AFM71: Airline Fleet Management

Issue 71 www.ubmaviationnews.com

The business andfinancing ofairline operations

January-February 2011

READY FOR TAKE-OFF:START-UP AIRLINESAND LESSORS

PLUS:

n EXAMINING THE MARKET FOR LOW-COST LONG-HAUL

n AN UPDATE FROM IATA ON THE FUTURE OF BIOFUELS

n THE CASE FOR LOW-COST CARGO

n AIR TRAFFIC MANAGEMENT: MOVING FORWARD

AFM71 cover_Layout 1 01/02/2011 10:19

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January-February 2011 • Issue 71

NEWS ROUND-UP2 The latest on deals, mergersappointments and more.

FOCUS:12 Start-up airlines: Clearing for take-off Launching an airline and ensuring itsprofitability is not easy, as many failed start-ups have shown. Chris Kjelgaard investigatesAllegiant Air, Feel Air and Porter Airlines toexamine the factors that new airlines shouldtake into account when trying to ensuresurvival.

FLEET OPERATIONS: 18 Air Traffic Management: MovingforwardThe next generation of air trafficmanagement systems will need to supportmore efficient airline operations whilecoping with the doubling of air traffic.Bernard Fitzsimons examines the situation.

24 The rise and sustainability of low-cost cargoMost European low-cost carriers (LCCs) viewcargo as a distraction from their corebusiness of moving passengers as cheaplyand efficiently as possible, but as MartinRoebuck discovers, the case for low-cost cargois still strong.

28 Biofuels: The climate-friendly fuelsof the futureThey were the unsexy stepsisters of nature’sbounty. Their flavours were unappealing,their nutritional content low and theircommercial value limited. Throughouthistory they have been ignored, derided andoften treated as pests – until now. Paul Steele,director of Aviation Environment, IATA,reports.

The business andfinancing of airline operations

TRADING, LEGAL & FINANCE:34 The new generation of aircraftlessors: Is this a revolution? The recent spate of new aircraft leasingcompanies has surprised some people, giventhe instability faced by established lessorsand the depth of the industry’s downturn.Yet after well-reported industry woes, astring of new lessors, including Air LeaseCorp, Avolon and Jackson Square Aviationhave materialised. Mary-Anne Baldwin reportson the trend.

40 Deals News Catch up on the last month of aircraft deals.

AIRPORTS AND ROUTES:44 Airport development: SabihaGökçen, a 21st century successIn the next two decades up to $1tn mustbe spent on airports worldwide toaccommodate a two-fold increase in airtraffic. But where that money comes fromand how it is spent remains a complexmatter. Alex Derber indentifies the majorissues and takes a look at Istanbul’s secondairport, Sabiha Gökçen, only a decade oldbut already a success.

50 Low-cost long-haul: Square peg,round hole?The conventional view that low-cost andlong-haul are mutually exclusive has beenreinforced by recent failures, but some low-cost carriers have not given up the task ofproving it can work. Bernard Fitzsimonsreports.

MAINTENANCE OPERATIONS:54 OEMs: Chasing profit in a crowdedMRO marketOriginal equipment manufacturers (OEMs)are chasing profits in the increasinglycrowded MRO field. Why have the big OEMsentered the field? It is for profits, pure andsimple. Scott Hamilton asks how far they canand will go for the extra buck.

INDUSTRY DATA58 Data including transactions andmarket, list and lease rates.

C O N T E N T S

EDITORMary-Anne Baldwin: [email protected]: +44 (0) 207 579 4843

JOURNALISTAlex Derber: [email protected]

CONTRIBUTORSChris Kjelgaard, Bernard Fitzsimons, Scott Hamilton, PaulSteele and Martin Roebuck.

DESIGN & PRODUCTIONKalven Davis: [email protected]:+44 (0) 207 579 4851

DISPLAY ADVERTISINGSimon Barker: [email protected] Samuel: [email protected]: +44 (0) 207 579 4845/46

GROUP PUBLISHER & SALESAnthony Smith: [email protected]:+44 (0) 207 579 4875

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AFM71 TOC restyle_TOC 28/01/2011 16:21 Page 2

2 | AFM • ISSUE 71 January-February 2011

NEWS ROUND-UP The latest on deals, mergers, appointments and more

SWA revamps frequentflyer schemeSouthwest Airlines (SWA) has over-hauled its ancient frequent flyerprogramme in a bid to woo businesspassengers. Rather than accumulatemiles based on the number of flightstaken, SWA customers now receivepoints based on fares paid. As businesspassengers tend to book late and thuspay higher fares, they should benefitfrom the new programme. However,leisure travellers will also welcome thecancellation of expiry dates for flyingpoints and the abolition of seatrestrictions.

Qantas settles US cargoclass actionQantas has settled all claims relating to thepurchasers of its freight services between2001 and 2006 to or from the US bypaying $26.5m. For its part in the illegalglobal cargo cartel, the Australian flagcarrier has already paid regulatory fines inAustralia, the US, Europe, Canada andKorea. However, it still faces an A$200m($200m) class action in Australia, which itcontinues to contest in the courts.

Rockwell dividendsannouncedRockwell Collins’ board of directorshas declared a quarterly dividend of 24cents per share on its common stock.This will be payable on March 7, 2011,to shareholders of record at the closeof business on February 14, 2011.Meanwhile, FLY Leasing has declareda quarterly cash dividend of $0.20 percommon share for Q4 2010. Thedividend will be paid on February 18,2011 to shareholders of record onJanuary 28, 2011.

AirAsia pax up in 2010AirAsia, Asia’s leading budget operator,has reported a three point rise inpassenger load factor for 2010, up to 78per cent. In 4Q 2010 load factor for theAirAsia group, which includes its Thai andIndonesian operations, was also up threepoints, to 82 per cent, on the year-agoperiod. Passenger numbers for 2010 rose13 per cent to just under 26 million.

NEWSHIGHLIGHTS

The aircraft finance market will be shaken whenapproval for a new Aircraft Sector Understanding(ASU), last updated in 2007, is granted. Alreadybeyond its due date for approval, the new ASU willforce interest rates and repayments on loans fromExport Credit Agencies (ECA) higher, pushing areturn to capital markets and commercial debt.

The Organisation for Economic Co-operation andDevelopment (OECD) started its review of the ASU inFebruary 2010 because of “market developments,including the marketing of new aircraft models andthe growing number of aircraft manufacturers,” it said.

The body has also been under pressure frombanks, many of which have argued that ECAs arepricing them out of the market. In late DecemberAviation Industry News reported Kostya Zolotusky,Boeing Capital’s MD, as saying that banks “will gettheir wish” after being “very vocal about wantingmore capacity” but added that ECA support willremain as a “backstop” to financing. “We believethere will be mechanisms so that if the marketdislocates or explodes, export credit will function asa backstop from a liquidity standpoint and as a capon pricing.”

Boeing, which benefited from ECAs financingtheir aircraft during 2009 and 2010, said that thebanks’ demands for agencies to step away fromfinancing were “ungrateful to say the least”.

“Export credit stabilised the platform they [banks]all do business from,” Zolotusky said. “We wouldn’thave had the problem [of a need for additionalfinancial support] if you [banks] hadn’t run for thebushes when things got tough.”

Zolotusky believes that 2011 will bring “a lot ofinnovation in the capital markets” with newstructures to fund lessors that will take some of theelements of the EETC (enhanced equipment trustcertificate, a bond backed by aircraft lease rentals)and some of private equity leasing.

Deliveries financed by ECA’s rose from 20 to 35 per

Aircraft financing to receiveshake-up under new ASU

cent during the downturn, but many argue that thefinancing went to the wrong airlines. Funded by thetax-payer, ECAs are obliged to back the most secureairlines – arguably the same airlines that would havebeen able to secure financing through thecommercial market.

According to Zolotusky, the new ASU will be the“most complicated ever negotiated”. For the first time,regional and large aircraft will be considered on asingle tier. Airlines and lessors will pay differentamounts to finance aircraft depending on theircredit rating.

Those rated AAA to BBB- would face an upfrontminimum exposure fee of 7.74 per cent; almostdouble the four per cent which they have been usedto since 2008. Companies rated BB+ and BB wouldhave a fee of 10.47 per cent and CC rated companies14.77 per cent. Rates will be reset every year andthere will be a two-year transition.

Loan-to-value rates would also be lowered, butthere would be no overall cap on export creditvolumes, which home-country airlines had lobbiedfor. However, included in the new ASU is a revisionof the Home Countries Rule, under which exportcredit agencies in the countries that provide supportto Airbus and Boeing – Germany, France, Spain, theUK and US – cannot lend financing to airlines; asituation that operators like Lufthansa and AmericanAirlines believe distorts the market. Canada refusedto adopt the rule and supplies export financing forBombardier’s sales into the US, an exception that hasraised the call for new rules.

Approval is yet to be granted by participatinggovernments: Brazil, Canada, Japan, the US and theEuropean Union (France, Germany, UK and Italy). Apreliminary date was set for January 20, with itcoming into play on February 1, but at the time ofwriting an OECD spokeswoman told AFM thatapproval had not yet been granted and that therewas no official date for this in mind.

AFM71 News_AFM News 28/01/2011 11:17 Page 2

January-February 2011 AFM • ISSUE 71 | 3

The latest on deals, mergers, appointments and more NEWS ROUND-UP

NEWSHIGHLIGHTS Air India to consider payfreezeConsultancy Deloitte has recommendeda three-year pay freeze at Air India (AI).The airline, which is seeking a $440mequity injection after losses totalling$3.3bn over the last three years,employs 31,000 people with an averagewage of $22,000. Deloitte also recom-mended that AI negotiate with Indianstate oil companies to cut its annual$8.8bn fuel bill.

MAG turns financing pageWith its existing facilities due to expire inJuly, Manchester Airports Group (MAG) hassecured £280m ($440m) of financing fromseven banks: The Co-operative, Barclays,RBS, Handelsbanken, Santander andYorkshire Bank. The fresh funding will bespread over five years and will help fund a£20m ($30m) refurbishment of ManchesterAirport’s runway one and a new 60-acrebusiness and retail park called Airport City.

Asiana orders A380sSouth Korea’s Asiana Airlines hasordered six A380s on the back ofbooming Asian travel demand. Theairline expects long-haul flights togrow by five per cent a year to the USand Europe. The deal is worth $1.8bnat list prices and the aircraft should bedelivered between 2014 and 2017.

737-800 NG delivered toNorwegianNorwegian Air Shuttle has received its first737-800 NG from Boeing. The aircraft wasfitted with the new Boeing Sky Interior, andits inaugural flight was scheduled “almostimmediately”. The new Boeing interiorfeatures sculpted sidewalls and windowreveals, larger stow bins and moreheadroom around the aisle seats.

Winter proposes newIsraeli LCC Ex-easyJet COO Edward Winter isplanning a new budget Israeli airline,according to Israeli site Ynetnews. It isto be called Jet Israel and hopes tooffer flights to Switzerland, Germanyand France. To set up the new airlineWinter is seeking government assis-tance through a $28m safety net thatwould compensate the start-up carrierif it achieved load factors between 70and 90 per cent.

Air Greenland: it’s aboutthe oil, Inuit?The fact that Greenland has its own airline, completewith wide- and narrowbody aircraft, might surprisesome: like constructing a monorail to transportmeals around the home, it’s handy, but a touchexcessive. Yet Greenland’s 50,000 or so inhabitantscan boast, in Air Greenland, a flag carrier whose fleetcomprises an A330-200, a 757-200, eight Dash 7 andDash 8 turboprops, two smaller propeller aircraft anda large helicopter fleet. Nor is it a mere vanity projectfor the autonomous realm within the Kingdom ofDenmark: Air Greenland, jointly owned by SAS andthe governments of Greenland and Denmark, postedprofits of around $10m annually throughout theglobal economic crisis.

Ash, snow and strikesmask Europe’s realproblemsThe Association of European Airlines (AEA) hasblamed Icelandic volcano ash, snow, and industrialaction for the disappointingly slow recovery of theEuropean airline industry in 2010. Traffic increasedby only 2.5 per cent in 2010, compared with theprevious year, up to 335 million, according to theAEA’s latest report. Secretary general Ulrich Schulte-Strathaus raised concerns about the wider com-petitive landscape, warning that Europe was losingout to regions experiencing much stronger growth,such as Asia and the Middle East.

