AFM74

Issue 74 www.ubmaviationnews.com

The business andfinancing ofairline operations

July-August 2011

PLUS:

n LESSORS RANKED BY VALUE AND QUIZZEDON THE MARKET

n AIRLINE FINANCE UNRAVELLED

n STREAMLINING GROUND OPERATIONS

n THE 737NG’S ROLE IN ROUTE DEVELOPMENT

BOEING SPECIAL:PROGRAMME UPDATE

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

Jackson Square Aviation is one of the world's fastest growing privately-held aviation capital provider, with a fleet of over 70 new and committed next generation aircaft, serving multiple airlines throughout the world.

Operating leases · Finance leasesEngine finance · Pre-delivery payments

Acquisition of three Boeing 737-800’s

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

Sale/leaseback of two 2011 Boeing 737-800 deliveries

Sale/leaseback of five 2011 Boeing 737-800 deliveries

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

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

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

PDP funding of four 2011 Airbus A320-200 deliveries and sale/ leaseback of two 2008 Airbus A319-100’s

Sale/leaseback of one 2011 Boeing 777-300ER delivery and three 2011 Airbus A320-200 deliveries

Sale/leaseback of two 2011 Airbus A330-300 deliveries

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

Sale/leaseback of three 2011 Boeing B777-300ER deliveries

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JSA_Update_PrintAd_July2011_Update_Final_UBM.pdf 7/11/11 5:16:13 PM

July-August 2011 • Issue 74

The business andfinancing of airline operations

34 State of the nation: Lessors assessthe market at Paris Air showParis orders, the sale of RBS, marketsaturation and the introduction of Basel III– aircraft lessors have much to contendwith. New and market-leading lessors spoketo Mary-Anne Baldwin at the Paris Air Showon these and other subjects. Plus, we giveyou the low-down on who is moving andwho is losing with portfolio value data from Ascend.

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

AIRPORTS AND ROUTES:44 Charge of the Flight BrigadeHardly a week goes by in Europe without a spat erupting between airport operatorsand airlines. In December 2010, it wasweather-related disruption that hit theheadlines, but the usual factor is charges.Alex Derber investigates how they areimplemented.

48 The route to traffic growth:Single-aisle NGs and Asian routedevelopment With more than 200 seats, widebodyaircraft have proven too large for somesecondary markets. In some cases, thesemarkets have suffered from weak passengerload factors, thus making the servicescommercially unviable. The NextGeneration single-aisle aircraft, boostedwith a better operating range than theClassic models, is becoming a popularoption for operations into secondarymarkets. Kee Keat Ong, senior consultant atASM, investigates.

MAINTENANCE OPERATIONS:52 Maintaining the next generationThe introduction of new aircraft alwaysmeans a flurry of work behind the scenes,as maintenance organisations, trainingcentres and parts suppliers gear up tosupport new products. Though lessonslearned on older aircraft prove useful, newtechnology means that innovative strategiesand techniques must be developed,particularly in the field of maintenance.Alex Derber finds out just how much all thisnew business is going to be worth.

INDUSTRY DATA58 Data including transactions andmarket, list and lease rates.

C O N T E N T S

EDITORMary-Anne Baldwin: [email protected]: +44 (0) 207 579 4843

JOURNALISTAlex Derber: [email protected]

CONTRIBUTORSChris Kjelgaard, Bernard Fitzsimons, Scott Hamilton, Neil Duffy,Peter Morrell and Kee Keat Ong.

DESIGN & PRODUCTIONKalven Davis: [email protected]:+44 (0) 207 579 4851

DISPLAY ADVERTISINGSimon Barker: [email protected] Samuel: [email protected]: +44 (0) 207 579 4845/46

GROUP PUBLISHER & SALESAnthony Smith: [email protected]:+44 (0) 207 579 4875

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Cover image: Jonathan Zaninger

NEWS ROUND-UP2 The latest on deals, mergersappointments and more.

FOCUS:12 Boeing: Programme updateDespite being weighed down by long-runningprogramme difficulties with the 787 and 747-8, Boeing Commercial Airplanes (BCA)is immersed in seven programmedevelopments including those for the 787-9;787-10; 737 (re-engine or new aircraft); and a777 study for an enhanced aircraft. Scott Hamilton investigates.

FLEET OPERATIONS:16 Flight planning and crew schedulesFlight and crew scheduling systemsconstantly add new functionality in responseto the evolving operational environment andmerging user requirements. Bernard Fitzsimons examines the market.

20 Streamlining ground operationsOne of the biggest challenges for an airline isto make its ground operations efficient andits aircraft turn-arounds fast withoutcompromising customer satisfaction. Chris Kjelgaard reports on best practices and possible future improvements.

24 An Update on EU ETS: Are weconfident?Now that the first year of the EuropeanUnion Emissions Trading Scheme (EU ETS)has passed, Neil Duffy technical manager atICM ETS, which specialises in the verificationof aircraft operators, looks at the scheme, theconcerns it has raised and the strategies thatcan be employed to overcome them.

TRADING, LEGAL AND FINANCE:28 Airline finance unravelledFinance has been readily available to themajority of airlines despite the cyclical natureof airline earnings and a worse record ofprofitability than most other industries. Peter Morrell, visiting professor at CranfieldUniversity, explains the aviation financemarket and examines the opportunities it offers.

AFM74 TOC _TOC 12/07/2011 17:08 Page 2

2 | AFM • ISSUE 74 July-August 2011

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

MAS mulls privatisationplansMalaysia Airlines (MAS) is considering ade-listing, its chairman Tan Sri MunirMajid has told local news sources. In itsreport to the airline, investment bank,Maybank, has said: “There are merits to aprivatisation, it provides a shelter awayfrom further downside volatility in theshare price, while the company re-shapesitself up for a re-listing in the futureyears.’’ It also suggested that MAS list itssubsidiaries: Firefly, MAS Engineering andMASKargo.

A319neo deal establishesnew FrontierRegional air group Republic hassigned a memorandum of under-standing for 40 A320 neos and 40A319 neos, becoming the launchcustomer for the latter type in theprocess. The aircraft will be deliveredto subsidiary Frontier, the low-costcarrier that – unlike most of thegroup’s airlines – flies independentlyof agreements with US majors.Frontier already operates 58 A320-family aircraft. Republic has selectedCFM’s LEAP-X engine for its order.

China threatens A380order in response to ETSAirbus was unable to announce an orderfor 10 A380s from Hong Kong Airlinesat the Paris Air Show due to Chinesegovernment intervention in a row overthe European emissions trading scheme(ETS), according to Reuters. Though it wasinitially thought that the customer wouldmerely remain unidentified, Chinese newssources have since said that the order,worth $3.8bn at list prices, has been“delayed”. China claims the ETS will costChinese airlines $800m in 2012, when itcomes into effect. Hong Kong Airlines is asubsidiary of Hainan Airlines.

CSeries wins secondorder in a weekAn anonymous airline has placed afirm order with Bombardier Aerospacefor three CSeries (CS100) aircraft, withoptions on three more. The manu-facturer said deliveries of the aircraftwould start in 2014. Based on listprices, the firm order is valued at$186m, which could increase to $385mshould all three options be converted.

NEWSHIGHLIGHTS

Boeing likes to jest about the media’s obsession withair show order tallies, but – regardless of whetherAirbus has ‘saved up’ announcements for Paris –behind closed doors few will have been laughing inBoeing’s Paris chalet. As the trade-day doors at theParis Air Show (PAS) closed on June 22, the count was300 orders to Airbus, 72 to Boeing. Dollar for dollar,the score was $57bn to $22bn.

In the first two days of the show the best news forthe US manufacturer involved orders for about 50aircraft from low-cost carrier Norwegian and newlessor ALC, the creation of ex-ILFC boss Steven Udvar-Hazy. Orders and commitments for 17 747-8 Inter-continentals from two undisclosed customers werealso announced

Those signatures, however, were eclipsed bysignificant orders for Airbus’ new A320 neo fromother airlines and lessors. Even ALC’s debut widebodyorder, for five 777-300ERs, was overshadowed as thelessor then signed MoUs for 50 A320 neos and firmorders for 11 A330s. Then, AirAsia announced a head-spinning $17bn order for 200 of the A320 neo, plusoptions for a further 100. AirAsia said it also plans totake the 86 standard A320s already on order withAirbus, rather than convert them as some hadspeculated. The airline is now Airbus’ largestcustomer, topping Indigo’s $16bn order for 180aircraft, made a day earlier.

Collectively, the success of PAS marks the returnto a stable but growing market; the largest ordershighlight both the burgeoning Asian and healthy

Paris Air Show tallies arein: A320neo orders toolarge to ignore

low-cost segments. But most evident was that Airbus’re-engined offering stole the show - and the business.

Yet, not to be overlooked was the success ofregional aircraft manufacturers. Like two flyweightscontesting the undercard of a heavyweight titlefight, the battle between regional jet manufacturersBombardier and Embraer tends to be pushed to oneside. Nonetheless, it was an encouraging few days forthe Canadian and Brazilian companies.

By June 22, Bombardier had picked up 40 much-needed orders for its forthcoming CSeries, 30 fromKorean Air and 10 from an anonymous buyer. Intotal, the Montreal-based manufacturer recorded arespectable 56 orders during the first two days of theParis Air Show (June 20, 21). Vistajet penned a dealfor 10 Global 8000 jets worth $650m at list prices;Avwest announced orders for six bizjets includingfour Global 7000s and two Global 8000s, two ofwhich were ordered earlier this year; and the CSeriesaccounted for the rest.

Embraer, meanwhile had great success with its 100-seat E190. Jakarta, Indonesia-based Sriwijaya Air signeda purchase agreement for 20 E190s plus 10 options;Kenya Airways signed a letter of intent to buy 10 ofthe same type plus 10 options; Kazakh flag carrier AirAstana placed two firm orders and two options; andlessor ALC added five more E190s to previous ordersfor 20 of the type. The Brazilian manufacturer’s E-Jetsline, ranging from 70 to 120 seats through the E170,E175, E190 and E195, has now taken 1,000 orders sincethe first E-Jet was delivered in 2004.

Photo: C.Verrier

AFM74 News_AFM News 12/07/2011 09:37 Page 2

July-August 2011 AFM • ISSUE 74 | 3

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

NEWSHIGHLIGHTS

A320neo rides JetBlueavenue into US low-costmarketJetBlue has signed a memorandum of understanding (MOU) for 40A320neos. The airline has not yet an-nounced its engine selection. Inaddition, the MOU will convert 30 ofJetBlue‘s current orders for A320aircraft to the larger A321 model withenhanced wingtip devices calledSharklets. Prior to the June 21 order,JetBlue had ordered 173 A320 aircraft.Another US low-cost carrier, VirginAmerica, has also ordered the A320neo.

LEAP-X1A takes $11bn inorders thanks to the neoCFM International raked in $11bn fororders of the LEAP-X1A engines in June,largely thanks to those announced at theParis Air Show. The manufacturer sold 910of the engines to power 455 Airbus A320neo aircraft. AirAsia placed the singlelargest order on record for engines topower 200 A320 neo aircraft; CIT Aero-space placed an order to power 15 A320neos; GECAS to power 60 A320 neos; ILFCto power 40 A320s; Republic Airways(parent of Frontier Airlines) to power 40A319 neo and 40 A320 neo aircraft; andSAS for 30 A320 neos. Virgin Americalaunched the LEAP engine on June 15 withan order for engines to power 30 A320 neoaircraft.

Bombardier closes twofinancial agreementsBombardier has closed both a letter ofcredit and revolver facility agreementtotalling $1.35bn with a syndicate of first quality financial institutions,mainly North America-based. The$600m letter of credit and $750m un-secured revolving credit facilities,which mature in June 2014, are to beused to support Bombardier Aero-space’s operations. They replace twofinancial agreements: the $600m letter of credit facility which was toexpire in December 2011 and the$500m unsecured revolving creditfacility scheduled to mature in August2011. National Bank Financial, Citi-group Global Markets, and RBC CapitalMarkets jointly arranged the facilities as mandated lead arrangers and joint bookrunners; BNP Paribas and UBS Securities also acted as jointbookrunners.

American Airlines is pursuing hard-nosed discussionsto replace its fleet of Boeing aircraft with an order for250 aircraft. The US carrier, which has lost revenue,market share and credit rating, would need heavyfinancing and a competitive deal from the manu-facturer and, if media reports are to be believed, it willgo to great lengths to find it.

According to the Wall Street Journal, Airbus has alreadyoffered the carrier a deal worth $15bn, which includeshefty discounts, creative financing terms and otherincentives such as training. And – so says a leaked andunsubstantiated report – American has gone to Boeing,asking what it can offer.

Losing the deal would be a blow for either

Scrapping payment chargesThe United Kingdom’s Office of Fair Trading (OFT) hasrecommended the government ban surcharges fordebit card payments and bring credit card charges inline with actual processing costs.

“The growth of internet retailing has broughtmassive benefits, but the increasing use of cardsurcharges is not one of them. You can’t buy onlinewith cash and people are frustrated about being askedto pay for paying,” said Cavendish Elithorn, seniordirector of the OFT’s goods and consumer group.

The OFT singled out airlines as particularly gross

manufacturer: Airbus would lose an important andsubstantial order from a new customer, whereas Boeingwould lose a long-standing customer and a slice of itsfavoured American market. To add insult, it would nodoubt lose it to the A320neo – orders for which havedwarfed those for Boeing aircraft in recent months.

American’s entire fleet comprises old Boeing aircraft.It is likely American would retire 220 of its oldestaircraft, including MD-80s aged about 20 years and 30 ofits 757s, aged about 15 years. The cost to modernise andrenovate them would be vast. Added to that areconcerns over the safety and fatigue of older Boeingaircraft following recent damage to the skins of ageing models.

offenders, noting that British passengers spent £300m($480m) on card surcharges in 2009. It also criticised‘drip pricing’, where card surcharges were onlyrevealed after a lengthy payment process. EasyJetcustomers, for instance, discover an £8 ($13) chargeonly after completing eight booking pages, whileRyanair adds £6 ($10) after four pages. The airlines’stock response to this is that customers can avoidcharges by using a certain card. But the OFT pointedout that such cards are often “only available to a smallproportion of consumers, making a surchargeeffectively compulsory”.

United-Air Canada ventureopposedA planned joint venture on US-Canada flightsbetween United Continental and Air Canada hasstalled after the Canadian competition regulatorcriticised the plan. “If allowed to proceed, consumerswill face higher prices and even less choice on key,high-demand air passenger routes,” said commiss-ioner of competition Melanie Aitken. She added thatthe venture would create a monopoly on 10 routes,including Calgary-Houston, Montreal-Washington,Ottawa-New York and Toronto-San Francisco. Unitedand Air Canada already co-operate to some extent inthe trans-border market, of which they control 55 percent. “Making matters worse, they now want to fullymerge their operations,” Aitken said.

American shops for full fleet renewal deal

Jet promises European growthJet Airways is eyeing European expansion as it seeks to turn its hubs in Delhi and Mumbai into launch-padsfor Western passengers travelling to Asia. Jet plans to use A330s, to be delivered by 2014, to add destinationssuch as Rome, Amsterdam and Paris. “We are looking at some of the European expansion and we have appliedfor some of the traffic rights to the civil aviation ministry. I hope those clearances will come, so that we as anIndian carrier can get India’s market share to what we deserve,” Jet Airways chairman Naresh Goyal told Indianmedia. However, Goyal promised shareholders that the airline would only pursue sustainable expansion.Present targets for Jet are 11 to 12 per cent growth for domestic traffic and 12 to 15 per cent for international.

Czech, Etihad reach codeshare agreementCzech Airlines and Etihad Airways have signed a codeshare agreement. The Czech Republic flag carrier willlaunch direct flights between Abu Dhabi and Prague, and offer onward global connections through Etihad’snetwork. The connections include Middle East cities such as Abu Dhabi, Muscat, Bahrain and Kuwait. Theagreement will also allow Etihad passengers to book flights straight through to Prague and beyond to otherCzech Airlines-serviced routes.




Sixth airport for LondonEasyJet, Europe’s second-largest low-costcarrier, is to launch flights from SouthendAirport. The decision to base three aircraftat the coastal airport, offering flights toSpanish and Portuguese destinations suchas Barcelona, Ibiza and Faro, effectivelygives London a sixth international airport– after Heathrow, Gatwick, Stansted,Luton and London City. It is thought thatSouthend could handle two millionpassengers per year by 2019 from itsenviable position on the east coast, whichallows aircraft to avoid congested Londonflight paths, potentially cutting journeytimes by 20 minutes. It is roughly thesame distance from central London asStansted, which handled 18.6 millionpassengers in 2010.

Airbus beefs up A350-1000Airbus will increase payload and rangeon its A350-1000 after Rolls-Royceagreed to increase the thrust of theTrent XWB engine from 93,000lbs to97,000lbs. The greater power positionsthe A350-1000 as a competitive threatto the 365-seat 777-300ER. Airbus’decision will add 400nm to the rangeof the 350-seat A350-1000 and 4.5tonnes to its payload, but will pushback its entry into service by 18months, to 2017. In addition entry ofthe smaller A350-800 will drift twoyears to 2016, though late 2013remains the planned entry date for theA350-900. Rolls-Royce has beengranted exclusivity to power theA350-1000.

Bizjet Superjet 100announced, stretch on holdSukhoi has revealed plans for a bizjetversion of its Superjet 100. The manu-facturer announced broad plans at theParis Air Show but said more detail wouldbe announced in October. Suggestionswere that the aircraft would include amaster bedroom, shower and businesssuite to be priced at around $50m.Vladimir Prisyazhnuk, CEO, said the com-pany had received numerous requestsfrom people who “appreciated” theregional aircraft. Plans for a stretchedversion of the aircraft are now on hold.

NEWSHIGHLIGHTSANI signs for five MRJs, considers 20 moreHong Kong-based lessor, ANI, has signed a pre-contract for five Mitsubishi Regional Jets (MRJs), becoming thefirst Asian customer for the aircraft outside Japan. A subsidiary of Aero Nusantara Indonesia, an IndonesiaMRO, ANI leases aircraft to five Indonesian airlines. “Indonesia is a rapidly developing market. Since thiscountry is formed by more than 17,000 islands, has a population of more than 240 million people, and has arapidly growing economy, airplane travel from city to city will undoubtedly increase as time goes on. Regionaljets will therefore be essential for Indonesia,” ANI’s management said in a statement. It is unknown what sizevariant of the MRJ ANI has ordered, but management also stated: “We are considering an additional order of20 when the MRJ family is expanded to cover the 100-seat class.”

Airbus reveals 2050 concept aircraftAirbus has unveiled its Concept Cabin, which hints at what air travel might be like in 2050. Instead oftraditional cabins, Airbus has devised personalised zones. A ‘vitalising zone’ delivers vitamin and antioxidantenriched air, mood lighting, aromatherapy and acupressure treatments. An ‘interactive zone’ featuresholographic gaming, advance in-flight communication, interactive shopping and changeable virtual rooms.Airbus also revealed concepts including seats that morph to your body shape and self-cleaning materialsmade from sustainable plant fibres, which would also harvest passengers’ body heat to power cabin features.“Such technologies are already being developed and, while they may not be seen in the exact same manneras in the Airbus Concept Plane and Cabin, some of them could feature in future Airbus aircraft programmes,”the manufacturer said in a statement.

ST Aero forms new enginelessorSingapore’s ST Aerospace and Japanese tradingcompany Marubeni are to set up an equally ownedengine leasing company. The 50:50 joint venture,which will be called Total Engine Asset Management(TEAM), will initially stock CFM56 engines fornarrowbodies. The company’s two investors saidTEAM will spend $100m on assets over its first twoyears. It plans to begin operations in 2H 2011.“Marubeni has an extensive track record in theinvestment of engine development programmes andaircraft leasing, as well as in providing sales agencyservices for commercial aircraft, engines, businessjets and various other services,” said Gentaro Toya,senior operating officer at Marubeni’s transportationmachinery division.

CFM takes record orders forCFM56-5B and -7BsCFM International has topped its own records bybooking firm orders for 420 CFM56-5B and CFM56-7Bengines during the Paris Air Show – the largest weeklytotal ever taken. Customers of the CFM56-5B includedAir Lease Corporation (ALC), which ordered enginesfor 20 A320 family aircraft; Hainan Airlines for 42 A320family aircraft; Jazeera Airways for four A320s;National Air Services (NAS) for 20 A320 family aircraft;Shenzhen Airlines for 10 A320 family aircraft; TibetAirlines for three A319s; and Virgin America for 30A320s. With the CFM56-7B, ALC will power 14 737-800sand Malaysia Airlines will power 10 737-800 aircraft.MIAT Mongolian Airlines ordered the engines for two737-800s; Norwegian Air Shuttle for 15 737-800s; andUTair Aviation for 33 737-800s and seven 737-900ERs.




NEWSHIGHLIGHTS GoAir places monster A320 orderIndian budget carrier GoAir has ordered72 A320 neos for delivery from 2015through 2020. The airline will also add 10current generation A320s to its fleet,which presently numbers only 10 aircraft,from next year. The neo order is worth$7.2bn at list prices. No engine selectionhas yet been made. GoAir is part of the Wadia conglomerate; in a statementmanaging director, Jeh Wadia, said: “Interms of aircraft, we see tremendouspotential in India, which has barely sixairlines with 350 aircraft catering to abillion people, compared to China’s present1,100 aircraft.” Rival Indian budget carrierIndiGo ordered 180 A320s, which includedthe launch order for the A320 neo.

Cebu bets on A321 neoPhilippine low-cost carrier Cebu Pacifichas ordered 30 A321 neos and conver-ted seven A320 options into firmcontracts. Cebu has also placed optionsfor 10 more 220-seat A321 neos. Thecontract takes Cebu’s firm orderbacklog with Airbus to 55 aircraft, com-prising 25 A320s and 30 A321 neos. Thelatest aircraft to be signed for, worth$3.8bn at list prices, will be deliveredbetween 2015 and 2021; 18 previouslyordered A320 are scheduled fordelivery through to 2014. Cebu’s dealfor the A321 neo represents thebiggest single order to date for thelargest of Airbus’ forthcoming narrow-body line. The airline is still to make anengine choice for the aircraft.

Boeing weighs potentialfor breakthrough enginein 2020sA little more light has been shed onBoeing’s plans for a successor to the 737.Randy Tinseth, VP marketing at BoeingCommercial Airplanes, said that anydecision to produce for an all-new aircraftby 2020 would assume that no new‘disruptive’ engine technology emergedin the years up to 2030. However, Tinsethdid add that Boeing would prefer toproduce a new airframe rather than re-engine current models. His commentscoincided with the release of Boeing’slatest market outlook, which predicteddemand for 33,500 aircraft of more than100 seats over the next 20 years.

ALAFCO firms deal for 30A320 neosALAFCO, the Kuwait-based leasing andfinance company, has firmed its orderfor 30 A320 neo aircraft at the Paris AirShow. A preliminary contract hadalready been announced at the show.ALAFCO had already penned a dealfor six A350-900 aircraft; its total orderbacklog is now 56 aircraft.

The first commercial flight to operate on biofuel hassuccessfully taken place. The KLM Royal DutchAirlines 737-800, with a 50/50 blend of conventionaljet fuel and renewable jet fuel in both engines,carried 171 passengers from Schiphol, Amsterdamand flew to Charles de Gaulle, Paris on June 29.

The flight was operated on biokerosene – ahydroprocessed esters and fatty acids (HEFA) fuelproduced from used cooking oil – and was a previewof a series of more than 200 flights the airline hasscheduled for September. The same raw material willbe used in these flights, which will also be carried outon the Amsterdam-Paris route. The fuel was suppliedby Dynamic Fuels via SkyNRG, the consortium co-

founded by KLM in 2009 with the North Sea Groupand Spring Associates.

Meanwhile, Thomson Airways has announced thatit is to become the UK’s first airline to operate acommercial flight using biofuel. Subject to finalsafety clearance being received, the flight will takeoff from Birmingham, England on July 28 and land inPalma, Spain. Thomson will use the same usedcooking oil/ conventional jet fuel mix as KLM in bothof the aircraft’s engines. Weekly flights to Spain usingthe biofuel will then commence in September andrun for one year, the airline said. The same route willbe used initially, switching to Birmingham-Alicanteduring the winter schedule.

Virgin to swap MAS for SIAVirgin Australia has applied to Australian anti-trustauthorities for an alliance with Singapore Airlines(SIA), in a move that would see it abandon itscodeshare with Malaysia Airlines (MAS). Virgin and SIAwant to co-operate on pricing, scheduling, marketingand frequent flyer programmes. Though no specificroutes were revealed in the application, Virgin said itwould not let any part of an SIA codeshare overlapwith that in place with Etihad. MAS, meanwhile hasapplied to join the oneworld alliance and is pursuingcloser ties to Qantas, in itself sufficient reason forVirgin to wind down its relationship.

Brave new world for commercial biofuel flights

US airlines take $5.7bnin feesUS airlines took almost $5.7bn in baggage andreservation fees during 2010, according to the USDepartment of Transportation’s (DOT) Bureau ofTransportation Statistics (BTS). American passengerairlines took more than $2.1bn profit from fees in thesame year with baggage and reservation fees bringing$906m and $646m respectively. “Airfares todayremain an unmatched bargain – in real terms whenadjusted for inflation, it still costs far less to fly, evenwith ancillary fees included, than it did during the1970s,” the ATA said in a statement.

India’s oil companies toldto help Air IndiaIndia’s state-run oil companies have been told tocontinue to provide aviation fuel to the flag carrier,Air India, despite its mounting fuel debts. The ‘cashand carry’ form of payment put in place by the oilcompanies since December has been halted andVayalar Ravi, minister of India’s Civil AviationAuthority, requested that fuel be provided to theairline for the next three months. Air India willcontinue to pay INR16.5 crore per day in keeping withits previous agreement. The airline will be allowed totake additional fuel worth INR1 crore in the nextthree months. ($1=44.7INR. Crore =10m)




NEWSHIGHLIGHTSThai plots fleet renewalThai Airways will add 37 new aircraftto its fleet between 2011 and 2017.The airline’s board has approved thepurchase of six 777-300ERs and fiveA320s, to be delivered from 2014 to2015; the purchase of four A350aircraft and the 12-year lease of anadditional eight, with deliverybetween 2016 and 2017; a 12-yearoperating lease for eight 787 aircraft,with delivery between 2014 and2017; and a 12-year lease for sixA320s, to be received from 2012 to2013. Thai has also outlined plans toadd a further 38 aircraft to its fleetfrom 2018 to 2022, though thatstrategy awaits board approval at alater date.

Air Mauritius out of the redAir Mauritius has swung to a $15m profitfor the 2010/11 financial year after losing$6m the year before. “Over the last year,we have grown capacity to pre-crisislevels” said Andre Viljoen, the airline’sacting chief executive. Air Mauritius saidit would continue growth and open newroutes to China this year.

The US’ National Transportation Safety Board (NTSB)has unveiled its annual list of the top 10 most criticaltransport safety issues that need to be addressed.Aviation concerns feature heavily on the organisation’s‘most wanted list’. These are: to promote pilot and airtraffic controller professionalism; address humanfatigue; require safety management systems; improverunway safety; require image and onboard datarecorders; and improve general aviation safety.

“The NTSB’s ability to influence transportation safetydepends on our ability to communicate and advocatefor changes,” said NTSB chairman Deborah Hersmanin a statement. “The most wanted list is the mostpowerful tool we have to highlight our priorities.”

The organisation says numerous accident investi-gations have shown that a safety management system(SMS) or system safety programmes could haveprevented loss of life and injuries. It says aviation

organisations should establish a SMS to help “predictand correct problems to prevent accidents” and thatthey “are also a natural complement to investigationswhen accidents do occur”. The NTSB also thinks SMSand system safety programmes can be effective in allorganisations, regardless of their size.

Also highlighted in the list was the “disturbingnumber of individual incidents of non-compliantbehaviour, intentional misconduct, or lack of commit-ment to essential tasks” that has demonstrated “anerosion of pilot and air traffic controller profession-alism”. The NTSB believes the industry can providebetter guidance on expected standards of perform-ance and professional behaviour, while monitoringperformance and holding pilots and air trafficcontrollers accountable will reinforce the “absoluteimportance of maintaining the highest level ofprofessionalism”.

‘Most Wanted’ safety issues revealed

AWAS re-prices term loan facilityDublin-based aircraft lessor, AWAS, says it has favourably re-priced its May 2010 $530m term loan facility toachieve a 250 basis points advantage over the previous terms. The company says the revised terms will giveit increased flexibility to acquire attractive new and used aircraft. Goldman Sachs Lending Partners andMorgan Stanley Senior Funding, acting as joint lead arrangers, closed the transaction.




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

We know where the world’s going

Qantas cancels orders asit reduces expenditureQantas has cancelled nine aircraftorders as it scales back its growth and spending in 2011. The airline will reduce its outgoings by A$400m ($426m) in the year ahead and willlower aircraft leasing costs by A$300m.Orders for 12 narrowbodies have beendeferred or cancelled, three of whichwere due in 2H 2011. Furthermore, theairline will reduce domestic capacitygrowth for 2011 to 2012 from eight to5.5 per cent. Qantas has already an-nounced that it will slash jobs, most ofwhich are expected to be managerial.The carrier said its cuts were a result ofhigh fuel prices and natural disasters.

IndiGo confirms mammothA320 neo dealIndian budget carrier IndiGo has finaliseda deal, first announced in January 2011,for 150 A320 neos and 30 standardA320s. The order adds to one for 100A320s placed in June 2005. Almost halfthe aircraft from that have now beendelivered. No engine selection for the newA320 neos has yet been made.

Virgin strike could shakeinvestor relationsVirgin Atlantic’s pilots have voted in favour of a strikewhich head, Sir Richard Branson, has said wouldleave “an indelible scar on the company”. Members ofthe airline’s union, Balpa, voted in protest of a fourper cent pay rise after several years of pay freezes.Branson said that the threat of strike would dissolvepassengers’ and investors’ trust in the company. “Itwill affect jobs and it will make it very difficult forthe company to afford the current offer on the table,”he claimed. “They have also played into the hands ofour larger rivals.”

Boeing increases production Signalling that the aviation industry is on the up, Boeing is to increase its production rate for the 737 to 42 amonth in 1H 2014 – that’s two every working day.

“Customers are demanding our Next-Generation 737 at an unprecedented rate,” Jim Albaugh, CEO forBoeing Commercial Airplanes (BCA), said in a statement. “New performance improvements and enhancedpassenger comfort features have driven home the value equation for our customers.”

The production rate will match Airbus for its competing A320, though Airbus is to churn out 42 of theseper month as soon as 4Q 2012. The European manufacturer now builds 36 A320s a month and will boost thisto 38 in August and 40 early next year.

Speaking at Boeing’s annual investor conference in Seattle Albaugh said: “We need to move our productionrates up in response to market demand… In my mind, seven years of backlog is too much.” He added thatthere would be demand for 33,000 new commercial aircraft, worth almost $4tn, over the next 20 years andthat BCA would increase its production rate by 40 per cent in the next three years.

Last year, Virgin hired Deutsche Bank to find invest-ment partners. Etihad and Delta Air Lines bothdeclared an interest, though Etihad’s CEO, JamesHogan, told reporters recently that the airline’spriorities have changed.

Virgin’s future seems dependant on Branson andhow much control he is willing to relinquish.Branson has said he would prefer for SingaporeAirlines to sell some of its 49 per cent stake anddescribes Virgin with the steely protectiveness:“Virgin Atlantic was very much my baby and nowshe’s a very beautiful young lady,” he told the pressrecently. “I will always remain a major shareholderin this airline.”




NEWSHIGHLIGHTSUnited merger withContinental “on track”The merger of United Airlines andContinental Airlines is on track andset to be completed by the end of theyear, according to multiple reports.United Continental Holdings CEO JeffSmisek told shareholders the com-pany should receive a single operatordesignation from the Federal AviationAdministration (FAA) in that time. Thecompanies closed the $3.17bn mergerlast October; it is expected to create$1bn in annual benefits and savingsby 2013. However, the Air Line PilotsAssociation (ALPA) was critical ofSmisek’s optimism, saying that a bar-gaining agreement to unite theairlines’ pilots was “nowhere near onschedule”.

