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By Vincent Valery
Introduction
June 8, 2020, © Leeham News: Last week, we saw that earlier generations of widebody aircraft had significant range restrictions. Airlines with sizable long haul operations had to operate multiple aircraft types to serve different markets.
With the innovation of common pilot type rating and increased range of smaller widebody aircraft, airlines can now serve all their long haul destinations with far fewer types than in the past.
In the context of muted passenger traffic in a post-COVID-19 world, airlines will be under pressure to become more efficient and streamline operations. We will analyze the consequences for current twin-aisle programs and the fleet situation at large carriers.
By Bjorn Fehrm
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June 4, 2020, © Leeham News: Air cargo prices are at an all-time high. The air cargo demand is down 28% compared with the same time last year, but the capacity has disappeared faster. Half of the world’s cargo was flying in the bellies of passenger aircraft, and as these were grounded, 50% of the world-wide cargo capacity went missing.
Airlines have taken the seats out of passenger jets and now fly them as belly freighters with light pandemic protective gear cargo in the cabins on special authorization from the authorities. This has alleviated the capacity crunch somewhat but demand and capacity still don’t match. As a result, cargo prices stay high.
As international passenger traffic slowly recovers, how much of the cost of flying passengers on the international routes can be paid by high priced freight in the bellies of the aircraft?
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By Vincent Valery
Introduction
June 1, 2020, © Leeham News: As airlines slashed capacity in the aftermath of the COVID-19 outbreak, some took the opportunity to accelerate aircraft retirements.
Older generation twin-aisle aircraft, notably the Airbus A340, older A330s, Boeing 747 and 767, have exited numerous carrier’s fleet early. Several Airbus A380 operators put their Superjumbos in long-term storage, wondering whether these will ever fly in passenger service again.
Major crises tend to accelerate existing trends. The move away from large twin-aisle aircraft is a case in point. In the context of subdued demand for several years, airlines will be under pressure to reduce expenses. Streamlining fleets is an obvious target.
The Airbus A320 and Boeing 737 families dominated the single-aisle market for decades. The picture has historically been far more fragmented for twin-aisle aircraft. Airbus and Boeing still have three widebody aircraft families apiece with significant numbers of passenger aircraft in service.
LNA analyzes in two-part articles why the picture will likely change for the widebody market in the 2020s. In the first part, we will take a historical detour to analyze why twin-aisle fleets are still so fragmented nowadays.
By Bjorn Fehrm
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May 28, 2020, © Leeham News: As flying recommences after country lockdowns, the fill factors for the flights will be low for an extended period.
Airlines and the OEMs are anticipating the low load factors. For instance, Delta has not deferred any Airbus A220 deliveries but is postponing deliveries of larger aircraft. How much of an advantage is a smaller aircraft when opening up the traffic again?
We compare the operational costs of the Airbus alternatives. The cost of flying the A220-300 is compared with the A320neo.
By Bjorn Fehrm
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May 21, 2020, © Leeham News: We looked at the economics of extending the lease of a Boeing 777-300ER or taking an ordered 777-9 here.
If traffic post-COVID-19 on the routes we fly stays down for long, should we change the order to a 787-10? What are the trades between staying with the 777-300ER, taking the 777-9, or stepping down to a 787-10?
We use our airliner economic model to find out.
Summary:
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By Scott Hamilton
May 18, 2020, © Leeham News: As airlines park or retire thousands of aircraft, lessors with wide-body airplanes are most at risk.
Single-aisle airplanes are easier to re-lease and more in demand when traffic recovers. Reconfiguration and maintenance costs, if required, are reasonable by aviation standards. Cabin reconfiguration may run up to $1m. Airframe and engine MRO costs for Airbus A320s and Boeing 737s typically are in the low millions, depending on condition.
MRO and reconfigurations costs for wide-body airplanes, on the other hand, can cost more than a new A320 or 737. GE Aviation GE90s on Boeing 777-200LRs, -300s and -300ERs are notoriously expensive. MRO for Rolls-Royce wide-body engines is costly under RR’s contract packages.
Reconfiguration costs for A330s, 777s and A380s can run up to $30m, depending on the initial operator and who the second (or third) one will be. Therefore, HiFly did not reconfigure the ex-Singapore Airlines Airbus A380 it acquired after SQ retired the airplane.
LNA analyzed the number of wide-bodies owned by lessors. There are more than 670 Airbuses and more than 600 Boeings.
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By Vincent Valery
Introduction
May 14, 2020, © Leeham News: Last week, we compared the economics of the Boeing 777-300ER and 777-9 on the world’s busiest intercontinental route. The older aircraft proved a viable alternative, thanks to low fuel prices and low capital costs. We will now turn our attention to the step-down case mentioned in the article.
We will look at the market developments in the twin-aisle market and compare the economics of the 777-300ER with the 787-10 on the JFK to London Heathrow route to find out how attractive such an option is.
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By Vincent Valery
Introduction
May 11, 2020, © Leeham News: The timeline for a passenger traffic recovery is highly uncertain. Major OEMs and some airlines expect a return to 2019 passenger traffic levels in two years at the earliest.
Southwest Airlines doesn’t see traffic returning to 2019 for five years. IAG, parent of British Airways and several other airlines, predicts a three year recovery.
Leeham Co. predicts that it will take four to eight years before traffic returns to pre-COVID-19 levels.
However, the recovery sequence for the various markets is becoming clearer. Governments will progressively lift travel restrictions on domestic markets, followed by regional international. Long-haul international will probably be the last to return to normal.
Airlines in China started ramping up domestic capacity, though the government mandates some of this. The governments of Australia and New Zealand disclosed discussions to lift trans-Tasman travel restrictions. French President Emmanuel Macron made it clear that travel would be first allowed within the European Union before outside the old continent.
People who need to travel for business reasons will be allowed first, including for long-haul travel. That means airlines that wish to restore long-haul capacity will have to do so with a much-reduced demand. With this in mind, it might make sense to restore long-haul flights with latest generation narrowbody aircraft such as the Airbus A321(X)LR and Boeing 737 MAX.
LNA analyzes pre-COVID-19 long-haul route patterns to determine what fraction narrowbody aircraft can cover as passenger traffic recovers.