such as the DHC2 Beaver and DHC-3 Otter have been in service since the 1950’s. The aircraft have been updated and many have been re-engined to turboprop power. 
 

Nine months after British Airways launched all-business class services from London-City to New York-JFK, CEO Willie Walsh has announced that the feedback from customers so far has been fantastic. The long haul operation from London’s downtown airport has always been viewed as an experiment. Now that the airline has reported load factors of up to 75%, there may be good reason to take the experiment to the next level.

Now that Wimbledon has started and the sun is shining, people’s thoughts inevitably turn towards the Farnborough International Airshow. While it offers a good chance to gauge the mood of bankers and lessors, the Airshow is really a manufacturer’s event where Boeing, Airbus et alia get to show off their latest creations and trumpet their latest orders. But what are the big issues for aircraft investors and industry watchers?

A quick round-up of some more new airlines planning to start operations…

While many space experts and pundits (including the Ascend space team) noted the high risk of failure that maiden flights usually have to face (in excess of 50%), and while even Space X’s CEO Elon Musk, equated the first launch of the Falcon 9 to ‘Russian Roulette’, in the end, the launch vehicle’s first flight successfully achieved orbit on 4th June.

Peter Morris, Chief Economist at Ascend shares his observations about changes in customer trends and challenges for the airlines.

What will be the composition of the global airline fleet in 2020? That's the question that Chris Seymour, Head of Market Analysis, answers in his Global Fleet Forecaster.  The 2010 ten year forecast has just been made available, and whilst this covers all regions and aircraft classes, I thought I'd share some of Chris's insight into fleet developments for possibly the most talked about region for aerospace - China.

The rapid expansion of the Chinese economy and their increasing share of global manufacturing, allied to increasing wealth amongst the 1.3 billion population and a growing tourism business, has resulted in the Chinese fleet expanding at ever higher growth rates. The fleet has more than tripled in the past 10 years and 120 jets (10%) were added in the past year alone.

The Chinese economy, which was suffering from a fall-off in orders for manufactured goods from the West, is seeing signs of revival. Airlines were losing money and the Government has acted to force some mergers and restrict startups. These are short term difficulties but will not impair long term aviation growth.

China is one of the key growth markets for the medium/long term and the forecast fleet growth rate is over 7.5% over ten years. In order to cope with the traffic growth led by an enlarged middle class, the increasing international routes and up to 90 new domestic airports being built or planned, the jet fleet is forecast to grow from some 1,300 today to some 2,720 in 10 years. China will account for 15% of global deliveries. From an 8% share of the jet fleet, China will rise to 11% over 10 years.

Passenger narrowbodies today make up 82% of the Chinese fleet, reflecting the large domestic networks which are centred around the Golden Triangle of Beijing, Shanghai and Guangzhou. This fleet of almost 1,100 will expand by over 90% over ten years to 2,100, some of them assembled and built in China (A320s and C919s) The average size will stay around 146 seats. Of the expected 1,400 deliveries, 65% will be for expansion purposes, the remainder mainly replacing earlier MD-80, 757 and 737 Classic fleets and older A320s and 737-NGs.

The locally built C919 will enter service in 2016 on current plans and will join the A320 and 737 in meeting the large domestic demand.

The widebody fleet, which has expanded more slowly, will see more rapid growth in the next 10 years and almost triple to over 400, increasing their fleet share to 15%. As the international networks expand, more European and American cities will be linked to China by the longer range types like 777s, A350s and 787s. The latter, together with A330s will also be the core of intra Asian expansion and domestic trunk routes. Chinese outbound tourism is also increasing, as travel restrictions are lifted, which will spur long haul traffic.

China has been relatively slow to develop a network of regional feeders, with only around 100 aircraft, mostly 30-50 seaters and some 100 seaters currently used. However, the orders by Hainan for the Embraer 190s, are seeing the start of major expansion. The new Chinese built ARJ programme will begin deliveries in 2010 and at least 160 are forecast for the next 10 year period, growing the RJ fleet to 240, as there are many new small/medium airports being built for which RJs are ideal.