Frontier fined for notposting performance dataThe US Department of Transportation(DOT) has fined Frontier Airlines $40,000for failing to display on-time performancefor its flights on its website. “Air travellershave a right to know whether the flightthey are buying is chronically delayed orcancelled,” said US transportationsecretary Ray LaHood. DOT rules state thatthe 16 largest US carriers must postinformation such as the percentage ofarrivals that were more than 30 minuteslate, with special highlighting if theseflights were late more than 50 per cent ofthe time; and the percentage ofcancellations if more than five per cent ofthe flight’s operations were cancelled.

Cargolux welcomes Qataras strategic investorQatar Airways has finalised thepurchase of 35 per cent of Luxem-bourg freight carrier Cargolux. Qatarbought the stake from Luxembourg’sgovernment and other investors who picked up Swissair’s one-thirdshare of Cargolux in 2009. Analystshave valued the stake at between$220m and $300m. “[Qatar Airways]want to become a major player in air cargo so we clearly view them asbeing a strategic long-term partner,” aCargolux spokeswoman told Reuters.

A380 out of the woodsThe A380 could break-even in the 2014-2015 period,seven years after its entry into service. Speakingahead of the Paris Air Show, EADS CEO Louis Galloissaid that favourable dollar-euro exchange rates andnew production efficiencies had hauled back a break-even date that some analysts had put as far out as2020. Ten years ago Airbus said it would only needto sell 270 A380s to break-even. Cost overruns,production delays and a cool reception from airlineshad seen that figure slip to 420 airframes by 2006.

Current orders for the aircraft stand at 234.Last year, though, Airbus speculated that it could

break-even by 2015 if dollar exchange rates remain-ed favourable. Gallois has since said that €1.35 to thedollar is the required rate. There is, of course, noguarantee of that. Moreover, depending on account-ing practice, break-even does not necessarily meanthat an aircraft has recouped all of its costs.Nonetheless, the end of a fraught beginning is insight for Airbus’ poster aircraft.

Minneapolis closures forceDelta repayment ofNorthwest loanMinneapolis-St. Paul International Airport hasdemanded that Delta Air Lines repay $175m ofgovernment-backed loans related to the bailout ofNorthwest Airlines, with which Delta is now merged.Delta has said that it will close training centres atMinneapolis, Northwest’s former base, negating aprior condition of the loan that Northwest maintainits headquarters at the airport. The loan had been duefor repayment in 2016, but that date has now beenbrought forward to early 2012.

Alaska Air to repurchase $50m of common stockAlaska Air Group’s board of directors have approved a stock repurchase programme authorising the companyto buy up to $50m of its common stock. The decision is “consistent with the company’s practice ofrepurchasing shares opportunistically and underscores our commitment to providing a reasonable return toinvestors while preserving our strong cash balance,” commented Bill Ayer, Air Group chairman and CEO.Alaska Air has repurchased approximately 7.5 million shares of its common stock for nearly $21m over thepast four years.

African volcano cancels flightsFlights within Ethiopia, southern Egypt and the Sudan were cancelled and delayed in June due to the eruptionof the Nabro volcano in Eritrea, which started on June 12. The last known eruption of Nabro was in 1861; thelatest eruption was thought to be due to earthquakes in the region. Meanwhile, the eruption of Puyehue inChile, which began on June 4, continued to affect flights in Australia throughout the month. Virgin Australiasuspended flights to Perth. Qantas and its subsidiary Jetstar cancelled flights to Perth, New Zealand, thesouthern island of Tasmania and the Argentinean capital Buenos Aires.




Patrick Murphy to advise Peach AviationRyanair’s former chairman, Patrick Murphy, is tojoin Peach Aviation – Japan’s first low-cost carrier –as its corporate advisor. Murphy was appointedchairman of Ryanair in 1991, leaving in 1994 tobecome a consultant and advisor to a number ofairlines. “It is our great pleasure to welcome MrMurphy on board as our corporate advisor. Tobecome a completely new type of airline that linksdestinations in Japan and Japan with Asia, I believehis advice and recommendations will be veryvaluable to the team,” commented Shinichi Inoue,CEO of Peach Aviation.

BAA announces new chief operatingofficer for HeathrowNormand Boivin is to join BAA as its chief operatingofficer for Heathrow, effective August 29. Normand,who has been in the industry for almost 30 years, willleave his post as operations director for Aéroports de Montréal for the new role. “Normand’s immedi-ate mission is to accelerate the improvement ofHeathrow by developing our security processes,implementing the recommendations of the Heath-row Winter Resilience Enquiry, and preparingoperations for the Olympics and Paralympics in2012,” said Colin Matthews, BAA CEO.

Frank Pray to head Intrepid AviationFrank Pray has been hired as president and CEO oflessor Intrepid Aviation. Pray was president and CEOof AWAS from 2006 to 2010. Before that, he served asSVP of sales at CIT Aerospace for nine years, and as adirector at CIT Aerospace International. On his teamwill be Volker Fabian, who has been appointed chiefcommercial officer. Fabian was formerly co-MD atAmentum Capital. Prior to that, he was with HSHNordbank and CIT Aerospace.

GoAir appoints De Roni as CEOGiorgio De Roni, the former chief revenue officer atItalian carrier Air One, is to head GoAir as its newCEO. De Roni will manage the foreign expansion ofthe low-cost Indian airline. He was selected by GoAir’sMD, Jeh Wadia.

Solem joins Bombardier sales teamAnders Solem has been appointed as VP sales, Chinaat Bombardier’s commercial aircraft division. Solemwill lead the newly established China Sales regionand report to Chet Fuller, SVP sales, marketing andasset management. Solem has more than 25 years ofaviation experience; before joining Bombardier heworked at Lockheed Martin as corporate VP, newbusiness initiatives and has also served in many roles at GE.

Gurassa takes non-executive directorshipwith easyJetCharles Gurassa has been appointed as a non-executive director at easyJet, effective June 27, 2011.He will also become deputy chairman of the boardand senior independent director from September 1, 2011.

Edwards to leave Jet AviationPeter Edwards has announced his departure aspresident of Jet Aviation, effective August 31, 2011. Heinitiated a transition of leadership from July 4, withJoe Lombardo, EVP of General Dynamics AerospaceGroup, taking the role of president in the interim.Edwards has led the company since May 2007.

Isle of Man aviation director leaves postBrian Johnson has decided to step down as directorof civil aviation on the Isle of Man, effective August26. Johnson was instrumental in the establishmentof Isle of Man aircraft registry, which has grown tobe the eighth-largest register of business aircraft inthe world.

Hogan joins IATA boardJames Hogan, CEO of Etihad Airways, has beenelected to the board of the International Air TransportAssociation (IATA). Hogan began his career at AnsettAirlines and went on to hold positions with bmi andGulf Air, taking the top job at Etihad in 2006.

Bombardier’s James Hoblyn passes awayJames Hoblyn, president ofBombardier customer servicesand specialised and amphibiousaircraft passed away on July 3.In a statement, Bombardier saidHoblyn’s “boundless passion forour industry and his unrelentingfocus on customer experiencewill leave a lasting imprint on usall. His contributions, kind spiritand quick wit will be deeply missed”. Bombardierheld a minute of silence in honour of Hoblyn on July 7. Michael McQuay will oversee all areas of theBombardier customer services team in the interim,while retaining his current role as president ofAircraft Service Centres.

Christie joins Pinnacle AirlinesPinnacle Airlines has named Edward Christie as its newVP and CFO. He joins from Frontier Airlines where heserved as SVP and CFO. Christie, a partner at VistaStrategic Group, succeeds Peter Hunt, and is expectedto assume his new role at Pinnacle by July 25, 2011.

FAA cements Grizzle in ATC roleThe Federal Aviation Authority (FAA) has named DavidGrizzle chief operating officer of its air traffic organ-isation. Grizzle had previously occupied the role onan interim basis when former head Hank Krakowskistepped down following the scandal involving airtraffic control workers falling asleep on duty.

Tiger Airways undergoes rapid reshuffleChin Yau Seng, former CEO of SilkAir, is to take controlof Tiger Airways Holdings as acting CEO following thegrounding of the airline’s A320 fleet on July 2, 2011, dueto safety concerns. Tony Davis, president and CEO ofthe holding company, will lead Tiger AirwaysAustraliain place of Crawford Rix. Davis will continueto serve as a director of Tiger Airways Holdings.

PEOPLE IN THE NEWS Latin America joins EUETS protestsThe Latin America and Caribbean AirTransport Association (ALTA) hasbecome the latest body to criticise theinclusion of international aviation inthe European Union’s EmissionsTrading Scheme (EU ETS). Calling ongovernments, its members and itsindustry partners to reject thescheme, it said it considered the EUETS to be “an illegal, flawed andunjust attempt to force the aviationindustry to concede to unilateral andbiased measures to the benefit ofEuropean carriers”. ALTA said thescheme threatens to negatively affectits carriers and “cost them hundredsof millions of dollars over the firstfew years of implementation”.

ATR bags major lessorAircraft lessor GE Capital Aviation Services(GECAS) has placed its first-ever orderwith French turboprop manufacturer ATR.GECAS ordered 15 ATR72-600s and took15 options on the type in a deal valued at$680m at list prices. “This deal underlinesthe increasing interest of leasingcompanies for ATR aircraft, as they eyethe success of our aircraft and,particularly, the increasing businessopportunities they provide,” said FilippoBagnato, CEO of ATR.

Disaster averted asaircraft lands on runwayundergoing maintenanceA Thai AirAsia A320 mistakenlylanded on a runway undergoingmaintenance work at Kolkata airport,according to the Times of India. Adisaster was narrowly avoided whenone of the workers spotted theaircraft approaching and alerted hiscolleagues, who were all able to getoff the runway in time. The aircraft,which was carrying 141 passengers,landed about 500m from the spotwhere they were working. The pilothad been told by air traffic control to land on the airport’s secondaryrunway, but only realised his error afew seconds before touchdown.

ALC pens lease agreementsfor 25 aircraftAir Lease Corporation (ALC) has signedlease agreements for 25 additional air-craft. TRIP Linhas Aereas has entered intolong-term lease agreements for six ATR72-600s and six E190LRs to be deliveredbetween July 2011 and October 2012.Bulgaria Air is leasing four E190s due forMarch, April, June, and November 2012.Asiana Airlines is taking a new A330-300in September 2012. Garuda IndonesiaAirlines has signed a 12-year leaseagreement for an A330-200.




Blue Panorama ordersSuperjet 100sBlue Panorama Airlines has ordered 12Sukhoi Superjet 100s at the Paris Air Show.President of the Italian airline, Franco Pecci,said the aircraft would be used to “offernew routes into markets that are not oftenconnected today”. President of SuperJetInternational, Carmelo Cosentino, com-mented that “Blue Panorama is a dynamicand aggressive airline” and is expanding itsfleet in the regional market.

LAN places South America’sfirst A320 neo order Chile’s LAN Airlines has become thefirst South American carrier to sign afirm order for the A320 neo. The airlinehas ordered 20 of the type. Brazil’slargest airline, TAM – with which LANplans to merge – has already signed apre-contract for 22 A320 neos. LAN hasnot yet made an engine choice.

A380 orders edge upSkymark Airlines has ordered two moreA380s. The Japanese carrier will now takedelivery of six of the type for use on routesbetween Tokyo Narita and Europe and theUS. A380 orders now total 236 from 18customers.

UTair updates 737 fleetRussian airline UTair Aviation has ordered seven 737-900ERs and 33 737-800s. The company’s current fleet includes 21 737-500s, seven 737-400s,four 757-200s and two 737-800s.

AviancaTaca agrees MoU for33 A320 neosEstablished A320 operator AviancaTaca hassigned a memorandum of understandingfor 33 A320 neos and 18 current modelA320s. The newly merged Latin Americanoperator already operates 78 A320-familyaircraft. If confirmed, its A320 neo orderwould be the largest in the region.

No new Etihad bondsEtihad has financing for aircraft thisyear and does not intend to issuebonds, the Abu Dhabi airline has said.Etihad secured a 10-year financing planwhen it placed an order for 205 aircraftat Farnborough in 2008. The airline saidit is likely to secure $13.3bn to triple itsfleet in the next decade.

Thai Airways selects Brussels for European growthTHAI AIRWAYS INTERNATIONAL IS TO INAUGURATE FLIGHTS between Bangkok and Brussels, its eleventhdestination in Europe. The airport has been negotiating the new route for a number of years but discussionsintensified in 2011 after Brussels Airport executives learnt that the Thai national carrier had the capacity tointroduce a new three-times weekly link to Europe this year during a special Route Exchange briefing at theRoutes Asia forum in Incheon, South Korea in March.

“We have been in talks with Thai Airways for several years to add to the growing Star Alliance hub atBrussels,” said Leon Verhallen, head of aviation marketing, Brussels Airport. “At Routes Asia, Thai Airwaysannounced during their Route Exchange briefing that three weekly frequencies had become available forEurope. We saw many airports competing for this but are very pleased that our relationship with ThaiAirways, with frequent meetings at Routes events, has resulted in today’s announcement”.

Thai Airways will offer a three-times weekly schedule on the route from November 17, becoming the onlycarrier to offer non-stop scheduled flights between the two countries. An estimated 103,000 passengerstravelled between Brussels and Bangkok in the past year, the greatest share flying via Abu Dhabi with EtihadAirways (26 per cent), followed by Copenhagen with SAS Scandinavian Airlines (16 per cent) and CairoInternational with EgyptAir (nine per cent).

The airline will use a Boeing 777-200ER with 30 Business Class and 262 Economy seats and will offer aschedule that will deliver onward connections throughout Asia and Australasia from Bangkok. Thai Airwaysalready operates services to the European destinations of Athens, Copenhagen, Frankfurt, London, Moscow,Munich, Oslo, Paris, Stockholm and Zurich.

Turkish delight for China SouthernCHINA SOUTHERN AIRLINES IS TO LAUNCH A NEW FLIGHT TO ISTANBUL, its first service to Turkey. TheAsian carrier is to offer a thrice weekly Beijing-Urumqi-Istanbul Ataturk link from September 2. It will usea 757-200 on the route and will compete with Hainan Airlines on the Urumqi-Istanbul sector; the latter isdue to inaugurate a twice weekly link that originates in Shanghai on July 11.

China Southern currently offers flights to two other European destinations outside of the Russian andCommonwealth of Independent States markets, with links to Amsterdam from Beijing and Guangzhou andParis Charles de Gaulle from Guangzhou. An estimated 198,000 passengers travelled between Turkey andChina in the past year, up 13.3 per cent on the previous 12-month period. Turkish Airlines (THY) currentlydominates this market with a 79.8 per cent share.

AeroGal descends into Peruvian marketECUADORIAN CARRIER AEROLÍNEAS GALÁPAGOS (AEROGAL) has introduced flights to Peru with new linksto its capital Lima from Quito and Guayaquil. The airline and now serves three international destinations,adding to existing links to Bogota and Medellin in Colombia. AeroGal is offering a three-times-weekly servicefrom Guayaquil and eleven flights per week from Quito. It will face tough competition from TACA and LANAirlines in both these markets. TACA offers 10 and 13 weekly frequencies to Guayaquil and Quito,respectively, while LAN has seven and 10 flights per week. An estimated 121,000 passengers travelled to thePeruvian capital from Guayaquil in the past year with around 88,000 making the journey from Quito.

Malaysia Airlines inaugurates Saudi linkASIAN CARRIER MALAYSIA AIRLINES (MAS) WILL OPERATE A SERIES OF 15 FLIGHTS between Kuala Lumpurand Riyadh. The national carrier inaugurated the link on June 24 and will offer three flights per week untilJuly 27 to cater for the growing interest by Saudi Arabians to spend their summer holidays in Malaysia.

“Malaysia is a value for money and convenient destination for the Saudi nationals as they do not need visasto visit Malaysia,” said Abu Tahir, regional SVP for Middle East, Africa and South America, MAS. “We thankthe Saudi authorities for their timely assistance for us to mount these flights.”

MAS has had a long presence in Saudi Arabia with the commencement of annual Hajj services betweenKuala Lumpur and Jeddah on April 1, 1974. By June 4, 1978, Jeddah was added to the airline’s network ofscheduled services.

Virgin Atlantic to drop Kingston flightVIRGIN ATLANTIC AIRWAYS IS TO SUSPEND ITS TWICE-WEEKLY SERVICE between London Gatwick andKingston from the start of the 2012 Northern Summer season but will continue to serve Montego Bay on atwice-weekly basis. The UK carrier is no longer offering capacity to Kingston from March 25, 2012, a routethat is also flown by British Airways and is expected to be operated by Air Jamaica when it returns to the long-haul market.

Around 243,000 passengers travelled between the UK and Jamaica on scheduled flights last year, a marketthat is much larger when you also incorporate charter traffic. Virgin Atlantic handled 60.1 per cent of thesepassengers with its main rival British Airways flying 35.2 per cent. An analysis of this traffic data bydestination shows that the London Gatwick-Kingston market is more popular than London Gatwick-MontegoBay. An estimated 114,000 passengers travelled to or from Kingston with slightly less, 112,000, making thejourney to or from Montego Bay, although the yield to the latter is slightly stronger.

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AIR.FLEET_BULL_278x210.indd 1 13/06/2011 14:25

BOEING:PROGRAMMEUPDATE

Despite being weighed down by long-running pro-gramme difficulties with the 787 and 747-8, BoeingCommercial Airplanes (BCA) is immersed in sevenprogramme developments including those for the 787-9; 787-10; 737 (re-engine or new aircraft); and a 777study for an enhanced aircraft. There are also non-commercial programmes for the 737-based P-8APoseidon Navy sub-hunter and the 767-based KC-46Atanker. Scott Hamilton investigates.

THE FUTURE OF THE 737 IS HITTING HEADLINES WITHthe 787-10 beginning to draw major attention. Earlier thisyear, there were widespread expectations that Boeing

would reveal its plans for the 737 at the Paris Air Show. Sadly, thiswas not the case though officials at Boeing gave hints duringearnings calls, an investors day and in presentations.

Boeing executives are beginning to talk up the 787-10 as the anticipated “killer” of the A330-300. However, the 787programme was mooted to ‘kill’ the A330, which proved to haveremarkable resilience.

New aircraft developmentIndustry observers talk about a 737 replacement, but Mike Bair,VP of advanced 737 product development at Boeing, prefers justto say “new airplane”. According to Bair, a new aircraft wouldcomplement the current 737NG, which he and other officialspredict will be sold until at least 2026 – even if a new aircraftenters service in 2019 or 2020.

There has been a lot of talk about Boeing proceeding this with anew light twin (NLT) of 180- to 240-seats. It appears Boeing maybe settling on a single-aisle aircraft with company officialslabeling the proposed aircraft a ‘new small airplane’, or NSA.However, officials also told reporters in a pre-Paris Air Showbriefing that the size has not been decided, nor had it confirmedwhether the new offering would be a single- or twin-aisle.

A new 160- to 220-seat aircraft would be incrementally largerthan the 135- to195-seat two-class 737-700/900 family aircraftand is in keeping with the view that all market segments areshifting towards a slightly larger aircraft size.

The 737 programme It appears Boeing may abandon the lower-than 150-seat marketwith a new aircraft, but this does not mean it will abandon thesmaller market segment altogether. Boeing’s current vision tocontinue the production of the 737NG until at least 2026nominally means it will continue to offer the 135-seat 737-700.Sales of this aircraft have been slow, perhaps surprisingly as evenBoeing has touted the 737-800 against it, highlighting that itcarries more passengers for roughly the same operating costs.Nonetheless, BCA will pit the -700 against Bombardier’s CSeriesand Airbus’ A319.

Tied closely to the NSA discussion is Boeing’s choice of whether to re-engine the 737 or merely continue with productimprovement programmes (PIPs) in order to deflect thecompetition of the A320neo.

The amount of re-work on a 737 required to produce a re-engined variant is fairly extensive. On a technical level, Boeingknows how to re-engine the aircraft – but clearly, it is notenthusiastic. Bair, the VP of advanced 737 product development,has repeatedly said that Boeing does not see the valueproposition in a re-engined 737 (nor, for that matter, in the neo,which gained considerable orders at the Paris Air Show).

Despite Boeing’s claims that its customers would prefer a newaircraft to a re-engined one, sales of the A320neo suggest theidea of a re-engined 737NG is still very much alive.


FOCUS: Boeing

AFM74_Boeing_AFM71 12/07/2011 09:48 Page 12


FOCUS: Boeing

Part of the challenge is that the CFM Leap-X engine has a 70indiameter fan (compared with 61in on the CFM 56 engine, whichis used on the 737). This requires the nose gear to be extendedby six to eight inches. The heavier Leap-X means some structuralchanges are required to the wing, wingbox and surroundingstructure, adding to the complexity and cost.

But as recently as May 24, Jim McNerney, CEO of Boeing, said atBoeing’s investors meeting that the 737 re-engine programmehas not been definitively ruled out. The investment bank, UBSwrote in a research note: “Boeing commented that it would takea defection by a current 737 customer to get it to think moreseriously about re-engining. Boeing sees this as unlikely.”



FOCUS: Boeing

Since then it has been reported that Boeing’s long-standingcustomer, American Airlines, has been in discussions with Airbusfor it to provide 250 A320neos to fulfill the carrier’s fleet renewal programme. It has also been reported, following aleaked conversation with those close to the airline, that Americanhas also courted Boeing with the prospect of it providing theaircraft. Boeing has not yet lost a customer but there is littledoubt it would have to offer an extremely good deal, or a re-engined aircraft to beat Airbus.

At the air show media briefing, Nicole Piasecki, VP of Boeing’sbusiness development and strategic integration, argued that a re-engined 737 would – in Boeing’s view – be eight per cent moreeconomical than the A320neo and would be available until around2016. The NSA, which is riskier and costlier, would be twice aseconomical as a re-engined 737and should enter service by 2019.

John Hamilton, who heads the 737 engineering programme, saidstudies are now underway for a 737 re-engined with a Leap-Xthat has a smaller fan diameter, which could still fit on the low-slung 737 but which would eliminate the need for nose gearwork. The trade-off might be reduced fuel efficiency, he said.And there is reduced efficiency, the expectation is that the costwould be comparable.

At the very least, Boeing will continue to undertake PIPs, with agoal of shaving a few more percentage points off fuel burn bythe time Airbus’ neo enters service.

An off-shoot of the 737 commercial platform is the US Navy’s P-8A Poseidon. Development of this aircraft is largely complete,with flight testing now in progress. Boeing is developing a minorderivative of the P-8 for India and is offering the aircraft to othercountries that operate the ageing Lockheed P-3 Orion. ThePoseidon and Orion are mainly sub-hunters but the Orion isincreasingly used in maritime patrol, notably in the Indian Oceanlooking for pirates.

The 747-8 is two years late and delivery of the freighter version hasbeen scheduled for 3Q this year, though some believe it might slipto the beginning of 4Q. Troubled by a lack of engineering resources(which were diverted to the premier 787 programme longer thanintended) and aerodynamic issues (resolutions for which the FederalAviation Administration (FAA) still had to approve by late June), the747-8 remains a developmental programme even as it steps towardentry into service (EIS).

Because the GEnx-2B engines fall short of the fuel burn target, aGEnx PIP is due in about 18 months and Boeing is working toreduce the weight of the aircraft.

The commercial 767 has been on borrowed time since 2001 andsince the launch of the 787 programme in December 2003, butdelays to the 787 breathed new life in the aircraft as somecustomers ordered the aircraft to fill in capacity.

In February, a long lifeline was thrown to the programme whenthe US Air Force chose to award Boeing the tanker contract overEADS which had battled for a decade to pitch its A330-basedKC-30. The initial Boeing contract is for 179 KC-46As as thetanker is known; this extends the 767 production line to least 12years at the rates currently announced.

At Boeing’s media briefing during the Paris Air Show, it becameclear that the tanker is receiving the focus of the engineeringtalent and that PIPs for the commercial 767 are unlikely until thetanker is designed and flying. By this time, the current backlog ofthe 767 will have fallen and the commercial product may havedied its natural death. Kim Pastega, VP and GM of the 767programme, claims there is good commercial interest in the 767,but it is equally clear that (at least for now), Boeing will notenhance this ageing aircraft.

The 777 programme At one point, Boeing reasoned that prioritising the 777 over the737 was a good plan but it is now convinced Airbus will be asmuch as five years late with the A350-1000, which competeswith the best-selling 777-300ER. The A350-900, which competeswith the slow-selling 777-200 series, will be at least a year late.

The A350-900 is scheduled for EIS at the end of 2013, a slight slipfrom the advertised EIS of 1H. Airbus officials re-iterated this time-line at its air show media briefing, but there is a mounting rumourthat there will be a delay of at least six months. The ACAS databasestill shows a total of eight aircraft set for delivery in 2013, with thefirst going to Qatar in August. Airbus officials said in May that thereis a “reasonable chance” the EIS will be at the end of 2013.

During the Paris Air Show, Airbus was expected to announce thatRolls-Royce would increase the thrust of the -1000 by 5,000lbs inorder to add about 30 passengers and another 50nm. EmiratesAirlines, Qatar and Korean Air have each hoped for a larger -1000. EIS with these changes has moved from 2014 to late 2016.

Boeing’s options are to continue with routine PIPs, add a significantupgrade or wait until mid-2020 to produce an entirely new aircraft.The 2015 upgrade being considered includes enhancement of theGE-90 engines and a larger wingspan, according to Nicole Piasecki,VP of business development and strategic integration.

The 787 programmeBoeing is confident it will deliver the first 787-8 to its launchcustomer, All Nippon Airways, in August or September but othersin the industry believe it is likely to be later.

Boeing is putting the finishing touches to the 787-8 but it takesyears of production before a programme can be considered to berunning smoothly, yet engineers are already designing the 787-9and starting work on the 787-10. The 787-10 was put on holdwhile the difficulties of the787-8 were resolved, but now officialsare openly touting the 787-10 as the aircraft that will ‘kill’ theA330-300. The 787-10 is to be roughly the same size as theA330-300 and at about 6,800nm will have a longer range thanthe 5,850nm Airbus. With 300 passengers, the seat mile cost ofthe 787-10 would be outstanding, says Scott Fancher, head ofthe 787 programme. If the aircraft were offered today, Boeingwould have orders, he said.

The A330 proved difficult to kill. Indeed, sales have increasedsince the launch of the 787 due to its delay. Evaluating the A330,airlines found that the more conventional aircraft proved moreeconomical than had been realised. The A330-300 in particular,with its 6,000nm range, proved well-suited for intra-Asian routesand now also operates on US West Coast-European services.


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FLEET OPERATIONS: Scheduling systems

THE FUNDAMENTAL AIM OF FLIGHT PLANNING systems is to make the most efficient use of aircraft, pilotsand flight attendants within each airline’s own regulatory

and commercial constraints.

Some of the latest enhancements are designed not just toachieve those goals but to illuminate the financial implications ofoperational choices. The systems are also becoming easier to useas developers increase the level of automation and reduce theworkload for airline staff. And while they typically make theirsystems able to interface with rivals’ products, vendors tend toemphasise the benefits of more integrated solutions.

Rule-based systemsScheduling and crewing are closely related, says SITA’s director offlight operations, Toby Tucker. “Obviously the aircraft has to havea crew and they have to be qualified to operate that aircraft.” Sixyears ago SITA launched CrewWatch, a crew rostering andtracking extension to its FleetWatch operations control system.Since then, he says, further modules have been added toautomate pairing and rostering.

“CrewWatch is a very rule-based system,” he says. “When we takeon board a new customer, the first thing we do is document boththe rules of their regulatory authority and their in-house rules andunion agreements.” The rules are then encoded into the systemso that processes (such as automatic rostering introduced lastyear) can use them to create a roster that requires very littlemanual adjustment.

“It should have a good balance of work,” Tucker elaborates. “Ifthe airline’s policy is to never have four days off in a row, for ex-ample, it will adhere to that. Essentially it cuts down what wasmanually intensive tweaking of a roster and makes it almost fully automatic.”

FLIGHTPLANNINGAND CREWSCHEDULES

Flight and crew scheduling systems constantly add newfunctionality in response to the evolving operationalenvironment and merging user requirements. BernardFitzsimons examines the market.

To provide crew with access to data when they are on the road,views of rosters, personal information and flight schedules canbe made available via CrewWatch Mobile. “That can be accessedthrough the crew member’s mobile phone,” Tucker says.Developed in association with Cyprus Airways, it enables crewmembers to access the information using their own mobiles via awebsite that is aware of the device being used.

“It will present it correctly on an iPhone or Android device, and itwill not display information to any other type of device,” he says.

“When the crew are down route they don’t have to take a printedcopy of the roster, they can go in, have a look, chat with thepeople they’re working with on that particular flight, knowwhere they’re working next and deal with any queries.”

New this year is a bid line enhancement developed in associationwith Caribbean Airlines. “A lot of North American carriers andsome of the major carriers in Europe use a process so crews canbid for lines of work for the month,” explains Ian Wooldridge,head of scheduling and crewing. “Some of them use senioritybut others just use a bidding process. So we provided a portalthrough another module of CrewWatch, CrewConnex, which isa web browser whereby they can access the different lines offlying and bid for them for their next month’s work.”

CrewWatch then receives their bids and allocates the lines offlying. “It gives a better work-life balance for the crews,” he says.

“It also cuts down the work on the crew scheduler’s side becausethe system generates these lines of flying based on the automaticrostering process.

Legality is an over-riding concern. “We’re always looking at restperiods, training status, whether one of their qualifications isabout to expire so they need to be trained. When it comes tooperating that roster we’re tracking all the hours that have

AFM74_Crew schedule_AFM73 12/07/2011 10:04 Page 16



actually been flown by that crew, and any variation is tracked sowe can adjust the hours against that particular crew member,making sure their rest has happened.”

Both FleetWatch and CrewWatch work from the same database,Tucker adds. “If an aircraft goes ‘tech’ and operations controlswaps in a different type, the system would flag to him that thecrew who were going to operate that sector now can’t becausethey may not be cross-trained on that new type of aircraft.”

The operations control side also supports decision-making: “Wewould map certain assets and dollar rates for people orequipment, and when you’re swapping that aircraft it will showthe quickest or the cheapest way to get back to the schedule.And it will stop you doing things like putting an aircraft into anairport where you don’t have a ground power unit for thatparticular aircraft.”

Best practice demands that the operations side and the crewing side be integrated, he stresses, “not interfaced but trulyintegrated. Changing something in one area always has a knock-on effect in another area and the guy that’s making that changeor dealing with that issue should have that view at all times.”

On the fleet scheduling side, SITA’s FleetPlan handles generalschedule creation and management along with runway slotmanagement. “On top of that we have an application calledFleetPlan Max,” says Wooldridge. FleetPlan Max looks at theschedule in terms of profitability: “We feed the application withthe planned schedule, or a what-if schedule if you’re thinkingfurther ahead, then we connect it to various cost and revenuedrivers within the airline so that the fleet scheduler and seniormanagement can see how profitable the schedule is planned tobe. Nearer the time, they can see how profitable it is in terms ofdemand and forecast data.”

A further module within FleetPlan Max is a market model to addresswhat-if scenarios 18 months or two years ahead. “We have anagreement with OAG [an aviation data and analytics provider] toprovide us with the worldwide airline schedules of around 800airlines. So we can provide the airline with a view on seat capacityand routes that are currently being offered by competitors, and thenyou can model your schedule around avoiding those otherschedules or tying in with them in terms of alliances.”

Service providing New Cameroon’s national airline Camair-Co, which startedoperations in April, is supported by the first implementation ofLufthansa Systems’ NetLine service providing (SP) planning andcontrol solution. Designed specifically for small- and medium-sizedairlines, the new SP option runs in the Lufthansa Systems datacentre so that operators do not have to worry about investing inhost infrastructure or operating the system.

Bernd Jurisch, head of aircraft planning and control solutions, saysthe standard NetLine SP package includes the NetLine/Sched andNetLine/Crew schedule and crew management applications, alongwith the NetLine/Ops operations control system. It is open tocustomisation though: a small airline might not need the schedulingmodule to start with, but could add it later, along with options suchas maintenance control, slot management and slot monitoring.

Similarly, the core NetLine/Sched product is the same for allairlines, but some modules would not be appropriate for thesmall operators SP is designed to support: “For example, verysmall airlines don’t need a fleet assigner,” he explains.

