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Fleet retirement age remains stable

In recent years much has been made of the early retirement of aircraft – such as Luxair’s decision last June to part out a 10-year old 737-700 – but such incidents are “isolated” cases, according to the latest analysis by lessor Avolon.

In a white paper published yesterday (March 30), the firm’s head of strategy, Dick Forsberg, concludes that: “Patterns of retirement have not materially changed since 2012… with average retirement age stable at around 25 years.”

According to Forsberg’s analysis 60 per cent of delivered aircraft are still in service at 25 years of age. The average retirement age of widebodies in 2014 was the same as two years ago at 24.6 years and narrowbody retirement age fell by the smallest of margins from 25.9 to 25.7 years.

He says that just 44 “premature retirements” have taken place over the past two years, amounting to less than four per cent of total retirements. And, if fuel prices continue at their current level for the next two or three years, he concludes that retirements could be postponed for up to 200 aircraft a year.

While warning that reports of a sharp decline in retirements in 2014 are likely to be “overstated”, as it takes six to 12 months to collate accurate data, Forsberg does predict that continued low fuel costs could very well extend aircraft life.

“30 per cent of aircraft that might be considered retirement candidates could be retained for an extended active life in the event that their enhanced economic performance outweighed the incremental costs of extending their operating lives,” he concludes.

He estimates that such a trend would see around 150–200 aircraft a year remaining in the fleet. In addition, he forecasts that an additional 175–200 passenger jets may be returned to service from storage as a result of the change in economics.

But the OEMs do not need to worry. Forsberg concludes that the additional older aircraft would not result in a significant displacement of younger aircraft – with numbers representing just five to 10 per cent of new deliveries. This is, he says, “well within the capabilities of the OEMs to manage”.

Such a change may, however, have a more significant impact on the MRO sector. With part-out companies seeing a drop in the number of available assets, the price of serviceable material is sure to increase and perhaps drive demand for PMA parts and DER.

Only time will tell how the ripples of such a trend will play out.

Download a copy of Avolon's white paper: "Aircraft retirement and storage trends"

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