As China is such a major manufacturing centre, it has strong outbound cargo and the jet freighter fleet of a modest 69 today is forecast to rise to 230 over 10 years (slower than expected growth in the first five years), as local airlines take a much bigger share of the market. Some 50 new deliveries will be focussed on the 777 and A330, whilst 130 conversions will include some 767s, starting to serve intra Asian markets, increasing numbers of converted 757s and 737 Classics will be used domestically and 747-400s for long haul markets. 
 

Consolidation in the aviation industry has long been more a topic of conversation than a reality but slowly (often very slowly) it is starting to happen, at least in Europe and the US.

As the UK General Election approaches, David Todd has tried to analyse what each party would do for space if they won the election (or even just hold the balance of power).

 

Despite the recent economic downturn there have still been new airlines starting operations across the world during this time. The number of these carriers may have slowed a bit during the last 18 months, but there are certain signs that things are beginning to pick up. Reviewing the start-up data has shown that there are a number of airlines who are in the process of acquiring their very first aircraft. Of course, just because the first aircraft has left the paint shop does not necessarily mean they are about to start flying passengers around, but these are a few to watch out for.

Wednesday was a day for celebration in Ascend with the launch of the Aircraft Ratings product. Aircraft Ratings is a product that we hope will change the way you look at Ascend. It is an in depth and sophisticated way of looking at aircraft risk and is designed around the types of conversations and negotiations needed to ensure that capital keeps flowing into the aviation finance business. As a client-led product and one that has drawn from all parts of our business it has been a great experience for us to deliver the Ratings and to feel that we are getting closer to our customers through it.

Following advice from representatives of the British Space Industry, the Government of the United Kingdom has now formed a state space agency. Despite published advice to not use an unintentionally funny acronym, the Government has unfortunately decided to name its new space agency as the ‘UK Space Agency’ or UKSA for short.

At a customer meeting a few weeks ago I was asked what airlines were on my watch list this year. Apart from saying “everybody but nobody” I couldn’t think of a single name. As the industry enters another year of losses, how is it that we haven’t had more bankruptcies?

Over the past 3 days I've had the chance to present to two very different groups on the impact on the aviation industry of environmental regulation, particularly emissions regulation.  The first group, hosted by Berwin Leighton Paisner, was primarily attended by industry players; the second, hosted by Westminster Projects Forum, had an audience comprised largely of government and non-government organisations and academic advisors.

My presentations were roughly similar in scope and content: basically, looking at the potential financial cost burden (and resulting risk) imposed by the EU's Emissions Trading Scheme (EU ETS) once aviation starts trading carbon allowances in 2012. Central to my presentations was some analysis that showed carbon trading prices adding about 1-5% of the average cost of a typical round-trip ticket: a relatively small percentage, it's true, until you look at it in the context of an industry that enjoyes profit margins in the best years (if at all) in that sort of range.

What was really eye-opening for me was this: when presenting to industry players, you could see the potential size of the cost burden hit them right between the eyes. On the other hand, the "so what?" scepticism of the government/NGO crowd's response was palpable in the room. There was a lot of talk of so-called "demand management" - whether in terms of artificially rationing flying by setting per-person flight "quotas" or by raising ticket prices so high that people stop flying. Chilling stuff.

And it underscored the size of the gulf in terms of understanding of the industry that exists between those inside the aviation industry, and those outside it - and how high the stakes are to bridge that divide, as aviation's fate is to a great extent shaped by those outside the industry.  As one attendee at the Westminster Forum presentation asked me pointedly: "what's so special about the aviation industry? If we have to cut our emissions dramatically to limit global warming to 2 degrees, then everyone has to do their part!" And it's a question that we inside the industry are going to have to do a lot better job at answering than we have done up to this point.

So how do we do this? Well, for a start, by engaging on the issue.  The industry has been largely put on the defensive, having been caught blindsided in Europe.  This has allowed the debate to have been cast as an "us versus them" - with aviation clearly marked out as the guy in the black hat and long twirling mustache in the mind of the public and the governments beholden to them.