“While the recession of 2008/9 affected airlinesand their markets around the world, the recovery

But while success thus far has been built on soundcost management – the airline scrapped its only USconnection, Kangerlussuaq-Baltimore after justmonths due to poor returns – recent oil and gasdiscoveries off Greenland could allow the carrier tospread its wings. A serious obstacle to that, a stafflockout that saw Air Greenland cancel services to all60 of its destinations in Greenland for several days inJanuary, as well as on its trunk Kangerlussuaq-Copenhagen route, has just been resolved with pilotsand cabin crew accepting a settlement on pay andconditions after almost two years of disputes. Thenext challenge is to acquire the diverse range ofcapabilities and qualifications necessary to servicethe offshore oil industry, and the airline is alreadypartway through a training programme that sees itsstaff engage in work swap programmes.

process is very different between one region andanother, and particularly in Europe we are laggingbehind the rest of the world,” he said. “This aloneplaces European airlines at a competitive disad-vantage vis-à-vis their global rivals, and it is vitallyimportant that the political and operating environ-ment within which we do business does not burdenus further.”

But it is clear from the AEA report that evenwithout the impact of volcanic ash, airlines were notrecovering the losses of 2009 in the first part of 2010.The association also said that the level of recovery inthe rest of 2010 was “extremely weak”. The reportstated that “the resilience shown by the market inbouncing back after 9/11 and again after Gulf War 2and SARS has so far not been in evidence”. This isundoubtedly a major cause for concern.

China Eastern’s profit rocketsCapping a remarkable recovery, China’s second-largest domestic airline has predicted a 10-fold leap inprofits for 2010, to the chagrin of certain otherplayers in the region.

Three years ago, almost to the day, SingaporeAirlines had been expecting to celebrate New Yearwith the acquisition of a 24 per cent stake in ChinaEastern. Just weeks earlier, the joint bid by Singaporeand Temasek awaited a rubber stamp from ChinaEastern shareholders, only for last-minute spoilingtactics by Air China to derail what had been regardedas a done-deal.

By the end of 2008, though, it appeared thatSingapore had dodged a bullet, as Eastern swung

from marginal profit to an eye-watering $1.9bn lossand called in state aid. Now, however, the potentialspotted by Singapore’s investment team has beenrealised, as China Eastern prepares to post netincome in excess of $800m, up from $82m in 2009.

Buoyed by the upturn, the airline ordered 50 A320son December 30, 2010, for delivery from 2012, and itclearly expects resurgent travel demand in China – towhich it attributes the surge in profits along with itstakeover of Shanghai Airlines – to continue throughthe decade. So, great news for Eastern’s shareholders– most of whom are Chinese state institutions – lessso for Singapore Airlines, which can at least consoleitself with the purchase of a 16 per cent stake inShanghai-based China Cargo Airlines.




GOL to add Qatar codeGOL Linhas Aereas Inteligentes (GOL) andQatar Airways have signed a codeshareagreement that will have Qatar’s nationalcarrier adding its code to GOL’s flights.GOL, the largest low-cost airline in LatinAmerica, will place Qatar’s code on itsflights departing from Sao Paulo to 48destinations in Brazil.

Doha gets new arrivalsterminalA new arrivals terminal is almost readyto be opened in Qatar’s Doha Inter-national Airport (DIA). The terminalwill be a stand-alone facility separatefrom DIA’s current main terminal andwill handle all airport passengers arriv-ing into the country. The terminal formspart of a multi-million dollar re-dev-elopment plan ahead of the opening ofthe New Doha International Airport,scheduled for 2012, according to DIA.

EVA invests in China CargoTaiwanese carrier EVA Airways intends tobuy a 16 per cent stake in Shanghai-basedChina Cargo Airlines. EVA will investRMB328m ($49m) through its subsidiary,Concord Pacific, for the stake, ahead ofChina Cargo’s expected merger withShanghai Airlines Cargo. EVA originallyinvested in the latter airline, but withdrewits 25 per cent shareholding in favour of aChina Cargo investment.

Swissport expands tosecond Ukrainian citySwissport Ukraine has begun oper-ating in Kharkov, Ukraine’s secondlargest city, in the east of the country.The company says it is the first step ofa business expansion programme toother airports and services within theUkraine. Kharkov International Airportrecently opened a new 20,000m2terminal with a capacity of two millionpassengers per year.

Start-up Baltia Air Linesbuys second 747Baltia Air Lines has purchased a long-range747 aircraft from Kalitta Air. It is the second747 bought by the US start-up airline. Thenewly acquired aircraft was previouslyoperated by Northwest Airlines. At thetime of writing Baltia was not selling ticketsand its operations were subject togovernment approval.

NEWSHIGHLIGHTS

Despite founder Stelios Haji-Ioannou’s strongly-voiced assertion that easyJet has already purchasedtoo many aircraft, the airline has ordered a further15 A320s, to be delivered from 2012 to 2014. It willalso convert an existing order for 20 A319s into thelarger-capacity A320 model, and has secured optionson a further 33 A320s. The airline’s order book forthe A320 family now totals 242.

While the airline’s new CEO, Carolyn McCall, saidthe order would “help deliver easyJet’s strategy ofcontinued profitable growth”, Stelios is unlikely to be impressed, especially considering he is still thecompany’s largest shareholder. The businessmanrepeatedly clashed with McCall’s predecessor, Andy

premium has fallen about seven per cent, but thatincreases in 2011 are likely to exceed this. According tothe report, 2010 was a poor year for safety, with the rateof fatal accidents worsening to one in every 1.3 millionflights, compared with one in every 1.5 millions flightsin 2009. However, this was much better than theaverage for the 1990s, at one per 700,000 flights, andthe average for the 2000s, at one per 1.2 million.Western-built jets were involved in eight fatalaccidents – almost 70 per cent of all fatalities during2010, but about the same as 2009. Losses involvingWestern-built turboprops rose from 18 in 2009 to 27 in2010 and Eastern-built turboprops were involved in 12.Eastern-built jets were involved in four fatal accidents.

Harrison, over fleet expansion, with Stelios sayingthat easyJet had ordered too many aircraft and that itwould struggle to fill them with passengers in a timeof economic uncertainty. Stelios also said that allfuture fleet expansion should be fundamentallylinked to the identification of new routes that metthe airline’s profit targets.

The easyJet founder has yet to comment on theairline’s new order, although the company did makeit known in a statement that he had been consultedin advance of the order. His mood may also betempered by an October agreement that affordedeasyJet greater operational and commercial flexibilityin return for royalty payments to easyGroup. Inaddition, the latest order is merely an exercise ofpreviously existing options. McCall believes that theagreement with Airbus gives easyJet the “flexibility”to “vary the growth rate in its capacity to reflecteconomic conditions and market opportunities”.

Safety and insurancefigures make glumreadingLast year was disappointing both for safety and in-surance, according to aviation data provider Ascend.The estimated airline hull and legal liability losses for2010 reached $2.15bn. That is $370m less than in 2009;however, the 2010 figure exceeded the forecasted$2.1bn. According to Ascend: “Since 2007, estimatedpremium income has increased by about a third.However, more than half of this increase came in 2009following the loss of the Air France Airbus A330 in theSouth Atlantic that summer.” It added that written

Airbus’ 2010 deliveriesbreak recordAirbus delivered a record 510 aircraft in 2010, just upfrom the 498 delivered during 2009. The manu-facturer increased its production output for the ninthyear in a row and delivered aircraft to 19 newcustomers. During the year, Airbus delivered 401A320 Family aircraft, 91 A330/A340s and 18 A380s.The company took 644 commercial orders worth$74bn net. The number represents 51 per cent of theworldwide orders for aircraft over 100 seats. Com-mercial orders include 452 A320 Family aircraft, 160A330/A340/A350 XWB Family aircraft, and 32 ordersfor the A380. At the end of 2010, Airbus’ commercialorder backlog was 3,552 aircraft valued at over$480bn at list prices.

Strike threat looms overCathay Cathay Pacific flight attendants may take industrialaction after their union voted in favour of a string oflabour measures. The dispute has arisen from theairline’s annual pay offer. Among the measures, theCathay Pacific Flight Attendants’ Union, whichrepresents 5,800 out of the airline’s 14,000-strongcabin crew, voted to refuse working overtime. Theairline has publicly called on the union not to takeany action that would “inconvenience the travellingpublic”, while expressing confidence that all cabincrew would “act in a professional and responsiblemanner”. The airline also stated that while it wasalways ready to negotiate, it has “contingencymeasures in place for different situations”.

easyJet strengthens tieswith Airbus but risksStelios’ wrath




NEWSHIGHLIGHTS February IPO date forGarudaAfter putting back an IPO of flagcarrier Garuda from November lastyear, the Indonesian government hasrescheduled it for February 11. It ishoped the listing will raise up to$500m as the state opens 36.5 per centof the company to investors. Citigroupand UBS are the international bookrunners for the offer.

Lonrho announces Angolan airlineLonrho, the African investment company,has started a new Angolan airline and wasscheduled to commence flights onDecember 13, 2010, from Luanda toCabinda and Soyo using a single aircraft.By mid-2011, the airline plans to operatesix aircraft. Lonrho holds assets incompanies that span 17 African countries,including Kenyan airline Fly540.

TAP announces newroutes for New YearPortuguese flag carrier TAP hasannounced six new routes for 2011.The carrier will start services toAthens, Vienna, Düsseldorf, Bordeaux,Manchester and Dubrovnik from itsLisbon hub.

Ryanair scraps GermanroutesRyanair will cut services to Berlin, Bremen,Dusseldorf Weeze and Frankfurt Hahn in2011. In all, the carrier will scrap 34 routesto Germany in response, it says, to thecountry’s new €8 ($11) flight tax.

BA ups fuel levyLong-haul fuel surcharges are to rose£10 ($16) each way on British Airwaysflights from from December 16, 2010.The airline said that the higher levy,which will mean a £63 ($99) surchargefor sub-nine-hour flights in economy,were due to higher oil prices.

Aeroflot eyes 777s ahead ofSochi OlympicsAeroflot has signed a letter of intent to buyeight 777-200ERs and eight 777-300ER.The carrier may also order four 787s aheadof the 2014 Winter Olympics in Sochi. IfAeroflot’s board approves the 777 order,the airline intends to receive the aircraftbetween 2012 and 2017.

Turboprop upside ofsoaring fuel priceATR sold 80 aircraft in 2010 with 33 options,attracting five new customers. The turbopropmanufacturer’s new -600 model, due to be certifiedlater this year, attracted big orders from Brazilianlow-cost carrier Azul, Caribbean Airlines and AirLease Corporation in the US.

CEO, Filippo Bagnato, told a January media briefingin Paris that the lessor deal was particularlyimportant, re-opening a North American market thatATR had been unable to penetrate for the last threeyears because of the region’s economic problems andcustomers’ unwillingness to invest.

ATR’s turnover was fractionally lower than 2009,at $1.35bn, but the company is confident in therecovering market and is preparing to ramp upproduction from 50 to 70 aircraft a year from 2012.That may look ambitious with the current backlogstanding at just 159 aircraft, but the trend is clear.

Turboprops have accounted for 76 per cent of salesin the 30-70 seat segment over the last five years, a

complete turnaround from the position in 2000 whenthey took just 15 per cent of the market. Increasingcompetition in the regional airline sector, against abackground of soaring fuel costs, sent out a “verystrong message”, Bagnato said.

Airlines will need almost 3,000 new andreplacement turboprops in the next 20 years. If ATRmaintains its current share of the turboprop market,65 per cent on last year’s sales against 35 per cent forBombardier, it has apparent scope to build more than90 aircraft a year. In this context Bagnato said anincrease to 70 annual deliveries was “prudent”.

ATR expects oil to average $110 per barrel this year,stimulated by high demand from the emerging BRICmarkets. “The oil price is important to ATR becauseeconomy is our operating edge,” Bagnato emphasised.ATR’s current 70-seat model, the 72-500, burns 700kgof fuel an hour compared with 1,500kg for anequivalent regional jet. Given the correspondingreduction in carbon emissions, this cost advantagewill increase when the European Union’s EmissionTrading Scheme (ETS) extends to airlines from 2012.

Cost of Heathrow’s WinterNone-to-landScant comfort to those condemned to a night on thetiles at Hotel Heathrow, but figures have emergedshowing airlines lost £100m ($158m) as a result of thesnow disruption that hit the UK hub in the run-up toChrist-mas. Roughly half those losses were incurred byBritish Airways, one in eight of whose passengers hadtheir flight cancelled during Britain’s coldestDecember in a century.

