Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Boeing’s 737 North Line and the Everett factory: in transition now June 9, 2025
- Bjorn’s Corner: Air Transport’s route to 2050. Part 25. June 6, 2025
- New RISE powerplant benefits from decades of GE research and development June 5, 2025
- Engine makers emphasizing durability, reliability June 4, 2025
- Boeing CEO: Lessons learned are key to certification of 737-7/10 and 777X June 2, 2025
Potential credit crisis in China would hurt aviation industry
Subscription Required Now open to all readers (11/27/17).
Introduction
Sept. 4, 2017, © Leeham Co.: China, now the world’s second largest economy, appears to be feeling the strains of its long, explosive growth.
The economy is slowing, there are concerns about capital outflow and increased debt by key companies.
HNA Group is one of China’s largest companies and a global investor. Indeed, it’s one of the largest in the world.
Its place in commercial aviation is known among those who are integral parts of the industry, but the depth of its reach may not be well understood.
Due to recent transactions, HNA now is owner of one of the largest aircraft leasing portfolios in the world, with nearly 600 aircraft. Another 253 airplanes are on order.
This includes the acquisition this year of CIT Aerospace, which added more than 300 aircraft to the Avolon portfolio.
Avolon was acquired by HNA in 2015.
However, HNA’s growth means debt, and according to several media reports, the Chinese government is now scrutinizing HNA under a general government “crackdown” on capital leaving the country.
Summary
- Widespread investment in airlines and a few in lessors.
- China’s cracking down on money leaving the country.
- Leverage also concerns the government.
Pontifications: Facial recognition coming to an airport near you
By Scott Hamilton. Would you really want this face in facial recognition?
Sept. 4, 2017, © Leeham Co.: Facial recognition for airport operations is becoming a reality.
The new terminal T4 at Singapore’s Changi Airport is completing testing of the system before the terminal is open.
William Bain, an occasional contributor to LNC, recently was at the airport for a preview. He provided us with several photos.
This is the latest step in an emerging trend away from documents in favor of biometrics, scans and other technology.
Eurowings’ costs compared with the competition
By Bjorn Fehrm
Subscription Required
Introduction
August 31, 2017, © Leeham Co.: We presented Lufthansa Group’s LCC, Eurowings, yesterday. It’s an amalgamation of different companies; some started out as LCCs (Germanwings), others, the remains of defunct Legacies (Brussels Airlines).
The mix is spiced with leased-in parts of the non-Legacy, non-LCC Air Berlin. Can such a cocktail compete with the LCC specialists?
We look at operational and financial data for Eurowings and its competition. How far from the competition is the costs today and will the outlined improvements close the gap?
Summary:
- Eurowings of today is not competitive on costs with equivalent LCCs.
- The announced changes up to 2020 will narrow the gap but not close it.
Eurowings, Lufthansa Group’s LCC
By Bjorn Fehrm
August 30, 2016, ©. Leeham Co: The European leading legacy carriers are all forming LCC arms. First for short-haul and now for long-haul. For Lufthansa, the LCC operations are gradually consolidated under its Eurowings brand.
The route there has been a roller coaster of airlines and brands. In the end, the regional Eurowings brand became the umbrella under which all Lufthansa Group low cost airlines consolidate.
Pontifications: Jets took 30 years to match piston efficiency
The Douglas DC-6B was considered the finest, most efficient and most reliable of the piston engine airliners. Photo via Google.
By Scott Hamilton
Aug. 28, 2017, © Leeham Co.: Airline officials want their airplanes to sip fuel and the engine and airframe manufacturers work mightily to shave even 1% off of consumption.
The Airbus A320neo, Boeing 737 MAX, A330neo, A350 and 787 all made big strides in cutting fuel costs.
Bombardier’s CSeries, Embraer’s EJet-E2, the Mitsubishi MRJ and even the COMAC C919 and Irkut MC-21 are touted to be double-digit more fuel efficient than the jets these are intended to replace.
Pratt & Whitney, Rolls-Royce, CFM and GE Aviation spend billions of dollars developing engines that drive the fuel efficiencies sought by the airlines. After all, typically airframe improvements only account for about 5% of fuel reductions. Engines account for 15% or more.
It took 30 years for the most fuel efficient jets matched the fuel efficiency of the best piston airliners from the 1950s, according a recent presentation by AeroDynamics Advisory at the ADSE conference at the Abbotsford Air Show early this month.