“Nevertheless, if an airline is growing over time and needs a fleetassigner later on we are able to handle that.”

The three modules are very integrated, he says. “The airline doesnot have to worry about different systems using different data.Everything is based on the same data.” And the fact that thesame basic modules are used by airlines of all sizes means “wehave best practice implemented within our product. If an airlinestarts to work with our system with 10 aircraft and they grow to50 or so we don’t come to a point where we say, ‘now you haveto change from our small system to a big one.’ They can alwaysstay with the main basic system.”

The Camair-Co NetLine SP implementation took around sixmonths from contract signature last November, but the timescalecan be as little as six weeks, Jurisch says. “There was a lot of workto be done on Camair-Co’s side, that was the main reason why ittook so long. If everything is well prepared, we can make it faster.”The cost is largely a function of airline fleet size: there is usuallyan initial fee to cover project costs such as hardware set-up, thena monthly fee calculated on the basis of the number of aircraft.

Compared with an in-house solution, he says, the SP model cancost as much as 30 per cent less than an in-house solution. “Thatusually means we have quite a quick return on investment.”

At the other end of the operational scale from Camair-Co and itstwo-aircraft fleet, Lufthansa recently renewed its agreement coveringNetLine/Plan, which handles network planning, NetLine/Sched formedium- and short-term scheduling and SchedConnect forcodeshare management and schedule distribution.

In terms of best practice, Jurisch says Lufthansa Systems has soldNetLine licences as well as operating the systems itself. “NetLineSched, for example, has run on HP Unix, IBM, Sun, Linux and soon. So we have a lot of experience in different environments, andfor SP we have chosen one that allows us very efficientimplementation and operation, the highest speed and so on.”




It also benefits from customer feedback stretching 15 years ormore. “We have gathered a lot of experiences from differentairline customers and found the best way to support the users increw management, schedule management and so on.” Thesystems are developed constantly in response to customers’needs and “quite often we find that our customers learn fromeach other. We bring all our customers together once a year toexchange ideas and experience with the system, and of coursewe listen very carefully to what the customers want and bringwhat they need into our product.”

Although SchedConnect was developed in partnership with theairline, Jurisch says, “We decided from the beginning that wewere not going to develop a pure Lufthansa system but one thatcould be used by other airlines.” Now in use with around 15airlines, including Austrian and Egypt Air, the system handles astaggering 40 million schedule changes every month by the 15users and their 150 codeshare partners.

Enhancements to the NetLine systems are planned in response tocustomer requirements. Codeshare management, for example,typically involves the operating carrier scheduling flights whichare then promoted by the marketing partner. “But there areairlines working a different way,” he says. “Sometimes themarketing carrier sets out how the flight should look and theoperating carrier follows. This is something we are currentlyimplementing in SchedConnect.”

The network planning tool, NetLine/Plan, has benefited from anew graphical user interface and current efforts focus on makingit easier for smaller airlines to use. “It’s a network planning tooland currently more suited to the needs of bigger airlines,” Jurischexplains. It requires extensive data calibration ahead of eachschedule season, so the company is working to make it usablewith standard data to make it more attractive to smaller airlines.

NetLine/Crew is updated constantly in line with new and evolvingregulations, and Lufthansa Systems is working on the issue offatigue risk management, an issue “which has becomes quiteinteresting here in Europe and will become more interestingduring the coming years.” It is also working on capacitymanagement methods for crew management such as man-power planning and vacation planning, and will soon add a crewtraining module.

Another project is an interface to a hotel broker. “One of ourcustomers (and others are very interested) wanted to make use ofa hotel broker rather than doing the bookings themselves,”Jurisch explains. An improved graphical user interface is also onthe agenda. NetLine/Sched, meanwhile, will have improvedshort-term slot management and will be better integrated withrevenue management, so that schedulers can see the revenueimpact of schedule changes.

NetLine modules can be interfaced with other systems, Jurisch adds:“From our point of view this is not the best solution, but if an airline

wants to do that for specific reasons they can.” But integration hasits own benefits, such as checking whether it is possible to find agood crew solution to accompany schedule changes: “This is aquestion we can easily solve running our products.”

Tailored softwareUsers of Acrobatico’s crew management and operations controlsoftware, Acrobat, range through Monarch Airlines, Royal Brunei,the bizjet operator VistaJet and operators of single businessaircraft. Operations manager, Dean Stewart, says the companygoes to great lengths to adapt its software to the operation.

“We make the software work for you,” he says. “We are much moretailored than most of the other systems available, we will designdifferent modules for different customers and we’ll run differentversions of the same module for different customers. So we believein making the system easy to use, quick to pick up, but we makesure the functionality remains rich and detailed in the background.”

Ease of use is a principal focus. “We have the complicatedfunctionality behind the scenes and we do all the legalitychecking, the crew training checking, but we try to present a verysimple user interface and we try to produce a roster-generatingtool that does most of the work for the user.”

Affordability is important, and Acrobatico also aims to be fast.“The last customer we put in contacted us in November and they

were live before Christmas,” Stewart says. “That was VistaJet inAustria, they have a fleet of 51 business jets. We integrated ourcrewing system with their operations system and got the crewingup and live in about six weeks. A smaller operator we’d do fasterthan that, but that’s a typical response.”

The company also prides itself on customer support, he says: “Ifyou contact us with a problem we’ll fix the problem rather thangiving you a reference number and putting you in the queue andgiving you a service level agreement. If there’s a problem we’ll justfix it. That’s been our philosophy the whole way through.”

During the 10 years he spent as a rostering crew manager,Stewart says he found the users were becoming less experiencedand skilled. “The last wave of recruitment I did was really lookingfor people who could use simple computer systems and betrained to actually use computers rather than learning how thecrewing world works,” he comments. “Acrobat is the idealsystem for that, because you can pick it up very quickly and it willdo all the technical checks for you. It will produce a basic rosterand make sure it’s legal, all the communication with the crew canbe automated, it does most of the work, it really needs someonejust to supervise it.”

A web-based system should be available in the next year or so,Stewart adds: “I think everyone’s looking at the next generation,but at the moment I think most of the systems are pretty similar.”In the meantime, he would like to see operators making more useof the data and reports available.

“We produce an awful lot of good data and a lot of good reportsand the operators could make better use of that,” he says. “Avery simple example: if the system can tell you quite clearly thatyour flight to Tenerife on Tuesday was late last week – the weekbefore, and the week before – because of catering, talk to thecaterers before next Tuesday and stop the flight being late.” Wehave an awful lot of data and we and the airlines are stillstruggling to find the best way of delivering it so that they will acton it. It’s still a very retroactive industry.”


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FLEET OPERATIONS: Ground Ops

IT IS IMPORTANT FOR AIRLINES TO THINK CAREFULLYabout how best to streamline its ground operations to keepaircraft grounded as little as possible. The logic of doing so is

compelling: for a short-haul operator flying its aircraft on sectorsaveraging one to two hours and on eight to 10 sectors each day,trimming five to 10 minutes from each ground stop could createa time-saving that would allow the airline to schedule an extradaily one-hour sector flight.

If a long-haul intercontinental carrier cuts 20 minutes from eachof the two or three turn-arounds its widebodies typically makeeach day, it could gain an entire seven-hour sector for each of itsaircraft during the course of a week. Across a fleet of a dozenwidebodies, that could mean an airline gains enough aircraft-utilisation time to add a new destination to its network.Nevertheless, while it is important for airlines to keep their turn-around times to a minimum, carriers must ensure their customerservice does not suffer. Highly served routes will be pricecompetitive and customers are unlikely to be loyal to a brand.

Many factors create a successfully streamlined ground operation.Few carriers can turn an aircraft around faster than SouthwestAirlines. Ground operations experts cite the Dallas carrier – theworld’s first and biggest low-cost, low-fare airline – as a proudexample of good ground operation practices.

Standardising equipment and processes and aligning staff areall-important factors in keeping turn-around times down,according to Barry Payne, Southwest Airlines’ director of airportperformance improvements. Payne leads Southwest’s airportoperations performance improvement team, which focuses bothon how Southwest can keep its ground operations simple and onhow all stations can achieve optimum efficiency each day. It takesinto account factors such as varying schedules, varying trafficloads, weather delays and the local air traffic control situation.

According to Payne, one example of Southwest’s improvementsis its switch from a previously complex ground operations processto an express bag-drop service. “It’s a one-button transaction,”says Payne.

STREAMLININGGROUNDOPERATIONS

One of the biggest challenges for an airline is to makeits ground operations efficient and its aircraft turn-arounds fast without compromising customersatisfaction. Chris Kjelgaard reports on best practicesand possible future improvements.

When to be flexible and when tostandardise Payne’s team also works on achieving “dynamically selectable”staffing levels for daily operations at each station. The airlinematches its staffing levels to daily traffic, schedule andweather/ATC conditions while ensuring its operations remain safeand in accordance to union rules (Southwest is the US’s most-unionised airline and its most profitable – showing the two arenot mutually exclusive).

For instance, if a schedule has run smoothly through the first shiftand the rest of the day’s traffic is forecast to be normal or light,supervisors may instruct some staff members to end their shiftearly. Payne says that in abnormal situations such as clearing amajor backlog of delays, it can roster extra staff – as long as itfollows union rules.

This can be very important. Andreas Britz, a principal withaviation consultancy, SH&E, and formerly with Lufthansa Technik,says local managers need to be involved in decision-makingregarding staff-resource allocation. When an airline faces adifficult and urgent situation – such as having to turn around a747-400 in an hour and 20 minutes (as Lufthansa has achieved)– it does not pay to have only a skeleton staff at the gate.

Rolf Hartleb, CCOSkyWork Airlines

Photos: Southwest

AFM74_Ground Ops_AFM74 12/07/2011 10:02 Page 20



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Simplifying of equipment and processes is also important instreamlining ground operations. “We have an airport-by-airportand gate-by-gate plan for the ideal staging of ground equipmentfor the shortest distance to the aircraft,” says Payne. Southwestcalls this its ‘equipment parking plan’ and has one for each of theairports it serves. Each plan also takes into account differing gateconfigurations – Southwest may use one equipment parking planfor one set of gates at an airport, but might use a different planfor another set.

‘Pre-staging’ equipment and staff resources is highly importantfor any airline intent on streamlining its ground operations, saysRolf Hartleb, chief commercial officer of the Bern-Belp airport-based regional carrier, SkyWork Airlines. The Swiss operator ofQ400s and Fairchild Dornier 328s outsources its ground handling,but says Hartleb, it makes sure contractors know “the mostimportant thing is that everything has to be ready in advance.”

“The ground crew really has to be in place when the aircraftarrives – if you arrange things after the aircraft is in position, it’stoo late,” says Hartleb. “It all costs money, but in order tomaintain passenger satisfaction, you have to do that.” Using jetways attached to the airport terminal creates fewer operational-delay risks than parking at outlying stands, he believes. Buses,ground crew, air stairs, fuelling and other service vehicles need tobe in position before the aircraft parks at the stand in order toavoid delay. “Where there are jet ways, we use them – it’sexpensive, but it reduces the problems of communication,” saysHartleb.

Communication, team spirit and flexiblework-rulesSouthwest Airlines illustrates other important factors that couldhelp an airline streamline its ground operations, according toMark Ahasic, senior airport planner with engineering and designconsulting firm, Arup. For example, Southwest excels in pro-viding good communication between the ‘below-wing’ staff(such as baggage-handlers, fuellers and catering-service workers)and the ‘above-wing’ staff (gate agents, dispatchers and pilots).When an aircraft is at the gate good communication is vital ingetting the aircraft away quickly. Ahasic says Southwest achievesthis by having an operation manager serve as a “quarterback forcommunications.” The manager co-ordinates workers servicingthe aircraft and those boarding the passengers. Southwest’sPayne says the carrier also uses coded radio communicationsduring the process to keep exchanges clear and simple.

Southwest’s closely co-ordinated ground process is an example ofstrong team spirit. “The key is [that] their unions work togetherand understand there’s benefit in efficiency,” says Ahasic. Thisteam spirit, says Ahasic, “has been in Southwest’s DNA since theearly days.”

It is common for a Southwest Airlines captain to carry a mother’sbaby-stroller down aircraft steps; or for a gate agent to closeoverhead stowage bins. In some airlines, says Ahasic, “a flightattendant can file a union grievance if a gate agent touches anoverhead bin.” Southwest also has flight attendants (and even itspilots) put on blue plastic gloves and pick up rubbish in the cabin,helping the cleaning crews who come through the aircraft afterthe passengers have disembarked.

Like their colleagues at Southwest, SkyWork Airlines’ flightattendants go through the cabins of its aircraft before landing topick up passengers’ rubbish, but they do it with Swiss flair.Instead of flight attendants dragging big plastic bags with them,as is the practice in the US, SkyWork’s cabin crews wheel a trolley.

“It’s more discreet,” says Hartleb.

De-planing and boarding are some of most critical processes inwhich an airline can save time turning around an aircraft. Britzbelieves that boarding by row-numbers from back to front is asgood a method as any. According to Ahasic, studies show thatrandom boarding – allowing everybody to board at the same time– is the quickest method, but it is “chaotic.” Boarding by zone(window, middle and aisle seat) is difficult, particularly when afamily occupies an entire row.

Alex Cruz, CEO of Vueling says that in his experience it dependson the mix of business and leisure travellers. “Passengers tend totake different things on board. In general, any segregation ofpassengers and any implementation of duel queues for boardingtend to have a positive effect.” He adds that pre-boardingdocument checks and jet bridge boarding prior to flight boarding– both standard for most airlines – can also lower turn-aroundtimes.

Payne says Southwest has always used its “first-come, first-served”model, with people assigned to numbered groups of 15passengers depending on when they check in. Group ‘A’ boardsfirst, and as Southwest has never offered assigned seats, they getthe best choice of where to sit in the aircraft. NowadaysSouthwest has modified the boarding process with two paid-forservices, one called ‘early bird’ (passengers pay Southwest toautomatically check them in 24-hours in advance) and ‘businessselect’ (this guarantees that the passenger will be among the first15 passengers to board).

Andreas Britz, principalSH&E




Mark Ahasic, seniorairport planner, Arup

marshalling. Frankfurt airport uses neon lights which, from thepilots’ perspective, converge into a single light when the aircraftreaches the stopping point for the gate. Meanwhile, pushbackswithout tow bars are increasingly employed to reduce turn-around times.

A technology used widely at major US hub airports to helpairlines stay on schedule is the use of ramp information displaysystems (RIDS) on or near the exterior of each gate. RIDS areprogrammed to display the flight number, destination, number ofpassengers and the departure time, in some cases with a clockcounting down until the scheduled push-back. Britz suggestsother information should also be programmed into RIDS displaysfor the benefit of ground staff, such as the number of passengersnot yet on board.

Ahasic suggests that, to hasten turn-arounds, airlines may wish tostart refuelling as soon as passengers disembark. Some airlinesalready do this although many others do not allow it. Whateverthe airline’s risk assessment of the practice, fuelling a narrowbodyaircraft at 800 gallons a minute throughout the de-planingprocess almost certainly ensures the aircraft will be fully refuelledby the time the next passengers begin boarding. Britz saysairports should consider providing fuel hydrants on each side ofthe aircraft, rather than just one. Fuel-pump carts can beattached quickly to each hydrant and moved a few feet to anoptimal position by the aircraft. Not only will this ensure theaircraft is refuelled twice as fast but it will also be better balancedduring (and probably after) refuelling. Meanwhile, providing astationary water supply at each gate prevents the need for awater truck.

Wherever possible, airports should provide double-widthtaxiways on the aprons between concourses. Almost invariably,this will prevent aircraft that are taxiing towards the gate frombeing obstructed by aircraft that have just pushed back and arenot yet moving. At some US airports – New York LaGuardia andNewark are two – the concourse layouts make some gatesdifficult to reach; some gates are so constrained for space thataircraft must be towed in by tugs.

Vueling’s Cruz believes that “only by significant airport andaircraft re-design – not expected over the next 30 to 40 years –will we achieve a significant scale of efficiency gains. Until then,it’s about flexible processes that adapt themselves to the type ofpassenger traffic and facilities at each airport.”

One thing airline’s reach a consensus on is that sorting and pre-positioning passengers by boarding group in queues close to thegate shortens the boarding time. The second thing, says Payne, isthat “educating” the customers prior to boarding helps ensurethey board with the proper group.

Britz notes that United Airlines makes particularly educative initialannouncements about its boarding process. Accordingly, itspassengers are usually aware of what will be involved and willboard easily and quickly. Britz also points out that, for years,Lufthansa has pre-staged passengers in queues near the gate tohelp speed up boarding international flights.

What often slows the boarding process, remarks Hartleb, arepassengers who stand in the aisle and block other people gettingto their seats. “I’m not telling the passenger to rush,” he says;the slow passenger is something airlines will have to deal with.

Nevertheless, there are other design steps and processadjustments that airports and airlines can make to speed up turn-around times and improve ground-operation efficiency, says Britz.One is to use two jet ways and two boarding doors on the aircraftrather than one, particularly when disembarking and boarding awidebody aircraft. This has been found to reduce boarding timeby as much as a third, he says.

At Frankfurt, where Lufthansa has to park some aircraft atremote stands and transport passengers to and from them, theGerman carrier has found that using three sets of air stairs (onefor first-class and business-class and two for economy-classpassengers) achieves a 40 per cent saving in boarding time.Ahasic points out that many European low-cost airlines routinelyboard using two doors, usually a jet way at the front and an airstair – which passengers reach by a cone-demarcated pathwayacross the ramp – at the rear of the aircraft.

Technologies and techniquesLufthansa, a leader in boarding technology, also uses automatedboarding gates. Passengers insert their boarding passes or show 2Dbarcodes on their smartphones in order to open a barrier and gainaccess to the jet way. Several US carriers have trialled similar sys-tems though they are not in general use in the US yet, says Ahasic.Meanwhile, says Britz, various Asian airports have adoptedautomated aircraft-guidance systems similar to one that FrankfurtAirport has been using for years. Such systems guide aircraft tothe gate and tell it when to stop without the need for human

Photo: SkyWork


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FLEET OPERATIONS: EU ETS

THE EU ETS IS THE MAIN TOOL ADOPTED BY THE EU TOcombat climate change. It has been running since2005 for static installations (power plants, factories

etc.) with aviation joining in 2010 (under legislation signedin 2008) after the International Civil Aviation Organisation(ICAO) failed to implement the mandated global schemefor aviation.

The scheme works on a ‘cap and trade’ basis. This cap is onthe total level of emissions per year for the Europeanindustry and operators must surrender an allowance foreach tonne they emit. These allowances can be bought andsold freely and there are investors who buy allowancespurely for speculation – i.e. the ‘trade’ part. This allows thefree market to dictate the price of emissions and meansthat reductions in emissions occur where they are most costeffective.

For aviation, 2010 and 2011 are monitoring years –operators will not have to surrender allowances until 2012,but the regulators still require them to report their verifiedemissions figures. These introductory years give operatorsexperience in the monitoring requirements of the scheme,how the verification process works and how to avoid costlymistakes when the surrendering of allowances begins.

In practise: Costs and considerationsOperators are required to monitor the amount of fuel theyburn on eligible flights and multiply this by a standardemissions factor – 3.15 for Jet A1; 3.10 for Jet B and Avgas;and 0 for biofuel – to calculate the CO2. The exactrequirements for monitoring fuel usage are set out in theMonitoring and Reporting Guidelines (MRG) (which, while

AN UPDATE ON EU ETS:ARE WE CONFIDENT?

Now that the first year of the European Union Emissions Trading Scheme (EU ETS) has passed,Neil Duffy technical manager at ICM ETS, which specialises in the verification of aircraftoperators, takes a look at the scheme, the concerns it has raised and the strategies that can beemployed to overcome them.

called ‘guidelines’, are in fact legislation and carry the fullweight of the law).

Other issues, such as fleet lists, need to be documentedcarefully. For static installations, the boundaries are easierto define but as fleets of aircraft regularly change, it can be harder to establish who is operating an aircraft for any given flight. This is something to be taken intoconsideration when drawing up lease agreements,management contracts and during flights that form part ofthe change of ownership of aircraft.

As free allowances are

awarded on the basis of tonne-km

data but surrendered based on

the amount of CO2 emitted, the

scheme presents opportunities for

an airline to raise capital and

reduce long-term costs.

…

…

AFM74_EUETS_AFM74 12/07/2011 09:57 Page 24



A market of third-party traders behind the scheme requiresinformation on demand for allowances; there are strictrules that govern how the data is collected and howaccuracy and consistency across the industry is ensured. Toachieve this, all procedures must be documented andcontrolled and all quality assurance records must be keptfor 10 years from the time at which the reports aresubmitted.

Many operators – not used to scrutiny of their processes atthis level – have found compliance to these requirements achallenge. Therefore, the control environment is oftenmore suited to quickly compiling reasonably accuratefigures. The best way for an airline to ensure proceduresare up to the requirements of the scheme is to follow theMRG.

The cost of the scheme is something all operators need toconsider. With fuel prices around €700 per tonne ($1=€0.7)and allowances trading at just over €13 per tonne(remember 3.15 tonnes of CO2 per tonne of fuel), the costof allowances alone is about six per cent of an airline’s fuelbill, ignoring free allowances.

As the price of allowances is controlled by the market, itcould rise or fall in the long-term, in fact, while writing thisarticle, the value of allowances dropped from €17 to €13. Itis generally accepted that the current price is too low tomotivate investment; indeed several proposals to artificiallyraise the price have been mooted. Many operators aretherefore already considering how to hedge their costs.

Compliance costs must also be considered. The UK, for example,does not ring-fence any of the funds raised through the ETS sothe regulators must cover their costs in other ways – such asannual subsistence charges and by charging for the submission ofa plan. In extreme cases business aircraft taking a single flight intoEurope can have higher annual administration fees than the costof allowances however, these are not charged in all countries. Thestaff costs for monitoring and preparing reports should also beconsidered.

In addition to the administration costs, which everyone must bear,operators that fail to comply with the scheme face penalties. TheEU has mandated a €100 charge for every allowance an operatorfails to surrender by April 30 of the year following the reportingperiod. The requirement to surrender an allowance also carriesover to the next period. Failure to pay can result in an EU-wideoperating ban.

As each member state is free to choose how they transpose thedirective into national legislation there are also different penaltiesat national levels. For example, the UK has various penalties, thehighest of which is up to £33,750 ($53,760) for failing to reportemissions. Failure to pay the UK fines can result in the aircraftbeing seized and sold to recover the costs.

Opportunities and strategies for airlinesAs free allowances are awarded on the basis of tonne-km databut surrendered based on the amount of CO2 emitted, thescheme presents opportunities for an airline to raise capital andreduce long-term costs.

If an airline that emits 100,000 tonnes of CO2 gets 80 per centof its allowances for free it will be required to purchase 20,000allowances each year, however in practice, free allowances aregiven more than a year in advance so when an operator has tosurrender them it will be one year ahead. Scenario one (see thetable over page) indicates what happens if an airline never buysor sells allowances until it has to. By 2017, it would have topurchase 20,000 allowances annually and by 2020 it would havepurchased a total of 80,000 allowances.




2012 2013 2014 2015 2016 2017 2018 2019 2020Feb Mar Feb Mar Feb Mar Feb Mar Feb Mar Feb Mar Feb Mar Feb Mar Feb MarFree Allowances80 80 80 80 80 80 80 80 80

Surrendered0 -90 -90 -90 -90 -90 -90 -90 90

Purchased/Sold-30 10 10 10

Total50 50 130 40 120 30 110 20 100 10 90 0 80 0 80 0 80 0

Scenario 2

Scenario 1

2012 2013 2014 2015 2016 2017 2018 2019 2020Feb Mar Feb Mar Feb Mar Feb Mar Feb Mar Feb Mar Feb Mar Feb Mar Feb MarFree Allowances80 80 80 80 80 80 80 80 80

Surrendered0 -100 -100 -100 -100 -100 -100 -100 -100

Purchased/Sold20 20 20 20

Total80 80 160 60 140 40 120 20 100 0 80 0 80 0 80 0 80 0

If, however, the airline sells 30,000 of its allowances when it firstreceives them, then invests that into technology that reduces itsemissions by 10 per cent every year, it would only have topurchase 10,000 allowances annually (see Scenario 2). But as theairline would have the following year’s allowances it would havemore than is required so would not have to purchase anyadditional credits until 2018.

Even then it would only have to buy 10,000 each year (half ofwhat it would had it not invested) and by 2020 (when freeallowances will be re-calculated), it would only have had topurchase a total of 30,000 to 50,000 less than in scenario one –which is over €600,000 at today’s price (June 29. Or €800,000 inthe week preceding).

Although this is a simplistic example, allowances be a relativelyinexpensive way to generate capital. In practice, probably onlythe largest low-cost carriers will see true benefits as mostoperators will not receive enough free allowances and becausethere is not yet the technology to offer this sort of return oninvestment. However, as emissions are directly proportional tofuel, any saving in emissions also saves in fuel costs. While thismight not be the main driver for investment it could certainly bepart of the cost benefit analysis when considering investments.

It should also be noted that if an airline relies on the next year’sallowances during the early years (as in both of these scenarios)but is not allowed to borrow allowances in the later stage from2021, it would have to buy 100 per cent of its allowances. Assuch, hedging options should also be seriously considered.

In practice, the European Commission has acknowledged this willnot work for a significant number of airlines for the reasonsmentioned above however, the aviation sector is expected topurchase allowances from other industries. This will drive up theprice of allowances, increasing the incentives for other industriesto make reductions in this way. As such, aviation’s role within thescheme should be viewed as being part of the broader ambitionsto reduce emissions across all industries.

International responseBacked by the Air Transport Association (ATA), American Airlines,Continental Airlines and United Airlines have taken their legalcase to the European Court of Justice with hearings due to starton July 5. The airlines claim that the EU ETS cannot be applied tointernational flights as most of the emissions occur outsideEuropean airspace. A verdict to the case is not expected for overa year.

Although the dispute has been brewing since the scheme wasfirst announced, it has grown in recent weeks with various otheroperators, nations and bodies (such as IATA) raising publicobjections. The most noticeable development is the threat thatChina might start a trade war, imposing punitive taxes on EUcarriers. It has also threatened to boycott the European manu-facturer, Airbus, and there are reports that an order for 10 A380’shas been delayed due to this. China’s main aviation body said itwill back airlines taking legal action against the ETS, such asAmerican, Continental and United are doing.

In response, it has been suggested that if China (or any othercountry) makes the same commitment to emission reductionsthen its airlines could be exempt from the scheme. Thesuggestion is in keeping with the general philosophy of climatechange being a global issue. Provisions were included in theoriginal directive to allow co-operation with other nations thatimplement similar schemes where possible. Negotiations havealready begun with Switzerland and with schemes either in placeor starting in South Korea, New Zealand and several US States,there are also debates occurring in several other countries aroundthe world and there is ample room for expansion of the scheme.The EU is currently drafting a new regulation for the scheme thatwill come into force from January 2013. Wholesale changes arenot expected but it should take into account the lessons learntfrom our experience so far.

There is still an uncertain future regarding the legal status of thescheme but the concept of cap and trade is well established. Evenif international flights become exempt under the EU ETS due topolitical pressure the scheme will most likely remain in force forintra-EU flights and this might lead to a bigger problem in theform of a global patchwork of regional schemes. ICAO couldsolve many of the issues under a global scheme, as they weremandated to create under the Kyoto Protocol, however it isunclear when, or even if such a scheme could be created.

The ETS has had a bumpy road to get to where it is today andwhile it is not perfect, there are reasons to be confident.Regulators, operators and verifiers are all learning and with newdraft regulations in the pipeline, plus two years’ of experience bythe time trading starts in 2012, hopefully today’s lessons willmake it easier for operators in the future.


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TRADING, LEGAL & FINANCE: Air finance

MANY OF THE LARGER INTERNATIONAL BANKS HAVEtraditionally been involved in aerospace and aircraftfinancing and often have specialist departments within

this industry. Until 1990, the big US banks such as Citibank andChase Manhattan Bank headed the table of top loan providersfor aircraft transactions. By 1990, however, these two names haddisappeared from the top 20 and were largely replaced byJapanese banks, such as Fuji Bank, Sumitomo Bank and theMitsubishi Trust and Banking Corporation. More recently, theposition has been reversed with Japanese banks being replacedby large US and European banks including some new entrantsfrom the UK such as Halifax and Abbey National (both formerlybuilding societies). An indication of the banks most involved inaircraft financing can be noted by analysing export credit deals.In 2010, the Crédit Agricole Group, BNP Paribas, Citi and HSBCwere the most involved. Barclays, which was a main player in theearly 2000s, slipped back and JP Morgan and Credit Suissemoved to take its place.

Emirates: A case study in aircraft financeAirline capital expenditure can be financed internally with cash orretained earnings, or externally by lenders or lessors using avariety of financial instruments. It is difficult to obtaincomprehensive data on the sources of finance for aircraftdeliveries however, we do know that the total value of allcommercial jet deliveries in 2009 was around $70bn and Boeingestimates a need for $77bn in 2011, a quarter of which will befrom cash (Figure 1).

Finance has been readily available to the majority ofairlines despite the cyclical nature of airline earningsand a worse record of profitability than most otherindustries. The strength of aircraft as assets and themight of the aviation financing industry has withstoodeconomic ups and downs. Peter Morrell explains theaviation finance market and examines the opportunitiesit offers. Morrell is a visiting professor at CranfieldUniversity, a faculty board member at Krems DonauUniversity, Austria and an air transport consultant.

Commercialbanks

Export creditagencies

Cash

Lessors

Tax equity

Capital markets

25%

33%25%

10%2% 5%

Figure 1:

Singapore Airlines has said it will lease 15 more A330-300sSource: Boeing Commercial www.boeing.com

Global financing forecast for 2011

AFM74_Air finance_AFM74 12/07/2011 10:13 Page 28



AIRLINE FINANCEUNRAVELLED

Operatinglease

Commercialloans

US Ex-lm

EU ECAs

Bonds

Islamic finance

42%

20%

13%

10%

10%5%Figure 2 shows how the fast growing hub carrier, Emirates,

has financed its aircraft from external sources with operatingleases taking a sizeable share. The US and EU export creditagencies (ECAs) together accounted for 23 per cent of finance,but this source has recently been made less attractive as willbe described later. Islamic finance is a relatively new sourcebut needs to comply with Sharia law; deals completed so farhave been in the form of a lease.

Figure 2 does not include internal cash-generated funds ornet profits. Deferred taxes and the profits from the sale ofassets will also be internal sources of finance. For manyairlines, depreciation is the largest single internal source;some carriers, such as Singapore Airlines, have also generatedsubstantial cash from aircraft sales. More recently, Ryanair hassold relatively new 737-800s obtained from the manufacturerat a large discount. Few major airlines pay dividends giventhe need to find finance for capital expenditure and toprovide a cushion for these sudden downturns.

Source: The myths and facts about Emirates and our industry, www.emirates.com

Figure 2:

Emirates fleet financing over the past 14 years




Sources of external financeMost airline finance is long-term as although it may be moreexpensive than short-term it is better suited to the economic lifeof an aircraft and therefore a rate of finance can be locked downfor the large part of the asset’s life. It also avoids frequent re-financing of short-term finance, which may be difficult whencredit is not widely available. Of course, airlines may have the useof aircraft on a short-term operating lease but such aircraft willbe financed by the lessor.

Airline owners can provide equity and preference share capital tohelp fund an airline. Outside North America and the EuropeanUnion (EU), many of the world’s scheduled airlines are still morethan 50 per cent owned by their governments. Othershareholders include other airlines (usually minority interests so asnot to affect traffic rights); financial institutions (investment andinsurance companies, hedge funds, private equity and pensionfunds); and employees (individually or through a trust).

In 2005, Lufthansa’s shareholding was comprised of 30 per centprivate and 70 per cent institutional investors. Employees orother individuals do not generally hold shares unless they can betraded either on a stock market or through a special arrangement.United Airlines in the US used to be 55 per cent owned by threelabour unions that held shares on behalf of their members. Theemployees of Air France-KLM held 11.8 per cent of the sharecapital at the end of March 2010, with the French governmentretaining a further 15.7 per cent. Just under two-thirds of itsshares are held by French interests.