It's true that this debate is largely Europe-centred: certainly in many developing regions, the issue isn't even in the kitchen, let alone on the back burner. But European perceptions changed breathtakingly swiftly in the past decade, and the global movement only appears to be going one way: towards greater environmental consciousness, not less. To me it seems simple prudence for non-European carriers to learn from the PR mistakes that their European counterparts have made, and be proactive where they still have the chance.

Engaging the issue means stepping up and telling the story of the benefits that aviation brings in terms of international development, social mobility, and trade. It also means telling the story of the incredible improvements in efficiency over the past 50 years. And it means doing everything possible to highlight areas where the industry is being held hostage to lack of political will: air traffic management is a key area where dramatic improvements in routing efficiencies could be made practically overnight.

And finally, engaging the issue means not shirking aviation's collective responsibility to the environment - recognising the impact, and taking steps to reduce it. Otherwise, others outside the industry, who don't see us as "special", will do it for us.

Business travellers are expecting to fly more often over the coming year, and predict increases in their travel budgets, according to Ascend's third annual Corporate Travel Survey.

After the recent announcement by the Government of the United Kingdom that an official British Space Agency is to be formed, a competition is to be held to name this new space agency.

The United States of America has its National Aeronautics and Space Administration, more famously known as NASA, while Europe has its European Space Agency (ESA) and Japan has the Japan Aerospace Exploration Agency (JAXA). So just what should the British version of NASA or JAXA be called? There is, of course, large scope for confusion, embarrassment, and even cynicism in using any such acronym, but Ascend’s space team is here to help!

After waiting several months the first ATR72 for BQB Lineas Aereas has just been delivered from France down to Uruguay. Legal issues had delayed the carrier from starting operations last year. In 2009 we got to see Fuji Dream, AviaNova, FlyDubai, V Australia, Eastarjet and AeroLogic all start up operations. Who can we look forward to seeing take to the air for the first time in 2010?

By Paul Sheridan - Head of Risk Advisory EMEA, Ascend

The Dublin Air Finance Conference always serves as a good barometer of where we are in the cycle and this year was no exception. The more upbeat were trumpeting the record attendances, the banks with money to lend and the number of start up lessors there to explain their business plans. The less optimistic in the crowd were quick to point out that there was no sign of a bottoming out of airline losses, that banks still didn’t have enough money to go around and that most the new lessors still hadn’t done a deal. An even divergence of opinion like that probably means that things probably aren’t getting any worse but we shouldn’t be ordering the cases of champagne just yet.

It’s hard to avoid and even harder to ignore the news came this week that Tiger Woods the global phenomenon, sports star and overall great guy wasn’t that great. Everyone’s inner gossip went wild with Tiger’s loose morals and looser belt which have meant that his reputation and marriage hang in the balance. The question reverberating around the world is will he still be marketable and will he lose his endorsements? Well in the airline industry he’s apparently more marketable.

This week came the news that the saviour of Irish Aviation Michael O’Leary would be staying at the helm of Ryanair for a further two to three years. I’m sure those who have taken his flights, some even to the same country than that of their hotel will all breathe a huge sigh of relief…

As the ISTAT 737 Express left London for the Dubrovnik European Conference one paused for thought as to what would happen if the aircraft became a Paul Hayes Total Loss statistic with nearly 50% of the conference onboard. Thought nearly became reality when Captain McDonald was forced to circle the Croatian Airfield for what seemed an eternity to let the bad weather shift on to neighbouring Bulgaria.

The conference got off to a cracking start (literally) with some of the most spectacular thunderstorms the Dalmatian coast has seen recently. Over a month of drought was brought to a close yesterday evening as we enjoyed catching up with acquaintances and colleagues, old and new, at the opening reception. The turnout was so healthy that there were at least 4 incidents involving trays with glasses on that I counted. This was testimony to the limited room available for manoeuvre; such was the amount of delegates in attendance. Crashes (both natural and man-made) heralded the start of proceedings.

