ISTAT: Industry stability as good as this CEO has ever seen it

Despite the constant fears of an impending order bubble, the CEO of one of the world’s largest leasing companies says the airline industry’s stability is as good as he’s ever seen it in his career.

Jeff Knittel, president of CIT Transportation, to which CIT Aerospace reports, told a press briefing Tuesday at the ISTAT conference that US network carriers are stronger than they have ever been, low cost carriers (LCCs) are maturing and ultra low cost carriers (ULCCs) are changing the dynamics of business.

“It’s as well or better positioned as I’ve seen it in my history,” Knittel said. “Airbus and Boeing are in as good a position as I’ve seen in a very long time.”

Elsewhere in the world, it’s not quite as good, he said.

“It’s early in the process” in Europe, where consolidation still hasn’t reduced the large number of airlines, many of which are driven by nationalistic motives. Knittel said that in the US, the four largest airlines control 75% of the traffic. In Europe, this figure is 30%.

“It’s a much more fragmented market in Europe and it’s a much more difficult economic market,” he said. “To use a baseball metaphor, the US is in the 7th or 8th inning. Europe is in the 5th or 6th.”

Asia, which is the highest growth area, is also the highest risk area, Knittel said. India, a market notorious for airline distress, has one carrier that “has gotten it right,” and that’s Indigo. Mexico is still fragmented but the rest of Latin America is “interesting.”

Damon D’Agostino, chief commercial officer for CIT Commercial Air, said another sign of stability is that used aircraft trading in down, indicating stability in the market and higher incidences of lease renewals. Some airlines are keeping older airplanes in their fleets to add capacity or new markets while still taking delivery of new orders.

“What’s changed [about getting new airplanes or rid of older ones] is the sense of urgency,” Knittel added.

2 Comments on “ISTAT: Industry stability as good as this CEO has ever seen it

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