Two short hops or one long for LCC long-range?
By Bjorn Fehrm
Subscription Required
Introduction
August 24, 2017, © Leeham Co.: We presented WOW Air yesterday, a long-range LCC which is using its Reykjavik, Iceland, hub to fly passengers over the Atlantic in two shorter hops instead of one long one.
It allows WOW Air to operate with single aisle A320 family aircraft instead of the classical long-range widebodies. But is it a more economical way of flying? The distance over the hub is longer than if flying direct, Figure 1.
Figure 1. Distances when flying Berlin-Chicago direct or over Reykjavik. Source: Great Circle Mapper.
We use our performance model to understand if two shorter hops with an Airbus A321 is a lower cost alternative to flying passengers direct with an Airbus A330.
Summary:
- What is the most economical way to fly? Two shorter hops with an A321or one longer with the A330?
- Our airline performance model gives the answer. We calculate fuel burn and compares Cash Operating Costs (COC) using WOW Air as example.
WOW Air, the well placed long-haul LCC
By Bjorn Fehrm
August 23, 2016, ©. Leeham Co: WOW Air is the smallest LCC to offer long-haul services over the Atlantic. And it’s the best-placed.
AirAsia X’s CEO explained its early problems with flying long-haul LCC. It was flying too far. Ideal is sectors shorter than seven hours. Fly longer and aircraft/crew utilization suffers. You can only do one turn a day.
With a placement at Reykjavik, Iceland, WOW Air can collect traffic at six hours or less from both sides of the Atlantic. It then connects them over its hub in the middle.
Fgiure 1. WOW Air’s founder, owner and CEO, Skuli Mogensen, in front of a WOW Air Airbus A321. Source: WOW Air.
Air Berlin files for bankruptcy
By Bjorn Fehrm
August 16, 2017, ©. Leeham Co: Air Berlin, Germany’s second largest airline, with 85 destinations, 8,000 employees and 72 aircraft, filed for bankruptcy yesterday.
We wrote about Air Berlin’s problems in October last year and we’ve covered its part owner, partner and moneylender, Etihad Airways, in articles this year.
It was the latter that no longer believed in Air Berlin’s turnaround plan and stopped the money flow.
Small airlines face replacement challenges
Aug. 15, 2017, © Leeham Co.: Small airlines face continuous challenges about acquiring modern aircraft at prices they can afford.
There was once a number of manufacturers producing small airliners. British Aerospace (BAe) produced the 19-seat Jetstream and Beech the 19-seat 1900. Saab built the 340 and later the 2000. BAe tried to update the old Hawker Siddeley 748 with the ATP, Advanced Turbo Prop. Fokker upgraded the F-27 to the F-50. Embraer got its start with the small Bandierante and really hit the mark with the Brasilia.
Bombardier produced the Dash-8 40-seat turboprop in competition with ATR’s ATR-42 and both compete with a 70-90 seat turboprop. BBD dropped its Dash 8 and barely holds on with the Q400. ATR is the dominant player now. (China produces a turboprop, but it’s mostly a captive-market airplane.)
BAE, Saab and Beech exited the commuter airplane business. Fokker went out of business. Embraer moved to jets.
This leaves smaller, independent regional and commuter airlines in a real bind. There are simply no replacements for the 19- to 30-seat airliner, save one: the Viking Twin Otter. More about this below.
Boeing’s tactical option for MOM sector
Subscription RequiredIntroduction
Aug. 14, 2017, © Leeham Co.: It’s not a done deal yet—the business for the so-called Boeing 797 remains a challenge. But the consensus is that Boeing will launch the program next year, for an entry-into-service around 2025.
Boeing 797 concept. Source: Boeing.
Yet there are airlines that say they don’t want to wait that long for a new airplane.
What are their choices?
Read more
7 Comments
Posted on August 14, 2017 by Scott Hamilton
air force tanker, Airbus, Airlines, American Airlines, Boeing, Bombardier, CFM, Delta Air Lines, GE Aviation, Leasing, Leeham News and Comment, Middle of the Market, MOM, Pratt & Whitney, United Airlines, US Airways
737-10, 737-9, 757, 767-200ER, 767-300ER, 777, 777-300ER, 797, A330-200, A330-800, Airbus, airlines, American Airlines, Boeing, Delta Air Lines, Japan Air Lines, Middle of the Market, MOM, New Midrange Aircraft, NMA, United Airlines