Air Finance Journal’s Middle East and Africa Airfinance Conference was a useful opportunity to gauge the mood within the region – although frankly the representation from Africa was limited to a handful of airlines and 1 bank. Some might say this kind of ratio mirrors the general debt chasing situation pretty well.

With the Cargo Facts Symposium in Seattle just around the corner I thought it would be appropriate to share a bit of ad-hoc analysis I’ve been looking at around the freighter market. In reaction to the current downturn (and off the back of the widely discussed theory that freight recovers ahead of passenger markets) and the reported softening in demand contraction in both the passenger and freighter market, one of the items we’ve been looking at has been the freighter market and how it compares to the passenger market.

NASA has become famous in recent years for spending a lot of money on a space project and then scrapping it before it comes to fruition. In some cases this was the wrong choice. However in some cases it made the right call. It is the amount of money wasted that is the problem. For example some US$2 billion was wasted on the X-33 suborbital aerospace plane – the final death knell being a failure of its new composite fuel tank in a test. Before that US$1 billion was wasted on the NASP – National Aerospace Plane – a technology that was never going to work. Sadder loses were the Orbital Space Plane – a mini-shuttle that could have been the answer to NASA’s current space vehicle shortfall (some US$2 billion was spent on that). A further US$3 billion has been spent on Ares 1 with little to show except technical problems. There were other less expensive but still wasteful projects including rocket engines that were never built and projects investigating reusable vehicles. But as the White House considers whether to scrap the Ares I & V launch vehicle elements of its manned Project Constellation plans, those that remember those cost-cut-driven decisions of the past will be fretting about the future. But are they right this time?

Not many people think that starting an airline is a good idea, particularly in 2009. But what if you are trying to start an airline, which does not even intend to take off? Some might think you’re mad, while others might realise that actually it is all a scam.

While the Government of the United Kingdom would like to have a British astronaut land on the Moon as part of NASA’s Project Constellation, they now find themselves too cash strapped to invest. But do not fret. In a world exclusive, Ascend can reveal that there is already a Union Jack (more correctly known as the Union Flag) on the Moon. This is not because, like the plot of the 1964 film treatment of H.G. Wells’ The First Men in the Moon, some Victorian British astronauts got there first. Actually, it is due to a British engineer cheekily sneaking a bit of ‘Union Jack’ graffiti onto Apollo 11’s experimental equipment.

Gary was one of the opening presenters at the recent Air Finance conference in Beijing and reports on some of the event’s highlights

The session was opened by Garry Burke, CEO of Pembroke; he noted that the “balance of power is shifting from West to East” when it came to the aircraft finance market. This was a recurring theme throughout the conference, particularly when it comes to the lending activity of Chinese banks to Chinese operators – interest in seeing that activity expand internationally is extremely high, not surprising given the financial squeeze that has characterized the international banking industry in the past year. However, the Chinese market and Chinese tax / regulatory structure are quite different to the West, and so it remains to be seen how quickly Chinese banks will become major international players in the aircraft finance arena. Furthermore, given the collapse of international trade flows, China’s export-oriented economy is giving increasing focus to its huge domestic market – from an air transport perspective, the contrast between domestic and international travel in China is stark, with domestic travel showing recovery while international travel remains weak.

Business Jet Transactions Down Since 2007

Whilst talking to anyone in the business jet sector you’ll learn quickly that the number of deals has declined year over year. The graph below details the number of transactions done, one of the most important indicators on the business jet market dashboard.