Financing assets by raising additional equity has the advantage ofimproving the relationship between equity and both output andexisting debt, and it permits further borrowing. It may however,dilute the control of existing owners and facilitate a take-over byanother company. Thus, private companies do not often useshare issues to fund equipment purchases.

Preference share capital is similar to equity capital but there is amaximum return or fixed dividend payable (as long as the airlinemakes a profit) and no voting rights are attached. It ranks beforeequity shares for the payment of dividend and distribution in theevent of bankruptcy and is therefore less risky. Preference sharescan either be redeemable (whereby the company can buy themback from shareholders at a future date), or perpetual (in thesame way as ordinary shares). Other features can be: cumulative(where any unpaid dividends are carried forward to the nextfinancial year) or non-cumulative; and participating (when a basicdividend is paid, plus an additional variable mount depending onhow much is left for distribution after paying a dividend toordinary shareholders).

In 2011, the Indian airline, Kingfisher, issued cumulativeredeemable preference shares with a coupon of eight per cent(the proceeds going to pay debt). In this case, the non-votingnature of the shares meant that the family holding in Kingfisherwas not diluted. Preference shares can also be convertible in thesame way as bonds – Malaysian Airlines (MAS) used this type offinancing in 2007.

Bonds, debenture and unsecured loan stock are financialsecurities or long-term promissory notes that pay a fixed orvariable rate of interest and a have a fixed term. They arenegotiable, which means that the public can hold, buy or sellthem in the same way as shares. Bonds can sometimes be tradedon the Eurobond or US bond markets. They are re-paid orredeemed at par on the due date. In the case of debentures, theycan be secured by a fixed or floating charge on the airline’s assets.

A mortgage debenture is secured on specific land or buildings. Afixed charge is on specific assets, a floating charge is a generalcharge on all assets owned.

Convertibles give the holder the option to convert to ordinaryshares within a certain period. They allow finance to be raised,often at a time when the share price is weak, on a fixed interestbasis but with rights attached to convert to ordinary shares at afuture date and at a given conversion rate. In addition, they canusually be traded on a stock market. The coupon or interest rateis lower than would be the case for loan stock without theconversion rights.

Lufthansa issued convertible bonds totalling €750m ($1=€0.69)in January 2002, with the relatively low interest rate of 1.25 percent per annum maturing in 2012. The conversion price was€19.86 per ordinary share. These were quoted on theLuxembourg stock exchange. In January 2006, the Lufthansaordinary share price was well below the conversion price; theinterest paid was also by then unattractive, as such around€700m worth of bondholders exercised an option they weregranted to redeem the bonds.

Equipment Trust Certificates (ETCs) are similar to a secured bondbut arranged in the form of a lease. The airline sells thecertificates to investors to pay for aircraft, which is then ownedby a trust on behalf of the investors. This can be done for singleaircraft or multiple aircraft, and certificates issued to finance newaircraft can be secured against aircraft already in an airline’s fleet.Lease payments are made to the investors through the trustee.On maturity, title to the aircraft passes to the airline. This form offinance was largely restricted to the US market in the 1990sbecause of the protection it affords investors when the airlinelessee enters Chapter 11 (a form of bankruptcy administrationunique to the US).

A modified version of the ETC is the Enhanced Equipment TrustCertificate (EETC). Rather than selling one type of certificate orbond, the EETC divides these into different categories, each ofwhich has a different risk or reward profile in terms of securityand access to lease rental cash flows. A structure of this type willgive the senior (lower risk) certificates a much higher credit ratingthan under the ETC. The EETC was developed in the US in the1990s as a means for non-investment grade airlines to sourcefunds using investment grade ratings, with the added advantageof giving more protection to the owner of the aircraft in theevent of Chapter 11 bankruptcy. Outside the US, EETCs are stillrare with only Korean Air, Qantas, Air France-KLM and Iberiausing them, the latter denominated in Euros.

Term loans are generally negotiated from banks or insurancecompanies and are easier and cheaper to arrange than bonds.They can be arranged on a bilateral basis for smaller amounts, oron a syndicated basis for larger loans. For the latter, a lead bankwill organise a number of banks to participate in the loan andform a closer relationship with the airline. They will need to besatisfied that the equity base is adequate, the borrower has along-term commitment to the business, and financialcontingencies are in place for possible business downturns.Covenants are frequently applied in the form of ratios that mustbe satisfied: if airlines do not meet these ratios default mayfollow. One advantage of term loans is the ability to match thefinancing to the expected life of aircraft. However, the economiclives of aircraft have been increasing to the extent that this rarelyhappens now. The loan period could be between 10 to 15 years,depending on airline creditworthiness. The nominal interest ratedepends on general economic conditions, as well as the airline’screditworthiness.


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The London Inter-Bank Offered Rate (LIBOR) or the US Prime Ratemay be used as benchmarks for the loan and a floating or fixedrate may be adopted. LIBOR has fallen significantly from thebeginning of 2006 to 2011 but lenders have imposed highermargins so airlines have not benefited much from the lower inter-bank rates.

Term loans can be combined with an export credit guarantee,which reduces the bank’s risk and lowers the interest rate paid onthe part of the overall loan that is guaranteed (85 per cent of thenet price of the aircraft). The terms and rates were originally laiddown in the Large Aircraft Sector Understanding (LASU), anagreement between aircraft-exporting countries to prevent unfaircompetition. In 2011, new rules were introduced under theAircraft Sector Understanding (ASU). The new rules make ECA-backed finance much more expensive and closer to market rates.They are a response to a campaign made by airlines that could notaccess this finance because of the Home Country Rule (underwhich airlines in the US, France, Germany, the UK and Spain – thecountries in which Airbus and Boeing aircraft are manufactured –can not use the same attractively priced finance other airlines can).

Where export of an aircraft from one country incorporates asubstantial share of airframe or components from anothercountry, two or more ECAs would be involved. This is essential forAirbus aircraft. Financial support is generally proportionate toeach ECAs national manufacturer’s share in the production of theaircraft (e.g. for an A320 with IAE engines: UK 32 per cent,France 32 per cent, and Germany 36 per cent; or an A321 withCFM engines 17 per cent, 52 per cent and 31 per centrespectively). Another example is the involvement of both theUS’s Ex-Im Bank and the UK’s Export Credit GuaranteeDepartment (ECGD) in financing a 757 with Rolls-Royce engines.


The export credit volume varies significantly from year to year,with just under $8bn of deals reported in 2007 for the US and EUagencies, this compares to almost $18bn in 2009. In 2009, Ex-Imsupported finance for 143 aircraft to 17 airlines in 18 countries.For the financial year 2009 to 2010, ECGB guaranteed around£2bn ($1=£0.62) worth of Airbus aircraft exports, of which 46per cent was for operating lessors.

Term loans may also involve support from the manufacturer(s)whose aircraft is being financed. This is usually from deficiencyguarantees on the aircraft on a first loss basis. This would beactivated in cases where a default occurs on a secured loan: theaircraft is repossessed and sold by the bank(s) and the saleproceeds are insufficient to cover the outstanding debt. Themanufacturer would then cover the loss up to an agreedmaximum. The part paid by the manufacturer could be a pre-agreed amount of the unamortised loan principal, or a pre-agreed share of the sale loss.

Manufacturers occasionally provide loans to airlines to assist in alarge sale, but they would be short-term or would allow exitthrough conversion to the airline’s equity and subsequent sharesale. For example, Boeing financed United Airlines in the 1980sand more recently AirTran for the purchase of 717s. Airbusprovided a $250m loan to US Airways for its order of A320 familyaircraft in 2001. By 2006, $89m was outstanding when it waswritten off against a new aircraft order.

LeasesA finance lease involves the acquisition and ownership of theaircraft by a company set up solely for owning the aircraft(Special Purpose Vehicle or SPV). The company purchases theaircraft from equity and bank debt, and is usually highly geared.The airline itself may have a minority stake in the SPV throughconverting the advance payments that it has paid to themanufacturer prior to delivery into equity. Often the equityinvestors are able to take generous tax allowances that lowersthe overall cost if this type of finance to the airline.

The best example of this was Japanese Leveraged Leases (JLLs),which until 1999, offered tax benefits in both lessor and lesseecountries of domicile (known as double dipping), with equityprovided by Japanese individuals and companies that wereunable to use all their tax allowances. Debt was provided byJapanese banks and the net cost to airlines was very low.However, they were only available to well-known airlines such asBritish Airways, Lufthansa or Cathay Pacific. British Airways usedthem for many of its aircraft financing in the 1990s.

An operating lease covers a shorter period (one to seven years)than a finance lease and is not placed on the balance sheet.However, the dividing line between the two has become blurred.The key features of an operating lease are that it allows airlinesto respond rapidly to changes in market conditions and gain theuse of an aircraft often with minimum delay and without theobligation to pay its full cost. The lessor expects to profit fromeither selling or re-leasing the aircraft, which it has bought fromthe manufacturer often in large numbers at large discounts. Thelessee generally cannot choose the aircraft specification and thelessee is usually responsible for the maintenance of the aircraftand often has to pay the lessor a maintenance reserve.

Operating lease rentals vary quite significantly over the economiccycle with lessors often accepting a short-term drop in monthlyrentals to avoid re-marketing or even parking aircraft.


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TRADING, LEGAL & FINANCE: Lessor ranking

WE’VE CLEARED THE APEX OF THE FINANCIAL GALEthough we’ve yet to clear all the debris and wreckage.The used aircraft market is yet to fully recover and

bank lending has not returned to pre-crisis levels. However, muchhas been tided. ILFC was nationalised, CIT Aerospace entered andexited Chapter 11 and AerCap’s freefalling share price has risen.

Next Royal Bank of Scotland (RBS), which is 83 per cent ownedby the UK government, is to sell its aviation arm, valued at $6bn,having waiting for the maelstrom of the downturn to clear.

But which lessor will be able to ingest a company the size of RBSAviation? It seems too early to judge though it is clear theindustry will be watching only the upper echelons. Speaking toNorman Liu, president and CEO of GECAS at the recent Paris AirShow, he said he had heard “rumblings” from leasing companiesand financial firms interested in the purchase. He added: “I thinkwe’ll look at it and if the economics make sense maybe we’ll dosomething.

“It’s of a size that you’d need pretty deep pockets. And rememberthat they have an orderbook of some 100 planes, so themanufacturer needs to be comfortable with whoever assumesthose… Or else it would be some kind of piecemeal solution –that might make it more palatable.”

Guy Hands, founder of Terra Firma and former owner of EMI, hasstated his intent to buy the division while other contenders arerumoured to include ICBC and HKAC. Perhaps in preparation,the latter hired former RBS head of aviation Donal Boylan lastApril.

According to data from Ascend which ranks lessors by theirportfolio value, RBS slipped two places to fifth and its combinedportfolio value (comprising both stored and in service managedaircraft) fell $173.3m year-on-year. GECAS and ILFC are thelargest lessors remaining at first and second place respectively,however ILFC’s combined value fell by $5487.85m.

Paris orders, the sale of RBS, market saturation and the introduction of Basel III – aircraft lessorshave much to contend with. New and market-leading lessors spoke to Mary-Anne Baldwin at theParis Air Show on these and other subjects. Plus, we give you low-down on who is moving andwho is losing with portfolio value data from Ascend.

STATE OF THE NATION:

LESSORS ASSESS THEMARKET AT THEPARIS AIR SHOW

“I know our balance sheet is growing and if we didn’t sell we’d begrowing even faster,” says Liu. He adds that the company tries toinvest $6.5bn in assets each year and it must invest $5.5bn justto stay flat “which is an enormous amount compared to otherguys out there. The net growth is about $1bn in rough numbersbut on a portfolio of $50bn that’s not a lot.”

Robert Martin, CEO of BOC Aviation told AirFinance Journal thatBOC would consider buying RBS given the right economics.However, he told AFM at the air show: “It’s up to the UK govern-ment… this is a nationalised bank (RBS, parent of RBS Aviation)where the state has taken majority shareholding, so the state mustdecide.” In terms of BOC’s clout, it ranks sixth – the same as in2010 – however its combined portfolio value has risen by $783.7m.

Looking at other lessors that feature high in the rankings, AerCaprose seven places to third, increasing its combined portfolio valueby $1838.4m year-on-year. CIT held its place at fourth, Babcock& Brown dropped two place to seven and AWAS was up one tonumber eight.

Of particular note was Macquarie, which rose five places to 10and saw its portfolio value climb by $1312.45m. Boeing CapitalCorporation (BCC) dropped a significant seven places justmaking the top table at number 20. Its managed portfolio valuefell $503.95m.

The new waveAs the larger lessors have been re-couping or planning to sell,new entrants have come in to scavenge what deals they can butaccording to John Higgins, CEO of Avolon, there is room enoughfor both. “I don’t think there’s been a death of the mega-lessor[a subject talked about across the industry] just a lot of marketopportunity and people like ourselves have been able to step inand satisfy that market demand.”

In late June, Infinity Aviation Capital announced itself to themarket. The new finance and leasing company is a joint venture

AFM74_lessor_AFM73 12/07/2011 10:15 Page 34



between Perella Weinberg and three aviation industry veterans:Richard Baudouin, co-founder of Aviation Capital Group, andKhawer Ali and Jerrold Rosen, both principals at KJ AviationServices.

Infinity has already acquired its first three aircraft, pre-owned737NGs, which are currently leased to a major airline. It said in astatement that it intended to invest further in jet and turbo-prop aircraft, engines and other related assets as well asmezzanine loans.

David Schiff, Partner at Perella Weinberg, stated his reasons for joining the new venture. “Recent disruptions in the airline andaircraft leasing industries have resulted in significant opportunitiesto provide needed liquidity and financing solutions to airlines,leasing companies, and other owners of aircraft and equipment.”

Despite newcomers detecting ‘significant opportunities’, others –namely established lessors – have complained that there is notenough capacity in the market. However, the success of Avolon,and even more so of Air Lease Corporation (ALC), provesotherwise. ALC raised $802.5m in its initial public offering (IPO)in April. It sold 30.3 million at $27.56, four per cent higher thanthe IPO price. Avolon has raised $3bn in capital since May 2010,ordered 12 new 737-800NGs, eight new A320s and completedsale and leaseback and portfolio transactions for over 60 aircraft.Its ‘base-case business plan’, says Higgins, is to build a portfolioof about $6bn over the next two years.”

Est. value inservice Est. value stored Combined 2010 CombinedAircraft operating lessor aircraft ($m) aircraft ($m) value ($m) value [$m]

Lessor ranking by managed value

GECAS 34,564.60 962.35 35,526.95 34,950.21ILFC 27,168.00 695.05 27,863.05 33,350.90AerCap 6,955.35 219.8 7,175.15 5,335.75CIT Aerospace 6,623.40 81.6 6,705.00 6,272.35RBS Aviation Capital 6,369.60 108 6,477.60 6,650.90BOC Aviation 6,249.90 N/A 6,249.90 5,466.20Babcock & Brown Aircraft Management 5,756.10 149.3 5,905.40 6,027.45AWAS 4,409.60 72 4,481.60 4,156.45Aviation Capital Group 4,253.90 277.8 4,531.70 4,423.85Macquarie AirFinance 3,738.55 61.55 3,800.20 2,487.75Aircastle Advisor 3,278.65 149.35 3,428.00 3,037.90Doric Asset Finance & Verwaltungs 2,743.60 N/A 2,743.60 2,350.35ICBC Leasing 2,680.80 5.7 2,664.50 N/AMC Aviation Partners/Mitsubishi Corporation 2,571.25 21 2,592.25 2,605.90Amentum Capital 2,393.75 131.3 2,525.05 2,216.65CDB Leasing 2,268.15 48.75 2,316.90 N/AHong Kong Aviation Capital 2,177.60 19.5 2,197 2,332.00DAE Capital 2,069.25 N/A 2,069.25 1,854.70SMFL Aircraft Capital 1,991.10 23.5 2,014.60 1,625.05Boeing Capital Corp 1,984.60 272.95 2,257.55 2,761.50

A converse criticism is that new lessors have been pricing up thesale and leaseback market. To this, Higgins responds: “I have theinsight so I can say with certainty that we haven’t bid up, butclearly I can’t make that information public, we’re a privatecompany.

What others believe is under-cutting, Higgins says is dexterousnegotiations. “When airlines award a mandate they don’t awardthe mandate purely on the basis of economics… when I sit infront of an airline we trade off a number of things; ourexperience, low risk, the economics, our understanding of aparticular operator and how they like to structure a lease in aparticular way.

“I’ve heard the commentary. But we are winning a small percentageof the deals we bid on because we are very disciplined... We don’twant to do whatever deal is on the market and then look back ina few years and say ‘how did we turn out to have 50 per cent ofour book in this country?’.” However, he admits that when hesees a deal that fits his portfolio the gloves may come off, chosingto be more competitive if bidding for a deal in one region moreconsistent with its portfolio build-up.

As a lessor that has a low cost of funding, BOC Aviation has fewconcerns about what it’s CEO, Martin, sees as the natural rise ofthe new entrant leasing company. “When you’re a new companyyou have to rush to get critical mass and we’re very happy to helpthem do that, we’ll sell them aircraft with leases attached to getthem going. We sold to ALC in the early days and to others, sowe don’t see them as a threat… actually we need new playersbecause no one party can do the amount of capital expenditurethat is going in this cycle.”

Meeting commitmentsDespite airline bankruptcies and route cuts, the top lessors havegenerally kept their aircraft on lease. BOC boasts that it has nothad an aircraft off lease for five years (it currently has 175 aircraft)and according to a report written by Goldman Sachs which wasreleased in May, only three lessors had aircraft returned. ILFC hadtwo of its 933 aircraft grounded when its Indonesian customerceased operators, however one of the two aircraft was quickly re-leased. Other early returns included Aircastle and AerCap, whichhad aircraft in the Middle East and Africa, both of which wereaffected by political unrest.

Robert Morin, VP Transport, US Ex-Im




“Going forward however, high fuel prices appear to be puttingpressure on ILFC’s customers. There were 17 customers flying 77 ILFC aircraft that were two or more months late on theirlease payments, up from 11 customers in 1Q 2010…Whilecompetitors have been able to re-lease aircraft quickly and forrelatively little cost after accounting for security and maintenancedeposits, more distressed customers could put pressure on leaserates in the next few quarters. ILFC had 49 scheduled leasematurities at the beginning of 2011and 137 in 2012,” the reportalso said.

ILFC, a wholly-owned subsidiary of American International Group(AIG), has so far entered into 114 lease commitments in 2011and placed its first aircraft orders since 2007. It’s CEO, HenriCourpron said, “Airlines are acknowledging ILFC’s financialstrength and the appeal of our portfolio and order book.”

In the year-to-date, ILFC ordered 100 A320 neo family aircraftand 33 737-800s and has raised considerable finance. It secureda term loan facility for $1.5bn and an unsecured bank revolver for$2bn. The company also raised $2.25bn in unsecured public debtand tendered for $1.75bn in bond maturities in 2012 and 2013.

ILFC is scheduled to take delivery of four new 737-800s worth anestimated $175m this year. It’s a “light” schedule, says GoldmanSachs’ report, and it will allow ILFC to direct more of its cash flowtoward debt repayment.

In a similar recent report by Goldman Sachs, this time on AWAS, itwrote: “AWAS took a large ($292.7m) write-down to its fleet bookvalue in 2009 after it concluded that the financial crisis hadpermanently impaired the value of much of its fleet. Since then, ithas made relatively small adjustments to its fleet, and the aircraft ithas sold have been at prices close to or above book value. Thecurrent market value of the fleet with no leases attached isapproximately $4.4bn, according to Ascend, which is about$1.1bn or 20 per cent below the book value of $5.5bn. We thinkthis method of valuation probably understates the actual value ofthe fleet when leases are taken into account, and we do not expectsignificant write-downs in book value from AWAS in the future.”

The report estimated AWAS’ book value as being “closer tomarket value than that of some of its competitors – most notablyILFC”. ILFC wrote down 155 aircraft by $1.5bn in 2010 and itmay take up to $300m per year in further impairments. Ascend’svaluation of AWAS’ fleet is approximately 26 per cent less thanbook value, says Goldman Sachs.

Burgeon or burst: Basel III and the ASUMartin admits he has renegade views on the market, as wasevident from BOC’s lack of orders during the Paris Air Show.While orders from other lessors were mounting, Martin assertedthat the industry is in a bubble. “In 2007 we said there was abubble and a year later the bubble burst,” he recalls. “We sat outand watched in 2007…we were the guys who at the bottom ofthe cycle picked up $2.5bn of equipment in the space of threemonths.” He plans to do this same this time.

“The reason why we’re seeing a bubble this time is the launchof the neo but frankly how people can say what the fleet is goingto look like in eight years time when you consider whathappened in the eight years from 2001 to 2009 – I’m amazed. Inreality, these (the orders made at Paris) are just options becausepeople put down a very small amount on them. These planes stillneed 95 per cent of their financing secured.

“We believe that having gone through the bottom of the cyclethe amount of capital expenditure in dollar terms will go updramatically over the next three years.” He cites a number ofreasons for this, firstly the 787, which is soon to start deliveryafter a delay of three years. Then there is the roll-out of the 747-800 and an increase in production rates for the A320 family,737NG family and A330 family.

Family (CFM) (NG) ERJAircraft operating lessor A300 A310 A320 A330/40 A380 737 737 747 757 767 777 CRJs 135-195 MDS Others aircraft

Aircraft Lessors — Top 20 ranking list

GECAS 3s 3is 467is,13s 46is,1s - 227is,21s 397is,2s 26is 22is,8s 70is,4s 35is,1s 233is,32s 149is,12s 34is,4s 33is,2s 1845

ILFC 5is,1s 3is,1s 370is,16s 121is,2s 77is,4s 197is,6s 14is,2s 64is,1s 53is,1s 70is,1s - - 8is,1s - 1017

AerCap 1is - 153is,11s 28is - 41is,3s 25is - 7is,2s 6is 2is 5is - 6is,1s - 291

CIT Aerospace - 1is 122is,2s 23is - 11is, 70is,2s - 11is 8is 1is 1is - - - 252

RBS Aviation Capital - - 118is,2s 2is - - 106is,2s - - - - 2is 9is,4s - - 245

BOC Aviation - - 71is 6is - 1is 64is 1is - - 19is - - - - 162

Babcock & Brown 1s - 81is,4s 8is - 37is,11s 111is 5is 27is,1s 6is,1s 7is - - 8is,1s - 309

AWAS - 1is 49is,3s 18is 1is 52is,7s 34is 7is 7is 19is,1s 1is - - 11is,2s 3is 203

Aviation Capital Group - - 75is,12s 3is - 37is,9s 76is,5s - 3is,3s 7is,1s - - - 9is,5s 5is 215

Macquarie Airfinance - 1is 72is,5s 9is - 12is,2s 51is 1is 4is,3s 1is 4is - 2is 2is - 124

Aircastle Advisor - 1is 25is,5s 20is - 15is,2s 29is,1s 13is,1s 10is 12is 1is - - 1is - 129

Doric - - 61s 3is 11is - - - - - 6is - - - - 26

ICBC Leasing - - 17is 8is - 2is,1s 11is 9is - 7is - 7is - - 62

MC Aviation /Mitsubishi - - 21is,1s 8is - 5is 19is 4is - 17is 2is - - 9is - 86

Amentum Capital - - 13is,2s 7is,1s - - 13is 2is - - 6is 1is 4is - - 49

CDB Leasing - - 15is 14is - - 11is 1is,4s - 3is 2is 2is - 1is - 54

Hong Kong Aviation Capital - - 31is 12is - - 10is 4is,1s - 2is 2is - 6is - 2is 70

DAE Capital - - 16is 11is - - 16is - - - 5is - - - - 48

SMFL Aircraft Capital - - 22is 5is - 2is 31is,1s - - 2is - - 4is - - 77

Boeing Capital Corp - - - 1is - 17is,4s 5is 1is 32is 8is - - - 28is,1s 101is,26s 224

CombinedNo of

is = In Services = Stored


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He notes the disparity between this increase in capital ex-penditure and the low supply of money. On the latter side he liststhe Greek crisis, the EU’s advice that European banks leaveaviation financing, and the significantly higher cost of exportcredit pricing.

“Add a large amount of excess demand for money to a restrictedsupply of money, and why would you be placing large speculativeorders? It’s better to wait and finance this large amount of cap-ex that’s going to come through.”

Avolon’s Higgins however, is confident that airlines and lessorswill continue to find financing though it may be a little harder. Ofparticular impact will be Basel III, a new regulation on the lendingpractises of banks, which will be gradually introduced from 2013,and the Aircraft sector Understanding (ASU), which from 2012will support wider lending by increasing the cost of export creditagencies (ECA) loans.

“I think banks will continue to be very active in lending to bothairlines and lessors because fundamentally, aircraft are goodassets. I think on the technical level of how Basel III isimplemented there might be a slight shift down in the overalltenor of lending (to below 10 years as opposed to 12) but I’m notexpecting a shock factor from Basel III.”

Liu of GECAS says: “I don’t think spreads will get much tighterbecause of Basel III and return on equity. Bank equity levels aregoing up in general, which means pricing will have to go up.They (spreads) are not going to drop that much further becauseof the regulatory requirements of [the] ASU… there’s a lot ofhullabaloo about it, but I’m like, ‘it’s relatively mild’.”

The ASU will affect lessors on varying levels. GECAS for example,relies on its parent company for funding rather than ECA or Ex-Im support. “We tried an Ex-Im just to give it a whirl whenfunding costs were different but now it doesn’t make a lot ofsense,” says Liu. However, lessors like Avolon, which hopes tosecure ECA and Ex-Im financing by the end of year – if only, saysHiggins to diversify its funding sources – will be affected.


But the higher cost of ECA loans should mean airlines will stepback from purchasing and towards leasing aircraft, bringing anoverall positive affect to the market. “If the market continues toevolve the way we see it evolving I think there will be increaseddemand for leasing as airlines will be looking for alternatives tothe ASU structure,” says Higgins.

“Maybe they’ll do more debt financing and capital financing andI would expect the new ASU to drive demand in operatingleasing… but who knows what broader macro environment we’llbe in. The new ASU may be a more expensive product than theprevious version but it may be that there’s high demand for it atthe time due to extraneous factors.”

“It’s very simple,” asserts BOC’s Martin. “When you put the priceof something up, the demand for it should fall but that doesn’tseem to tie with production. Most airlines order aircraft whenthey see their revenue start to go up. They don’t think about thefinancing side until the pre-delivery payments start two yearsahead of delivery. People haven’t considered that the cost offinancing is going up.”

According to Higgins, manufacturer’s production rates are “thekey driver of stability in the industry”. He says that despitehearing a variety of opinions of the matter he has faith the OEMswill get it right. “Manufacturers, through this most recent cycle,have demonstrated ability and a discipline around productionrates which wasn’t the same in other down cycles… Whereasthey make announcements – with real intent – about increasedproduction rates and timelines, if the market circumstances wereto change I think the manufacturers would change.”

Martin’s view however, like much of his market analysis, differsfrom other lessors. “Boeing and Airbus are not necessarily look-ing at overall market supply and demand, they are just doingwhat their shareholders want which is to produce the maximumnumber of aircraft,” he said.

“Manufacturers sell aircraft to every customer who comes to buyaircraft, rather like selling cars… A lot of people who used tolease aircraft are now buying them, and that’s not because theycan afford them, because then they have to go back to a lessorto do a sale and leaseback. So the dynamics of the market arechanging. We are seeing a lot of aircraft coming onto the marketto replace aircraft that are coming off their first leases – so sevento 12 years old.

“Because the manufacturers didn’t cut their supply during thedownturn there has been a relative excess of aircraft coming intothe market compared to demand and at the same time we’vehad airline consolidation with very little start-up [airline] activity…the utilisation of aircraft has gone up and we’ve needed lessaircraft. What that means is there’s been aircraft thrown out ofthe market at an earlier age – short-term unemployed if you like.”

In terms of leasing older used aircraft Higgins says: “I wouldn’tsay there’s an absence of competition in that space.” He notesthat other lessors, namely Aircastle, have stated their intent tobuy older aircraft. In the case of Aircastle, eight- to 15-years-old. While Avolon has a particularly young fleet, just 1.6-years-old onaverage, he says the company is not averse to buying oldermodels. “We don’t have a binary policy of ‘we don’t do usedairplanes’.” He adds that the company has bought aircraft as oldas five years and because of its relationships with airlines it hashad a number of opportunities to buy more. The decision willcome down to risk adjusted returns and only after looking at thefinancial and maintenance risks and technological obsolescencewill it make a decision.