Heathrow operator BAA may escape fines even if thechaos re-occurs, due to an outdated regulatory regime

– a further slap in the face for the flag carrier and itscustomers, especially since BAA has conceded that itwas under-prepared for the wintry conditions, to thetune of roughly £10m ($15.8m) of snow clearingequipment.

Yet, uncomfortable as it is to admit, BAA has a rathersolid catch-all defence in these circumstances (albeitone it considers imprudent to rely upon): try runningthe world’s second-busiest airport without a thirdrunway. As Graham Bolton, a director at airport dev-eloper Arup told AFM: “If you have two runways andyou use every possible opportunity to put aeroplaneson and off them, as soon as you have fog or snow oranything else your ability to respond is very limited.”

Embraer’s 2010 backlog uptwo per centEmbraer delivered 246 aircraft during 2010, including92 jets during the 4Q, 30 of which were to thecommercial market and 61 to the executive market. Atthe end of 2010, the company’s firm order backlog hit$15.6bn, two per cent up on 2009. During the 4Q,

Embraer signed letters of intent (LOI) with Air Leaseand Republic for 16 E190; LAM ordered one E190;Lufthansa, eight E195s; CDB Leasing, 10 E190s; one E190jet was sold to an undisclosed customer; and BACityFlyer and Fuji Dream Airlines, both previouslyunnamed customers, were announced to have orderedtwo E190s and one E175 respectively.




Garuda Airlines takes 737-800s from GECASGaruda Airlines has taken delivery of three new 737-800 aircraft fromGECAS. The Indonesian airline now has16 aircraft on lease through GECAS andoperates a fleet of 87 aircraft acrossmore than 50 destinations. The aircraftcome from GECAS’ existing order bookwith Boeing.

Air New Zealand and VirginAtlantic extend codeshareAir New Zealand and Virgin Atlantic havesigned a codeshare agreement on routesbetween the UK and New Zealand; it isexpected to come into play on February 28after regulatory approval. The airlines al-ready share their frequent flyer programmesand have additional interline cross-over.

Mandala Airlines torestructureMandala Airlines, the failing Indon-esian carrier, has been granted pro-tection from creditors by the SouthJakarta Commercial Court. The airlinewill now continue with a restructuringprogramme. Mandala will not onlysuspend payments but also suspendflights as of January 13th.

Saudi Arabian Airlines to joinSkyTeamSaudi Arabian Airlines is to become the firstMiddle Eastern airline to join SkyTeam. Theairline has signed an agreement to join thegroup in 2012. Saudi Arabian will add 35new destinations to the alliance’s network,from its hubs at Riyadh, Jeddah andDammam.

Greenwich Kahalaregisters for $250m IPOGreenwich Kahala Aviation, the Irishaircraft lessor, has registered for aninitial public offering (IPO) of up to$250m. The company, which currentlyowns only one aircraft, plans toexpand its portfolio with the proceeds.It has already agreed to buy a furthertwo aircraft and plans to buy anadditional 25 during the yearfollowing the IPO.

Latvia joins Eurocontrol as39th member state.The Republic of Latvia has joinedEurocontrol as its 39th member state.Latvia submitted its application formembership on September 4, 2008, andwas accepted in December 2010.

Boeing dividendBoeing has declared a quarterlydividend of 42 cents per share. Thedividend is payable March 4, 2011, toshareholders of record as of February11, 2011.

Cebu seeks to shrug offAsian pincerAfter a huge IPO in November, Philippine carrierCebu Pacific has announced a $1bn shopping list for21 A320s. This would bring Cebu’s total fleet, whichcomprises A320-family aircraft and seven ATR72s, to53 aircraft, 16 more than that flown by flag carrierPhilippine Airlines. The expansion will also see Cebuhire an additional 2,000 staff over the next four years.

Looking at a map of the region, it is easy to see whyCebu needs to bolster its fleet, as the Philippines sitsjust inside the claws of a crescent of powerful low-cost carriers. From the south, Australia’s Jetstar hasalready made deep inroads into the Asian market,and has also launched regional brands in Singaporeand Vietnam; in the North, Japan is finally catchingon to the budget model, with Skymark on a similargrowth trajectory to Cebu; Northwest lies themassive potential of China to swamp the low-costmarket; to the West, in Malaysia, lurks 500lb gorillaAirAsia; and Southwest is Indonesia’s Lion Air,already operating a fleet of over 50 aircraft.

So it’s probably a case of scale up or die for Cebu, especially since the Philippines government ismulling liberalisation of the country’s airspace.However, Cebu must develop a canny route networkto exploit its growth, as its gun-saturated homecountry isn’t top of every tourist’s holiday list. As PALpointed out in late 2010, of the 47 million seatsavailable to local and foreign carriers in 2009, only 10million were actually used.

Virgin America to launchA320neo with Airbus’10,000th orderVirgin America has ordered 60 A320s, including 30with the manufacturer’s new engine option, theA320neo. The deal brings Airbus’ total orders to10,000 and firms Virgin America as the launchcustomer of the A320neo, as Indian carrier Indigo has only signed an MoU for the aircraft. The deal wasinitially set out at the Farnborough Air Show in July2010, while the neo order was added later. Theaircraft will be fitted with Sharklet winglets, and willhave 146-149 seats fitted in a two-class configuration.The engine manufacturer for the aircraft has not yetbeen announced.

NEWSHIGHLIGHTS

IndiGo signs for 180 A320neos IndiGo has signed an MoU for 180 of Airbus’ re-engined A320, the A320neo. “Ordering more A320s was thenatural choice to meet India’s growing flying needs,” said Rahul Bhatia, co-founder of IndiGo. The deal isthought to be worth about $16bn at list prices, though it is likely that IndiGo will transfer some of its 63outstanding orders for the A320 to the A320neo. The airline ordered 100 A320s in 2005, only 37 of whichhave been delivered. The engine provider, either Pratt & Whitney or CFM, is yet to be announced.


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Global airline capacity upsix per cent, says OAGGlobal airline capacity rose six per cent duringDecember 2010, according to OAG, the aviationintelligence provider. The number of scheduled seatsworldwide rose to 312 million during December, thegroup said in its monthly Frequency and Capacity TrendStatistics (FACTS) report. The number of available seatsworldwide has increased by 40 per cent over the last10 years and the number of flights has risen 24 percent. On a regional basis, the frequency of flights toand from Africa has risen 14 per cent over the pastdecade; flights to the Middle East have risen 188 percent; Asia Pacific 88 per cent and Europe 82 per cent.“Passenger confidence is growing, along with theeconomy, and while some regions’ growth, like theAmericas and Europe, are mirroring the modestimprovements in the economic environment, manyare growing at a striking rate,” said Peter von Moltke,CEO of UBM Aviation.

NEWSHIGHLIGHTSSpring puts more wintersbetween it and IPOShanghai-based Spring Airlines has put backits IPO to 2012 or 2013. A public offeringhad been expected in 2011, having alreadybeen delayed from 2009. The airline said thelatest extension was to allow the globaleconomy to recover further and ensure ahigher valuation. With no equity offering,Spring said it would use internal resourcesto finance imminent fleet growth plans.

S&P grades ILFC notesRatings agency Standard & Poor’s hasassessed lessor ILFC’s planned 10-yearnotes at BB+. ILFC itself holds a BBB-corporate credit rating with negativeoutlook, though it has raised signifi-cant funds recently and plans to repay$5.3bn of debt in 2011.

airBaltic firms financing foreight Q400sairBaltic has secured financing for eightBombardier Q400NG aircraft, the remain-ing five of which should have been deliveredby February 2011. The aircraft, which have avalue of $212m at list prices, will be financedby Nordic Aviation Capital (NAC), which willthen lease the aircraft to airBaltic. Three ofthe aircraft, worth $80m at list prices, werealready owned by airBaltic and have beensold and leased back through NAC.

Hawaiian to power A330swith Trent 700 enginesHawaiian Airlines has signed a deal forthe supply and aftercare of Trent 700engines for six of its A330 aircraft.Hawaiian already has 10 Trent 700-powered A330s in service or on order;it took delivery of its first Trent 700-powered A330 in May 2010. The newdeal is worth $420m at list prices.

AirTran records 6.6 per centrise in passenger revenue AirTran has recorded a 6.6 per cent increaseto revenue passenger miles (RPMs) duringNovember, rising to $1.5bn. Passengernumbers rose 5.3 per cent compared withthe same period in the year before, toppingtwo million. The airline’s load factor rose3.9 per cent year-on-year to 80.6 per cent.

Traffic climbs 16 per centfor Alaska AirlinesAlaska Airlines has reported a year-on-year 15.5 per cent increase in trafficduring November; the result was on a9.9 percent increase in capacity. Loadfactor rose 4.1 percentage points to83.9 per cent. Alaska’s sister airline andfellow subsidiary of Alaska Air Group,Horizon Air, reported a two per centdecline in traffic on a 6.8 per centdecline in capacity compared withNovember 2009. Load factor rose 3.7percentage points to 76.3 per cent.

Russia’s report on Polishpresidential crash causesuproarRussian investigators’ conclusion on the crash thatkilled the Polish president in April 2010 was causedby pilot error has soured relations between the twocountries. Russia’s Interstate Aviation Committeeblamed Poland’s chief of air force, General AndrzejBlasik, who had been drinking and ordered theinexperienced crew to land in what were appalling

Operational results forUnited and ContinentalreportedUnited Continental Holdings has reported December2010 and full-year 2010 operational results for UnitedAir Lines and Continental Airlines. United andContinental's combined consolidated traffic (revenuepassenger miles, RPM) in December 2010 increased1.4 per cent versus December 2009 on a consolidatedcapacity increase of 2.3 per cent. The carriers'combined consolidated load factor decreased 0.7points compared with the same period in 2009.United and Continental's December 2010 combinedconsolidated passenger revenue per available seatmile (PRASM) increased an estimated 7.5 to 8.5 percent, while mainline PRASM increased an estimated8.5 to 9.5 per cent.

SEAir accused of beingTiger frontFour Philippine carriers have filed an objection to thepartnership of Singapore’s Tiger Airways and thePhilippines’ Southeast Asian Airlines (SEAir). In aletter to their country’s transport ministry, PAL, CebuPacific Air, Zest Air and Air Philippines, argued thatSEAir was effectively controlled by Tiger, contra-vening state rules on foreign ownership. “[This maybe] the first salvo of a foreign air carrier operating aPhilippine-based international route network in theguise of a Philippine air carrier and making useof Philippine carrier international traffic rightsprivileges,” the airlines said. Under the SEAir-Tigerdeal, SEAir leases aircraft from Tiger and markets itsSingapore-Philippines flights on Tiger’s website.

weather conditions. This pressure from Blasik andother high-ranking passengers, who feared annoyingthe president, led to the pilots refusing to divert toanother airport. The report said Blasik’s reasoninghad been impaired because of the alcohol he hadconsumed, and also claimed that the flight crew had“substantial deficiencies” in their training. The Aprilcrash killed President Lech Kaczynski and 95 others.Kaczynski’s brother Jaroslaw, who leads Poland'smain opposition party, said the report made a“mockery” of Poland, while the country’s interiorminister termed the report “one-sided”.

ALC seeks IPO for $100mAir Lease Corp (ALC), the new aircraft leasingcompany headed by Steven Udvar Hazy, is seeking a$100m initial public offering (IPO) to more thandouble its portfolio of aircraft, despite filing a net lossof $49m. ALC currently has 40 aircraft, 36 of whichare narrowbodies, and has a further 148 aircraft,valued at $6.2bn, due to be delivered through to 2017.The lessor plans to have a fleet of 100 aircraft by theend of this year and up to 500 within the next fiveyears. The company did not disclose how manyshares would be sold or when.

FAA makes ownershipregistration mandatoryThe Federal Aviation Administration (FAA) says nearlya third of the ownership records for the 357,000aircraft on its registry are inaccurate. The agency saysit is making a concerted effort to sort its aircraftrecord-keeping, and has notified owners and pilotsabout recent changes to federal rules that requireaircraft to be re-registered every three years. “Theagency is moving to a mandatory re-registrationsystem like the ones most states use to registerautomobiles, so we have more current and completeregistration information in our database,” the FAAsaid. “The data is necessary for important safetyreasons, including product recalls, safety directivesand locating an overdue flight.”




AFA-CWA calls forrestraints for youngpassengersThe president of The Association of Flight Attendants-CWA (AFA-CWA), Pat Friend, has called for separateseats and restraints for passengers under two-years-old. “In an emergency loose items can be dangerousif flying through the cabin. A lap child has thepotential to be one of those ‘loose items’ that may notonly suffer serious injury themselves but also injureothers.” The Federal Aviation Association (FAA)continues to allow parents to hold their children ontheir laps during landing, takeoff and turbulence.