The quietest Paris Air Show for in memory finally drew to a close on Thursday with a last minute LoI from Wizz Air of Hungry for 50x A320's. That the largest order came at the close is as telling as the storm that accompanied the opening ceremony itself. Whilst people spoke of money being available for deals again, and the mood was generally upbeat, the order totals versus previous years was still well down. Take Airbus, effectively on home ground, and traditionally very strong at the show managed to register 56 firm orders vs. the 2007 firm total of 375. The widebody / narrowbody split was telling as well, with the only firm widebody order announced being the long awaited order from AirAsia X for 10x A350 XWB's, and if we were to do the split geographically then we'd be looking at the lion's share of the orders coming from the Middle / Far East, with just a single A319 ordered by Aigle Azur to keep Europe in the picture. Regional Jets and TurboProps fared slightly better in Europe, with orders from Air Nostrum for a mixture of CRJ-1000 NG's and ATR 72-600's, Olympic ordering Dash 8-Q400 NG's and KLM Cityhopper placing an order with with Embraer for Embraer 190's. Boeing on the other hand fared slightly worse, only announcing an order for 2 aircraft, 2 737-800's for MC Aviation Partners/Mitsubishi Corporationvs, vs. 66 firm orders in 2007. Although the temperatures had risen for the close of the show, the skies over Paris were still overcast until later in the evening, when analysts and journalists were long gone and trying to put meaning to the firm order total standing at 134 aircraft, vs. the 1135 aircraft last time around.

The last Paris Air Show saw 660 firm orders, with the total reaching 1135 if you add in LoI's and Options. Airbus received the lion's share with 375 firm orders, 735 if you add in LoI's and options, Boeing however received 66 firm orders and no LoI's or options. 

There have been a lot of questions raised over the need for a new ultra large widebody aircraft right from the inception of the A380 concept. It took Boeing a long time to agree that there was a need beyond the 747-400 and proceeded to develop the 747-8. However, the 747-8 has failed to gain any support beyond the launch customer Lufthansa, which again puts in questions the world’s demand for the largest passenger aircraft.

The European Space Agency (ESA) has named a 37-year-old ex-British Army Apache helicopter gunship pilot as one of its six new recruits to its astronaut training programme.   Major Timothy Peake now works for Augusta Wesltand after serving in the Army Air Corps as a test pilot.  His appointment was announced after a selection competition. Major Peake was one of six astronauts selected.  The others were Italian Samantha Cristoforetti, German Alexander Gerst, Dane Andreas Mogensen, Italian Luca Parmitano and Frenchman Thomas Pesquet.

I wanted to take the chance to put up a few graphs that do a great job of displaying the difference between older and newer technology, specifically, I wanted to show the relationships between values and lease rates, and how aircraft near the beginning of their useful lives behave differently to those near the end.

From the 215 entries on the Ascend start-up airlines spreadsheet, two of the companies are to be located in Morocco. One of them will be created by an airline from inside, and one from outside the country. But both are hoping to make the best of the opportunities available to them from the North African nation.

The aviation industry has seen and been a part of some of the most powerful and exciting developments that have helped create what is today a global economy. As part of the aviation industry Ascend has seen the development of the 747 and the A380, the creation of route networks that circumnavigate the globe, and who knows how many business cycles. What we haven’t seen, but now find ourselves in the midst of, is a business community that is becoming increasingly aware of, and active in dealing with the issues that affect our world, the parts outside of P&L statements. I say this not to belittle the accomplishments of companies that take every step possible, down to insisting upon duplex printing or recycling, but to underline the increasing visibility of green projects in our industry.

Recent management changes at Air Canada, including the return of Calin Rovinescu as the new President and CEO, have set off a swirl of speculation regarding the company's strategic vision and business plan. Mr. Rovinescu made his mark at the Air Canada during in the early 2000's, notably in the role of Chief Restructuring Officer. He was the architect of the airlines current corporate holding company structure and the key company negotiator in bankruptcy restructuring. Now that he has returned, industry analysts are pondering the implications for Air Canada.

There were close to 1000 attendees at the ISTAT 26th Annual Conference in Scottsdale, and it seemed as if each had their own unique set of challenges. While airlines, publicly traded lessors and banks could all cite weakened balance-sheets, broken business models, devastating spikes in the cost of inputs during 2008, and uncertain near term business prospects, there was little consensus on what the commercial aviation industry should expect to see in 2009. And so the conference began with the confessional mood of a 12-Step Recovery meeting where all attendees stand up in turn to declare, " I am a [CHOOSE ONE: O AIRLINE O LABOR UNION O LESSOR O OEM O OEM SUPPLIER O BANK] and I have a problem."