FLEET FINANCE – Deals reportAircraft Transactions June 1 – 30, 2011

Boeing737-291 Jet Care Corporation San Jose Sharks 21508 JT8d-9a 1978-04 Sold 2011.06.17737-217 Unknown PALS 22256 JT8d-17 1980-05 Leased 2011.06.23737-291 Aircraft Guaranty Corp Sindie, Christian 22384 JT8d-17 1980-10 Sold 2011.06.24737-2v6 Sarab Blair Investors 22431 JT8d-15a 1981-09 Sold 2011.06.05737-2v6 Jet Connections Sarab 22431 JT8d-15a 1981-09 Leased 2011.06.18737-247 Bradley Air Services Celtic Capital 23521 JT8d-15a 1987-01 Sold 2011.06.10737-3h4 Frontiers Of Flight Museum Southwest Airlines 22940 CFM56-3b1 1984-07 Sold 2011.06.14737-3t0(W) Grandmax Group As & L 23371 CFM56-3b1 1985-12 Sold 2011.06.03737-3t0(W) Orient Thai Airlines Grandmax Group 23371 CFM56-3b1 1985-12 Leased 2011.06.03737-3t0(W) Orient Thai Airlines As & L 23375 CFM56-3b1 1986-02 Leased 2011.06.01737-33a Alba Star RPK Capital 23628 CFM56-3b1 1986-10 Leased 2011.06.01737-3g7 Desert Rainier Us Airways 23776 CFM56-3b1 1987-06 Returned 2011.06.04737-3g7 Wells Fargo Wells Fargo 23776 CFM56-3b1 1987-06 Sold 2011.06.21737-3g7 Wells Fargo Wells Fargo 23777 CFM56-3b1 1987-06 Sold 2011.06.16737-382 Airexplore Triton Aviation 24365 CFM56-3b2 1989-02 Leased 2011.06.09737-3l9 Vista Georgia Galaxy Aviation 25125 CFM56-3b2 1991-05 Leased 2011.06.25737-3l9 GE Capital Corp Norwegian Air Shuttle 27336 CFM56-3c1 1994-02 Returned 2011.06.29737-31s Small Planet Airlines Small Planet Airlines 29055 CFM56-3c1 1997-07 Leased 2011.06.30737-4k5 Alba Star Wells Fargo 24130 CFM56-3c1 1990-02 Leased 2011.06.17737-42c East Ireland Wells Fargo 24813 CFM56-3c1 1991-05 Sold 2011.06.02737-42c Central Connect Airlines East Ireland 24813 CFM56-3c1 1991-05 Leased 2011.06.02737-484 Aersale Aersale 25314 CFM56-3c1 1991-08 Sold 2011.06.23737-484 Blue Air-Transport Aersale 25314 CFM56-3c1 1991-08 Leased 2011.06.30737-484 Air Manas Bank Of Utah 25361 CFM56-3c1 1991-08 Leased 2011.06.23737-4q8 Tombo Aviation Merpati Nusantara 26280 CFM56-3c1 1992-02 Returned 2011.06.15737-48e Blue Bird Airways ILFC 27632 CFM56-3c1 1997-01 Leased 2011.06.07737-548(W) Goiania Comercio Barkham Associates 24968 CFM56-3b1 1990-11 Sold 2011.06.02737-548(W) Aerosvit Airlines Goiania Comercio 24968 CFM56-3b1 1990-11 Leased 2011.06.02737-55d Ukraine Intl Airlines Celestial Aviation 27418 CFM56-3c1 1992-10 Leased 2011.06.11737-524(W) Continental Airlines Wells Fargo 28900 CFM56-3c1 1997-07 Lease-Buyout 2011.06.03737-524(W) Wells Fargo Continental Airlines 28900 CFM56-3c1 1997-07 Sold 2011.06.10737-524(W) Utair Aviation Wells Fargo 28913 CFM56-3c1 1997-12 Leased 2011.06.27737-76n Hainan Airlines Lucky Air 28582 CFM56-7b24 1998-10 Returned 2011.06.21737-76n Hainan Airlines Lucky Air 28585 CFM56-7b24 1998-11 Returned 2011.06.21737-76q(W) Boullioun Aircraft Air Berlin 30271 CFM56-7b24 2000-12 Returned 2011.06.15737-76q(W) Yakutia Airlines Boullioun Aircraft 30271 CFM56-7b24 2000-12 Leased 2011.06.16737-76q(W) Yakutia Airlines Rain I 30277 CFM56-7b24 2001-08 Leased 2011.06.05737-73v BOC Aviation BOC Aviation 32426 CFM56-7b20 2004-03 Sold 2011.06.15737-73v Jet Lite BOC Aviation 32426 CFM56-7b20 2004-03 Leased 2011.06.15737-7h4(W) Southwest Airlines Boeing 36674 CFM56-7b24 2011-06 Delivered 2011.06.29737-7eh(W) Gol Transportes Aereos Boeing 37608 CFM56-7b24 2011-05 Delivered 2011.06.23737-7k2(W) KLM Boeing 39256 CFM56-7b22/3 2011-05 Delivered 2011.06.22737-7bc(W) F & L Aviation Boeing 30327 CFM56-7b26 1999-08 Sold 2011.06.09737-7bc(W) Frank & Victoria Fertitta F & L Aviation 30327 CFM56-7b26 1999-08 Leased 2011.06.09737-7afc(W) United States Navy Boeing 40577 CFM56-7b20 2011-05 Delivered 2011.06.24737-86j(W) ACG Saga Airlines 28068 CFM56-7b26 1998-02 Returned 2011.06.09737-8q8(W) ILFC Yemenia 28252 CFM56-7b26 2002-07 Returned 2011.06.02737-8q8(W) Caribbean Airlines ILFC 28252 CFM56-7b26 2002-07 Leased 2011.06.03737-8q8(W) Air Jamaica ILFC 28252 CFM56-7b26 2002-07 Sub-Leased 2011.06.03737-82r Jeju Air ILFC 29344 CFM56-7b26 2001-04 Leased 2011.06.16737-8k5(W) Bil Aircraftleasing TUIfly 30414 CFM56-7b27 2000-10 Returned 2011.06.27737-83n(WEtops) Unknown ILFC 30706 CFM56-7b27b1 2001-08 Sold 2011.06.10737-83n(WEtops) Aeromexico Unknown 30706 CFM56-7b27b1 2001-08 Leased 2011.06.16737-8q8(W) ILFC Yemenia 30730 CFM56-7b27 2007-09 Returned 2011.06.30737-86n(W) Xl Airways France Celestial Aviation 32736 CFM56-7b26 2002-03 Leased 2011.06.08737-8q8(W) RAK Airways Midwest Airlines 32841 CFM56-7b27 2005-04 Sub-Leased 2011.06.01737-881(W) ANA Boeing 33911 CFM56-7b26 2011-05 Delivered 2011.06.21737-838(W) OAS Australia Macquarie 34180 CFM56-7b24 2005-10 Transferred 2011.06.01737-838(W) Qantas Airways OAS Australia 34180 CFM56-7b24 2005-10 Leased 2011.06.01737-838(W) OAS Australia Macquarie 34181 CFM56-7b24 2005-12 Transferred 2011.06.01737-838(W) Qantas Airways OAS Australia 34181 CFM56-7b24 2005-12 Leased 2011.06.01737-838(W) OAS Australia Macquarie 34182 CFM56-7b24 2005-12 Transferred 2011.06.01737-838(W) Qantas Airways OAS Australia 34182 CFM56-7b24 2005-12 Leased 2011.06.01737-838(W) OAS Australia Macquarie 34183 CFM56-7b24 2005-12 Transferred 2011.06.01737-838(W) Qantas Airways OAS Australia 34183 CFM56-7b24 2005-12 Leased 2011.06.01737-838(W) OAS Australia Macquarie 34184 CFM56-7b24 2006-01 Transferred 2011.06.01737-838(W) Qantas Airways OAS Australia 34184 CFM56-7b24 2006-01 Leased 2011.06.01737-838(W) Qantas Airways Boeing 34190 CFM56-7b24 2011-05 Delivered 2011.06.22737-838(W) Jetconnect Qantas Airways 34190 CFM56-7b24 2011-05 Leased 2011.06.22737-8kn(W) Corendon Airlines Flydubai 35794 CFM56-7b26 2009-01 Leased 2011.06.03737-8eh(W) Gol Transportes Aereos Boeing 35843 CFM56-7b27 2011-05 Delivered 2011.06.09737-8eh(W) Transavia Airlines Gol Transportes Aereos 36596 CFM56-7b27 2010-01 Leased 2011.06.27737-86j(W) Air Berlin Boeing 36880 CFM56-7b26 2011-05 Delivered 2011.06.21


AIRCRAFT DEALS REPORT

Equipment New Owner/ Previous Owner/ Serial No. or No. of Date of Manf orModel Operator Operator (Orders)/(Options) Engine Model First Exp Deliv Equipment Date

AFM74_Deals _AF&NM Special Feature 12/07/2011 10:22 Page 40



737-86j(W) Air Berlin Boeing 36881 CFM56-7b26 2011-05 Delivered 2011.06.08737-8k5(W) TUI Travel Boeing 37259 CFM56-7b27b1 2011-05 Delivered 2011.06.13737-8k5(W) RBS Aerospace Boeing Company 37259 CFM56-7b27b1 2011-05 Sold 2011.06.13737-8k5(W) TUIfly Nordic RBS Aerospace 37259 CFM56-7b27b1 2011-05 Leased 2011.06.13737-8k5(W) TUI Travel Boeing 37260 CFM56-7b27b1 2011-06 Delivered 2011.06.24737-8k5(W) Jetairfly TUI Travel 37260 CFM56-7b27b1 2011-06 Leased 2011.06.24737-86j(W) RBS Aerospace Air Berlin 37747 CFM56-7b26 2009-11 Sold 2011.06.12737-86j(W) Airline Taimyr RBS Aerospace 37747 CFM56-7b26 2009-11 Leased 2011.06.12737-86n(W) GE Capital Boeing 38021 CFM56-7b26 2011-05 Delivered 2011.06.17737-86n(W) China Eastern Airlines GE Capital 38021 CFM56-7b26 2011-05 Leased 2011.06.17737-86n(W) China United Airlines Boeing Company 38021 CFM56-7b26 2011-05 Sub-Leased 2011.06.17737-86n(W) GE Capital Boeing 38022 CFM56-7b26 2011-05 Delivered 2011.06.10737-86n(W) Xiamen Airlines GE Capital 38022 CFM56-7b26 2011-05 Leased 2011.06.10737-8u3(W) ILFC Boeing 38821 CFM56-7b26 2011-05 Delivered 2011.06.21737-8u3(W) Garuda Indonesian ILFC 38821 CFM56-7b26 2011-05 Leased 2011.06.21737-8jp(W) Norwegian Air Shuttle Boeing 39007 CFM56-7b26 2011-05 Delivered 2011.06.07737-8jp(W) Norwegian Air Shuttle Boeing 39048 CFM56-7b26 2011-06 Delivered 2011.06.22737-87l(W) Shenzhen Airlines Boeing 39145 CFM56-7b26 2011-05 Delivered 2011.06.09737-8fz(W) Babcock & Brown Boeing 39320 CFM56-7b26 2011-06 Delivered 2011.06.28737-8fz(W) MAS Babcock & Brown 39320 CFM56-7b26 2011-06 Leased 2011.06.28737-8fz(W) Flyfirefly Boeing Company 39320 CFM56-7b26 2011-06 Sub-Leased 2011.06.28737-86n(W) GE Capital Boeing 39403 CFM56-7b26 2011-05 Delivered 2011.06.15737-86n(W) Garuda Indonesian GE Capital 39403 CFM56-7b26 2011-05 Leased 2011.06.15737-81d(W) AWAS Boeing 39415 CFM56-7b26 2011-05 Delivered 2011.06.21737-81d(W) Skynet Asia Airways AWAS 39415 CFM56-7b26 2011-05 Leased 2011.06.21737-82r(W) Pegasus Airlines Boeing 40011 CFM56-7b26 2011-05 Delivered 2011.06.06737-89l(W) Air China Boeing 40027 CFM56-7b26 2011-05 Delivered 2011.06.13737-8kn(W) Avolon GE Capital 40234 CFM56-7b26 2009-06 Sold 2011.06.01737-8kn(W) Virgin Australia Airlines Avolon 40234 CFM56-7b26 2009-06 Leased 2011.06.02737-8kn(W) Flydubai Boeing 40246 CFM56-7b26 2011-05 Delivered 2011.06.03737-8kn(W) Avolon Flydubai 40246 CFM56-7b26 2011-05 Sold 2011.06.03737-8kn(W) Virgin Australia Airlines Avolon 40246 CFM56-7b26 2011-05 Leased 2011.06.03737-846(W) Japan Airlines Boeing 40354 CFM56-7b24 2011-06 Delivered 2011.06.27737-823(W) American Airlines Boeing 40763 CFM56-7b26 2011-05 Delivered 2011.06.09737-823(W) American Airlines Wilmington Trust 40763 CFM56-7b26 2011-05 Sale-Leaseback 2011.06.13737-866(W) Egyptair Boeing 40800 CFM56-7b26 2011-05 Delivered 2011.06.15737-8jp(W) Norwegian Air Shuttle Boeing 40870 CFM56-7b26 2011-05 Delivered 2011.06.06737-8fe(W) Virgin Australia Airlines Boeing 40994 CFM56-7b26 2011-05 Delivered 2011.06.08737-8fe(W) Virgin Australia Airlines Avolon 40994 CFM56-7b26 2011-05 Sale-Leaseback 2011.06.08737-8fe(W) Virgin Australia Airlines Boeing 40995 CFM56-7b26 2011-05 Delivered 2011.06.20737-8fe(W) RBS Aerospace Boeing 40995 CFM56-7b26 2011-05 Sold 2011.06.20737-8fe(W) Virgin Australia Airlines RBS Aerospace 40995 CFM56-7b26 2011-05 Leased 2011.06.20737-800(W) ALC Boeing (6) CFM56-7b24 2017-06 Ordered 2011.06.01737-8jp(W) Norwegian Air Shuttle Boeing (15) CFM56-7b26 2015-02 Ordered 2011.06.01737-800(W) Mongolian Airlines Boeing (2) CFM56-7b26 2013-03 Ordered 2011.06.01737-9gper(W) Lion Air Boeing 37282 CFM56-7b27 2011-05 Delivered 2011.06.07737-9b5er(W) Korean Air Lines Boeing 37633 CFM56-7b27 2011-04 Delivered 2011.06.14737-9b5er(W) Korean Air Lines Boeing 37634 CFM56-7b27 2011-05 Delivered 2011.06.28747-338 Unknown Bank Of Utah 23408 RB211-524d4-19 1986-03 Leased 2011.06.22747-446 Aersale Japan Airlines 26342 CF6-80c2b1f 1992-02 Sold 2011.06.29747-446 Aersale Aersale 26346 CF6-80c2b1f 1991-12 Sold 2011.06.14747-446 Pullmantur Air Aersale 26346 CF6-80c2b1f 1991-12 Leased 2011.06.16747-4f6 ILFC Air New Zealand 27602 CF6-80c2b1f 1998-05 Returned 2011.06.30747-446 Wells Fargo Japan Airlines 27650 CF6-80c2b1f 1999-10 Sold 2011.06.23747-8 Unknown Boeing (2) GENX-2b67 2014-10 Ordered 2011.06.01757-2j4(W) Trump Group Tag Air 25155 RB211-535e4 1991-04 Sub-Leased 2011.06.01757-21b ACG China Southern Airlines 25258 RB211-535e4 1991-07 Returned 2011.06.24757-2k2(W) Icelandair Air Finland 26330 RB211-535e4 1996-05 Sub-Leased 2011.06.11757-28a(Etops) Astraeus Airlines British Midland 28161 RB211-535e4 1996-07 Returned 2011.06.04757-256(Etops) Icelandair Towy Leasing 29311 RB211-535e4 2000-08 Leased 2011.06.10767-231 Wells Fargo DHL 22566 JT9d-7r4d 1982-09 Transferred 2011.06.13767-231 ABX Air Wells Fargo 22566 JT9d-7r4d 1982-09 Leased 2011.06.13767-231 Wells Fargo DHL 22570 JT9d-7r4d 1983-06 Transferred 2011.06.13767-231 ABX Air Wells Fargo 22570 JT9d-7r4d 1983-06 Leased 2011.06.13767-231 Wells Fargo DHL 22571 JT9d-7r4d 1983-06 Transferred 2011.06.13767-231 ABX Air Wells Fargo 22571 JT9d-7r4d 1983-06 Leased 2011.06.13767-231 Wells Fargo DHL 22572 JT9d-7r4d 1983-06 Transferred 2011.06.13767-231 ABX Air Wells Fargo 22572 JT9d-7r4d 1983-06 Leased 2011.06.13767-205 Wells Fargo DHL 23058 JT9d-7r4d 1984-08 Transferred 2011.06.13767-205 ABX Air Wells Fargo 23058 JT9d-7r4d 1984-08 Leased 2011.06.13767-338er Cargo Aircraft Mgmt Qantas Airways 24316 CF6-80c2b6 1988-09 Sold 2011.06.28767-383er Pegasus Aviation Avianca 24357 PW4060 1989-03 Returned 2011.06.14767-319er North American Castle 24876 CF6-80c2b6 1992-01 Leased 2011.06.08767-338er Qantas Airways TJT Leasing 24930 CF6-80c2b6 1990-11 Lease-Buyout 2011.06.23767-383er Muzun Leasing One Air Madagascar 25088 PW4062-3 1991-02 Returned 2011.06.30767-38eer Guggenheim Gol Transportes Aereos 25132 CF6-80c2b6f 1992-01 Returned 2011.06.30767-38eer Atlas Air Wells Fargo 25132 CF6-80c2b6f 1992-01 Sold 2011.06.30767-338er Qantas Airways Ril Aviation 25316 CF6-80c2b6 1991-09 Lease-Buyout 2011.06.23767-3y0er Sunwing Airlines Euro Atlantic Airways 25411 PW4060 1991-11 Sub-Leased 2011.06.14



767-3y0er Sunwing Airlines Euro Atlantic Airways 26208 PW4060 1993-06 Sub-Leased 2011.06.14767-306er Wilmington Trust North American 28098 CF6-80c2b6f 1996-02 Returned 2011.06.22767-306er Nordwind Airlines Wilmington Trust 28098 CF6-80c2b6f 1996-02 Leased 2011.06.23767-343er Condor GECAS Technical 30009 CF6-80c2b6f 1999-03 Leased 2011.06.01767-316er(W) LAN Ecuador LAN Airlines 35696 CF6-80c2b7f 2008-05 Leased 2011.06.09767-300er Mongolian Airlines Boeing (1) Unknown 2014-02 Ordered 2011.06.01767-34af UPS Boeing 37866 CF6-80c2b7f 2011-05 Delivered 2011.06.08767-34af UPS Boeing 37867 CF6-80c2b7f 2011-06 Delivered 2011.06.29777-F6n GE Capital Boeing 37716 GE90-110b1l 2011-06 Delivered 2011.06.27777-F6n China Cargo Airlines GE Capital 37716 GE90-110b1l 2011-06 Leased 2011.06.27777-Fs2 Federal Express Boeing 37729 GE90-110b1l 2011-05 Delivered 2011.06.03777-Ffx Etihad Airways Boeing 39682 GE90-110b1l 2011-05 Delivered 2011.06.21777-F1b China Southern Airlines Boeing (6) GE90-110b1l 2012-02 Ordered 2011.06.01777-2fblr Boeing Business Jets Boeing 40668 GE90-110b1l 2011-05 Delivered 2011.06.17777-2fblr Ceiba Intercontinental Boeing Company 40668 GE90-110b1l 2011-05 Sold 2011.06.17777-3b5er Korean Air Lines Boeing 37648 GE90-115b 2011-05 Delivered 2011.06.07777-367er Cathay Pacific Boeing 37901 GE90-115bl2 2011-05 Delivered 2011.06.24777-3f2er Turk Hava Yollari Boeing 40795 GE90-115b 2011-05 Delivered 2011.06.24777-3m2er Taag Angola Airlines Boeing 40805 GE90-115b 2011-05 Delivered 2011.06.14AirbusA300b4-622r Wells Fargo Japan Airlines 703 PW4158 1993-06 Sold 2011.06.06A318-111 Avianca Wells Fargo 2552 CFM56-5b8/P 2005-08 Leased 2011.06.06A318-111 Avianca Wells Fargo 2575 CFM56-5b8/P 2005-09 Leased 2011.06.24A318-121 Oceanair LAN Airlines 3214 PW6122a 2007-12 Sold 2011.06.14A319-112 Constitution Aircraft Wells Fargo 1124 CFM56-5b6/2p 1999-10 Sold 2011.06.14A319-112 Atlasjet International Constitution Aircraft 1124 CFM56-5b6/2p 1999-10 Leased 2011.06.14A319-112 Hainan Airlines Beijing Capital Airlines 2617 CFM56-5b6/P 2005-11 Returned 2011.06.15A319-112 Lucky Air Hainan Airlines 2617 CFM56-5b6/P 2005-11 Leased 2011.06.15A319-111 RBS Aerospace Iberia 3169 CFM56-5b5/P 2007-06 Returned 2011.06.30A319-112 ALS ALS 3171 CFM56-5b6/P 2007-06 Sold 2011.06.29A319-112 Tatarstan Airlines ALS Bermuda 3171 CFM56-5b6/P 2007-06 Leased 2011.06.29A319-112 Flynext Germania 3589 CFM56-5b6/3 2008-07 Sub-Leased 2011.06.01A319-112 Germania Germania 3589 CFM56-5b6/3 2008-07 Sub-Leased 2011.06.01A319-112 Flynext Germania 3818 CFM56-5b6/3 2009-02 Sub-Leased 2011.06.01A319-112 Germania Germania 3818 CFM56-5b6/3 2009-02 Sub-Leased 2011.06.01A319-112 Tam Linhas Aereas Airbus 4734 CFM56-5b6/3 2011-05 Delivered 2011.06.07A319-111 Easyjet Airbus 4744 CFM56-5b5/3 2011-05 Delivered 2011.06.09A319-132 Turk Hava Yollari Airbus 4755 V2524-A5 2011-06 Delivered 2011.06.22A319-111 Aircraft Purchase Fleet Airbus 4759 CFM56-5b5/3 2011-06 Delivered 2011.06.29A319-111 Herodias Airbus 4759 CFM56-5b5/3 2011-06 Sold 2011.06.29A319-111 Alitalia Herodias 4759 CFM56-5b5/3 2011-06 Leased 2011.06.29A319-115 Tibet Airlines Airbus 4766 CFM56-5b7/3 2011-06 Delivered 2011.06.26A320-214 ILFC Iberia 1087 CFM56-5b4/P 1999-09 Returned 2011.06.01A320-214 BH-Air ILFC 1087 CFM56-5b4/P 1999-09 Leased 2011.06.02A320-211 African Holding Comp Of America Castle 112 CFM56-5a1 1990-07 Sold 2011.06.01A320-214 ILFC Koralblue Airlines 1454 CFM56-5b4/P 2001-03 Returned 2011.06.23A320-214 Calliope ILFC 1454 CFM56-5b4/P 2001-03 Sold 2011.06.23A320-214 Ural Airlines AFS 1751 CFM56-5b4/P 2002-03 Leased 2011.06.23A320-232 Qantas Airways Ril Aviation 2515 V2527-A5 2005-07 Sold 2011.06.01A320-232 Jetstar Airways Qantas Airways 2515 V2527-A5 2005-07 Leased 2011.06.01A320-214 Unknown Air Berlin 2539 CFM56-5b4/P 2005-09 Returned 2011.06.25A320-214 Interjet Unknown 2539 CFM56-5b4/P 2005-09 Leased 2011.06.25A320-232 OAS Australia Macquarie 2642 V2527-A5 2006-03 Transferred 2011.06.01A320-232 Qantas Airways OAS Australia 2642 V2527-A5 2006-03 Leased 2011.06.01A320-232 Jetstar Airways Jetstar Airways 2642 V2527-A5 2006-03 Sub-Leased 2011.06.01A320-232 OAS Australia Macquarie 2651 V2527-A5 2005-12 Transferred 2011.06.01A320-232 Qantas Airways OAS Australia 2651 V2527-A5 2005-12 Leased 2011.06.01A320-232 Jetstar Airways Jetstar Airways 2651 V2527-A5 2005-12 Sub-Leased 2011.06.01A320-214 GE Capital Orbest Orizonia Airlines 2745 CFM56-5b4/P 2006-03 Returned 2011.06.24A320-214 Celestial GE Capital 2745 CFM56-5b4/P 2006-03 Sold 2011.06.24A320-212 Transamerica Aviation Smartlynx Airlines 283 CFM56-5a3 1991-12 Returned 2011.06.01A320-214 Azerbaijan Airlines Belair Airlines 3006 CFM56-5b4/P 2006-12 Sub-Leased 2011.06.14A320-232 Turk Hava Yollari Wells Fargo 3308 V2527-A5 2007-10 Leased 2011.06.14A320-232 Anadolujet Crescent Leasing 3308 V2527-A5 2007-10 Sub-Leased 2011.06.14A320-232 Volaris Amentum 3543 V2527-A5 2008-06 Leased 2011.06.06A320-212 Travel Service Airlines Nouvelair Tunisie 400 CFM56-5a3 1993-01 Sub-Leased 2011.06.19A320-211 Arkia Israel Airlines Smartlynx Airlines 426 CFM56-5a1 1993-04 Sub-Leased 2011.06.01A320-214 Avolon Aerventure 4310 CFM56-5b4/3 2010-05 Sold 2011.06.01A320-214 Air Arabia Avolon 4310 CFM56-5b4/3 2010-05 Leased 2011.06.01A320-214 Air Arabia Maroc Air Arabia Maroc 4310 CFM56-5b4/3 2010-05 Sub-Leased 2011.06.02A320-214 Avolon Aerventure 4375 CFM56-5b4/3 2010-07 Sold 2011.06.01A320-214 Spring Airlines Avolon 4375 CFM56-5b4/3 2010-07 Leased 2011.06.02A320-214 Interjet Aerventure 4411 CFM56-5b4/3 2010-08 Leased 2011.06.27A320-232 Avolon Crescent Leasing 4518 V2527-A5 2010-11 Sold 2011.06.01A320-232 Indigo Avolon 4518 V2527-A5 2010-11 Leased 2011.06.02A320-214 Juneyao Airlines Airbus 4587 CFM56-5b4/3 2011-05 Delivered 2011.06.01A320-232 Air China Airbus 4593 V2527-A5 2011-05 Delivered 2011.06.02A320-232 Hainan Airlines Airbus 4602 V2527-A5 2011-05 Delivered 2011.06.10A320-232 Shenzhen Airlines Airbus 4620 V2527-A5 2011-06 Delivered 2011.06.16





Source: OAG Fleet iNET, 2011




A320-214 China Eastern Airlines Airbus 4627 CFM56-5b4/3 2011-06 Delivered 2011.06.24A320-232 Tiger Airways Tiger Airways 4645 V2527-A5 2011-03 Returned 2011.06.02A320-232 Sichuan Airlines Airbus 4707 V2527-A5 2011-05 Delivered 2011.06.09A320-232 British Airways Airbus 4725 V2527-A5 2011-05 Delivered 2011.06.01A320-214 AWAS Airbus 4727 CFM56-5b4/3 2011-05 Delivered 2011.06.09A320-214 AWAS Airbus 4727 CFM56-5b4/3 2011-05 Sold 2011.06.09A320-214 Frontier Airlines AWAS 4727 CFM56-5b4/3 2011-05 Leased 2011.06.09A320-214 Interjet Airbus 4733 CFM56-5b4/3 2011-05 Delivered 2011.06.22A320-214 GE Capital Airbus 4735 CFM56-5b4/3 2011-05 Delivered 2011.06.07A320-214 Orbest Orizonia Airlines GE Capital 4735 CFM56-5b4/3 2011-05 Leased 2011.06.07A320-232 Wizz Air Hungary Airbus 4736 V2527-A5 2011-05 Delivered 2011.06.17A320-232 Wizz Air Hungary JSA 4736 V2527-A5 2011-05 Sale-Leaseback 2011.06.17A320-214 GE Capital Airbus 4738 CFM56-5b4/3 2011-05 Delivered 2011.06.20A320-214 Spring Airlines GE Capital 4738 CFM56-5b4/3 2011-05 Leased 2011.06.20A320-214 Easyjet Airbus 4740 CFM56-5b4/3 2011-06 Delivered 2011.06.29A320-232 Wizz Air Hungary Airbus 4741 V2527-A5 2011-05 Delivered 2011.06.23A320-232 Avolon Wizz Air Hungary 4741 V2527-A5 2011-05 Sold 2011.06.23A320-232 Volaris Avolon 4741 V2527-A5 2011-05 Leased 2011.06.23A320-214 CIT Airbus 4742 CFM56-5b4/3 2011-06 Delivered 2011.06.22A320-214 Vueling Airlines CIT 4742 CFM56-5b4/3 2011-06 Leased 2011.06.22A320-214 Aviation Capital Group Airbus 4745 CFM56-5b4/3 2011-06 Delivered 2011.06.27A320-214 Bank Of Utah Airbus 4745 CFM56-5b4/3 2011-06 Sold 2011.06.27A320-214 Frontier Airlines Bank Of Utah 4745 CFM56-5b4/3 2011-06 Leased 2011.06.27A320-214 Air France Airbus 4747 CFM56-5b4/3 2011-06 Delivered 2011.06.01A320-214 Air France JSA Aircraft 4747 CFM56-5b4/3 2011-06 Sale-Leaseback 2011.06.02A320-214 Easyjet Airbus 4749 CFM56-5b4/3 2011-06 Delivered 2011.06.27A320-214 Spring Airlines Airbus 4750 CFM56-5b4/3 2011-06 Delivered 2011.06.28A320-232 Indigo Airbus 4752 V2527-A5 2011-05 Delivered 2011.06.30A320-232 Indigo Airbus 4757 V2527-A5 2011-05 Delivered 2011.06.01A320-232 Indigo HKAC Leasing 4757 V2527-A5 2011-05 Sale-Leaseback 2011.06.02A320-214 Yes Airways Jet-I 566 CFM56-5b4/2 1995-11 Leased 2011.06.21A320-212 Unknown ILFC 579 CFM56-5a3 1996-02 Sold 2011.06.09A320-212 Donbassaero Unknown 579 CFM56-5a3 1996-02 Leased 2011.06.20A320-212 Unknown ILFC 645 CFM56-5a3 1996-11 Sold 2011.06.10A320-212 Donbassaero Unknown 645 CFM56-5a3 1996-11 Leased 2011.06.20A320-214 Aegean Airlines Smartlynx Airlines 724 CFM56-5b4/P 1997-09 Sub-Leased 2011.06.01A320-211 White Airways ILFC 726 CFM56-5a1 1997-10 Leased 2011.06.01A320-200neo(W) AirAsia Airbus (200) Leap-X 2016-11 Ordered 2011.06.23A320-200 China Aviation Supplies Airbus (46) unknown 2012-11 Ordered 2011.06.28A320-200neo(W) Goair Airbus (72) unknown 2015-11 Ordered 2011.06.23A320-200neo(W) GE Capital Airbus (60) Leap-X 2016-09 Ordered 2011.06.20A320-200 ICBC Airbus (42) unknown 2012-09 Ordered 2011.06.28A320-200 Indigo Airbus (30) unknown 2016-01 Ordered 2011.06.22A320-200neo(W) Indigo Airbus (150) unknown 2016-04 Ordered 2011.06.22A320-200neo(W) LAN Airlines Airbus (20) unknown 2016-10 Ordered 2011.06.22A320-200neo(W) SAS Airbus (30) Leap-X 2017-01 Ordered 2011.06.20A320-200neo(W) SAS Airbus [11] Leap-X 2021-01 Optioned 2011.06.20A321-231 Sichuan Airlines Airbus 4731 V2533-A5 2011-05 Delivered 2011.06.07A321-231 Vietnam Airlines Airbus 4737 V2533-A5 2011-05 Delivered 2011.06.09A321-231 China Eastern Airlines Airbus 4746 V2533-A5 2011-06 Delivered 2011.06.23A321-231 Lufthansa Airbus 4753 V2533-A5 2011-06 Delivered 2011.06.22A321-231 Turk Hava Yollari Airbus 4761 V2533-A5 2011-06 Delivered 2011.06.29A321-211 Dgvr Alpha Mobilien Gulf Air 675 CFM56-5b3/P 1997-05 Returned 2011.06.01A321-231 Onur Air PK Airfinance 792 V2533-A5 1998-02 Leased 2011.06.03A321-200neo(W) Transasia Airways Airbus (6) unknown 2017-04 Ordered 2011.06.21A330-223 Hong Kong Airlines Hainan Airlines 1034 PW4170 2009-06 Returned 2011.06.29A330-223 China Southern Airbus 1233 PW4170 2011-05 Delivered 2011.06.22A330-243 Aircastle Airbus 1236 Trent772b-60 2011-06 Delivered 2011.06.01A330-243 South African Aircastle 1236 Trent772b-60 2011-06 Leased 2011.06.02A330-243 Air Europa Calliope 551 Trent772b-60 2003-11 Leased 2011.06.08A330-203 OAS Australia Macquarie 887 CF6-80e1a3 2007-11 Transferred 2011.06.01A330-203 Qantas Airways OAS Australia 887 CF6-80e1a3 2007-11 Leased 2011.06.01A330-202 OAS Australia Macquarie 945 CF6-80e1a4 2008-07 Transferred 2011.06.01A330-202 Qantas Airways OAS Australia 945 CF6-80e1a4 2008-07 Leased 2011.06.01A330-202 Jetstar Airways Jetstar Airways 945 CF6-80e1a4 2008-07 Sub-Leased 2011.06.01A330-203(Mrtt) Australian Air Force MTAD 951 CF6-80e1a3 2008-04 Sold 2011.06.22A330-203(Mrtt) Australian Air Force MTAD 969 CF6-80e1a3 2008-10 Sold 2011.06.01A330-243f Turk Hava Yollari Airbus 1092 Trent772b-60 2011-05 Delivered 2011.06.01A330-343e Etihad Airways Airbus 1226 Trent772b-60 2011-05 Delivered 2011.06.01A330-323e MAS Airbus 1229 PW4168a 2011-05 Delivered 2011.06.01A330-323e MAS JSA 1229 PW4168a 2011-05 Sale-Leaseback 2011.06.02A330-343e Aeroflot Airbus 1232 Trent772b-60 2011-06 Delivered 2011.06.23A330-323e MAS Airbus 1234 PW4168a 2011-06 Delivered 2011.06.24A330-323e MAS JSA 1234 PW4168a 2011-06 Sale-Leaseback 2011.06.24A330-343e Singapore Airlines Airbus (15) Trent772b-60 2013-05 Ordered 2011.06.29A330-343e Saudi Arabian Airlines Airbus (4) Trent772b-60 2013-07 Ordered 2011.06.20A340-313x ILFC Cathay Pacific 381 CFM56-5c4 2000-12 Returned 2011.06.01A340-313x Srilankan Airlines ILFC 381 CFM56-5c4 2000-12 Leased 2011.06.02A380-841 Singapore Airlines Airbus 058 Trent970-84 2010-07 Delivered 2011.06.16


AIRPORTS & ROUTES: Airport charges

AN AIRPORT-AIRLINE RELATIONSHIP IS A CURIOUS ONE.Each side is dependent on the other to deliver customers,

yet each operates according to a radically differentbusiness model. Take landing charges, for instance. If they risetoo quickly airlines complain that the additional cost – reflectedimmediately in higher ticket prices – will drive passengers away.An airport, meanwhile, might argue that such charges are vitalfor long-term infrastructural investment, without which futuregrowth of the airport – and more passenger capacity for theairlines – would be impossible.

In Europe, most major airports are subject to distinct regulationsgoverning how much they are able to charge. Capital city airports,in particular, are deemed vital to the economic interests of anation and are thus not allowed to increase their prices to thedetriment of the consumer. In the UK, for instance, London’sHeathrow, Gatwick and Stansted airports are regulated by theCivil Aviation Authority (CAA). Those airports are all privatelyoperated but even where publicly owned, such as AmsterdamSchiphol, charges are regulated for principal air transport hubs –in that case by the Netherlands Competition Authority (NCA).