Interjet airline orders 15Superjet 100sMexico’s Interjet has signed a purchaseagreement with SuperJet International (SJI)for 15 long-range Sukhoi Superjet 100s(SSJ100), plus options for a further five.The deal is worth $650m at list prices. Theaircraft will be configured with 98 seatsand are scheduled for delivery starting 2H2012. SuperJet will also provide after-market care under its per-flight-hour Super-Care programme. With this deal, theSuperjet 100 has received 170 firm orders.

Ireland to lose PSOs fordomestic routesIreland’s government has announcedthat subsidies on many domesticflights to and from Dublin will bewithdrawn in July. Transport ministerNoel Dempsey said the public serviceobligation (PSO) grants will be stop-ped as a result of improvements torail and road networks. It is thoughtairlines will now be forced to close anumber of regional routes as the PSOwill only remain on Dublin-Kerry andDublin-Donegal routes.

CIT Aerospace orders 38737NGsCIT Aerospace has ordered 38 737NGaircraft and secured purchase rights for anadditional seven. The order, which is thelargest placed by the company for Boeingaircraft, includes 15 737-900ERs and 23737-800s. The aircraft will be deliveredthrough to 2017 in order to expand andupdate the lessors’ portfolio. As of Sept-ember 30, 2010, CIT had 140 Boeingaircraft in its portfolio; its estimated totalcommercial fleet size is 300. The new orderbrings the company’s order book to 111aircraft, 58 of which are with Boeing.

US and Brazil ink OpenSkies agreementThe US and Brazil have reached anOpen Skies agreement that will seeroute and price restrictions lifted.Airlines of the two countries will alsobe able to form codeshare agreements.The agreement will stretch to October2014, after which a full Open Skiespolicy will take effect and airlines in theUS and Brazil will be able to selectroutes and prices based on consumerdemand and market conditions.

THY privatisation tenderTurkey’s privatisation administration,Ozellestirme Idaresi Baskanligi (OIB), istendering for a consultancy to assistdeeper privatisation of Turkish Airlines(THY). The OIB is seeking institutions withexperience in mergers, strategic sales andIPOs. Turkey’s government currently holdsa minority stake of 49 per cent in theairline.

NEWSHIGHLIGHTS

Contrasting fortunes inCyprusThe administrator of bankrupt Cypriot airlineEurocypria has reported healthy interest frompotential investors. These include Archbishop Chryso-stomos II, responsible for Church of Cyprus invest-ments, and bidders from Russia and Greece. There arehopes that the airline could rehire some staff this yearand begin flying again. Meanwhile, the flag carrierCyprus Airways faces an uncertain future: it has cutflights on major routes such as Paphos-Athens andCyprus’ finance minister has warned that the airlinecould follow Eurocypria into bankruptcy in 2011.

easyJet chooses fuel overpassengerseasyJet is dealing with the fallout from a blunderwhich saw 37 innocent customers booted off a flightunder threat of arrest because the aircraft, which hadbeen overloaded with 10 extra tonnes of fuel, was tooheavy to take off. The airline’s response to theproblem was to lighten the aircraft by ejecting notonly a large number of customers, but the luggage ofthose allowed to fly. easyJet offered £100 ($155) andovernight accommodation to anyone who was willingto give up their seat but, with few takers, later decidedto bar the last 37 customers to have checked in.

It was reported that when passengers asked whatwould happen if they did not agree to leave theaircraft, they were told that they would be forciblyremoved and that police would be waiting for them.

BAA: no case for snowcompensationThe CEO of airport operator BAA, Colin Matthews,has played down the prospect of airlines receivingcompensation for the disruption caused by heavysnowfall in the UK in December. Virgin Atlantic,which lost £10m due to Heathrow’s closure and flightcancellations, and Lufthansa have indicated a desirefor financial redress. However, Matthews said thatHeathrow’s snow plan, which accounted for up to6cm of snow rather than the 16cm that fell, had longbeen agreed with the airlines. “I don’t believe wewere incompetent or irresponsible. We executed thesnow plan, which the airlines knew about. I don’tthink there is any basis for compensation,” he toldthe Telegraph.

Cathay bumps passengerand freight volumesCathay Pacific and budget subsidiary Dragonair carriedthree per cent more passengers in December 2010 thanin December 2009, but saw load factors fall 3.8percentage points to 80.1 per cent on the back of a risein capacity. Cargo volumes were up 12 per cent, thoughload factors were also somewhat reduced. CathayPacific general manager revenue management TomOwen said: “The quality of revenue in all classes oftravel was higher, with an improvement in the revenueefficiency of the operation. Demand out of Hong Kongto all the popular holiday destinations remained strong,and we mounted a number of extra flights in response.We also saw strong demand on key long-haul routes,though results to London and New York were slightlyimpacted by the major snow disruptions.”

Copa traffic up a fifthCopa Holdings has reported a collective increase inNovember passenger traffic (RPM) of 19 per cent.Capacity (ASMs) increased 20 per cent and collectiveload factor fell 0.5 percentage points to 80.3 per cent,compared with the same month in 2009. Thecompany’s subsidiary airlines, Copa Airlines and CopaAirlines Colombia, recorded an increase in RPM of 18per cent and 33 per cent respectively. November’sASM for the airlines rose 18 per cent and 33 per centrespectively. Copa Airlines’ load factor rose 0.4percentage points to 82.2 per cent, but Copa AirlinesColombia’s fell 4.5 percentage points to 70.5 per cent.




Butschek joins Airbus as EVP, operationsAirbus has appointed Günter Butschek as EVP ofoperations, replacing Gerald Weber. Butschek willbecome a member of the Airbus executive comm-ittee and will take up his new position on March 1,2011. He joins Airbus from Daimler, where heworked for 25 years. He will also become chairmanof the board of management of Airbus in Germany.One of Butschek’s main tasks will be to lead the startof serial production of the A350.

Maroto succeeds Jones as Amadeus’CEOThe former deputy CEO of Amadeus, Luis Maroto,has replaced David Jones as president and CEO of thecompany. The appointment became effective at thestart of 2011, although the succession plan was originally announced in January 2010. Maroto hasworked for Amadeus for 11 years in a number of positions, including CFO.

Lindeman defects from Qantas Roger Lindeman has joined the exodus of Qantas staffheading for rival Virgin Blue, joining the latter asgeneral manager of service experience after 40 yearswith Qantas. He will take up his post in early 2011.

JetBlue promotionJetBlue has promoted Jeffrey Goodell from hisformer role as director to VP of government affairs,effective immediately.

BOC Aviation appoints Le Meur tomarketing teamRemi Le Meur has joined BOC Aviation as VPmarketing, Europe and Africa. He will be based inDublin, and will report to Peter Goodman, head ofmarketing for Americas, Europe and Africa. Le Meurhas most recently served as VP of aircraft marketingat an asset management affiliate of the AsianAviation Group.

ILFC appoints HR headAircraft lessor International Lease Finance Corp-oration (ILFC) has named Maggie Luciano-WilliamsSVP of human resources. Prior to joining ILFCLuciano-Williams was chief human resources officer for digital marketing agency iCrossing.

Lufthansa juggles boardLufthansa has rejigged its supervisory board aheadof the assumption of Wolfgang Mayrhuber’s roleas CEO of Deutsche Lufthansa by Christoph Franz.The changes will see three new members join theboard from April 2011: Captain Kay Kratky will beresponsible for the Frankfurt and flight operationsdivision; Thomas Klühr for Munich and directservices; and Jens Bischof for sales and revenuemanagement.

Jazz names new CFOCanadian carrier Jazz Air has promoted RichardFlynn to chief financial officer, effective 28 February2011. He will replace current CFO Alan Rowe.

IAA names Molli COO Mike Molli has been appointed COO of InternationalAircraft Associates. The Florida company providesaftermarket support services.

Bram Gräber becomes MD oftransavia.comBram Gräber has been appointed MD ofTransavia.com, part of the KLM Group. Gräbercommented that “there is work to be done” yetassured Transavia.com “is a fantastic airline whichhas all the qualities to ensure success”. Gräber hasworked with KLM since 1995 and appointed directorof KLM, Netherlands in 2006.

Kim Hammonds promoted in Boeing’sIT organisationBoeing has promoted Kim Hammonds to chief information officer. She will also remain as VP of thecompany’s Information Technology Infrastructureorganisation, a role she took when joining Boeing inAugust 2008. Hammonds replaces John Hinshaw,who has been named VP and general manager ofBoeing’s new Information Solutions division inBoeing Defense, Space and Security.

Kenyon moves north of the borderCameron Kenyon has joined WestJet from LynxAviation in Denver. At Calgary-based WestJet Kenyonwill serve as EVP, operations.

Aer Lingus board movements Mella Frewen has joined the Aer Lingus board as anon-executive director, effective January 1. Mean-while, director Ivor Fitzpatrick has retired from the board. Frewen is director general of the Con-federation of the Food and Drink Industries of theEU (CIAA).

Alaska Airlines president appointedto parent boardAlaska Air Group has appointed Brad Tilden to the boards of directors of Alaska Air Group andAlaska Airlines. Tilden, the president of AlaskaAirlines, oversees the carrier’s operating divisions,as well as cargo, marketing, planning and revenue management.

Non-executive directors join BAARachel Lomax and Professor David Begg have joinedthe BAA board as non-executive directors. Lomax has40 years’ experience in policy making and served asdeputy governor of the Bank of England from 2003until 2008. Begg has extensive expertise in thetransport sector and serves on the board of a numberof transport-related bodies.

Williams elected to Boeing boardBoeing has elected Ronald Williams to its board ofdirectors, effective immediately. He is currently thechairman of Aetna, a diversified health care benefitscompany, and stepped down as CEO of the companylast month. He will serve on the Boeing board’s auditand finance committees.

RBS delivers 737-800 andextends leasesJet Airways has received the second oftwo 737-800s, both of which are onfive-year leases with RBS. The Indianairline received the first of the pair onNovember 25. RBS has also signed anumber of lease extensions: TACAsigned a 19-month extension for anA319-100; Olympic Air inked a 24-month extension for one A319-100;Nouvelair lengthened its lease for anA320-200 by four years; and ChinaEastern Airlines extended its lease onthree A319-100s by three years.

UK traffic down in 2010Severe winter weather and the volcanicash cloud have been cited as reasons forthe 4.3 per cent decrease in the numberof aircraft flying in UK-controlled airspacein 2010. Air navigation service providerNATS said it managed 2,106,689 aircraftin the year, compared with 2,200,326 in2009. In December, when snowfall led toairport closures, flights were 6.6 per centlower than the same month the previousyear. Of all market sectors, only trans-atlantic overflights posted positive growthover the course of the year, with anincrease of 0.1 per cent.

Bombardier receivesorders for nine businessjetsBombardier has received orders fornine business jets. Comlux, the Zurich-based charter operator, will add twoGlobal 7000 jets to its fleet of 12Challenger and Global jets. Addition-ally, Munich-based Jet Air Flug hasordered five mid-size Learjet 85 andtwo large-cabin Challenger 605 jetsworth $155m at list prices. PatrickRaftery, CEO, Jet Air commented thatthe order will help the airline’s“ambitious plans” to develop intoAfrica and serve its existing customerbase in Western Europe and Russia.

Jackson Square Aviationsecures $400m creditfacilityJackson Square Aviation (JSA), the recentlylaunched aircraft leasing company, hasclosed a $400m secured credit facility. DVBBank was the agent, and Credit Agricole,BNP Paribas and KfW IPEX-Bank were jointarrangers and underwriters. Half of the fundswill be used to finance aircraft that arealready owned or have been ordered by JSA,the rest will be used to procure Airbus andBoeing narrowbody aircraft. Scott Weiss,Jackson Square’s COO and EVP of capitalmarkets, said: “We are actively growing andhaving this long-term solution to financenew deliveries is a major competitiveadvantage for us and for our customers.”

PEOPLE IN THE NEWS




Copa reveals Toronto serviceStar Alliance member to be, Copa Airlines,will open new scheduled services fromPanama City to Toronto from June 16. Theroute will be operated four-times weeklywith 737 equipment. American Airlinescurrently has a 41 per cent share of thisindirect market via Miami as there is noexisting non-stop service.

Starflyer reveals launchplansAfter announcing late in 2010 that itwould begin international flights in2012, Japan’s StarFlyer has said thatfrom July that year it will operate atwice-daily Kitakyushu-Busan-Kitak-yushu service onboard A320 aircraft.