It is not a good time for the airline industry currently, nothing new, and there are still a number of new airlines with plans to start-up operations. 2008 saw more start-ups than failures and there is no real reason to doubt that will happen in 2009.

Now that governments are starting to employ so called ‘quantitative easing’ (printing money to buy assets) that threatens to begin an era of ‘stagflation’ (economic stagnation AND inflation),  I have to ask how we came to this?  While executives’ bonus targets, financial deregulation, credit rating errors and the ‘gambling instinct’ of bankers have all been blamed for the credit crunch and world economic downturn, there could be other causes. 

For western jets, announced cancellations and deferrals combined equated to 12% of the number of orders placed in 2006, 6% in 2007, rising to 20% in 2008 and this year to date is running at 242%.

Recently I'd decided that it was high time I went to visit a friend of mine in Barcelona, a beautiful city I'm sure you'll agree. Working at Heathrow as I do, a flight from here on a Thursday night, returning on the Sunday night seemed like the perfect option. However, on checking my bank account it seemed like taking an LCC was a better option and a check again later before I booked the ticket confirmed that walking was my only option.

Manufacturers Backlog

Investors are paying close attention to the Airbus and Boeing backlogs, with particular attention being paid to their vulnerability.  A few months ago we had stated that there was potential for as many as 200 white tails to be produced throughout the duration of the downturn, largely depending on how bad it gets and how long it lasts.  In fact, we weren’t the only ones saying this. That said I thought it would be useful to highlight some of other the key dynamics of the two biggest manufacturers backlogs that could also factor into the “white tails” equation.

Air freight has long acted as a bellwether for passenger traffic, with trends generally appearing in the freight sector around a year before they’re seen in the passenger sector. Although not an exact science, the freight sector acted as an early warning that the current downturn was around the corner. As we go through the current cycle its likely that air freight, which is so closely tied to the business cycle, will signal further declines, and eventually an upturn in global trade.

“True care, truth brings - I'll take, one lift - Your ride, best trip.” It was this first verse of the above titled Blink 182 song which came to mind as I was arriving in to JFK last week, some 5 hours late.

I must admit I was quite laid back about the whole situation; however, what had dawned on me was what a difference the small things really do make to passenger decisions. Going further than just providing the mandatory £5 refreshment voucher for a delay, as a for instance.
 

Heathrow has received a go ahead for its third runway from the Government: an issue that has been debated for decades. Arguments are so varied that it’s very hard to judge whether it’s right or wrong to have an extra runway. But I would like to share some of my views based on my limited knowledge and experience.

China has seen tremendous growth in all sectors over the past decade, the airline industry and the sectors around it being no exception. The graph below shows the percentage growth in the in-service airline fleet in China as compared to the percentage growth in the global airline industry. The notable trend here is that between 1999 and around 2003 the two seemed to be moving similarly, around this time the Chinese fleet bottomed out at around -2.0% growth.

With the departure of Qantas flight 31 from Sydney to London via Singapore on 16th January, Heathrow becomes the only airport which handles scheduled Airbus A380 flights from all three of the aircraft types operators.

Last year was clearly one of the worst the industry has ever experienced. For many airlines it was a tough operating environment to be in. For some it was too tough. Airlines cease trading on a regular basis. However because of the higher number of casualties and because of the bigger name airlines amongst them, 2008 was a real shock to the system.

2008 Overview

While dismal holiday shopping numbers, growing unemployment and bank profit warnings are taking all the wind out of the highly touted New Year rally, most of the US economy is left to look only to the “Obama Bounce” for their next bit of hope. But somewhere between the fuel spike in the middle of 2008 and the financial paralysis that began later in the year, the U.S. airline industry, seemingly as a whole, made the right moves.
 

As a child I grew up next to Blackbushe airport. It’s not the biggest airport in the world; more of an aerodrome, but it has an illustrious history going back as far as the Second World War and was once London’s second airport.