Controlling chargesRegulation not only means that aircraft, passenger and securitycharges have to be approved, but also that they are transparent. Inthe UK this means that the accounts of major airports are examinedby the CAA once every five years. The CAA will only investigatecharges at non-regulated airports if it receives a complaint.

This is not to say that non-regulated airports can charge whatthey like. In the UK, any airport with more than one millionpassengers per year has to receive permission to levy charges. Inaddition, since March 2011, all airports across Europe with morethan five million passengers per year have been subject to the EUAirport Charges Directive. Amongst other things, this requiresthat airports do not discriminate between users (airlines); thatthey consult users annually on charges and service quality; andthat they provide users with information about cost structuresand revenues relevant to charges.

If airlines are unhappy with charges the directive gives them aright of appeal to an independent supervisory authority.

Hardly a week goes by in Europe without a spaterupting between airport operators and airlines. InDecember 2010 it was weather-related disruption thathit the headlines, but the usual factor is charges. AlexDerber investigates how they are implemented.


910 933 931 1,226

2,142 2,359

2,550

3,339

4,360 4,360

5,450

8,175

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2008 2009 2010 2011

Heathrow Aircraft Charges

Passenger Charges

Government Charges

£

604 615 533 537

3,030

3,529 3,451

3,669

1,064 1,064 1,097 1,107

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2008 2009 2010 2011

Paris

Aircraft Charges Passenger Charges Government Charges

£

However, although the right of appeal has been welcomed byairlines, other provisions of the directive are less groundbreak-ing. Louise Congdon is a managing partner at the airportsconsultancy, York Aviation, and has previously worked for the UK CAA and Birmingham and Manchester airports. She feels thatthe European legislation is too much of a compromise tosignificantly affect airport charging regimes.

“What’s been put in place is a fairly low-level piece of genericlegislation,” she says.

“The Airport Charges Directive puts in place an initial set ofrequirements to airports to demonstrate that their charges are

Charges based on an international service with an A320 with a MTOW of 73.5 tonnes with 109 passengers on board. Source: RDC Aviation

AFM74_Airport charges_AFM74 12/07/2011 10:10 Page 44

CHARGE OF THEFLIGHT BRIGADE



941 925 998

910

2,211

2,661 2,647 2,657

0 0 0 0 0

500

1,000

1,500

2,000

2,500

3,000

2008 2009 2010 2011

Amsterdam Aircraft Charges

Passenger Charges

Government Charges

£

802 826 826 805

876 916 916

1,271

0 0 0 0 0

200

400

600

800

1,000

1,200

1,400

2008 2009 2010 2011

Madrid Aircraft Charges

Government Charges

Passenger Charges

£

related to cost, and to consult, but it’s not very different to whatwas actually in practise in the UK anyway. Certainly, it’s far lessonerous than the regime that exists at a regulated airport interms of expectations about transparency and consultation.”

Nonetheless, the principle of non-discrimination does exercisea degree of control on how airports negotiate their charges.Although it does not preclude non-regulated airports fromnegotiating lower charges with certain airlines – who in returnpromise to drive a certain number of passengers through theairport’s shops and amenities each year – it does require them toshow that they would have done the same deal with any carrierin the same conditions.

In the case of regulated airports – the extra scrutiny means thatoperators have to show a particularly compelling business casefor deviating from their published rate. “This involves providing adetailed business case to show that giving an additional discountwould generate extra retail spend, for instance, and that the neteffect would be that the airport was better off,” says Congdon.

Regulated airports have to be so careful with discounts becauseairlines not in receipt of them fear that their charges will rise tocompensate. An airport manager must therefore show that theadditional passengers and revenue brought in by an airline witha discount are enough to ensure that overall charges goingforward will be lower than they would otherwise have been.




646 633 633 631 663

825 826

2,166

2,330 2,372 2,430

2,372

1,397

0

500

1,000

1,500

2,000

2,500

3,000

2008 2009 2010 2011

Frankfurt Aircraft Charges Passenger Charges Government Charges

£

528 496 502 519

1,167 1,209 1,206 1,224

96

434 434

530

0

200

400

600

800

1,000

1,200

1,400

2011

Rome Aircraft Charges

Passenger Charges

Government Charges

2010 2009 2008

£

Single or dual-tillMost airports are regulated on a single-till basis, which means thatall their revenues – whether they be from aeronautical charges,retail or car park sales – are considered as one. The rationale is thatairlines bring in the customers for an airport’s shops so should alsoreceive some of the benefit – in the form of lower charges.

However, many airports would like to be regulated on a dual-tillbasis and keep retail revenues to themselves. Indeed, this is theposition of Airports Councils International – an airport industrybody – which argues that a dual-till approach “allows the

‘monopolistic’ part of an airport’s business – the provision of coreaeronautical activities – to be regulated, while ensuring that theother parts of the business can be run using the normalmarketplace competition rules”.

Airlines, of course, would argue differently. Congdon says that“in many cases the aeronautical part of the business is designednot to cover its costs directly and, effectively, airport charges are supported from retail revenues earned from passengers.”Without that subsidy, aeronautical charges would have to rise.

Where an airport achieves its biggest margins depends very muchon its size. Smaller airports cannot generate sufficient volume ofpassengers to justify extensive retail or restaurant developmentsso often look to car park charges for profit, while larger hubs canafford to turn themselves into shopping centres with air transportservices attached.

Scale and profitIn the past, it was generally thought that an airport could hitprofitability once it exceeded about one million passengers peryear. However, the advent of low-cost airlines and Europeanaviation liberalisation saw that threshold creep up. The reasonwas that airlines were forced to become more competitive andthus take a closer look at their costs. In turn, this restricted howmuch airports were able to levy airlines in charges, placing moreof a focus on their retail revenues and passenger throughput.

Congdon believes the threshold for profitability in Europe is nownearer two million passengers per year. “This means that airportshave got to get much cleverer than they were 10 years ago inmaking best use of their assets. It’s forced airports to look at theircost base, at how they do things – it should make people thinkwhat it actually is they need to build and why.”

The need for airports to focus on their own efficiencies will lead,Congdon says, to a decline – at least in the West – in prestigeterminals and a rise in airports designed for functionality ratherthan aesthetics. “Personally, I think the age of the architect-driven airport terminal passed a long time ago – when we were

designing Terminal 2 at Manchester in the 1980s we started fromfunctional form, not architectural design, and we accepted that itmight not win any architectural awards, but it would work.”

The best expressions of function over form are usually low-costterminals, which concentrate on maximising passenger through-put and minimising aircraft turnaround times. When Dublinairport opened its grand, €610m ($884m) second terminal in2010, Ryanair boss Michael O’Leary compared it to the “fantasyproperty developments” that sprung up prior to Ireland’seconomic collapse. Ryanair had offered to build a cheaper secondterminal for €250m ($360m).

Ryanair itself, though, has landed in hot water over alleged illegalsubsidies for its operations at Lubeck and Frankfurt Hahn airports.The budget operator is the biggest user of both airports andtherefore has substantial power when negotiating charges. But,Air Berlin and Lufthansa both claim that because those airportsare publicly owned, any reduced charges they give amount toillegal state aid.

The case is ongoing, but in 2008 Ryanair successfully fought asimilar charge, overturning a 2004 ruling that it repay €4m($5.8m) of incentives at Belgium’s Charleroi airport. At the timethe carrier said the ruling showed “that the low-cost airportsmodel works and does not involve state aid”.

Congdon, who consults for Ryanair, says: “ I think airports have tolook at what they want to achieve very carefully. There will be somewho can do without low-fare carriers, but if an airport wantsgrowth in Europe, unless it’s a major hub airport, it must think verycarefully if it can afford to turn them away because in short-haulterms, low-fare carriers are virtually the only show in town.”

In Europe today, airports with spare capacity must decidebetween doing a deal with a low-cost airline, or holding out for a customer who will pay their published rate. Provincial orsecondary airports will almost always opt for the former, but theymust do so with their eyes open, Congdon warns.

“A lot of publicly-owned airports across Europe entered intoagreements with airlines for rational business reasons but often,when there were complaints to the Commission, they did nothave their paperwork to demonstrate they had behaved as arational private investor would, which is the key test. It isimportant that airports can show a business case and that it wasconsidered and documented up front, such as gaining additionalincome in order to support longer term investment. This isessential to be consistent with the market economy investorprinciple, which is what you have to comply with in order not tofall foul of state aid rules.”

Charges based on an international service with an A320 with a MTOW of 73.5 tonnes with 109 passengers on board. Source: RDC Aviation


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AIRPORTS & ROUTES: Asia and the 737NG

ASIAN FULL-SERVICE CARRIERS HAVE COMFORTABLYoperated international medium-haul services with

widebody aircraft for years. Unfortunately, the fuelcostspike in 2008 forced a painful review of such services.Although long-haul routes were the biggest some of thesemedium-haul international routes were also suspended, inparticular services into non-hub (secondary) cities.

Nevertheless, airlines have adapted well to high fuel costs andmany have evolved the ways they manage their business. SomeAsian and Australasian carriers have made good use of Boeing’sNext Generation (NG) single-aisle aircraft in the existing marketand the 737-800, which entered service in 1998, is fast gainingpopularity in Asia and Australasia. These carriers capitalise on thelower seat capacity and lower operating costs of the narrowbodyaircraft to right-size the seat capacity offered on some regionalroutes, especially the short- and medium-haul services tosecondary markets. Over the last 12 months, carriers have strivedeven harder to develop new opportunities and to be creative inutilising their fleets.

Right-sizing seat capacity to match demandMany full-service carriers were operating services into secondarymarkets using widebody aircraft. More often than not, these low-frequency services recorded weak passenger load factors as theseat capacity proved too large for secondary markets. Moreover,low-frequencies made the services unattractive to businesstravellers who instead opted to connect through the nearest hubairport with multiple daily-frequency services.

Fuel costs remained high, which made operating widebodies onthese routes economically unviable; many Asian carriers had toresort to alternative ways to maintain these services. Carriers withNext Generation narrowbody aircraft ‘downgraded’ thewidebody services to narrowbody ones to ensure the ‘right-size’seat capacity aircraft was deployed to match the market demand.Right-sizing the seat capacity also created an opportunity for theairlines to increase service frequencies enhancing the connectingtraffic opportunities.

THE ROUTE TO TRAFFIC GROWTH:

SINGLE-AISLE NGS ANDASIANROUTE DEVELOPMENT

With more than 200 seats, widebody aircraft have proven too large for some secondary markets.In some cases, these markets have suffered from weak passenger load factors, thus making theservices commercially unviable. The Next Generation single-aisle aircraft, boosted with a betteroperating range than the Classic models, is becoming a popular option for operations intosecondary markets. Kee Keat Ong, senior consultant at ASM, investigates.

An example is Malaysia Airlines (MAS). In 2010, MAS leased 737-800s into its fleet prior to receiving its own factory-new jetsfrom Boeing in 2011. It then deployed the 737-800s on regionalservices where operating widebody aircraft has proven achallenge. By right-sizing the seat capacity to better matchdemand, MAS also had the opportunity to increase frequencieson some sectors, enhancing its hub and spoke network model.MAS used the 737-800s to enhance operations on all types ofregional markets, i.e. capital city markets, leisure resortdestinations and secondary markets.

The Kuala Lumpur (KUL) to Manila (MNL) sector was previouslyoperated by the 294-seats A330-300 on a daily frequency. Nowthe carrier operates the 737-800 on a frequency of 10 flights aweek. In comparison, the weekly seat capacity had been reducedby 25 per cent yet the weekly frequency has increased by 42 percent. Moreover, the services offered better connectivity optionsat its Kuala Lumpur hub through two different flight timeschedules.


AFM74_Asia and 737_AFM74 12/07/2011 10:06 Page 48



Direct access to the secondary marketIn China, the advantages of lower seat capacity and a longeroperating range have enabled more commercially viabledirect services into secondary cities such as Kunming, Fuzhou,Qingdao, Dalian and Hangzhou. It is even more interestingto see city pairs between secondary cities, such as Hiroshima– Dalian (Air China); Phuket – Hangzhou (Hainan Airlines);and Nagoya – Qingdao (China Eastern Airlines). Chinesecarriers with secondary hubs in secondary cities in mainlandChina are also fast expanding their international networks,connecting major foreign hub airports to secondary cities inChina, such as Fuzhou – Singapore (Xiamen Airlines);Kunming – Kolkata (China Eastern Airlines); Shenzhen –Bangkok (planned by Hainan Airlines); and Nanning – KualaLumpur (China Eastern Airlines).

In Australasia, Virgin Australia operates 737NGs intosecondary markets in south-east Asia – such as fromBrisbane, Melbourne and Sydney – into Denpasar Bali, andPerth to Phuket.

The leisure resort, Malé, in the Republic of Maldives, isanother beneficiary from the use of the 737-800. Previously,Malé was served by thrice-weekly flights using A330-300svia Colombo (CMB). Now, it is served by two dedicated non-stop services, both operated by 737-800s. The servicefrequency has also increased to five-times-a-week, directinto both markets. Previously, Malé had to share seatcapacity with the Colombo market but now it has full seatcapacity and more importantly, direct access to the KualaLumpur hub.

Hyderabad, India, provides a good example for thesecondary market. It was previously operated using the229-seats A330-200 on a thrice-weekly frequency but isnow enjoying a five-times-a-week service using the 737-800. The increase in frequency has again boostedopportunities to connect to the Kuala Lumpur hub and hasenhanced the carrier’s hub and spoke network model. Interms of seat capacity, Hyderabad now enjoys a 16 per centincrease in weekly seat capacity.




In Korea, Jeju Air is rapidly expanding its services out of Busan,with new services soon to be launched that connect Busan toHong Kong and Bangkok respectively.

Base carriers at major hubs are also deploying the NextGeneration single-aisle aircraft to operate direct services intosecondary- or third-tier foreign markets. Air China connectsBeijing with Sendai, Sapporo, Daegu, and Busan. China EasternAirlines connects Shanghai Pudong with Jeju, Da Nang, andToyoma in Japan.

Meanwhile, Continental Airlines based the 737-800s in Guam toserve various regional destinations, such as the secondarymarkets in Cairns, Fukuoka, Hiroshima, Nagoya, Okayama,Okinawa, Sendai, and Sapporo.

Back to MAS, the carrier based the first few factory-fresh 737-800s it received to form its secondary hub in Kota Kinabalu (BKI).It connects Kota Kinabalu to Tokyo Haneda, Osaka Kansai, SeoulIncheon and Perth. Another similar example is China SouthernAirline’s secondary hub in Urumqi. The airline operates the737NGs into central Asia such as Kazakhstan, Tajikistan andKyrgyzstan.

Pushing the limits: Aircraft operating rangeAs the airline industry continues to evolve its business operations,some airlines are pushing the Next Generation single-aisle fleetto operate on a sector length close to its maximum limit.

A unique case is Air Nippon, which operates Tokyo Narita –Bombay services using the 737-700ER and which recorded a6,789km sector length, or nine hours 35 minutes block time. Thisis a unique case as the 737-700ER operated by Air Nippon isconfigured to have only 44 seats, with the majority beingbusiness-class.

The longest sector length scheduled service at high seat capacityis Virgin Australia’s Perth – Phuket services using the 737-800.The weakening yield in the domestic Australian market hasencouraged the carrier to look for alternatives in deploying thenarrowbody aircraft. This has prompted it to push the NextGeneration narrowbody to operate a much longer sector length.Nevertheless, the carrier may face a minor payload penalty forthe sector 4,832km or six hours 35 minutes block time.

Interestingly, Virgin Australia’s Sydney – Denpasar Bali services,although at a shorter sector length of 4,623km, is the longestblock time sector after Air Nippon’s Tokyo Narita – Bombayservice. The Sydney – Denpasar Bali flight takes six hours 50minutes, probably due to the longer flight path across the ocean.

Most of the top city pairs listed in these tables are for newservices launched within the last two to three years. As airlinesstrive to get the most out of their fleet we should expect to seemore new city pairs introduced.

The Next Generation single-aisle aircraft remains an attractiveoption for developing markets, especially secondary markets. It isalso a strong alternative for routes that can not sustain a dailyfrequency of widebody aircraft operations. Nevertheless, thebiggest challenge in replacing the widebody with Next Generationsingle-aisle is belly hold cargo space. Hence, the fleet type isprobably best deployed by budget carriers on leisure routes.

No. Airline Origin Destination Aircraft Sector Length Block Time Type (km) (minutes)

1 NH NRT BOM 737 6,789 5752 DJ PER HKT 73H 4,832 3953 DJ SYD DPS 73H 4,623 4104 DJ BNE DPS 73H 4,487 3905 DJ MEL DPS 73H 4,381 3856 DJ SYD APW 73H 4,326 3157 MH BKI PER 738 4,212 3358 9W SIN DEL 73H 4,154 3459 MH BKI HND 738 4,090 33010 HU PEK HKT 738 3,991 35011 MH KUL DEL 738 3,878 33012 DJ / FJ MEL NAN 73H 3,868 29013 CI TPE DPS 738 3,824 30514 DJ ADL DPS 73H 3,761 33015 MH BKI KIX 738 3,732 31516 KE CJJ BKK 73H 3,691 33017 HU SIN HFE 738 3,670 31018 LJ / 7C / KE ICN BKK 738 3,661 36019 MH BKI ICN 738 3,655 31020 DJ AKL CNS 73H 3,622 340

Source: Flightbase, July 2011

No. Airline Origin Destination Aircraft Sector Length Block Time Type (km) (minutes)

1 NH NRT BOM 737 6,789 5752 DJ SYD DPS 73H 4,623 4103 DJ PER HKT 73H 4,832 3954 DJ BNE DPS 73H 4,487 3905 DJ MEL DPS 73H 4,381 3856 LJ / 7C / KE ICN BKK 738 3,661 3607 HU PEK HKT 738 3,991 3508 NH NRT CTU 737 3,417 3459 9W SIN DEL 73H 4,154 34510 DJ AKL CNS 73H 3,622 34011 MH BKI PER 738 4,212 33512 DJ ADL DPS 73H 3,761 33013 MH BKI HND 738 4,090 33014 KE CJJ BKK 73H 3,691 33015 KE ICN CNX 73H 3,374 33016 MH KUL DEL 738 3,878 33017 CA XMN CGK 738 3,621 33018 KE ICN REP 73H 3,484 32519 HU PEK ALA 738 3,275 32020 KE PUS REP 73H 3,507 320

Source: Flightbase, July 2011

Top 10 city pairs of longest block time operated by 737NGs in Asia or Australasia.

Top 10 city pairs of longest sector length operated by 737NGs in Asia or Australasia.

“

”

The Next Generation single-aisle aircraftremains an attractive option for developingmarkets, especially secondary markets.

It is also a strong alternative for routes that can

not sustain a daily frequency of widebody

aircraft operations.


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The introduction of new aircraft always means a flurry of work behind the scenes, asmaintenance organisations, training centres and parts suppliers gear up to support newproducts. Though lessons learned on older aircraft prove useful, new technology means thatinnovative strategies and techniques must be developed, particularly in the field ofmaintenance. Alex Derber finds out just how much all this new business is going to be worth.

THE NEXT GENERATION OF PASSENGER AIRCRAFT WILLlook remarkably similar to what passengers are currentlyflying on. But while the basic shape of the 787 and A350

is little different to the A330 and 767 they replace, those twowings and a tube are going to require significantly lessmaintenance than their predecessor designs.

One of the main reasons for this is a shift from aluminium tocomposite airframes, which are far more resilient to corrosionand fatigue. Boeing’s 787, for instance, is a 50 per centcomposite design and is expected to generate roughly 30 percent lower life-cycle maintenance costs than the 767. This will bedue both to a reduction in part counts and longer heavymaintenance intervals, of up to 10 years.

Such will be the maintenance cost advantage of newergeneration aircraft that advisory group Seabury estimates realglobal MRO spend will barely rise through to 2025 from itspresent level of near $40bn, despite a big increase in the globalfleet. That does, however, assume that both Boeing and Airbustie customers for their new products into guaranteedmaintenance cost-per-flight-hour contracts.

BoeingBoeing’s support programme for the 787 is called Goldcare.Initially, it was a total package, like the maintenance deals thatengine manufacturers seek to channel their customers towards.However, following pressure from its customers, some of whomwanted to keep certain functions in-house or with otherproviders, Boeing broke Goldcare down into separate elements.It also dropped line maintenance from the programme, which


MAINTENANCE OPERATIONS: NG MRO

MAINTAINING THENEXT GENERATION

resulted in SR Technics falling off the list of Goldcare providers.

Though component, heavy checks and materials managementremained in Goldcare, an analysis from the OAG Fleet and MROForecast Suite shows why the omission of line maintenancemattered so much to SR Technics: across the 787 family the valueof line maintenance work from 2011 to 2020 is expected to risefrom $19m to $650m.

Goldcare’s first customer, in early 2010, was London-listed TUITravel, which opted for the full roster of services. Its deal, GoldcareEnterprise, means that Boeing and its partners will provide heavymaintenance, engineering and materials management for each of TUI’s 13 787s on order, for 12 years from the delivery of eachaircraft.

Boeing hopes that at least half its customers will buy in to theprogramme, though it does not expect many airlines to signmaintenance deals at the time of order – as occurs often forengine purchases. The OEM has also said it wants to extendGoldcare to other aircraft types.

The total 787 maintenance market to be captured over the comingdecade has been modelled by OAG. The aircraft is due to enterservice this year with Japan’s ANA and by 2015 should havereached an installed base of 443 aircraft. The maintenance spendmodel assumes that by 2020 1,171 Dreamliners will be in service.This means that from 2015 to 2020 the value of its airframe heavymaintenance will rise from $9m to $43m; componentmaintenance will rise from $207m to $648m; and modificationswork will increase from under $1m to $161m.

The A380 is the most advanced passenger aircraft currently flying, but even its maintenance intervals won’t compare to the forthcoming 787 and A350

AFM74_NextGen_AFM71 12/07/2011 10:52 Page 52

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The vast gap between line ($650m) and heavy ($43m)maintenance in 2020 is a reflection both of the higher frequencyof line work and the durability of next generation aircraft. By wayof contrast, a current generation aircraft like the 737NG isexpected to generate $703m of heavy maintenance work in2011 – and $1.2bn of line.

AirbusThe most advanced commercial aircraft currently flying, the A380,entered service with an A check interval of 1,000 hours, C checksat 24 months and heavy structural inspections at six and 12 years.

During the aircraft’s development, airlines and suppliers attendedmore than 200 meetings to discuss how reliability, supportabilityand maintainability could be optimised.

One of the ways this was achieved was by increasing the numberof internal sensors and monitors in the aircraft, which affordsmaintenance organisations a detailed overview of systemsperformance and allows them to pre-empt any failures, whichincreases reliability. Boeing incorporates similar technologies onits new aircraft.

In 2011, four years after the superjumbo’s entry into service (EIS)with Singapore Airlines, OAG calculates that line maintenancework for the type will be worth $53m. By 2015, with 218 A380sin service, that figure will have risen to $136m, while heavymaintenance will be worth $115m. By 2020, when OAGforecasts an installed base of 326 A380s, line maintenance willbe valued at $197m and heavy work at $234m.

OAG’s forecast suite extrapolates future aircraft numbers fromorders already in place and an assessment of ongoing capacityrequirements based on GDP growth and other factors. The valueof maintenance work, meanwhile, is arrived at by taking currentcost and maintenance interval assumptions and using a one percent compound productivity improvement to account for savingsgenerated by new materials and maintenance techniques.

What becomes apparent from the figures is that, compared withline maintenance, heavy checks on the A380 are far morevaluable than on the newer 787. Boeing’s airframe is 50 per centcomposite, while the A380 is roughly 25 per cent, whichtranslates to 144 months per major heavy event for the 787, and72 months for the A380 – thus increasing the cost of heavychecks on the latter aircraft over its lifetime.

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A380 – Entry into service: 2007

Year (No. of aircraft)

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2020 (1,171)

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Some operators have signed up to Airbus’ own supportprogramme. Called Flight Hours Services (FHS), it offers airlines acustomisable support solution incorporating component repairsand spare parts services, airframe maintenance, and engineeringand fleet technical management. In 2007, A380’s launchcustomer, SIA, contracted Airbus’ FHS service to cover linereplaceable units and services for avionics, cabin and integratedmodular avionics systems on all its A380s over 10 years.

Independent MROs are also offering maintenance solutions forthe A380. As two of the superjumbo’s earliest customers,Lufthansa and Air France teamed up to offer spares support on apooling basis through Lufthansa Technik and Air FranceIndustries (AFI).

Called Spairliners, the joint venture (JV) covers all aspects ofcomponent maintenance, inventory management and logistics,with repair work distributed between AFI’s component overhaulfacility in Paris and Lufthansa Technik’s component workshops inHamburg. Parts are flown from Paris, Charles de Gaulle and,proving the solution had global reach, in 2009 Qantas signed upto the programme. Australia’s flag carrier awarded Spairliners a 10-year contract to provide component support for a total of20 A380s.

Airbus’ next aircraft type to enter service will be the A350-900 in 2013, followed by the A350-800 in 2016 and the A350-1000in 2017. Like the 787, the A350 will be 50 per cent compositeand this will have similar implications for its line and heavymaintenance markets.

OAG forecasts that by 2015 there will 71 A350-900s in service,requiring $39m of line maintenance and, due to their young age, no heavy checks, intervals for which Airbus puts at 12 years.More than 400 A350-900s could be in service by 2020,necessitating $19m of heavy checks and $222m of linemaintenance.

Maintenance centresThe advanced materials and technologies of the next generationof commercial aircraft will require new skills and tooling acrossthe world’s independent MRO organisations. Some of these arealready in evidence, of course, with the A380.

“The double-deck superjumbo is making its entry as the largestpassenger airliner in the world. Being a category in itself, itrequires major changes to the standard infrastructure to operateit,” states AFI. All of Air France’s A380 airframe maintenance willbe carried out at the company’s purpose-built hanger at its Roissy,Charles de Gaulle facility.

In Germany, Lufthansa Technik possesses an A380 hangar at itscentral maintenance facility in Frankfurt. Two A380s or three747s can be maintained simultaneously on in the 25,000sq.mhangar, but by 2015 there will be capacity to maintain fourA380s simultaneously.

Lufthansa Technik has also been busy in China where its JV with Air China, Ameco Beijing, has also developed A380 main-tenance capacity. Ameco Beijing opened its new hangar that can accommodate four Airbus A380s, or other widebodies,simultaneously. The hangar, opened in March 2008, is70,000sq.m and can fit four A380s.

Elsewhere in Asia, SIA was also the first airline to conduct linemaintenance on it. One of the many features of SIA’s advancedhangar is a computer-controlled docking system that employslasers to fine-tune the docking process.

The Middle East hosts the world’s largest A380 operator, Emirates.Emirates Engineering’s giant MRO centre in Dubai already housesseven A380-size hangars, overhaul shops for engines andcomponents, storage facilities and a staff training centre.However, such is the scale of Emirates’ own A380 fleet – whichis scheduled to reach 90 aircraft – that even this mammothfacility may be unable find space for third-party work.

A350-900 – Entry into service: 2013

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At around 50 per cent composites, the A350 will, like the 787, require far less heavy maintenance than predecessor aircraft


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Project3_Layout 1 12/07/2011 11:17 Page 1