ANZ ups West CoastconnectionsStar Alliance member, Air New Zealand hasannounced that it will add new scheduledservices from Auckland to San Francisco,effective December 1, 2011. The route hasseen over 50,000 passengers travellingannually, though others have flown via LosAngeles with Qantas.

ANA reinstates ShanghaiserviceStar Alliance member All NipponAirways (ANA) will resume servicesfrom Nagoya to Shanghai Pudong.From March 27, ANA will return to thesector on a daily basis after cancellingdue to slot issues. It will compete withAir China, China Southern and JAL,which operate a daily service each.China Eastern operates a thrice-dailyservice. The route has seen over 460,000passengers travel between October2009 and October 2010 with ChinaEastern holding a 37 per cent share.

Asiana boosts US capacityStar Alliance member Asiana will increasecapacity into the US from May. EffectiveMay 24, it will operate the Seoul Incheon-San Francisco route on a daily basis with777 equipment. It competes with KoreanAir which operates the sector four-timesweekly, United Airlines which operates theservice daily and Singapore Airlines whichalso provides a daily flight. Over 321,000passengers flew between the cities fromOctober 2009 to October 2010. Also fromlate May, Asiana will boost scheduledservices to Seattle, using A330s, from fiveto seven flights per week.

Canada opens skies withJamaica, Trinidad andTobagoCanada has finalised Open Skiesagreements with Jamaica and Trinidadand Tobago. This will allow greaterflexibility on frequency, Canada originpoint and prices.

ROUTES NEWSGulf Air ends European hiatusBAHRAIN-BASED GULF AIR will add two new non-stop European services from March 28, when it will begina thrice-weekly service to Geneva and a four-times weekly service to Milan Malpensa, both to be operated witha 737-700 wet-leased from Privatair. The new routes will complement Gulf Air’s existing European services,which consist of a double-daily service to London Heathrow, and daily flights to Frankfurt and Charles deGaulle, operated with widebody A330-200 aircraft, and a six-times weekly service to Athens, operated with E-190 equipment. Gulf Air has not expanded in Europe in recent times and discontinued its thrice-weeklyservice to Dublin in 2007.

Armavia spreads its wingsTHE NATIONAL CARRIER OF ARMENIA, Armavia, has announced that it will commence two new services fromits Yerevan base. Effective January 17, it will start a weekly service from Yerevan to the Slovak capital of Bratislava,to be operated with CRJ200 aircraft. There is no carrier currently operating this route. From April 20, it will adda twice-weekly service from Yerevan to Venice, to be operated with A319 aircraft, also a route not currently served.

Asiana returns to TurkeyAFTER NEARLY TEN YEARS, Star Alliance member Asiana Airlines will resume a two-class service from itsSeoul Incheon hub to Istabul’s Ataturk Airport. The new route will begin March 29 and will be operated ona thrice-weekly basis with a 777-200. The route is currently well served with fellow Star Alliance memberTurkish Airlines offering six weekly flights with a mix of A330 and A340 aircraft. While SkyTeam isrepresented by Korean Air, which flies four times a week. The route has seen over 156,000 passengers travellingbetween the city pairs between October 2009 and October 2010, with Korean Air the market leader, currentlyhaving a 34 per cent share of this traffic, though Emirates hives off 11 per cent share of traffic via Dubai.

FlyDubai targets ChittagongFLYDUBAI BEGAN FOUR FLIGHTS PER WEEK to the western Bangladeshi city of Chittagong on January 17.This will become a daily service from March 27. The route is currently served by the national airline ofBangladesh, Biman Bangladesh, four-times a week and there are in total 36 flights per week between Dubaiand Bangladesh, with Dhaka, the capital of Bangladesh accounting for 28 of these. Emirates, Biman, GMGAirlines, United Airways and China Eastern all operate between the two countries. The wider Middle East-Bangladesh market saw nearly 2.5 million passengers travel between October 2009 and October 2010, withBiman handling 32 per cent of this traffic; Saudi Arabian Airlines 14 per cent; and Emirates 13 per cent.

Norwegian to begin Swedish domestic serviceLOW-COST OPERATOR NORWEGIAN has announced that it will begin scheduled services from StockholmArlanda to Gothenburg effective February 17. The route will be operated 17 times a weekly and will compete withSAS, which operates over 40 weekly flights, while JAT Airways and B+H Airlines also operate a weekly fifth-freedom flight. The route has seen over 340,000 passengers fly the route between October 2009 and October 2010.

Alitalia expands in FlorenceSKYTEAM MEMBER ALITALIA will expand its scheduled service from Florence in Summer 2011 with two newroutes. It currently only operates Florence from its Rome hub, but will add routes to Catania and Amsterdamfrom March 27. Catania will be operated on a five-times weekly basis, a route currently served on a daily basisby Meridiana. Amsterdam will be served twice-daily with A319 equipment, a route also served by Meridiana,eleven-times weekly.

Brussels Airlines boosts Prague flightsEFFECTIVE MARCH 27, STAR ALLIANCE member Brussels Airlines will add a fourth daily route from itsBrussels hub to the Czech capital of Prague, using a mix of Avro regional jet equipment and narrowbodyA319s. It competes on the sector with Skyteam member Czech Airlines, which during the winter season isoffering 19 weekly flights. IATA BSP data shows that over 158,000 passengers travelled between the two citiesbetween October 2009 and October 2010, 55 per cent of whom flew with Brussels Airlines.

Ryanair bolsters Girona baseRYANAIR HAS ANNOUNCED a further expansion of its Girona, Spain base with eight new routes to be added insummer 2011. This will mean that Ryanair will base up to 10 737-800 aircraft at the airport, where it is the dominantcarrier. At Girona, Ryanair operates 187 weekly flights of the scheduled 190 weekly departures according to JanuaryFlightbase data, while it also continues to expand in Catalonia at Barcelona’s main El Prat Airport, where itcurrently operates 194 weekly departures, making it the fourth largest scheduled operator there.

Aires cuts international flightsCOLOMBIAN OPERATOR AIRES, recently acquired by Chile’s LAN, has announced that it will discontinue anumber of international routes. Effective January 18, three routes to Fort Lauderdale from Barranquilla, Caliand Cartagena will be stopped, while it will also drop Bogota-JFK and Pereira-Panama City. The only route notto be dropped will be Bogota-Fort Lauderdale, where Aires is the third-largest operator with a 22 per centmarket share, behind Spirit, which has a 30 per cent share, and the 44 per cent of leader Avianca.


AVIATION FASCINATES MANY ENTREPRENEURS – THIS ISdespite it being a notoriously difficult sector in which

to succeed commercially and one in which failure iscommon. The industry’s high profile, its glamorous image and thelarge amounts of cash sloshing around continue to lure would-beairline tycoons.

When start-up airlines succeed, they can do so spectacularly,even if they experience a few hiccups along the way. ConsiderJetBlue Airways, Ryanair, Emirates, Air Asia, WestJet and VirginBlue. All are household names in their respective parts of theworld and yet none of them existed before 1985 – and four ofthem launched much later than that.

Many other start-ups have performed respectably. In the past 15years, most have used a version of the low-cost model pioneeredby Southwest Airlines in 1971. Southwest held the title of themost successful start-up and is now morphing into one of theworld’s three largest airlines with its takeover of AirTran Airways.Today, carriers such as GOL, Spirit Airlines, Volaris, easyJet,Norwegian, Air Arabia, Aegean Airlines and flydubai typify agrowing group of thriving young airlines throughout the world.

But for every successful start-up, there is at least one failure.Where are Zoom Airlines, Flyglobespan, SkyEurope, Canada3000, Air Littoral, myair.com, Air Comet and Blue Wings now?The European Regions Airline Association (ERAA) calculated inAugust 2009 that some 85 airlines had failed worldwide sinceJanuary 2008 and expected another 20 to fail by April 2010.Since April, other carriers – including Cyprus Turkish Airlines,Ghana International Airlines, Viking Air and HamburgInternational – have stopped operating. At the time of writing,the jury was still out as to whether Mexicana, one of the world’soldest and most famous airlines, would begin flying again afterceasing operations in August.

START-UP AIRLINES

CLEARINGFOR

TAKE-OFF

Launching an airline and ensuring its profitability isnot easy, as many failed start-ups have shown. ChrisKjelgaard investigates Allegiant Air, Feel Air and PorterAirlines to examine the factors that new airlines shouldtake into account when trying to ensure survival.


FOCUS: START-UP AIRLINES

You have to make sure of

the market opportunities.

We’re not fooling ourselves. If you

try to create something

that’s not there, it’s verydangerous.– Kai Holberg, CEO, FEEL Air

“

”

AFM71_Start up airline_AFM 68 B&B 28/01/2011 13:30 Page 12



FEEL Air's COO, Otto Lagarhus and CEO Kai Holmberg




Decisions such as whether to dry-lease,wet-lease or purchase and whether

to acquire new or used aircraft can vary depending on aircraft availability, rental levels,planned utilisation and service frequency… It can often make sense for a start-up to

wet-lease aircraft until it’s cheaper to operate its own aircraft using its own crews.

“

”Allegiant Air, Porter Airlines and Feel AirOthers have adopted different strategies to thrive. In the USdomestic market Allegiant Air has used strategies pioneered byRyanair to become one of the US’s most envied carriers. Ultra-low-cost Allegiant is designed as a unified travel company thatnot only charges ancillary fees for everything from booking tochecking-in but also offers (on its website) a variety of dynamic-packaging options for travel services such as hotels, car rental,cancellation insurance, show tickets and golf-course bookings.

Allegiant operates a large fleet of low-capital-cost, second-handMD-80s and has concentrated on markets abandoned by higher-cost legacy airlines during their massive downsizings in the pastdecade. Allegiant’s strategy has been to link secondary and eventertiary US airports with primary domestic-tourism destinationssuch as Las Vegas. At several major destinations (such as Orlandoand Phoenix) the airports Allegiant serves have never even seen alegacy carrier.

Market research is critical for any start-up, says Diamond. Onlyby exploring fully the nature and circumstances of the marketswill a new entrant understand where its opportunities might lie.For instance, although a competitor may use a particular airportas a connecting hub, its banks of connecting flights might notbe well-timed to suit locally originating business traffic. A start-up might be able to establish itself at the airport by offeringhigh-frequency, suitably timed flights to and from certainbusiness destinations.

Being adequately capitalised is also important in order to weatherunexpected operational circumstances and to meet flexibly withcompetitive responses. A case in point is Porter Airlines,recognised as one of the most impressive North American start-ups of the past decade.

Boasting a respected record as a Canadian airline entrepreneurand extensive connections with institutional investors, RobertDeluce saw an opportunity to revitalise a business-travel marketwhich he felt had become vastly under-served through theneglect of Air Canada. Using C$121m ($121.5m) belonging tohimself and four investors, Deluce set up a company in 2006 tobuy the terminal at Toronto City Airport, kicked Air Canada Jazzout (the lawsuits continue to this day) and then formed PorterAirlines to operate high-frequency services on short-haul routesto Canadian and US business destinations using a fleet ofBombardier Q400 turboprops.

Ironically, banishing Air Canada Jazz from Toronto City completeda 20-year chapter for Deluce: Air Canada had created Jazz fromAir Ontario, which Deluce and his family sold to Air Canada in1986 as Canada’s then-largest regional airline. Jazz was laterfloated as a stand-alone company but retained its closeoperational ties to Air Canada.

So start-up magnates have to think hard about the business theyare entering. Several challenges must be met head-on if a newairline is to be successful in the long-term.

Know your market and competitors“Probably the most fundamental thing is to understand thecompetition and the market – and not to underestimate thecompetition,” says Mark Diamond, a principal with the airlineconsulting firm SH&E. Start-ups should ask themselves; “Can youfind an opportunity where you can take advantage of theweakness of the competition, and exploit it?”

Such opportunities might arise in finding routes that are under-served or not served at all, or by taking advantage of a newlyliberalised market. Competing at a lower price against existingairlines can establish market presence as will offering a betterstandard of service to that previously provided. But Diamond saysthat, whatever the opportunity, it is important for the start-up todifferentiate its product from those of market incumbents, unlessthe incumbents are very weak.

“Do not underestimate what the competition is capable of,”cautions Diamond. At a time when most legacy carriers havemanaged to trim their costs, learn how to use ancillary fees as apowerful revenue tool and forge strong marketing relationshipswith other airlines; it ill-suits a start-up carrier not to position itselfdifferently to those existing airlines which will be its competitors.For a start-up, “Doing the same thing [as an incumbent] on asmaller scale is, in many or most cases, a recipe for disaster. Inmost cases the incumbents have lots of advantages.”