It is my first day back at work. This is always a good time to look back and to look forward. Around this time last month I gave my friends a copy of my top choice as business book of the year, Snowball, the authorized biography of Warren Buffet. It is a cracking read but a bit of a tome. I suspect many of my friends drank the bottle of port that accompanied my gift and are now using Snowball as a door stop. This would be a shame. Although Buffet would claim he is not in the advisory business, there are few others who have been so mostly right over so many years.

Although the industry is suffering at the moment, some airlines are successfully battling the downward economic trend. There are still new opportunities out there that airlines are hoping to exploit and earn revenue from.

Overview

Much like with our previous analysis of narrowbodies, this feature looks at the 767-300ER and A330-200 widebody aircraft, and compares their percentage decreases in value. For the 2008-built aircraft values, the graphs show a decrease in value since January 2008, while the 2000-built aircraft decreases run through to the latest values (as of November) and are based on the October 2007 values, so as to keep them in line with the narrowbody data from two weeks ago.

Early last year I had the chance to visit Taiwan, and more specifically Taipei. It’s a fascinating city populated by wonderful people but unfortunately my trip was all too short and soon I had to leave. My flight out to Seoul left during the morning so I headed out to Taoyuan airport nice and early. Check in and security was a breeze and I was soon sat, coffee in hand, watching the world go by.

There has been no shortage of serious talk this week in Hong Kong at a series of aviation events which have included the annual Asia-Pacific Airfinance Conference, not least of which has been ongoing discussions about the industry’s ability to fund the commercial aircraft scheduled for delivery in 2009.

Overview

Ascend is constantly monitoring Market Values (the ‘spot’ price an aircraft will sell for) and as the aviation downturn starts to bite, many aircraft types have seen their values falling.

This week I’ll take a look at narrowbody values, with widebody values to follow next time.

The recent AFJ conference in Dubai provided a good gauge of the state of mind of the region’s aviation players – both those based there …and those along for the ride.

The latter group includes many of the seasoned finance players Ascend knows and loves, or at least quite likes. The finance panel was notable for its dominance by the international rather than locally based players, with Barclays, BNP, Citi, Natixis and Standard Chartered dominating proceedings, and Bahrain’s United International Bank the only ME based representation.

Well I’d like to challenge that. This article aims to help you understand the aircraft enthusiast. To try and provide a better understanding of what we do. Not just the members of Ascend’s Aircraft Data Team but aircraft enthusiasts the world over. Welcome to Spotters 101…if you like.

Like father like son is an old saying and sometimes sons follow their fathers into their professions. Millionaire computer games designer, Richard Garriott, has now followed his father into becoming an astronaut as he was launched to the International Space Station on SOYUZ TMA-13 on 12th October. But while his crewmates U.S. astronaut Mike Fincke, Russian cosmonaut Yury Lonchakov of the flight from the Baikonur launch site in Kazakhstan did not have to pay for the pleasure, Garriot is reported to have paid around US$30 million for his ten days in orbit.

Richard Garriot’s father, Owen Garriott, was a NASA astronaut from 1965 to 1986. During this period he carried out two space missions: one to America’s first space station SKYLAB in 1973 and one on a Shuttle SpaceLab mission in 1983. But while there has been a lot in the press about Garriott being the first second generation "astronaut" to fly in space, this is not actually true. In fact, the first second generation spaceman was already in orbit when Richard Garriott was launched. The current commander of the International Space Station, Cosmonaut Sergey Aleksandrovich Volkov, is the son of Cosmonaut Alexander Volkov, who joined Russia’s cosmonaut corps in 1978 and retired in 1998. During that time the older Volkov carried out three space missions,SOYUZ T-14 in 1985, SOYUZ TM-7 in 1988 and SOYUZ TM-13 in 1991.

Sergey Volkov and Richard Garriott along with cosmonaut Oleg Kononenko are expected to return to Earth on SOYUZ TMA-12 on 23rd October. And their proud fathers are expected to be close by to greet their boys home.
 

And another one bites the dust. Hansung Airlines, the South Korean carrier operating 4 ATR72s from Jeju to Seoul and Cheongju has effectively run out of funds and decided to suspend services, cancelling all flights on Saturday. Hansung reportedly owes the airports and its employees about a billion won, and debts were approaching 30 billion won (US$23 million) earlier this year.
 