Contract Owner Operator Event Date S/N A/C Model Variant Reg No Name Name Remarks4/18/2011 26421 Boeing 737 (CFMI) 500 G-BVKD TAG Aviation TAG Aviation Purchased - parked4/18/2011 23054 Boeing 737 (JT8D) 200 Adv.(Stg3 Hk) N737AJ Ajeton Ajeton Purchased - parked4/18/2011 30468 Boeing 737 (NG) 800 LN-RPR La Darien SAS Pur'd - subject to lease - pkd4/18/2011 40355 Boeing 737 (NG) 800 Winglets JA338J JSA Japan Airlines Pur’d - sale leaseback on del4/18/2011 37865 Boeing 767 300ERF (GE) N342UP SNC Heloise UPS Airlines Pur’d - sale leaseback on del4/19/2011 35983 Boeing 737 (NG) 800 Winglets TC-AJP General Electric Pegasus Airlines Pur’d - sale leaseback on del4/19/2011 36529 Boeing 737 (NG) 800 Winglets TC-SNF ALC SunExpress Purchased - subject to lease4/19/2011 451 Bombardier (de Havilland) Dash 8 300 C-GAPW Avmax Group Avmax Purchased - parked4/19/2011 120330 Embraer EMB-120 Brasilia ER XA- Aereo Calafia Aereo Calafia Purchased4/20/2011 3001 Airbus A318 120 (P&W) PR-AVH Avianca Avianca Purchased4/20/2011 4671 Airbus A320 210 (CFM) B-6776 ICBC ICBC Purchased4/20/2011 23848 Boeing 737 (JT8D) 200 Adv.(Stg3 Hk) N443SF Belina Export Belina Export Purchased - parked4/20/2011 527 Bombardier (de Havilland) Dash 8 300 N838CA Global Pripal Global Pripal Purchased - parked4/20/2011 593 Bombardier (de Havilland) DHC-6 TOr 300 RDPL- Lao Airlines Lao Airlines Purchased4/20/2011 120280 Embraer EMB-120 Brasilia ER ZS-TAA TAB Charters TAB Charters Purchased4/21/2011 637 Airbus A300 620R (P&W) N3740 European Air Transport European Air Transport Purchased - parked4/21/2011 641 Airbus A300 620R (P&W) N5641 European Air Transport European Air Transport Purchased - parked4/21/2011 729 Airbus A300 620R (P&W) N3729 European Air Transport European Air Transport Purchased - parked4/21/2011 4645 Airbus A320 230 (IAE) VH-FJR Falcon Tiger Airways A Pur’d - sale leaseback on del4/21/2011 23772 Boeing 737 (CFMI) 300 EI-CXN Transalpine Leasing Transaero Purchased - subject to lease4/21/2011 24493 Boeing 737 (CFMI) 400 N314JW National Nuclear Security National Nuclear Security Purchased - parked4/21/2011 23847 Boeing 737 (JT8D) 200 Adv.(Stg3 Hk) N443RC Belina Export Belina Export Purchased - parked4/21/2011 40244 Boeing 737 (NG) 800 Winglets A6-FDQ General Electric FlyDubai Pur’d - sale leaseback on del4/21/2011 3093 Fairchild/Dornier 328 100 N545EF US Air Force US Air Force Purchased - parked4/21/2011 11384 Fokker 100 UP-F1001 Caspiy Caspiy Purchased4/21/2011 UE-132 Hawker Beechcraft 1900 D ZS-SNK Balmoral Central Balmoral Central Contracts Purchased4/22/2011 46067 Boeing (McDonnell-Douglas) DC-8 72 VP-BHS Brisair Brisair Purchased - parked4/22/2011 53039 Boeing (McDonnell-Douglas) MD-80 87 N826TH Corsair Two LLC Corsair Two Purchased - parked4/22/2011 31071 Boeing 737 (NG) 800 Winglets N992AN Avolon American Airlines Purchased - subject to lease4/22/2011 40723 Boeing 737 (NG) 800 Winglets TC-AMP General Electric Pegasus Airlines Pur’d - sale leaseback on del4/26/2011 1991 Airbus A318 110 (CFM) N802FR Insignia Frontier Airlines Purchased - sale leaseback4/26/2011 4613 Airbus A320 210 (CFM) B-6775 Tianshang ICBC Purchased4/26/2011 49468 Boeing (McDonnell-Douglas) MD-80 82 (MDC) N442AA Reliance Reliance Purchased - parked4/26/2011 25393 Boeing 767 300ER (P&W) N655UA United Airlines United Airlines Pur'd off lease/fin term complete4/26/2011 25393 Boeing 767 300ER (P&W) N655UA Tennebau United Airlines Purchased - sale leaseback4/26/2011 27115 Boeing 767 300ER (P&W) N660UA Tennebaum United Airlines Purchased - subject to lease4/26/2011 848 Viking Air DHC-6 Twin Otter 400 (Floats) 8Q-TMX Trans Maldivian Trans Maldivian Pur'd off lease/fin term compl - pkd4/27/2011 53527 Boeing (McDonnell-Douglas) MD-90 30 N957DN Delta Air Lines Delta Air Lines Purchased - parked4/27/2011 37084 Boeing 737 (NG) 800 Winglets VQ-BKV Unknown S7 Airlines Pur’d - sale leaseback on del4/27/2011 20101 Boeing 747 100F (M) N676UP Stewart Industries Stewart Industries Purchased - parked4/27/2011 389 Bombardier (de Havilland) Dash 8 100 N826EX EP Aviation EP Aviation Purchased - parked4/27/2011 11374 Fokker 100 N134MN Qwest Air Parts Qwest Air Parts Purchased - parked4/28/2011 621 Airbus A300 620R (P&W) N2621 Aircraft Solution Universal Asset Mgmt Purchased - parked4/28/2011 2051 Airbus A318 110 (CFM) N804FR Undisclosed Frontier Airlines Pur’d - sale leaseback - pkd4/28/2011 0185 Airbus A320 210 (CFM) CS-TNA GOAL GOAL Purchased - parked4/28/2011 0185 Airbus A320 210 (CFM) CS-TNA FL Technics FL Technics Purchased - parked4/28/2011 E3165 BAE SYSTEMS (HS) 146 300 UR- Unconfirmed Unconfirmed Purchased - parked4/28/2011 23374 Boeing 737 (CFMI) 300 Winglets N10323 Grandmax Group Orient Thai Airlines Purchased - parked4/28/2011 34253 Boeing 737 (NG) 800 Winglets B-5146 ALC Xiamen Airlines Purchased - subject to lease4/28/2011 25283 Boeing 767 300ER (P&W) N646UA unknown United Airlines Purchased - sale leaseback4/28/2011 25283 Boeing 767 300ER (P&W) N646UA United Airlines United Airlines Pur'd off lease/fin term complete4/28/2011 40894 Boeing 767 300ER Winglets (GE) JA623A FI Walnut ANA Pur’d - sale leaseback on del4/28/2011 32854 Boeing 777 300ER (GE) F-GSQV ALIP Air France Purchased - sale leaseback4/28/2011 7075 Bombardier (Canadair) CRJ RJ Challenger 800 N135BC GY Challenger DJ Burrell & Burrell Purchased - subject to lease4/28/2011 15001 Bombardier (Canadair) CRJ900 RJ 900ER C-GKUY Bombardier Bombardier Purchased - parked4/28/2011 19000276 Embraer 195 LR EC-KYO GOAL Air Europa Purchased - subject to lease4/28/2011 11382 Fokker 100 N109MN Qwest Air Parts Qwest Air Parts Purchased - parked4/29/2011 4683 Airbus A320 230 (IAE) HA-LWJ JSA Wizz Air Pur’d - sale leaseback on del4/29/2011 22470 Boeing 727 200F(M)Adv.(Stg3Hk) N715AA Cargo Aircraft Mgmt Capital Cargo Pur'd off lease/fin term complete4/29/2011 27452 Boeing 737 (CFMI) 300 N270AE Aerovista Vista Georgia Purchased - parked4/29/2011 35493 Boeing 737 (NG) 800 Winglets EC- AerDragon AerCap Purchased4/29/2011 37896 Boeing 777 300ER (GE) B-KPT BOC Cathay Pacific Pur’d - sale leaseback on del4/29/2011 587 Bombardier (de Havilland) Dash 8 300 C-GKUX Bombardier Bombardier Purchased - parked4/29/2011 11428 Fokker 100 N994JM Jet Midwest Jet Midwest Purchased - parked4/30/2011 47819 Boeing (McDonnell-Douglas) DC-10 30F (M) N478CT Reliance Reliance Purchased - parked5/2/2011 8098 Bombardier (Canadair) CRJ Regional Jet Challenger 850 C-GJTL Chartright Air Chartright Air Purchased - parked5/2/2011 U-123 Hawker Beechcraft 99 99A HH- Unconfirmed Unconfirmed Purchased5/3/2011 24877 Boeing 737 (CFMI) 500 N487AE Evergreen Trade Evergreen Trade Purchased - parked5/4/2011 1660 Airbus A318 110 (CFM) N805FR Insignia Frontier Airlines Purchased - sale leaseback5/4/2011 1219 Airbus A330 320HGW (P&W) 9M-MTB Pembroke Group Malaysia Airlines Pur’d - sale leaseback on del5/4/2011 719 BAE SYSTEMS (Jetstream) Jetstream 31 G-BTXG Swedewings Swedewings Purchased - parked5/4/2011 24327 Boeing 737 (CFMI) 300 LN-KKG FL Technics FL Technics Purchased - parked5/4/2011 35630 Boeing 737 (NG) 800 Winglets JA737R Avolon Skymark Airlines Purchased - subject to lease5/4/2011 37366 Boeing 737 (NG) 800 Winglets VT-SGU BBAM SpiceJet Pur’d - sale leaseback on del5/4/2011 39047 Boeing 737 (NG) 800 Winglets LN-DYP DY2 Norwegian Pur’d - sale leaseback on del5/4/2011 TC-245 Fairchild (Swearingen) Metro II N71Z Clingenpeel Clingenpeel Purchased - parked5/5/2011 E2053 BAE SYSTEMS (HS) 146 200 ZS-SBD Internal Finance Internal Finance Purchased - parked5/5/2011 E3120 BAE SYSTEMS (HS) 146 300 ZS-SBR Internal Finance Internal Finance Purchased - parked5/5/2011 28295 Boeing 737 (NG) 600 LN-RRZ Infinity Aviation SAS Purchased - subject to lease5/5/2011 28296 Boeing 737 (NG) 600 LN-RRX Infinity Aviation SAS Purchased - subject to lease5/5/2011 28297 Boeing 737 (NG) 600 LN-RRY Infinity Aviation SAS Purchased - subject to lease5/5/2011 531 Bombardier (de Havilland) Dash 8 300 N857CA Global Pripal Commutair Purchased - parked5/5/2011 357 Bombardier (de Havilland) DHC-6 TO 300 C-FCSX BBS Aircraft BBS Aircraft Purchased - parked5/5/2011 19000432 Embraer 190 LR PP-PJM Banco Safra TRIP Pur’d - sale leaseback on del5/5/2011 AC-563 Fairchild (Swearingen) Metro Expediter l N563TR Career Aviation Sierra West Airlines Purchased5/6/2011 4697 Airbus A320 230 (IAE) CC-BAM Bandurria LAN Airlines Pur’d - sale leaseback on del5/6/2011 24387 Boeing 737 (CFMI) 300QC ZS-ASL Safair Safair Purchased5/6/2011 37945 Boeing 767 300ERF (GE) N343UP SNC Heloise UPS Airlines Pur’d - sale leaseback on del5/6/2011 7431 Bombardier (Canadair) CRJ Regional Jet 200LR EK-20017 Armavia Armavia Purchased5/6/2011 294 CASA 212 200 N502FS Sentry Sentry Purchased

AIRCRAFT TRANSACTIONS – Boeing, Airbus, ATR, and Bombardier. 18 Apr to27 Jun 2011


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

AFM74_Data_AFNM 12/07/2011 10:24 Page 58

Contract Owner Operator Event Date S/N A/C Model Variant Reg No Name Name Remarks5/8/2011 53525 Boeing (McDonnell-Douglas) MD-90 30 B-2252 Delta Air Lines Delta Air Lines Purchased - parked5/9/2011 25843 Boeing 737 (CFMI) 400 N843BB Aviation Exchange Aviation Exchange Depot Purchased - parked5/9/2011 25843 Boeing 737 (CFMI) 400 N843BB Aviation Technologies Aviation Technologies Purchased - parked5/9/2011 UE-137 Hawker Beechcraft 1900 D N81533 VPAA Gulfstream Purchased - subject to lease5/9/2011 UE-147 Hawker Beechcraft 1900 D N81535 VPAA Gulfstream Purchased - subject to lease5/9/2011 UE-152 Hawker Beechcraft 1900 D N81536 VPAA Gulfstream Purchased - subject to lease5/9/2011 UE-158 Hawker Beechcraft 1900 D N38537 VPAA VPAA Purchased - parked5/9/2011 UE-172 Hawker Beechcraft 1900 D N16540 VPAA Gulfstream Purchased - subject to lease5/9/2011 UE-185 Hawker Beechcraft 1900 D N53545 VPAA Gulfstream Purchased - subject to lease5/9/2011 UE-189 Hawker Beechcraft 1900 D N69547 VPAA Gulfstream Purchased - subject to lease5/9/2011 UE-198 Hawker Beechcraft 1900 D N47542 VPAA Gulfstream Purchased - subject to lease5/9/2011 UE-203 Hawker Beechcraft 1900 D N17541 VPAA Gulfstream Purchased - subject to lease5/9/2011 UE-205 Hawker Beechcraft 1900 D N87550 VPAA Gulfstream Purchased - subject to lease5/9/2011 UE-206 Hawker Beechcraft 1900 D N87551 VPAA Gulfstream Purchased - subject to lease5/9/2011 UE-216 Hawker Beechcraft 1900 D N87552 VPAA Gulfstream Purchased - subject to lease5/9/2011 UE-227 Hawker Beechcraft 1900 D N87554 VPAA Gulfstream Purchased - subject to lease5/9/2011 UE-234 Hawker Beechcraft 1900 D N87555 VPAA Gulfstream Purchased - subject to lease5/9/2011 UE-239 Hawker Beechcraft 1900 D N81556 VPAA Gulfstream Purchased - subject to lease5/10/2011 621 Airbus A300 620R (P&W) N2621 European Air Transport European Air Transport Purchased - parked5/10/2011 24750 Boeing 737 (CFMI) 400 N980ST AAR AAR Services Purchased - parked5/10/2011 4034 Bombardier (de Havilland) Dash 8 400 G-ECOZ Bombardier Bombardier Purchased - parked5/10/2011 UE-181 Hawker Beechcraft 1900 D N49543 VPAA Gulfstream Purchased - subject to lease5/10/2011 UE-187 Hawker Beechcraft 1900 D N81546 VPAA VPAA Purchased - parked5/10/2011 UE-246 Hawker Beechcraft 1900 D N87557 VPAA Gulfstream Purchased - subject to lease5/11/2011 24245 Boeing 737 (CFMI) 300 N203MG Source One Source One Purchased - parked5/11/2011 24355 Boeing 737 (CFMI) 300 EI-CXR Transalpine Leasing Transaero Purchased - subject to lease5/11/2011 40245 Boeing 737 (NG) 800 Winglets A6-FDR General Electric FlyDubai Pur’d - sale leaseback on del5/11/2011 27100 Boeing 747 400 (GE) EI-XLC SB Leasing Transaero Pur'd - subject to lease - parked5/11/2011 11304 Fokker 100 ZP- Sol del Paraguay Sol del Paraguay Purchased - parked5/11/2011 11348 Fokker 100 ZP- Sol del Paraguay Sol del Paraguay Purchased - parked5/11/2011 UE-168 Hawker Beechcraft 1900 D N82539 VPAA Gulfstream Purchased - subject to lease5/11/2011 UE-194 Hawker Beechcraft 1900 D N69549 VPAA Gulfstream Purchased - subject to lease5/11/2011 UE-199 Hawker Beechcraft 1900 D N81538 VPAA Gulfstream Purchased - subject to lease5/11/2011 056 Saab 340 A SP- Sprint Air Sprint Air Purchased - parked5/12/2011 41039 BAE SYSTEMS (Jetstream) Jetstream 41 HK-4775X Easyfly Easyfly Purchased - parked5/12/2011 22449 Boeing 727 200 Adv. (Stg3 Hk)FAB-112 Bolivian Air Force Bolivian Air Force Purchased5/12/2011 23848 Boeing 737 (JT8D) 200 Adv.(Stg3 Hk) YV488T Avior Airlines Avior Airlines Purchased5/12/2011 36584 Boeing 737 (NG) 800 Winglets B-5491 AerDragon AerCap Purchased5/13/2011 4204 Airbus A319 110 (CFM) N952FR AerCap Frontier Airlines Purchased - subject to lease5/13/2011 916 ATR ATR 72 500 OH-ATM Undisclosed FinnComm Airlines Pur’d - sale leaseback on del5/13/2011 E1160 BAE SYSTEMS (HS) 146 100 A2-ABF Air Botswana Air Botswana Purchased - parked5/13/2011 7037 Bombardier (Canadair) CRJ Regional Jet 100ER N931CA Undisclosed Undisclosed Pur’d - subject to lease - pkd5/15/2011 368 Airbus A300 600 (GE) EK-30068 Mahan Air Mahan Air Purchased - parked5/15/2011 398 Airbus A300 600 (GE) EK-30098 Mahan Air Mahan Air Purchased - parked5/15/2011 466 Airbus A300 N80058 Apollo Apollo Purchased - parked5/15/2011 470 Airbus A300 600R (GE) N11060 Apollo Apollo Purchased - parked5/15/2011 474 Airbus A300 600R (GE) N7062A Apollo Apollo Purchased - parked5/15/2011 320 Airbus A310 220 (P&W) XY-AGE Undisclosed Air Bagan Pur’d - sale leaseback - pkd5/15/2011 419 Airbus A310 220 (P&W) XY-AGD Undisclosed Air Bagan Pur’d - sale leaseback - pkd5/15/2011 3062 Airbus A318 120 (P&W) PR-AVK Avianca Avianca Purchased5/15/2011 0191 Airbus A320 210 (CFM) CS-TNB GOAL GOAL Purchased - parked5/15/2011 1686 Airbus A320 210 (CFM) B-6320 ALC Spring Airlines Purchased - subject to lease5/15/2011 2724 Airbus A320 230 (IAE) 9V-TAE MC Aviation/Mitsubishi Tiger Airways Purchased - subject to lease5/15/2011 622 ATR ATR 42 500 A5-RGH Druk Air Druk Air Purchased5/15/2011 E3358 BAE SYSTEMS (Avro) RJ Avroliner RJ100 SX-DMC Sky Wings Airlines Sky Wings Airlines Purchased - parked5/15/2011 E3362 BAE SYSTEMS (Avro) RJ Avroliner RJ100 SX-DMD Sky Wings Airlines Sky Wings Airlines Purchased - parked5/15/2011 53221 Boeing (McDonnell-Douglas) MD-80 82 (MDC) EP-LCJ Kish Air Kish Air Pur'd off lease/fin term complete5/15/2011 23927 Boeing 737 (CFMI) 300 3X-GGR GR Avia GR Avia Purchased - parked5/15/2011 24320 Boeing 737 (CFMI) 300 D-AGEB A J Walter A J Walter Purchased - parked5/15/2011 25083 Boeing 757 200 (RR) UP-B5702 SCAT SCAT Purchased5/15/2011 26417 Boeing 767 300ER (P&W) OE-LAW Austrian Austrian Pur'd off lease/fin term complete5/15/2011 28149 Boeing 767 300ER (RR) B-2569 ALC ALC Purchased - parked5/15/2011 25273 Boeing 767 300ER Winglets(P&W) OE-LAT Austrian Austrian Pur'd off lease/fin term complete5/15/2011 27095 Boeing 767 300ER Winglets(P&W) OE-LAX Austrian Austrian Pur'd off lease/fin term complete5/15/2011 30331 Boeing 767 300ER Winglets (P&W)OE-LAZ Austrian Austrian Pur'd off lease/fin term complete5/15/2011 30383 Boeing 767 300ER Winglets(P&W) OE-LAE Austrian Austrian Pur'd off lease/fin term complete5/15/2011 14500960 Embraer ERJ-135 Legacy 600 OE-IBR Avcon Avcon Jet Purchased5/15/2011 3206 Fairchild/Dornier 328JET OE-HRJ Icejet Icejet Pur'd off lease/fin term complete5/15/2011 20211 Fokker 50 PH-KVG Insel Air International Insel Air International Purchased - parked5/16/2011 730 Airbus A300 620R (P&W) N4730 European Air Transport European Air Transport Purchased - parked5/16/2011 1228 Airbus A330 340HGW (RR) TC-JNN Undisclosed Turkish Airlines Purchased - sale leaseback on del5/16/2011 400 Airbus A330 340HGW (RR) C-GHKR Air Canada Air Canada Pur'd off lease/fin term complete5/16/2011 41041 BAE SYSTEMS (Jetstream) Jetstream 41 SE- Undisclosed Undisclosed Purchased - parked5/16/2011 36878 Boeing 737 (NG) 800 Winglets B-5586 ICBC ICBC Purchased5/16/2011 22769 Boeing 747 200SF (P&W) N923FT Kalitta Air Kalitta Air Purchased - parked5/16/2011 24071 Boeing 747 200SF (P&W) N110TR Kalitta Air Kalitta Air Purchased - parked5/16/2011 UC-121 Hawker Beechcraft 1900 C-1 N821SF Suburban Air Freight Suburban Air Freight Purchased5/17/2011 052 Airbus A380 860 (EA) F-HPJE DS-Fonds Air France Purchased - sale leaseback on del5/17/2011 22597 Boeing 737 (JT8D) 200 Adv.(Stg3 Hk) N250TR MAP MAP Purchased - parked5/17/2011 35825 Boeing 737 (NG) 800 Winglets PR-GGJ JSA GOL Purchased - subject to lease5/17/2011 29899 Boeing 747 400 (GE) N917UN SB Leasing Sberbank Leasing Purchased - parked5/17/2011 8090 Bombardier (Canadair) CRJ Regional Jet Challenger 850 RA-67219 Yamal Airlines Yamal Airlines Purchased5/17/2011 440 Bombardier (de Havilland) Dash 8 200 LN-WSB Wideroe Wideroe Purchased - parked5/18/2011 124 Airbus A300 B4-100F (GE) N124TN Kalitta Turbine Leasing Kalitta Turbine Leasing Purchased - parked5/18/2011 155 Airbus A300 B4-200F (GE) N155TN Kalitta Turbine Leasing Kalitta Turbine Leasing Purchased - parked5/18/2011 261 Airbus A300 B4-200F (GE) N261AX Kalitta Turbine Leasing Kalitta Turbine Leasing Purchased - parked5/18/2011 4696 Airbus A320 230 (IAE) B-6761 ICBC China Southern Airlines Purchased - sale leaseback on del5/18/2011 7520 Bombardier (Canadair) CRJ Regional Jet 200ER VQ-BLZ Magpie Aviation AK Bars Aero Purchased - sale leaseback - pkd5/18/2011 7520 Bombardier (Canadair) CRJ Regional Jet 200ER VQ-BLZ AK Bars Aero AK Bars Aero Purchased - parked5/18/2011 441 Bombardier (de Havilland) Dash 8 200 LN-WSC Wideroe Wideroe Purchased - parked





Contract Owner Operator Event Date S/N A/C Model Variant Reg No Name Name Remarks5/18/2011 99 Bombardier (de Havilland) DHC-6 TO 100 N990KD Alberta Aircraft Leasing Alberta Aircraft Leasing Purchased - parked5/19/2011 3030 Airbus A318 120 (P&W) PR-AVJ Avianca Avianca Purchased5/19/2011 1224 Airbus A330 240 (RR) N975AV Celestia Avianca Purchased - sale leaseback on del5/19/2011 49398 Boeing (McDonnell-Douglas) MD-80 83(MDC)(Stge4 ready) N566MS Falcon Air Express Falcon Air Express Purchased - parked5/19/2011 25361 Boeing 737 (CFMI) 400 N761AS Sayegh Group Aviation Sayegh Group Aviation Purchased - parked5/19/2011 435 Bombardier (de Havilland) Dash 8 200 LN-WSA Wideroe Wideroe Purchased - parked5/19/2011 4033 Bombardier (de Havilland) Dash 8 400 G-ECOV Bombardier Bombardier Purchased - parked5/20/2011 0792 Airbus A321 230 (IAE) EI-LVD PK Airfinance PK AirFinance Purchased - parked5/20/2011 E2025 BAE SYSTEMS (HS) 146 200 G-TBIC Casco Aero Casco Aero Purchased - parked5/20/2011 24897 Boeing 737 (CFMI) 500 N561MS AeroTurbine AeroTurbine Purchased - parked5/20/2011 28914 Boeing 737 (CFMI) 500 Winglets N14653 Continental Airlines Continental Airlines Pur'd off lease/fin term complete5/20/2011 25067 Boeing 747 400 (RR) 5N- Max Air Max Air Purchased - parked5/20/2011 26943 Boeing 777 200ER (P&W) N790UA T7 Aviation T7 Aviation Purchased - parked5/23/2011 4713 Airbus A319 110 (CFM) OK-REQ Eastwest Aircraft Leasing CSA Czech Airlines Purchased - sale leaseback on del5/23/2011 37085 Boeing 737 (NG) 800 Winglets VQ-BKW Cramington S7 Airlines Purchased - sale leaseback on del5/23/2011 40869 Boeing 737 (NG) 800 Winglets LN-DYQ DY2 Norwegian Purchased - sale leaseback on del5/23/2011 533 Bombardier (de Havilland) DHC-6 TO 300 C-FAKB Kenn Borek Air Kenn Borek Air Purchased5/24/2011 49458 Boeing (McDonnell-Douglas) MD-80 83 (MDC) N572AA Trident Aviation Services Trident Purchased - parked5/24/2011 49944 Boeing (McDonnell-Douglas) MD-80 83 (MDC) HK-4591X Jet Midwest Jet Midwest Purchased - parked5/24/2011 94 Gulfstream Aerospace Gulfstream I N8E Mission Air Mission Air Capital Purchased5/25/2011 14500974 Embraer ERJ-135 Legacy 600 N10SV ECC Leasing ECC Leasing Purchased5/25/2011 14501132 Embraer ERJ-135 Legacy 650 N747AG Continental Aircraft ACM Aviation Purchased - sale leaseback on del5/25/2011 UB-55 Hawker Beechcraft 1900 C N900MX Tropical Transport Svcs Tropical Transport Services Purchased - parked5/26/2011 4714 Airbus A320 210 (CFM) F-HBNF Avolon Air France Purchased - sale leaseback on del5/26/2011 4716 Airbus A320 230 (IAE) HA-LWK JSA Wizz Air Purchased - sale leaseback on del5/26/2011 208 ATR ATR 42 300 N9621C AeroVision AeroVision Purchased - parked5/26/2011 E1260 BAE SYSTEMS (Avro) RJ Avroliner RJ70 G-CGWY Ansett Ansett Purchased - parked5/26/2011 53194 Boeing (McDonnell-Douglas) MD-80 88 N825AG Tiger Aircraft Trading Tiger Aircraft Purchased - parked5/26/2011 40762 Boeing 737 (NG) 800 Winglets N867NN NAS American Airlines Purchased - sale leaseback on del5/26/2011 25641 Boeing 747 400 (GE) N597MS BHK Partners CDB Purchased - parked5/26/2011 29950 Boeing 747 400 (P&W) N747NB VEBL VEB-Leasing Purchased - parked5/26/2011 438 Bombardier (de Havilland) Dash 8 300 N876CA Global Pripal Commutair Purchased - parked5/26/2011 4022 Bombardier (de Havilland) Dash 8 400 C-GKZV Bombardier Bombardier Purchased - parked5/26/2011 110388 Embraer EMB-110 Bandeirante P1 N62CZ Piper East Wiggins Airways Purchased5/27/2011 20046 Boeing 727 100(RbkStg3Sys) VP-BDJ Weststar Aviation Services Weststar Aviation Purchased5/27/2011 24009 Boeing 737 (CFMI) 300 N302AW N302AW US Airways Purchased - subject to lease5/27/2011 24010 Boeing 737 (CFMI) 300 N303AW N302AW US Airways Purchased - subject to lease5/27/2011 27425 Boeing 737 (CFMI) 500 N463AC Undisclosed Undisclosed Purchased - parked5/27/2011 35842 Boeing 737 (NG) 800 Winglets PR-GUG AWAS GOL Linhas Aereas Purchased - sale leaseback on del5/27/2011 4265 Bombardier (de Havilland) Dash 8 400 C-GMRX Skyservice Skyservice Purchased - parked5/28/2011 38966 Boeing 737 (NG) 800 Winglets B-5587 ICBC China Southern Airlines Purchased - sale leaseback on del5/30/2011 604 BAE SYSTEMS (Jetstream) Jetstream 31 N78019 DAO Aviation DAO Aviation Purchased - parked5/30/2011 30196 Boeing 737 (NG) 800 LN-RCX SAS SAS Pur'd off lease/fin term complete5/30/2011 25064 Boeing 747 400 (GE) N634AS AerSale AerSale Purchased - parked5/30/2011 26341 Boeing 747 400 (GE) N349AS AerSale AerSale Purchased - parked5/31/2011 686 Airbus A310 320 (P&W) N841AB Airbus Airbus Purchased - parked5/31/2011 4728 Airbus A321 210 (CFM) D-ABCH Volito airberlin Purchased - sale leaseback on del5/31/2011 28666 Boeing 757 200 (RR) N952FD FedEx FedEx Purchased - parked5/31/2011 BC-770B Fairchild (Swearingen) Metro III N770ML Career Aviation Sierra West Airlines Purchased - parked5/31/2011 11371 Fokker 100 UP-F1002 Caspiy Caspiy Purchased6/1/2011 0112 Airbus A320 210 (CFM) N101LF African Holding Co of America African Holding Co of America Purchased - parked6/1/2011 2515 Airbus A320 230 (IAE) VH-VQS Qantas Jetstar Pur'd off lease/fin term complete6/1/2011 969 Airbus A330 200 MRTT (GE) A39-003 Australian Air Force Australian Air Force Pur'd off lease/fin term comp - pkd6/1/2011 7042 Bombardier (Canadair) CRJ Regional Jet 100ER N934CA Avmax Avmax Purchased - parked6/2/2011 25769 Boeing (McDonnell-Douglas) DC-3 BT-67 C-FTGX Bell Geospace ALCI Aviation Pur'd off lease/fin term complete6/2/2011 24681 Boeing 737 (CFMI) 300 N554MS TAG Aviation TAG Aviation Purchased - parked6/2/2011 UC-118 Hawker Beechcraft 1900 C-1 N439QA Undisclosed Undisclosed Purchased - parked6/3/2011 33024 Boeing (McDonnell-Douglas) DC-3 C-47TP N198RD IAL Corp IAL Corp Purchased - parked6/3/2011 33024 Boeing (McDonnell-Douglas) DC-3 C-47TP N198RD Lee County Mosquito Control Lee County Mosquito Control Purchased6/3/2011 23371 Boeing 737 (CFMI) 300 HS-BR Grandmax Group Orient Thai Airlines Purchased - parked6/3/2011 28900 Boeing 737 (CFMI) 500 Winglets N14639 Continental Airlines Continental Airlines Pur'd off lease/fin term complete6/3/2011 4265 Bombardier (de Havilland) Dash 8 400 HB-JIK SkyWork Airlines SkyWork Airlines Purchased - parked6/3/2011 4265 Bombardier (de Havilland) Dash 8 400 HB-JIK Centaurium SkyWork Airlines Purchased - sale leaseback - pkd6/3/2011 AC-759B Fairchild (Swearingen) Metro III N640PA Worthington Aviation Parts Worthington Aviation Parts Purchased - parked6/4/2011 063 Airbus A340 210 (CFM) LV-ZPO Aerolineas Argentinas Aerolineas Argentinas Pur'd off lease/fin term complete6/5/2011 UB-73 Hawker Beechcraft 1900 C ZS-OUD Executive Turbine Air Charter Executive Turbine Purchased6/6/2011 703 Airbus A300 620R (P&W) N4703 Aircraft Solution Universal Asset Mgmt Purchased - parked6/6/2011 410 Bombardier (de Havilland) DHC-6 TO 300 N974SW Aircraft Investments Aircraft Investments Purchased - parked6/7/2011 40246 Boeing 737 (NG) 800 Winglets A6-FDS Avolon FlyDubai Purchased - sale leaseback on del6/7/2011 11280 Fokker 100 VH-XWO Aircraft Leasing Alliance Airlines Purchased - parked6/7/2011 11281 Fokker 100 VH-XWP Aircraft Leasing Alliance Airlines Purchased - parked6/8/2011 36881 Boeing 737 (NG) 800 Winglets D-ABKT JSA airberlin Purchased - sale leaseback on del6/8/2011 40994 Boeing 737 (NG) 800 Winglets VH-YFF Avolon Virgin Australia Purchased - sale leaseback on del6/8/2011 7186 Bombardier (Canadair) CRJ Regional Jet 200ER C-GEXI Avmax Avmax Purchased - parked6/8/2011 446 Bombardier (de Havilland) Dash 8 200 N446YV Zions Credit Corp Zions Credit Corp Purchased - parked6/8/2011 576 Bombardier (de Havilland) Dash 8 300 C-GFCD Cenovus Energy SunWest Aviation Purchased - subject to lease6/9/2011 E3203 BAE SYSTEMS (HS) 146 300 ZA-MAN Albanian Airlines Albanian Airlines Purchased - parked6/9/2011 49620 Boeing (McDonnell-Douglas) MD-80 83 (MDC) N620MD Aerolux Aerolux Purchased - parked6/9/2011 30327 Boeing 737 (NG) BBJ1 N796BA F & L Aviation F&L Aviation Purchased6/9/2011 4038 Bombardier (de Havilland) Dash 8 400 C-GLGV Bombardier Bombardier Purchased - parked6/9/2011 120268 Embraer EMB-120 Brasilia ER N286AS Air Investments Air Investments Purchased - parked6/9/2011 145362 Embraer ERJ-145 MP SE-RAF Goiania Comercio E Servicos City Airline Purchased - sale leaseback6/9/2011 145362 Embraer ERJ-145 MP SE-RAF City Airline City Airline Purchased6/9/2011 UE-138 Hawker Beechcraft 1900 D N239SC Southern Cross Southern Cross Aircraft Purchased - parked6/9/2011 UE-292 Hawker Beechcraft 1900 D C-GVGA Execaire Execaire Purchased6/9/2011 UE-5 Hawker Beechcraft 1900 D N5YV Royal Leasing CorpJet Purchased - subject to lease6/10/2011 28900 Boeing 737 (CFMI) 500 Winglets N14639 Undisclosed Undisclosed Purchased - parked6/10/2011 23521 Boeing 737 (JT8D) 200 Adv.(Stg3 Hk) C- Unconfirmed Unconfirmed Purchased - parked6/11/2011 46162 Boeing (McDonnell-Douglas) DC-8 62AF (Stg3 Hk) ZS- Stars Away Aviation Stars Away Aviation Purchased - parked