These can include brand recognition; operational scale andscope; frequent-flyer programmes and networks which offerconsumers lots of attractive redemption possibilities; andmembership of a global alliance, which magnifies all the otherpotential advantages that are already enjoyed. Additionally,says Diamond, “If you go in with the same product or service

as the competition, you court a serious risk of fare wars.”

Nevertheless, some start-ups have entered markets alreadyloaded with many airlines and have succeeded beautifully

because they offered enough differentiation toensure their survival. AirTran took on

Delta Air Lines in Atlanta where Delta operated the world’s biggestpassenger hub and was able toestablish itself because it broughtmuch lower costs and fares to themarket. Virgin America, which offerscompetitive fares but primarilydifferentiates itself by offering slick in-flight services based on the latest IFEtechnology, appears to be holding itsown against United at San Francisco.

Robert Deluce, CEO,Porter Airlines


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Deluce had seen Air Canada neglect Toronto City Airport – whichlies on Toronto Island less than a 10 minute drive from Toronto’sfinancial district – in favour of increasing flights from the distantPearson International Airport to the point at which passengernumbers at tiny Toronto City had fallen from 400,000 a year tojust 26,000. Deluce thought a business-oriented carrier offeringhigh-quality service could turn Toronto City Airport into a vibrantmarket.

By no means a low-fare carrier, Porter Airlines nevertheless sawtraffic boom as it launched more routes and kept adding flights inits biggest markets. Porter now operates 20 flights a day fromToronto to Montreal, 19 to Ottawa and 11 to Newark and plansto go higher. Toronto City Airport became the preferred short-haulairport for Toronto business people, fed up with the long, traffic-jam-prone drive to Pearson 17 miles away. In 2010, Porter Airlinessaw 1.4 million passengers travel through Toronto City Airport andit expects to board 1.9 million there in 2011. Now, Porter isbuilding networks from Montréal, Ottawa and Halifax too.

So confident was Deluce in Porter’s ability to sustain operationsthat, when it started achieving operating profitability in 2007,Deluce immediately began a major round of expansion to takeadvantage of competitors’ weakness, even though the expansionset Porter’s break-even point back three years. (The carrier’sbreak-even load factor is just 49 per cent, says Deluce.) PorterAirlines grew rapidly throughout the 2008-2010 recession.Deluce demonstrated his confidence in Porter Airlines’ viabilityagain in June 2010, when he and Porter’s four core investorsscrapped the airline’s planned initial public offering (IPO) afterthey decided the share price required by the market for theflotation was not high enough.

“It was absolutely the right thing to do,” says Deluce. “As we lookback at it now, the markets were in turmoil: timing just wasn’tgood. Putting it aside and just continuing to focus on our short-term requirements and our growth and expansion, utilising aninternal equity raise as opposed to the public markets – that wasthe right thing to do. And the capital we raised internally wasmore than enough to cover our short-term requirements …

When we do come back [to the market], if we do an IPO it’ll be with some assurance in terms of market stability. If we decideto wait on the IPO and do a private placement, then that’ll work as well.”

Intelligent business planning is vital to any new airline. “Youdon’t go in just based on wishful thinking – the devil is in thedetails, to a certain extent,” says Diamond. Start-ups must ensuretheir contracts with credit-card companies, fuel suppliers,ground-handling providers and caterers are reasonably pricedand contain competitive terms and conditions; and make suretheir safety and security arrangements are of high quality.

One proposed start-up which has planned extensively is Oslo-based FEEL Air. As of January, FEEL Air had yet to announce itsplanned entry into service (EIS) date – mainly because, says theCEO, Kai Holberg, the company postponed it in order to mitigatecommercial and market risks, however, FEEL Air does expect tobegin service in 2011.

FEEL Air plans to offer a low-fare, leisure-oriented, à la carte-feeservice with two-class, 300-seat Airbus A330-200s in under-served long-haul markets from Scandinavia. The start-up hasdeveloped a five-year business plan which calls for it to launchservices on 16 long- and medium-haul routes to (probably) eight or nine destinations, with a fleet gradually rising from twoto nine aircraft.

Holmberg has 12 years as a senior travel industry executive andhas assembled an experienced management team which includesformer Vueling CEO Lars Nyggard as chairman; Otto Lagarhus,former SAS Group’s COO and director general of civil aviation atNorway’s Civil Aviation Authority, as COO and accountablemanager under FEEL Air’s aircraft operating certificate (AOC); andLane Zirnhelt, formerly of SkyEurope, as CFO.

During FEEL Air’s initial planning, the company “only did marketresearch,” says Holmberg. “You have to make sure of the marketopportunities. We’re not fooling ourselves. If you try to createsomething that’s not there, it’s very dangerous.”






FEEL Air found that nearly three-quarters of Scandinavianstravelling long-haul have to fly via hubs elsewhere in Europe,indicating that the Scandinavian market is greatly under-served bydirect long-haul flights. After examining potential long-haulmarkets to ascertain the largest city-pairs, expected traffic growth,and market demographics, FEEL Air applied the analysis to itsbusiness and operational models to see how this would interactwith its operational planning.

“What we found was that New York and Bangkok are not only thelargest city-pairs [from Scandinavia], but also that they give atremendous leisure share – and if we combined both routes withthe same aircraft we could get a record high utilisation withouthaving to depart during the night,” says Holmberg.

As a result, FEEL Air plans to begin operations by flying fromOslo and Stockholm to New York and Bangkok, which representScandinavians’ two favourite long-haul markets. According toHolmberg, both destinations are under-served from Scandinaviain terms of leisure-traffic capacity and will remain so eventhough SAS is due in March to launch a daily Oslo-New Yorkservice with an A330-300 to complement Star Alliance partnerContinental’s 757 flight, and although Thai Airways servesBangkok from Oslo.

These three carriers’ flights from Scandinavia are very muchfocused on business traffic and some 75 per cent of Continental’straffic to Newark travels on to other US destinations, as will mostof SAS’ traffic, says Holmberg. “FEEL Air … focuses on point-to-point, cost-conscious leisure travellers, and thus we believe thiswill be a healthy market balance,” he argues.

Holmberg recognises that during its start-up phase, a new airlineis completely dependent on external factors such as economiccycles and availability of the right aircraft and crews. However, hesays, as the start-up becomes established it must create a culture,brand and operational set-up that can allow it to sustain itselfthrough the peaks and troughs of economic cycles. FEEL Air aimsto be a “simple, feel-good brand … with a rock-and-roll element”positioned not only to resonate with the public as a fun, lifestyle

brand, but also to take into account “how we as a companyrelate to the destinations we fly to”.

The aircraft-acquisition decisionAircraft acquisition is a primary issue for all start-ups. Decisionssuch as whether to dry-lease, wet-lease or purchase and whetherto acquire new or used aircraft can vary depending on aircraftavailability, rental levels, planned utilisation and service frequency.It can often make sense (as in FEEL Air’s case, says Holmberg) fora start-up to wet-lease aircraft until it’s cheaper to operate itsown aircraft using its own crews. To ensure its brand is properlyrepresented when wet-leasing, the start-up can supply the back-office functions and flight attendants, who are the only crewmembers the public sees and who are more quickly and cheaplytrained than pilots.

“If someone is starting an airline, in our opinion it’s not worth hiswhile getting his own AOC [air operators certificate] until he hasthree aircraft,” says Shaun Monnery, chief commercial officer anddirector of aircraft leasing for wet-lease specialist Astraeus. UK-based Astraeus has assisted three start-up airlines in the past andnow operates on its own AOC all flights for sister companyIceland Express. “From four aircraft onwards, you’re better doingit yourself, and we’ll help you.”

Astraeus offers both an AOC-preparation service and type-rating-training service for start-up clients. Accordingly, a start-upcontracting with Astraeus does not have to wait to beginoperations until it has hired pilots, trained them for its aircraftand completed the regulatory work needed to obtain its AOC.Astraeus can assist with this at the same time that it is operatingflights on the new carrier’s behalf. It can also provide and traincabin crews: Astraeus employs three full crews of attendants,most of whom are qualified to train new flight attendants hiredby clients.

“But you need to know the demand,” for the service you areplanning, says Monnery. “It is the most important thing – if youhaven’t got the seats filled, you’ve got nothing. You get that bitright first and we’ll give you branding.”


THE TRANSITION TO A NEW GENERATION OF SATELLITE-BASED AIR TRAFFICManagement (ATM) systems has been in the planning and development stagefor nearly two decades, since an ICAO air navigation conference endorsed the

Future Air Navigation System (FANS) concept and the associated CommunicationsNavigation and Surveillance (CNS) systems for ATM in 1991.

There have been advances in many areas since then, but most of the world’s air trafficis still routed along airways defined by ground-based beacons using Very HighFrequency (VHF) voice communications with ground-based air traffic controllersmonitoring displays generated by ground-based radars. For years, the system hasbeen creaking under the strain of traffic growth, but a projected doubling of trafficby 2025 has inspired both Europe and the US, the two most congested areas, toembark on ambitious rebuilds of their systems.

As envisaged by FANS, the idea is to replace much of the ground-based infrastructurewith satellite-based CNS technologies, including data communications, GlobalPositioning System (GPS) navigation and Automatic Dependent SurveillanceBroadcast (ADS-B). The concept has evolved to focus on trajectory-based operations,in which aircraft and ATM computers negotiate the optimum trajectory all the wayfrom departure to arrival gate, based on the availability of system-wide information.

AIR TRAFFICMANAGEMENT:

MOVINGFORWARD

The next generation of air traffic management systems will need to support more efficient airlineoperations while coping with the doubling of air traffic. Bernard Fitzsimons examines the situation.


FLEET OPERATIONS: ATM

AFM71_ATM_AFM 68 B&B 28/01/2011 13:15 Page 18



“

”

That is the goal of Europe’s Single European Sky ATM Research (SESAR) and the USNextGen programmes. But defining requirements and engineering solutions is onething: equipping dozens of aircraft control centres, hundreds of airports and tens ofthousands of aircraft is another.

Mandates and incentivesThe basic task of Air Traffic Control (ATC) is to ensure the safe separation of aircraft,and the fundamental aim of FANS was to make it possible to reduce minimumseparation distances in order to make better use of finite airspace. There has beenprogress in some areas. By a painstaking process of measuring every individualaircraft’s ability to maintain a specified altitude accurately, and forcing any that couldnot to either improve their capability or stay out of upper airspace, the verticalseparation minimum has been reduced, region by region, from the traditional 2,000ftto just half that.

There have also been delays and diversions. ICAO, for example, had mandated theMicrowave Landing System (MLS) as the replacement for the 50-year-old InstrumentLanding System (ILS). But, dazzled by the promise of GPS when it was made availableto civil users in the 1980s, US airlines baulked at the cost involved: they were goingto fit GPS anyway because of the vastly improved positioning information itprovided, and it was believed that a simple ground station to broadcast correctionsto the GPS satellite signals would enable it to act as the new precision approach aid.

Defining requirements and engineering solutions is one thing:

equipping dozens of aircraft control centres, hundreds of

airports and tens of thousands of aircraft is another.




It’s [NextGen ATM is] an investment well worth making, just not one that should

be borne by the airlines because there are a lot of other benefits – reducedcarbon, increased jobs, other things – that should be funded by people

other than airline customers.

– Doug Parker, CEO, US Airways

“

”NextGen, next stepsIn the latest version of its NextGen implementation plan, theFederal Aviation Administration (FAA) outlined its aims for 2018.They include common weather and system status information toimprove flight planning, allied to ADS-B surveillance, datacommunications and Performance Based Navigation (PBN).

Anticipated benefits are a 21 per cent reduction in total flightdelays and cumulative benefits to the travelling public, aircraftoperators and the FAA, worth $22bn. The principal challengeslisted are complexity (because systems in various stages ofdevelopment and maturity are inter-dependent and would beimplemented in a variety of timeframes), and the reliance onoperators to equip as the system moves to aircraft-centriccapabilities.

So far, the agency can point to such programmes as the use ofADS-B to control traffic since December 2009 in the Gulf ofMexico, where radar coverage is unavailable. But there is a bigdifference between an investment in a limited area that providessurveillance (and the associated safety benefits where there wasnone) and its application on a national basis (where the perceivedbenefits are minimal in comparison to the expense). So the bigquestion remains, who will pay for it?

