Demand for mid-life aircraft has soared in the past few years thanks to cheap fuel and airlines’ needs for extra capacity.
With the price of oil up nearly 50% in 12 months, though, it is tempting to speculate that the market has peaked.
Aircraft lessor GECAS is monitoring developments closely, but Dermot Manifold, GECAS’ EVP commercial operations, says that mid-life demand could weather some fuel price increases.
“It is important to note that fuel is not the only driver of demand for mid-life aircraft,” he tells Inside MRO.
“The demand for assets is very high given that the rate of growth in global passenger traffic continues to outpace the capacity adds even at record high production rates. This may be playing as big or bigger role than fuel as airlines simply need airplanes to serve their customers.”
Another important factor is the reliability of the CFM56-5B/7B and IAE V2500 engines that power current-generation Airbus A320 and Boeing 737 narrowbodies, which account for most mid-life aircraft trading.
“The continued reliability of these engine types make operators more comfortable retaining mid-life aircraft as the on-time performance and reliability metrics are not impacted by the aging of the aircraft,” says Manifold.
Less important, but still an influence in the short term, are problems associated with the Pratt & Whitney PW1100G for the A320neo and the Rolls-Royce Trent 1000. Respectively, these have caused production delays and service disruptions while engines are inspected for premature wear.
As a result, airlines have had to seek replacement narrow- and widebody capacity for aircraft either not delivered on time or hauled from service.
However, Airbus appears reasonably confident that the PW1100G problems are almost behind it, leaving it clear to ramp up A320/A320neo production to record levels. And while Trent 1000 fixes could take years to implement, widebody demand is only a small part of the mid-life market.
Therefore, after a decade of increases, perhaps 2019 will be the year when the global average fleet age begins to decline again.
To find out more about the mid-life market pick up the Farnborough issue of Inside MRO.