Based on US airline reporting for the second quarter of 2008, six key Network carriers in the US carried 6% less passengers when compared to the second quarter of 2007. At the same time, available seat miles (ASMs) were only 4.5% less, meaning that passenger numbers were falling faster than seat miles were being taken out of the market. ASMs did not go down enough. Net result is Load Factor fell 0.8%. That's not really a good thing.

Could Low Cost save the day? The four key 'low cost' carriers recorded an increase in passenger numbers of 2.9% (now that's promising). However they also recorded an available seat mile (ASM) increase of 5.4%, meaning seat miles were being introduced faster than they could fill them. ASMs went up too much. That's probably a bad thing. Load Factor went down 0.95%

We all know how 'interesting' the third quarter 2008 has been. I don't think we are going to see any improvement, or any light at the end of this particular tunnel. In fact, as one observer put it recently, it is likely to get worse before it gets bad. US airlines are losing the race to remove capacity. Their saving grace would be a continued easing of fuel prices. Capacity will be less of an issue if the yield per passenger has a chance of improving. Assuming the passengers are still there in sufficient numbers of course.
 

YOUR QUESTIONS ANSWERED.

What is the outlook for the 767-300ER in light of tanker uncertainty?

The US Air Force tanker decision is a military matter and has no bearing on the market for airliner 767s, what it will determine is how long the 767 family stays in production.  Boeing is to build more 767-300ERs for JAL and ANA in 2010 to cover for 787 delays, but these are likely to be amongst the last off the line for the passenger version.

That said, the real story behind the 767-300ER at the moment is secondary demand.  Six months to a year ago it was difficult to find an available airframe, today there are 24 parked and to be placed.  Despite the delays to 787 deliveries, there is now overcapacity in the 300ER market.

Over 400 industry players gathered in Prague on the 5th October for the 15th ISTAT European conference. After a Sunday night of festivities hosted with aplomb by Erste Bank, the conference on Monday began against a backdrop of Black Monday 2, the sequel, as global stock markets nosedived led by the finance and commodity sectors.

The Market Defined

Business (or corporate) aviation is one of the most important segments of general aviation.  The universe spanned by purpose-built business jet types is quite wide, ranging from small, four-seat, short-range aircraft to large business airliners that can carry up to 19 passengers 7,000 miles nonstop – and of course, even larger commercial jets, all the way to the A380 can be, have been, and will be converted to corporate usage.  For the purposes of this article, we will restrict our view to purpose-built business jet types.  These fall into several fairly distinct categories (although the classification is not always neat), outlined below:

Once again, the US airline industry is facing significant challenges. Whatever the criticisms of the U.S. Chapter 11 options, it provided an umbrella for several of the Majors to reinvent their businesses over the 2002-2005 period. As a result of restructuring measures taken whilst under this protection, costs were slashed, productivity increased and overall profitability was restored (albeit briefly). This success inevitably came at a price, both for staff who found their terms and conditions significantly eroded; the travelling public, who found falling service levels, fuller planes and rising fares; and shareholders who found much of their investment destroyed.

Given the events of the last 48 hours Ascend believes this synopsis of the ILFC fleet will be of interest. We have provided a brief breakdown of the ILFC fleet by aircraft type, by region, and by top 20 operators. Additionally, we have used data from our Ascend Online Fleets and V1 databases to approximate a generic half-life market value for the entire fleet.

While most major airlines in the world’s largest aviation market continue to struggle through a period of economic uncertainty, it’s important to examine the overall growth and contraction of different sectors of the global aviation industry.

For those aviation-anoraks out there, there are always a few trick questions that can be asked of you. For example, during an interview for a job, I was once asked what was the fastest passenger aircraft in World War II? I started by reciting all the WWII passenger aircraft I knew, - ruling them out as I went…….the Handley Page HP-42, the Armstrong Whitworth Ensign, the Junkers Ju 52-3M, the Douglas DC-3, the Curtiss C-46, Focke-Wulf FW-200 Condor etc.