Not airlines, if they can help it. “We are huge proponents ofNextGen,” said US Airways’ CEO, Doug Parker, last May. “It’s afantastic project that has enormous benefits to airlines and to thegeneral public. Our point is that we just can’t pay for it. It’s aninvestment well worth making, just not one that should be borneby the airlines because there are a lot of other benefits – reducedcarbon, increased jobs, other things – that should be funded bypeople other than airline customers.”

Parker points out that 20 per cent of the price of the averageconsumer ticket already covers taxes and fees. And currentproposals in Washington threaten to add annual costs of $2bneach for Passenger Facility Charge (PFC) increases and securityfees: $1bn for fire-fighting services; $5bn for carbon cap-and-trade; $3.5bn for the US visit and exit programmes.

In the specific case of ADS-B, the Department of Transportation’s(DOT) inspector general found in October that the greatest risksto the programme were airspace users’ reluctance to equip theiraircraft and the FAA’s ability to define requirements for moreadvanced capabilities. The users, according to the FAA’sestimates, face costs somewhere between $2.5bn and $6.2bn toequip for an ADS-B ‘out service’ that essentially replicates existingradar coverage and provides them with few new benefits.Requirements for the ADS-B ‘in service’, which will provide userswith a cockpit display of traffic information and other benefits,remain undefined, while problems encountered with integratingADS-B information on existing controller displays suggest thatmodifying ground systems may also represent a major challenge.

It was found that using GPS to land aircraft reliably was not sosimple. After nearly 20 years of effort, Honeywell certified itsSmartPath landing system: like MLS, it supports multipleapproach paths rather than the straight-line, fixed-angle descentof an ILS. But SmartPath is not certified for the most stringentCategory III operations, in which aircraft can descend below100ft before they need to see the runway, and there are just ahandful of SmartPath installations around the world. There is justone commercial MLS, installed by Thales at London Heathrowand certified to Category IIIb, where it supports the low-visibilityoperations of British Airways’ single-aisle Airbuses. ILS has beenimproved, and it seems likely to remain in service indefinitely.

After its experience with the introduction of radios capable of8.33kHz channel spacing to avoid running out of frequencies inthe late 1990s, Eurocontrol looked at alternatives to thetraditional mandate to support the introduction of ControllerPilot Data Link (CPDLC) communications, seen as the next step inreducing frequency congestion and improving the efficiency ofATC, and ADS-B. The Link 2000+ and Cristal programmes offeredsubsidised equipment to pioneer airlines, enabling operators andcontrollers to gain operational experience, refine the operatingprocedures and pave the way for full-scale implementation.


Powerturbine 2011 mod_ATEM 11/01/2011 09:54 Page 3

The inspector general’s report quotes estimates for aircraftequipage ranging from a low of $32,000 for ADS-B ‘out’ and$162,500 for ADS-B ‘in’ to respective highs of $174,640 and$670,000. It suggests a range of possible incentives to encourageoperators to equip. They include buying equipment for operators,an investment tax credit, an adjustment to current excise taxesfor ADS-B equipped aircraft, and research and development taxcredits specifically for avionics manufacturers.

In 2008, the report recalls, the FAA’s Government AviationRulemaking Committee (ARC) called for the agency to establishagreements with operators, subsidise the purchase andinstallation of new avionics, and accelerate ADS-B deployment atdesignated locations. But while the FAA has since establishedseveral agreements with airlines and avionics manufacturers andpurchased equipment for some airspace users, it has nevermanaged such a large task to equip commercial aircraft. So thereneeds to be a clear understanding of what the incentives wouldbe used for as well as their strengths and weakness, timing andpotential impacts. Cost-sharing mechanisms have merit becausethey help share risks between the Government and air spaceusers. The report says: “If FAA does use equipage incentives, itmust properly design them to achieve objectives at minimal costto taxpayers.”

The DOT’s Future of Aviation Advisory Committee (FAAC)followed up in December with a report recommending that thefederal government make a “significant financial investment” toaccelerate NextGen equipage in exchange for a financial oroperational commitment by operators, such as a reduction incarbon dioxide emissions. An envisaged public-private partnershipwould focus on equipping aircraft and training staff to use thenew technologies, and the FAAC suggests a menu of financialoptions, including grants, loans, leases and loan guarantees.

Under the FAAC’s scheme, the form and structure of the financialoptions depend on the appropriateness of the incentive for thetechnology and capability being funded, the aviation operatorsinvolved, the costs and benefits associated with the particulartechnology or operational capability, and the shared responsibilitybetween the public and private partners. Such a partnershipwould be consistent with previous federal funding of ground-based infrastructure, as that infrastructure is now being replacedby an integrated system with both ground and airbornecomponents.

As it happened, September saw US president Obama unveil a$50bn scheme for investment in transport infrastructure thatwould include public funding for accelerated equipage of aircraftto accelerate NextGen benefits. Preliminary indications, accordingto the FAAC report, are that the value of benefits moved forwardin time will exceed the cost of the funding required to pay for theaccelerated equipage. Unfortunately, the fate of the FAA budgetreauthorisation legislation, still in limbo after three years, doesnot bode well for an approach that would depend on theapproval of the US congress.

Charting the progressThe FAA has at least been spending money. In 2007, it signed acontract with a team backed by ITT, the technology engineeringand manufacturing company, for the construction of a nationalADS-B ground network worth $1.8bn over 18 years. Another$6m went to Aviation Communication and Surveillance Systems(ACSS) to equip 20 US Airways’ A330s and carry outdemonstrations at Philadelphia, while Honeywell was awarded$3m for concept evaluation and demonstrations with JetBlue and Alaska Airlines. Last year, following the introduction of ADS-B at Philadelphia, the FAA awarded a series of system engineer-ing 2020 contracts to Boeing ($1.7bn), ITT ($1.4bn), GeneralDynamics ($1.2bn), Metron Aviation ($1.15bn), TASC Aviation($827m), Booz Allen Hamilton ($711m) and CSSI, theengineering, IT and research company, ($280m).

The SE2020 programme involves concept development,evaluation and demonstration through 2018, and each contractinvolves a large team: Boeing’s, for example, includes Airbus,Cessna, Honeywell and Lockheed Martin along with severalsmaller companies, consultants and academic institutions. But itdoes nothing to address the cost of implementing the resultingtechnologies and concepts.

There is another possible approach. At the US Air Traffic ControlAssociation’s annual conference in October, ADS-B primecontractor ITT and NEXA Capital Partners, a Washington-basedfinancial advisory firm, launched the NextGen Equipage Fund tohelp bridge the gap.

The government’s cost-benefit analyses are not consideredadequate to support airline financial commitments running intothe hundreds of millions of dollars, the fund says. In the past,moreover, airlines last to equip with new avionics reaped thehighest benefit, while early adopters paid a higher price and rangreater risks from programme delays, deployment uncertaintiesand version creep. So the fund aims to use a combination of privatesector capital, supply chain investment and commercial operatingand management practices to bridge the gap.

As outlined so far, the fund aims to raise equity investment fromequipment manufacturers and borrow additional fundscommercially. It would then buy the equipment needed toimplement ADS-B, data communications and other services andlease it to operators, that would not have to start paying for theequipment until the FAA provided the service. And, the fund says,it could begin equipping aircraft fleets as early as 2013.



The government’s cost-benefit analyses are not

considered adequate to support airline financialcommitments running into the hundreds of

millions of dollars… So the [NextGen Equipage]

fund aims to use a combination of private sector

capital, supply chain investment and

commercial operating and management practices to

bridge the gap.

“

”


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ALTHOUGH LCCS ARE FINDING IT HARD TO PUSHyet more ancillary products, many believe it is more

practical to extract additional cash from passengers thanto add a new tier of complexity and cost. While cargo wouldusefully fill available belly space, it is seen as potentially harmfulto turnaround times that are as fast as 25 minutes. And the need to compete with trucking on intra-European routes wouldinevitably curb the kilo rate and the potential additional income.

A case in pointNo official word has yet emerged on the success or otherwiseof easyJet’s cargo trial last year. The six-month test, based oncarrying small-dimension shipments on selected routes out of itssecond-string UK hub at London Gatwick, was designed to showwhether easyJet could develop cargo as a viable ancillary revenuestream. The carrier is not ready to talk to the media about it, butapparently will have more to say later this year.

EasyJet operates more than 500 routes to 29 countries, a den-sity of European network that the carrier’s then director ofoperations, Cor Vrieswijk, said at the launch of the project would appeal to shippers. Although “very confident of success”,he admitted he was conscious of cargo’s potential impact onservice reliability, and stressed that passengers must be theoverriding concern.

Vrieswijk resigned in October as delayed and cancelled flightscontinued to plague easyJet. The new CEO, Carolyn McCall,promoted the carrier’s procurement director, Warwick Brady – aformer director at rival, Ryanair – in Vrieswijk’s place in what wasinterpreted as a statement of intent about improving future on-time performance.

THE RISE ANDSUSTAINABILITY

OF

LOW-COSTCARGO

Most European low-cost carriers (LCCs) view cargo asa distraction from their core business of movingpassengers as cheaply and efficiently as possible, but asMartin Roebuck discovers the case for low-cost cargo isstill strong.

Ryanair is not thought to have given serious consideration tocargo. An additional complication is that it serves mostlysecondary airports that can be more difficult to reach by truck,with little local commercial traffic and limited freight forwardingor ground handling facilities.

Other European LCCs, such as Wizz Air, Vueling andNorwegian, limit themselves to mail or small quantities of high-revenue, urgent freight. This has left the way clear for carrierswith a different business model, such as long-haul leisurespecialists and hybrid operators.

Latvia’s national airline, airBaltic, regards itself as one suchhybrid, “integrating some of the best features of networkcarriers and low-cost airlines” in the words of its CEO, BertoltFlick.

The carrier has exploited its geographical position to tap intoeast-west trade flows. Twelve new routes for the winter seasontook airBaltic up to 80 destinations in Europe, Scandinavia,Russia, the CIS countries and the Middle East. Transit cargo overits Riga hub represents 60 per cent of the carrier’s traffic.Bombardier Q400 aircraft has replaced Fokker-50s on short-haulservices, increasing capacity and allowing larger-dimensioncargo to be carried, while 737s and 757s serve the longer routes.

Cargo is an independent business unit. Sales are outsourced toforwarders in the Baltic countries and to more than 40 onlineand offline general service agents (GSAs) worldwide. “Wecarried over 9,000 tonnes of cargo and mail in 2010, 13 percent more than in 2009,” says Toms Andersons, head ofairBaltic Cargo.

JetBlue inaugurates its service to Washington DC

airBaltic regards itself as a hybrid carrier


FLEET OPERATIONS: Low-cost cargo

AFM71_LCC_AFM 68 B&B 28/01/2011 11:13 Page 24



AirBaltic sells to 26 postal operators. Mail represents 40 per centof its cargo traffic, though airfreight began improving its share lastyear as the market recovered.

“There is plenty of competition and we have to stay sharp withproduct and pricing. Volume has doubled since 2007, reflectingboth the increase in our network and development andinvestment in the cargo department itself. Last year we comp-leted several projects aimed at improving product and processes.We introduced the MailSuite management system from CDA ITSystems and the CHAMP e-booking portal, and moved to real-time rate distribution in co-operation with CargoXL.”

The online portal allows forwarders to view schedule availabilityin real-time and make bookings outside normal office hours forthe first time.

“Turnarounds are 30-50 minutes and I don’t see issues with this atall,” Andersons says. AirBaltic transferred its handling to NorthHub Services in Riga from January 1. Cargo transit time has beenreduced from four hours to three and the carrier is nowbenefiting from fully covered cargo trolleys, “which has made lifemuch easier considering our climate,” he adds.

Other European LCCs, such as Wizz Air, Vueling and Norwegian,

limit themselves to mail or small quantities of high-revenue, urgent

freight. This has left the way clear for carriers with a different businessmodel, such as long-haul leisure specialists and hybrid operators.

Toms Andersons, head ofairBaltic Cargo

Sathis Manoharen, regionalhead of cargo, AirAsia

Loading cargo at Riga


After acquiring the loss-making German charter carrier, LTU, inMarch 2007, airberlin also entered the hybrid arena. The buyoutmade it the second largest German airline and the sixth inEurope, adding long-haul services to its existing Europeanportfolio. As well as traditional holiday destinations such asMalaga, Alicante and Palma, airberlin serves main airports incommercial locations including Vienna, Zurich, Rome, Naples,Basel, St. Petersburg and, as of February 2011, London Gatwick.