Contract Owner Operator Event Date S/N A/C Model Variant Reg No Name Name Remarks6/13/2011 208 ATR ATR 42 300 N9621C Intertrade Intertrade Purchased - parked6/13/2011 22440 Boeing 727 200F(M)Adv.(RbkStg3Sys) N748DH Undisclosed Undisclosed Purchased - parked6/13/2011 20665 Boeing 727 200F(M)Adv.(Stg3 Hk) N745DH Undisclosed Undisclosed Purchased - parked6/13/2011 21290 Boeing 727 200F(M)Adv.(Stg3 Hk) N742DH Undisclosed Undisclosed Purchased - parked6/13/2011 21393 Boeing 727 200F(M)Adv.(Stg3 Hk) N793DH Undisclosed Undisclosed Purchased - parked6/13/2011 21953 Boeing 727 200F(M)Adv.(Stg3 Hk) N770AT Undisclosed Undisclosed Purchased - parked6/13/2011 21954 Boeing 727 200F(M)Adv.(Stg3 Hk) N760AT Undisclosed Undisclosed Purchased - parked6/13/2011 21998 Boeing 727 200F(M)Adv.(Stg3 Hk) N782DH Undisclosed Undisclosed Purchased - parked6/13/2011 21999 Boeing 727 200F(M)Adv.(Stg3 Hk) N783DH Undisclosed Undisclosed Purchased - parked6/13/2011 22001 Boeing 727 200F(M)Adv.(Stg3 Hk) N784DH Undisclosed Undisclosed Purchased - parked6/13/2011 22006 Boeing 727 200F(M)Adv.(Stg3 Hk) N780DH Undisclosed Undisclosed Purchased - parked6/13/2011 22008 Boeing 727 200F(M)Adv.(Stg3 Hk) N754DH Undisclosed Undisclosed Purchased - parked6/13/2011 22013 Boeing 727 200F(M)Adv.(Stg3 Hk) N749DH Undisclosed Undisclosed Purchased - parked6/13/2011 22253 Boeing 727 200F(M)Adv.(Stg3 Hk) N747DH Undisclosed Undisclosed Purchased - parked6/13/2011 22466 Boeing 727 200F(M)Adv.(Stg3 Hk) N752DH Undisclosed Undisclosed Purchased - parked6/13/2011 22468 Boeing 727 200F(M)Adv.(Stg3 Hk) N753DH Undisclosed Undisclosed Purchased - parked6/13/2011 22982 Boeing 727 200F(M)Adv.(Stg3 Hk) N751DH Undisclosed Undisclosed Purchased - parked6/13/2011 40763 Boeing 737 (NG) 800 Winglets N868NN NAS Investments American Airlines Purchased - sale leaseback on del6/13/2011 145285 Embraer ERJ-145 MP G-CGUS ECC Leasing ECC Leasing Purchased - parked6/14/2011 3214 Airbus A318 120 (P&W) PR-AVL Avianca Avianca Purchased6/14/2011 3006 Airbus A320 210 (CFM) 4K-AZ84 Azerbaijan Airlines Azerbaijan Airlines Purchased6/14/2011 951 Airbus A330 200 MRTT (GE) A39-002 Australian Air Force Australian Air Force Pur'd off lease/fin term complete6/14/2011 22940 Boeing 737 (CFMI) 300 N300SW Frontiers of Flight Museum Frontiers of Flight Museum Purchased - parked6/15/2011 747 Airbus A330 200 MRTT (GE) A39-001 Australian Air Force Australian Air Force Pur'd off lease/fin term com - pkd6/15/2011 53224 Boeing (McDonnell-Douglas) MD-80 82 (MDC) EP-LCK Kish Air Kish Air Pur'd off lease/fin term complete6/15/2011 53229 Boeing (McDonnell-Douglas) MD-80 82 (MDC) EP-LCL Kish Air Kish Air Pur'd off lease/fin term complete6/15/2011 49853 Boeing (McDonnell-Douglas) MD-80 82 (SAIC) HS- Unconfirmed Unconfirmed Purchased - parked6/15/2011 27373 Boeing 737 (CFMI) 300SF B-2951 SF Airlines SF Airlines Purchased - parked6/15/2011 587 Bombardier (de Havilland) Dash 8 300 VH-XKI Skippers Aviation Skippers Aviation Purchased6/15/2011 1860 Bombardier (Shorts) SC.7 Skyvan 3 9Q-CST ITAB ITAB Purchased6/15/2011 20217 Fokker 50 PH-KVH Insel Air International Insel Air International Purchased - parked6/16/2011 E2114 BAE SYSTEMS (HS) 146 200QT OB- Star Peru Star Peru Purchased - parked6/16/2011 24750 Boeing 737 (CFMI) 400 N980ST National Nuclear Security National Nuclear Security Purchased - parked6/16/2011 22431 Boeing 737 (JT8D) 200 Adv.(Stg3 Hk) VP-CAQ Undisclosed Jet Connections Purchased6/16/2011 8104 Bombardier (Canadair) CRJ Regional Jet Challenger 850 A6- Unconfirmed Unconfirmed Purchased - parked6/16/2011 11305 Fokker 100 PH- Undisclosed Undisclosed Purchased - parked6/16/2011 849 Viking Air DHC-6 Twin Otter 400 (Floats) 8Q- Trans Maldivian Trans Maldivian Pur'd off lease/fin term comp - pkd6/17/2011 4736 Airbus A320 230 (IAE) HA-LWL JSA Wizz Air Purchased - sale leaseback on del6/17/2011 064 Airbus A380 860 (EA) F-HPJF Undisclosed Air France Purchased - sale leaseback on del6/17/2011 7226 Bombardier (Canadair) CRJ Regional Jet 200LR C-GLPZ Avmax Avmax Purchased - parked6/17/2011 14501127 Embraer ERJ-135 Legacy 650 G-VILP Etlagh Aviation London Executive Aviation Purchased - sale leaseback on del6/19/2011 408 Airbus A330 340HGW (RR) C-GHKW Air Canada Air Canada Pur'd off lease/fin term complete6/20/2011 120301 Embraer EMB-120 Brasilia ER N301YV JP Morgan SkyWest Airlines Purchased - subject to lease6/21/2011 E2257 BAE SYSTEMS (Avro) RJ Avroliner RJ85 JU-9909 Eznis Airways Eznis Airways Purchased6/21/2011 21508 Boeing 737 (JT8D) 200 Adv.(Stg3 Hk) N977UA Jet Care Corp Jet Care Corp Purchased - parked6/21/2011 36880 Boeing 737 (NG) 800 Winglets D-ABKS JSA airberlin Purchased - sale leaseback on del6/22/2011 E2138 BAE SYSTEMS (HS) 146 200 N18FF Tronos Plc Tronos Purchased - parked6/22/2011 581 Bombardier (de Havilland) Dash 8 300 C-GLKW Avmax Group Avmax Group Purchased - parked6/22/2011 UE-167 Hawker Beechcraft 1900 D N167YV Fargo Fargo Jet Center Purchased - parked6/23/2011 27650 Boeing 747 400 (GE) N918UN SB Leasing Sberbank Leasing Purchased - parked6/23/2011 211 Bombardier (de Havilland) Dash 8 100 P2- Airlines Airlines Purchased

AIRCRAFT TRANSACTIONS – Boeing, Airbus, ATR, and Bombardier. 18 Apr to 27 Jun 2011



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

ENGINE DATA CHANGES 18 Apr to 27 Jun 201118 Apr 2011 27 Jun 2011 18 Apr 2011 27 Jun 2011 18 Apr 2011 27 Jun 2011

Type Engine Full-life value Full-life value % Current half-life Current half-life % Mkt lease Mkt lease %mkt value mkt value change rate rate change rate rate change

Data supplied courtesy of Ascend Online Fleets / Ascend V1 database

B737-300 CFM56-3B1 $2.18m $2.18m 0.0% $0.70m $0.70m 0.0% $0.030m $0.030m 0.0%B737-400 CFM56-3B2 $2.38m $2.38m 0.0% $0.90m $0.90m 0.0% $0.032m $0.032m 0.0%B737-500 CFM56-3C1 $2.58m $2.58m 0.0% $1.10m $1.10m 0.0% $0.035m $0.035m 0.0%A321-200 CFM56-5B3/P $8.19m $7.94m -3.1% $6.20m $5.85m -5.6% $0.075m $0.070m -6.7%A319-100 CFM56-5B5/P $6.49m $6.24m -3.9% $4.50m $4.15m -7.8% $0.055m $0.050m -9.1%A340-300 CFM56-5C4/P $7.25m $6.60m -9.0% $5.00m $4.35m -13.0% $0.058m $0.052m -10.3%B737-600 CFM56-7B22 $6.81m $6.81m 0.0% $4.90m $4.90m 0.0% $0.059m $0.059m 0.0%B737-700 CFM56-7B24 $7.11m $7.11m 0.0% $5.20m $5.20m 0.0% $0.062m $0.062m 0.0%B737-800 CFM56-7B26 $7.51m $7.51m 0.0% $5.55m $5.55m 0.0% $0.065m $0.065m 0.0%B737-900ER CFM56-7B27 $7.96m $7.96m 0.0% $6.00m $6.00m 0.0% $0.067m $0.067m 0.0%CRJ-200 CF34-3B1 $2.05m $2.05m 0.0% $1.00m $1.00m 0.0% $0.020m $0.020m 0.0%CRJ-700 CF34-8C1 $3.85m $3.85m 0.0% $2.20m $2.20m 0.0% $0.027m $0.027m 0.0%E170 CF34-8E5 $4.33m $4.33m 0.0% $2.68m $2.68m 0.0% $0.033m $0.033m 0.0%B767-200ER CF6-80A2 $4.69m $4.69m 0.0% $1.50m $1.50m 0.0% n/a n/aA300-600R CF6-80C2A5 $7.13m $7.13m 0.0% $3.75m $3.75m 0.0% $0.050m $0.050m n/aMD-11 CF6-80C2D1F $7.91m $7.91m 0.0% $4.40m $4.40m 0.0% $0.070m $0.070m 0.0%A330-200 CF6-80E1A3 $14.07m $14.07m 0.0% $9.35m $9.35m 0.0% n/a n/aB777-300ER GE90-115B $26.77m $26.77m 0.0% $20.70m $20.70m 0.0% $0.210m $0.210m 0.0%A320-200 V2527-A5 $7.32m $7.12m -2.7% $5.20m $5.00m -3.8% $0.058m $0.058m 0.0%MD-82 JT8D-217C $1.70m $1.70m 0.0% $0.60m $0.60m 0.0% $0.023m $0.023m 0.0%B747-400 PW4056 $7.34m $7.34m 0.0% $3.75m $3.75m 0.0% $0.060m $0.060m 0.0%B767-300ER PW4060 $7.69m $7.69m 0.0% $4.10m $4.10m 0.0% $0.065m $0.065m 0.0%A310-300 PW4152 $6.84m $6.84m 0.0% $2.80m $2.80m 0.0% $0.055m $0.055m 0.0%B757-200 RB211-535E4 $7.52m $7.52m 0.0% $3.90m $3.90m 0.0% $0.050m $0.050m 0.0%Fokker 100 RB183 Tay 650-15 $2.50m $2.50m 0.0% $1.40m $1.40m 0.0% $0.026m $0.026m 0.0%A340-600 Trent 556-61 $13.38m $13.38m 0.0% $8.14m $8.14m 0.0% $0.110m $0.110m 0.0%A330-300 Trent 772B-60 $13.78m $13.78m 0.0% $8.60m $8.60m 0.0% $0.120m $0.120m 0.0%B777-200ER Trent 895 $20.29m $20.29m 0.0% $14.00m $14.00m 0.0% $0.155m $0.155m 0.0%ERJ-145 ER AE3007-A1P $2.50m $2.50m 0.0% $1.40m $1.40m 0.0% $0.030m $0.030m 0.0%B717-200 BR715A $3.33m $3.33m 0.0% $2.00m $2.00m 0.0% $0.045m $0.045m 0.0%




FIRM ORDERS – 18 Apr – 27 Jun 2011

Airbus A320 200 neo (CFM) AirAsia 23/06/2011 Order 200 LEAP-X-1A 200 neo (CFM) LEAP-X-1AAirbus A320 200 neo (Engines Unannounced) Go Air 23/06/2011 Order 72 Unannounced 200 neo (Engines Unannounced) UnannouncedAirbus A320 200 neo (PW) IndiGo Airlines 22/06/2011 Order 150 PW1000G-1100G 200 neo (PW) PW1000G-1100GAirbus A320 200 (Engines Unannounced) IndiGo Airlines 22/06/2011 Order 30 Unannounced 200 (Engines Unannounced) UnannouncedAirbus A320 200 neo (Engines Unannounced) LAN Airlines 22/06/2011 Order 20 Unannounced 200 neo (Engines Unannounced) UnannouncedAirbus A320 200 neo (CFM) GECAS 20/06/2011 Order 60 LEAP-X-1A 200 neo (CFM) LEAP-X-1AAirbus A320 200 neo (CFM) SAS 20/06/2011 Order 30 LEAP-X-1A 200 neo (CFM) LEAP-X-1AAirbus A320 210 (CFM) Cebu Pacific Air 16/06/2011 Order 7 CFM56-5B4/3 210 (CFM) CFM56-5B4/3Airbus A320 210 (CFM) Star Flyer 09/05/2011 Order 2 CFM56-5B4/3 210 (CFM) CFM56-5B4/3Airbus A320 200 neo (PW) ILFC 27/04/2011 Order 47 PW1000G-1100G 200 neo (PW) PW1000G-1100GAirbus A320 200 neo (Engines Unannounced) ILFC 27/04/2011 Order 28 Unannounced 200 neo (CFM) LEAP-X-1AAirbus A321 230 (IAE) Sharklets JetBlue Airways 21/06/2011 Type Swap 30 V2500-2533-A5Sel.One 230 (IAE) Sharklets V2500-2533-A5Sel.OneAirbus A321 200 neo (Engines Unannounced) TransAsia Airways 21/06/2011 Order 6 Unannounced 200 neo (Engines Unannounced) UnannouncedAirbus A321 200 (Engines Unannounced) ALC 15/05/2011 Type Swap 1 Unannounced 210 (CFM) CFM56-5B3/3Airbus A321 200 neo (Engines Unannounced) ILFC 27/04/2011 Order 12 Unannounced 200 neo (CFM) LEAP-X-1CAirbus A321 200 neo (PW) ILFC 27/04/2011 Order 13 PW1000G-1100G 200 neo (PW) PW1000G-1100GAirbus A330 340HGW (RR) Saudi Arabian Airlines 20/06/2011 Order 4 Trent-772B-60EP 340HGW (RR) Trent-772B-60EPAirbus A330 320HGW (P&W) Korean Air 03/05/2011 Order 5 PW4000-4170 Adtg 70 320HGW (P&W) PW4000-4170 Adtg 70Airbus A380 800 (Engines Unannounced) Skymark Airlines 23/06/2011 Order 2 Unannounced 800 (Engines Unannounced) UnannouncedATR ATR 42 500 TAME Ecuador 21/06/2011 Order 3 PW100-127M 500 PW100-127MATR ATR 72 600 Nordic Aviation Capital 22/06/2011 Order 10 PW100-127M 600 PW100-127MATR ATR 72 500 Avation Plc 21/06/2011 Order 4 PW100-127M 500 PW100-127MATR ATR 72 500 BoraJet 21/06/2011 Order 1 PW100-127M 500 PW100-127MATR ATR 72 500 Israir 21/06/2011 Order 2 PW100-127M 500 PW100-127MATR ATR 72 500 Malaysia Airlines 21/06/2011 Order 2 PW100-127M 500 PW100-127MATR ATR 72 600 Avation Plc 21/06/2011 Order 4 PW100-127M 600 PW100-127MATR ATR 72 600 Azul 21/06/2011 Order 10 PW100-127M 600 PW100-127MATR ATR 72 600 Unannounced 21/06/2011 Order 19 PW100-127M 600 PW100-127MATR ATR 72 600 GECAS 20/06/2011 Order 15 PW100-127M 600 PW100-127MBoeing (McDonnell-Douglas) C-17 A Indian Air Force 15/06/2011 Order 10 PW2000-2040 A PW2000-2040Boeing (McDonnell-Douglas) C-17 A US Air Force 16/05/2011 Order 5 PW2000-2040 A PW2000-2040Boeing (McDonnell-Douglas) C-17 A Australian Air Force 18/04/2011 Order 1 PW2000-2040 A PW2000-2040Boeing 737 (NG) 800 Winglets Norwegian 21/06/2011 Order 15 CFM56-7B26/3 800 Winglets CFM56-7B26/3Boeing 737 (NG) 800 Winglets ALC 20/06/2011 Order 6 CFM56-7B26/3 800 Winglets CFM56-7B26/3Boeing 737 (NG) 700/800 Unannounced 06/06/2011 Order 1 CFM56-7B Series 700/800 CFM56-7B SeriesBoeing 737 (NG) 800 Winglets Mongolian Airlines 31/05/2011 Order 2 CFM56-7B26/3 800 Winglets CFM56-7B26/3Boeing 737 (NG) 800 Winglets Unannounced 02/05/2011 Order 1 CFM56-7B26/3 800 Winglets CFM56-7B26/3Boeing 747 8I (GE) Unannounced 20/06/2011 Order 2 GEnx-2B67 8I (GE) GEnx-2B67Boeing 767 300ER (GE) LAN Airlines 18/05/2011 Order 5 CF6-80C2B6F 300ER (GE) CF6-80C2B6FBoeing 767 300ER Winglets (GE) Mongolian Airlines 03/05/2011 Order 1 CF6-80C2B6F 300ER Winglets (GE) CF6-80C2B6FBoeing 777 300ER (GE) Qatar Airways 27/05/2011 Order 4 GE90-115B 300ER (GE) GE90-115BBoeing 777 300ER (GE) American Airlines 25/05/2011 Order 1 GE90-115B 300ER (GE) GE90-115BBoeing 777 200LRF (GE) Lufthansa 13/05/2011 Order 5 GE90-110B1L 200LRF (GE) GE90-110B1LBoeing 777 300ER (GE) Aeroflot 11/05/2011 Order 8 GE90-115B 300ER (GE) GE90-115BBoeing 777 300ER (GE) American Airlines 29/04/2011 Order 2 GE90-115B 300ER (GE) GE90-115BBombardier (Canadair) CRJ900 RJ900ER NextGen PLUNA 25/04/2011 Order 3 CF34-8C5 900ER NextGen CF34-8C5Bombardier (Canadair) CSeriesCS100 Unannounced 24/06/2011 Order 10 PW1000G-1524G CS100 PW1000G-1524GBombardier (Canadair) CSeriesCS100 Unannounced 20/06/2011 Order 10 PW1000G-1524G CS100 PW1000G-1524GBombardier (Canadair) CSeriesCS100 Unannounced 07/06/2011 Order 3 PW1000G-1524G CS100 PW1000G-1524GBombardier (Canadair) CSeriesCS100 Braathens Leasing 01/06/2011 Order 5 PW1000G-1524G CS100 PW1000G-1524GBombardier (Canadair) CSeriesCS300 Braathens Leasing 01/06/2011 Order 5 PW1000G-1524G CS300 PW1000G-1524GEmbraer 175 LR ALC 15/05/2011 Order 5 CF34-8E5 LR CF34-8E5Embraer 190 LR Air Astana 20/06/2011 Order 2 CF34-10E5 LR CF34-10E5Embraer 190 LR ALC 20/06/2011 Order 5 CF34-10E5 LR CF34-10E5Embraer 190 LR GECAS 20/06/2011 Order 2 CF34-10E5 LR CF34-10E5Embraer 190 LR Sriwijaya Air 20/06/2011 Order 20 CF34-10E5 LR CF34-10E5Embraer 190 LR ALC 13/06/2011 Order 5 CF34-10E5 LR CF34-10E5Embraer 195 LR ALC 20/06/2011 Order 5 CF34-10E5 LR CF34-10E5Embraer ERJ-135 Legacy 650 Comlux Aviation 17/05/2011 Order 3 AE 3007-A2 Legacy 650 AE 3007-A2GECI Intl Skylander SK-105 Trans Asia 22/06/2011 Order 8 PT6A-65B PT6A-65BViking Air DHC-6 Twin Otter 400 Airfast Indonesia 22/06/2011 Order 4 PT6A-34 400 PT6A-34

Mfr & Type Variant Customer Order Order/ Number Engines at Order Variant at delivery Engines at deliverydate Type Swap


Data supplied courtesy of Ascend Online Fleets / Ascend V1 database

Mfr & type Fleet Stored Total Fleet Fleet Stored % Seats Stored Total Seats Seats Stored%

STORED AIRCRAFT 27 June 2011

A.S.T.A. (GAF) Nomad 9 71 12.68 15 139 10.79ATR ATR 42 37 359 10.31 1,604 13,837 11.59ATR ATR 72 36 500 7.20 2,224 30,559 7.28Aerospatiale 262 11 14 78.57 53 53 100.00Airbus A300 84 364 23.08 16,200 38,970 41.57Airbus A310 46 190 24.21 6,056 23,056 26.27Airbus A318 5 69 7.25 366 6,366 5.75Airbus A319 37 1,292 2.86 3,636 166,777 2.18Airbus A320 96 2,588 3.71 14,494 411,718 3.52Airbus A321 11 652 1.69 2,135 122,917 1.74Airbus A330 23 789 2.92 5,903 213,884 2.76Airbus A340 27 369 7.32 5,593 97,923 5.71Airbus A380 2 54 3.70 924 25,548 3.62Alenia C-27J Spartan 1 41 2.44 0 0Avcraft 328JET 2 2 100.00 20 20 100.00BAE SYSTEMS (Avro) RJ Avroliner 39 163 23.93 3,606 14,878 24.24BAE SYSTEMS (BAC) One-Eleven 3 12 25.00 70 315 22.22BAE SYSTEMS (HS) 146 71 164 43.29 6,297 11,896 52.93BAE SYSTEMS (HS) 748 20 65 30.77 344 669 51.42BAE SYSTEMS (HS) ATP 16 54 29.63 456 716 63.69BAE SYSTEMS (Jetstream) Jetstream 31 80 246 32.52 1,336 4,244 31.48BAE SYSTEMS (Jetstream) Jetstream 41 26 93 27.96 749 2,575 29.09Boeing 707 46 195 23.59 1,903 5,584 34.08Boeing 717 27 155 17.42 2,664 17,716 15.04Boeing 727 130 399 32.58 6,236 12,914 48.29Boeing 737 (CFMI) 264 1,752 15.07 33,786 220,833 15.30Boeing 737 (JT8D) 215 464 46.34 22,619 45,619 49.58Boeing 737 (NG) 61 3,670 1.66 5,795 566,516 1.02Boeing 747 169 922 18.33 40,177 201,610 19.93Boeing 757 77 1,004 7.67 11,848 153,459 7.72Boeing 767 80 934 8.57 13,187 177,716 7.42Boeing 777 8 937 0.85 1,718 276,424 0.62Boeing (McDonnell-Douglas) DC-10 32 197 16.24 2,165 6,255 34.61Boeing (McDonnell-Douglas) DC-3 12 75 16.00 413 2,708 15.25Boeing (McDonnell-Douglas) DC-8 47 90 52.22 32 161 19.88Boeing (McDonnell-Douglas) DC-9 178 294 60.54 10,918 19,875 54.93Boeing (McDonnell-Douglas) MD-11 8 192 4.17 100 5,143 1.94Boeing (McDonnell-Douglas) MD-80 289 940 30.74 41,602 135,247 30.76Boeing (McDonnell-Douglas) MD-90 53 108 49.07 7,845 16,221 48.36Bombardier (Canadair) 580 1 2 50.00 0 0Bombardier (Canadair) CL-215 1 19 5.26 0 0Bombardier (Canadair) CL-415 13 71 18.31 0 0Bombardier (Canadair) CL-44 1 1 100.00 0 0Bombardier (Canadair) CRJ Regional Jet 131 1,033 12.68 5,989 48,296 12.40Bombardier (Canadair) CRJ700 Regional Jet 2 340 0.59 140 23,014 0.61Bombardier (Canadair) CRJ900 Regional Jet 11 252 4.37 860 20,522 4.19Bombardier (Shorts) 330 3 45 6.67 0 30 0.00Bombardier (Shorts) 360 13 105 12.38 346 1,001 34.57Bombardier (Shorts) SC.5 Belfast 1 1 100.00 0 0Bombardier (Shorts) SC.7 Skyvan 11 61 18.03 54 129 41.86Bombardier (de Havilland) DHC-5 Buffalo 14 51 27.45 0 38 0.00Bombardier (de Havilland) DHC-6 Twin Otter 64 546 11.72 1,118 8,203 13.63Bombardier (de Havilland) Dash 7 7 56 12.50 292 2,310 12.64Bombardier (de Havilland) Dash 8 62 968 6.40 3,107 51,152 6.07CASA 212 56 249 22.49 916 3,298 27.77CASA CN-235 8 186 4.30 128 430 29.77Carstedt Aviation CJ600 1 1 100.00 0 0Embraer 170 11 187 5.88 764 13,554 5.64Embraer 190 6 360 1.67 592 35,015 1.69Embraer 195 1 75 1.33 108 8,727 1.24Embraer EMB-110 Bandeirante 63 263 23.95 778 1,753 44.38Embraer EMB-120 Brasilia 60 266 22.56 1,738 7,126 24.39Embraer ERJ-135 56 313 17.89 1,799 7,082 25.40Embraer ERJ-145 64 683 9.37 3,179 33,379 9.52Fairchild F-27 3 3 100.00 44 44 100.00Fairchild (Swearingen) Metro 50 484 10.33 593 4,999 11.86Fairchild/Dornier 228 34 180 18.89 518 2,084 24.86Fairchild/Dornier 328 22 100 22.00 665 3,070 21.66Fairchild/Dornier 328JET 60 109 55.05 1,745 3,029 57.61Fokker 100 56 228 24.56 5,246 22,349 23.47Fokker 50 42 188 22.34 2,010 8,416 23.88Fokker 70 4 47 8.51 284 3,577 7.94Fokker F.27 28 123 22.76 838 3,117 26.88Fokker F.28 51 91 56.04 3,240 5,743 56.42General Dynamics (Convair) 580 12 69 17.39 43 437 9.84General Dynamics (Convair) 600 1 1 100.00 0 0Gulfstream Aerospace Gulfstream I 16 45 35.56 151 366 41.26Handley Page Jetstream (HP/Scottish) 2 2 100.00 18 18 100.00Hawker Beechcraft 1900 51 619 8.24 950 9,700 9.79Hawker Beechcraft 99 5 143 3.50 15 306 4.90Hindustan Aeronautics 748 1 65 1.54 0 96 0.00Hindustan Aeronautics Saras 1 1 100.00 14 14 100.00Indonesian Aerospace 212 10 68 14.71 205 828 24.76Indonesian Aerospace CN-235 8 49 16.33 255 371 68.73Israel Aerospace Industries Arava 15 73 20.55 19 116 16.38Lockheed Galaxy 7 111 6.31 0 0Lockheed Hercules 201 1,546 13.00 100 244 40.98Lockheed L-1011 TriStar 15 28 53.57 3,131 5,196 60.26Lockheed L-188 Electra 8 20 40.00 89 89 100.00NAMC YS-11 19 39 48.72 399 399 100.00Saab 2000 3 58 5.17 150 2,712 5.53Saab 340 99 402 24.63 3,257 11,614 28.04Viking Air DHC-6 Twin Otter 1 4 25.00 19 76 25.00




Average CMV Dry Lease RateManufacturer List Price Type Oldest Newest %Change Oldest Newest %Change

LIST PRICES AND LEASE RATES

Airbus $120.15m A300-600R $7.00m $13.50m 0.0% $0.140m $0.180m 0.0% 267

Airbus $57.00m A310-200 $2.00m $2.00m 0.0% $0.070m $0.070m 0.0% 210

Airbus $81.50m A310-300 $4.50m $8.00m 0.0% $0.100m $0.120m 0.0% 210

Airbus $62.50m A318-100 $12.00m $24.50m 0.0% $0.125m $0.185m 0.0% 108

Airbus $77.70m A319-100 $11.80m $31.10m 0.0% $0.125m $0.265m 0.0% 124

Airbus $85.00m A320-200 $5.00m $39.30m -3.2% $0.070m $0.320m 0.0% 150

Airbus $56.00m A321-100 $11.95m $18.75m 0.0% $0.150m $0.180m 0.0% 185

Airbus $99.70m A321-200 $19.30m $43.40m 0.6% $0.195m $0.375m 0.0% 185

Airbus $200.80m A330-200 $43.00m $84.00m 0.0% $0.440m $0.755m 0.0% 250

Airbus $222.50m A330-300 $27.00m $93.25m 0.3% $0.330m $0.870m 2.1% 300

Airbus $127.50m A340-200 $18.00m $18.00m 0.0% $0.320m $0.320m 0.0% 280

Airbus $228.00m A340-300 $20.00m $59.75m 0.0% $0.275m $0.580m 0.0% 295

Airbus $261.80m A340-500 $55.45m $78.45m -1.2% $0.525m $0.760m 0.0% 280

Airbus $275.40m A340-600 $60.40m $90.40m -0.8% $0.575m $0.835m 0.0% 350

Airbus $236.60m A350-800 - - - - - - 270

Airbus $267.60m A350-900 - - - - - - 314

Airbus $375.30m A380-800 $146.00m $185.00m 0.0% $1.450m $1.745m 0.0% 525

Boeing $40.00m B717-200 $7.90m $11.45m 0.0% $0.105m $0.145m 0.0% 117

Boeing $40.00m B737-300 $2.50m $6.45m 0.0% $0.055m $0.090m 0.0% 134

Boeing $44.00m B737-400 $4.00m $7.55m 0.0% $0.090m $0.120m 0.0% 144

Boeing $34.50m B737-500 $2.70m $5.50m 0.0% $0.055m $0.075m 0.0% 104

Boeing $56.90m B737-600 $11.00m $19.50m 0.0% $0.150m $0.200m 0.0% 103

Boeing $67.90m B737-700 $15.30m $32.10m 0.0% $0.160m $0.280m 0.0% 134

Boeing $80.80m B737-800 $19.70m $40.75m 0.8% $0.235m $0.350m 0.0% 160

Boeing $71.75m B737-900 $18.90m $23.05m 0.0% $0.190m $0.220m 0.0% 180

Boeing $85.80m B737-900ER $32.90m $44.40m 0.0% $0.310m $0.375m 0.0% 215

Boeing $250.00m B747-400 $19.00m $59.25m 0.0% $0.350m $0.670m 0.0% 412

Boeing $317.50m B747-8 - - - - - - 467

Boeing $79.80m B757-200 $6.50m $20.60m 0.0% $0.120m $0.230m 0.0% 188

Boeing $144.10m B767-200ER $4.50m $14.50m 0.0% $0.160m $0.230m 0.0% 158

Boeing $164.30m B767-300ER $9.50m $58.90m 0.0% $0.205m $0.520m 0.0% 190

Boeing $186.50m B777-200 $21.80m $37.05m -2.0% $0.350m $0.430m 0.0% 313

Boeing $232.30m B777-200ER $42.00m $117.75m 0.0% $0.560m $0.995m 0.0% 313

Boeing $262.40m B777-200LR $90.00m $135.00m 0.0% $0.810m $1.045m 0.0% 313

Boeing $222.00m B777-300 $43.50m $64.00m -1.7% $0.575m $0.705m 0.0% 382

Boeing $284.10m B777-300ER $86.00m $147.00m 0.0% $0.860m $1.285m 0.0% 350

Boeing $185.20m B787-8 - - - - - - 243

Boeing McDonnell Douglas $119.10m MD-11 $10.00m $10.00m -19.1% $0.150m $0.150m -21.1% 285

Boeing McDonnell Douglas $34.25m MD-81 $0.50m $0.90m -5.0% $0.025m $0.030m 0.0% 144



Boeing McDonnell Douglas $30.25m MD-87 $2.00m $2.00m 0.0% $0.030m $0.030m 0.0% 109


Boeing McDonnell Douglas $39.40m MD-90 $5.00m $5.00m 0.0% $0.090m $0.090m 0.0% 144

Bombardier (Canadair) $24.20m CRJ-100/200 $2.75m $8.05m -7.6% $0.040m $0.080m 0.0% 50

Bombardier (Canadair) $35.57m CRJ-700/705 $10.00m $21.20m -5.6% $0.110m $0.225m 0.0% 70

Bombardier (Canadair) $40.81m CRJ-900 $13.80m $23.55m -5.7% $0.150m $0.245m 0.0% 86

Bombardier $15.70m Q200 $3.70m $8.50m 0.0% $0.055m $0.085m 0.0% 37



Embraer $17.14m ERJ-135ER $4.70m $5.25m 0.0% $0.050m $0.050m 0.0% 37

Embraer $22.25m ERJ-145ER $4.80m $8.70m 0.0% $0.060m $0.085m 0.0% 50

Embraer $34.18m E170 LR $14.00m $23.25m 1.2% $0.150m $0.230m 0.0% 70




Fokker $24.50m Fokker 70 $3.50m $3.50m 0.0% $0.055m $0.055m 0.0% 79

Fokker $31.60m Fokker 100 $3.00m $3.70m -6.1% $0.060m $0.070m 0.0% 108

ATR $16.90m ATR42-500 $5.30m $14.60m 1.0% $0.065m $0.130m 0.0% 48

ATR $20.50m ATR72-500 $5.60m $18.50m 3.5% $0.070m $0.180m 0.0% 70

Seating*(Typical C+Y)

Data supplied courtesy of Ascend Online

Region Net Delivered Leased Purchased Fleet as of Orders new 2nd hand 5 July 2011

WORLDWIDE FLEET SUMMARY BY REGION — March to July 2011

Undisclosed 27 4 NA 5 NAAfrica N/A 5 4 14 2572Asia-Pacific 478 51 59 34 7484Central America NA 4 6 7 1265Europe 78 57 86 56 8178Middle East 8 21 11 2 2017North America 108 57 48 255 17595South America 38 8 14 19 3210

Source: OAG Fleet iNET, July 2011




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