The ‘virtual’ modelThis growing European network has provided opportunities forDüsseldorf-based Leisure Cargo, which entered the market in2000 in a unique niche providing cargo sales and marketing forprimarily tourist carriers.

Christian Weidener, director of operations, describes LeisureCargo as a “virtual airline” now representing 17 carriersworldwide. “Airberlin came onboard in 2005 and is not a typicalLCC. It operates various business models, combining businesstravel and the tourism market, and is to become a member of theoneworld alliance.

“Even to the tourist resorts, there are always food products andnewspapers to be transported, and there is always spaceavailable on the flight,” Weidener says. “Other LCCs seem afraidof 30- to 40- minute ground times, but I think they have notreally looked at the possibility. It’s a lot easier to load 500kg ofnews-papers – let’s say 10 parcels – than the same weight of bags,which will be 10 times the volume.”

Return airberlin flights from Bangkok, a key transit airport forlong-haul holidaymakers, enable Leisure Cargo to compete withtraditional network operators. Its westbound flights are full withconventional Asia-Europe cargo such as electronic components,textiles and medical supplies.

Weidener claims the company is even positioned to followmanufacturers as they migrate from Thailand to neighbouringcountries in search of cheaper labour as it can provide roadfeeder services into Bangkok from locations such as Cambodiaand Laos.

Meanwhile Leisure Cargo picked up its first Middle East contractlast year, from Saudi carrier nasair. “They weren’t selling cargo atall before, but it works well for us because they fly to Dubai, fromwhich airberlin connects to Europe,” Weidener says.

Asia’s strongest example of a cargo-carrying LCC is KualaLumpur-based AirAsia, which operates A320s across south-eastAsia. Sathis Manoharen, regional head of cargo, says: “It took ustwo years to get where we are now. Before that we were doingmaybe a couple of boxes, 50-100kg. To build this to two or threetonnes and become serious about cargo, we talked with freightforwarders and also directly to manufacturers such as Dell andIntel about what they expected in terms of security and reliability,



and how far ahead we should cut-off so as not to conflict withthe passenger business.”

The cut-offs were set at four hours for the narrowbodies andthree hours for the A330s and A340s operated by the group’slong-haul arm, AirAsia X. Loading has been streamlined to fittight turnaround times averaging 25 minutes for AirAsia and 60minutes for AirAsia X, and the services are proving reliable forcargo customers. AirAsia’s flown-as-booked record was 90 percent in November, compared with an average for the Asia regionof 87 per cent.

The carrier treats cargo as part of its ancillary revenue. “It’s thesecond highest contributor after excess baggage, accounting forbetween 3.5 and 4.5 per cent of total revenue,” Manoharen says.

AirAsia is responsible for its own sales in Malaysia but appointsGSAs, or “business partners” as it describes them, elsewhere.Cargo volumes grew by 55 per cent last year. “Revenue growth

Other LCCs seem afraid of 30- to 40- minute ground times, but I

think they have not really looked at the possibility. It’s a lot easier

to load 500kg of newspapers – let’s say 10 parcels – than the same weight of

bags, which will be 10 times the volume.– Christian Weidener, director of operations, Leisure Cargo

“

”unloading cargo




was even higher because we saw yields improve as the marketrecovered,” Manoharen says. This is despite a low-cost strategyfor cargo that mirrors passenger fares, consciously under-cuttingSingapore Airlines, Malaysia Airlines and Korean Air.

AirAsia X is achieving 12- to 15-tonne payloads on new routessuch as Incheon, launched in November, and Tokyo Haneda, inDecember. “We’re building our reputation and credibility in themarket and the new services give us better connectivity tomarkets such as India,” Manoharen says.

Cargo has become an integral part of SpiceJet’s ancillary strategyin India, and now makes up 3.5 per cent of overall revenue. TheLCC typically carries two to 3.5 tonnes of cargo on its short- andmedium-haul domestic services using 737-800 and 737-900ERaircraft. As is typical in Asia, SpiceJet serves main airports andcarries all types of cargo, excluding only valuable cargo anddangerous goods, with a maximum package weight of 100kg.

Cebu Pacific, the number two airline in the Philippines, doubledcapacity in a recent re-fleeting. It now operates 24 A320 familyaircraft and eight ATR 72-500s, serving 14 destinations acrosssouth-east Asia as well as domestic routes.

Ancillary revenues, which Cebu classifies separately from cargo,fell by five per cent to PHP245 ($5.59) per passenger in the 3Q of2010 and were 12 per cent down for the first nine months due tomore stringent travel regulations and “changing consumerbehaviour”, the carrier says.

Cargo more than compensated for the ancillary shortfall with a 22per cent year-on-year revenue increase in Q3, and 32 per cent forthe year to September. Cargo revenue reached 8.2 per cent ofCebu’s total revenue in the quarter – a share most networkcarriers would be proud of.

Cargo in the USWhile cargo has grown into a valuablesideline for a number of NorthAmerican LCCs, Wally Devereaux,director of sales and marketing forSouthwest Airlines Cargo, refutes themuch touted argument that longerdistances and limited direct com-petition on many point-to-point routessomehow makes for an easier oper-ating environment than in Europe.

“Some of our circumstances are similar to those our European LCCcounterparts contend with. Southwest serves many secondaryairports, although most do have an infrastructure in place tohandle cargo effectively. We also face significant competitionfrom trucking, integrators, and other commercial airlines,”Devereaux says.

There is plenty of competition and we have to stay sharp with

product and pricing. Volume has doubled since 2007, reflecting

both the increase in our network and development and

investment in the cargo department itself.

– Toms Andersons, head of airBaltic Cargo.

“

”“We transfer cargo just like we transfer passenger baggage, so

cargo connections are often completed in as little as 30 minutes,though larger shipments can take longer. We try to mitigate thepossible negative effects of these quick turns on our ramp agentsby effectively managing our capacity, restricting certain types ofcommodities, and limiting the weight limit per piece to no morethan 200lbs [91kg].”

Southwest’s recent order for 737-800s “should have a verypositive effect on our cargo business,” Devereaux says. “It offerssignificant cargo capacity that could be particularly helpful onlonger-haul flights and in slot-controlled airports where we havea limited amount of lift. It also could provide us with theopportunity to serve new markets.”

Southwest currently serves four Canadian destinations on anexport basis only under an interline programme with WestJet.

“The reach is somewhat limited. However, the service quality hasbeen very good, so we’ve attracted quite a few loyal shippers. Wehave aspirations of expanding the agreement in the future,”Devereaux says. Cargo usually makes up a little over one per centof Southwest’s gross revenue, but he reports that 2010 volumeswere flat.

JetBlue Cargo by contrast, saw growth of “close to 50 per cent inboth volume and revenue terms” in 2010, one of the bestperformances seen in North America last year, says system cargomanager, Ed McDonald. “Despite the economic downturn we haveexperienced double-digit cargo growth over the last three years.”

The carrier offers cargo to 29 cities across its network, focusingmainly on the domestic US market to date. It has beenencouraged by its success to the Dominican Republic, however,and “will likely expand in the near future to other countries,”McDonald says.

JetBlue averages payloads of 1.5 to two tonnes of loose-loadedcargo on its A320s and carries up to one tonne on its E190s. Itoutsources the majority of sales to GSAs and likewise most cargohandling is carried out by third parties, with JetBlue looking afterits own handling only at Newark and Long Beach.

Pressure on pricing has become less intense as the economy hasbegun recovering, McDonald says. “We provide an all-in pricingplan and we do not charge fuel and security surcharges. Ourprices change no more than a few times a year based oneconomic challenges and market fluctuations. We are able toaccomplish this because of our variable-cost model. We do ourbest to keep fixed costs out of the equation as much as possible.

“Cargo should not disrupt the core business of customer serviceabove the wings,” McDonald concludes. “We have kept thecargo business relatively simple and we continue to add necessaryautomation to ensure efficiency.”

Wally Devereaux

tail in new livery


SUDDENLY ALGAE, JATROPHA, CAMELINAand other scorned plants and organisms arehot. Researchers around the world are

discovering how to turn their oily content intogreen biofuels that could soon power aircraftand reduce the environmental impact of airtravel. Over the past three years, biofuels havebeen added to traditional jet fuel on successfultest flights using commercial aircraft in NewZealand, the US, Japan and the Netherlands.Biofuels still emit carbon. But as they grow, thesource crops for biofuels absorb in advance thecarbon that they will eventually emit. The net impactis impressive – a reduction of up to 80 per cent overtraditional carbon-based fuels.

Pressure for an alternativeThe quest for alternate fuels got underway in the early 1970safter some oil-producing nations put an embargo on exports.Gas ran out at pumps in industrialised nations and prices soaredfor the limited quantities available. To this day, airlines continueto be frustrated by radical fuel-cost fluctuations that regularlyforce them to raise fares or add surcharges. They also worryabout supplies being restricted by unforeseen events or abouttraditional fuel supplies eventually running out.

More recently, climate change has been the biggest spur to new developments in alternative fuels. With concerns overgreenhouse gasses rising, airlines have put themselves in thevanguard of new research into biofuels.

They were the unsexy stepsisters of nature’s bounty.Their flavours were unappealing, their nutritionalcontent low and their commercial value limited.Throughout history they have been ignored, deridedand often treated as pests – until now. Paul Steele, director of Aviation Environment, IATA, reports.


FLEET OPERATIONS: Alternative fuels

AFM71_alternative fuel_AFM 68 B&B 28/01/2011 13:27 Page 28

BIOFUELS: THECLIMATE-FRIENDLYFUELS OF THEFUTURE






In aviation’s green biofuel vision, the

feedstock of choice in a given region will be

processed into an oil – often referred to

as bio-crude – which looks not unlike

cooking oil. It will then be refinedinto biofuel in much the same way crude oil is

turned into kerosene.

“

”of biofuel in the fuel mix, and moving to next-generation bio-masssources that would not compete with food or water sources.

Subsequent trials with Air New Zealand and KLM showed theincreasing viability of different biofuels, and in January 2009, aContinental Airlines’ algae and jatropha flight reported adecrease in fuel consumption in the biofuel engine comparedwith the one running conventional jet fuel. In other words, theenergy density of the biofuel was higher than kerosene.

However, substantial hurdles are yet to be overcome before mass-production of aviation biofuel can begin.

Unlike petroleum, which can be shipped in large volumes,biofuels need to be locally produced to ensure maximumefficiency. The challenges presented by local biomass productionwill require an entirely new distribution, business model andapproach to distribution – but this could have a number ofadvantages, particularly for a nation’s energy security.

Local production also creates the possibility of other innovativesources of fuel, beyond jatropha or even algae. British Airways(BA) has announced an initiative to produce fuel from municipalsolid waste. A plant built by the Solena Group will convert500,000 tonnes of waste into 16 million gallons of green jet fuelevery year. BA estimates CO2 savings of up to 95 per centcompared with normal fuel services. This is equivalent to taking48,000 cars off the road. The project will also generate 1,200 jobs,and cut another greenhouse gas, methane, by reducing landfill.

In the US, marine algae – another strong contender for biomassmaterial – has no realistic geographical boundaries. TheSeaGreen project, being run by the Sustainable Use of RenewableFuels (SURF) group, will work to further progress this particularfuel source in the short-term.

There are concerns that areas of Africa particularly suitable forbiomass crops may not have the financial and logistical capabilitynecessary for local production. But the potential of a newindustry, bringing with it new jobs and new hope for the future,is a strong argument in favour of support where necessary.

Kick-starting demandEnergy security and new jobs are strong incentives for biofuelsdevelopment. In the current economic environment, however,these goals must be accompanied by a balancing of the books. Inshort, there needs to be a demand for biofuels.

Although the climate experts at the United Nations agree thatairlines currently produce only two per cent of man-made CO2

emissions, the potential aviation growth in emerging marketsmeans that overall emissions are set to grow. So the industry istaking a lead. It has already improved its efficiency by 20 per centin the past decade – thanks to new aircraft and smarter operatingprocedures – but recently the industry went further still, pledgingto halve carbon emissions by 2050. And it plans to do so in asustainable manner.

That means not using ‘first generation’ biofuels such as corn andsugar cane, which were criticised as a threat to food supplies andwater resources. Instead, the search is on for crops (referred to asfeedstocks in the fuel industry) that do not compete with foodand water supplies, and that, in the process, help local peopleand economies around the world. Ideally, the new crops willbloom in unfarmed areas – arid land, deserts and salty water.

But no single feedstock will provide the magic bullet. What’sgrown and where will depend on local variables such as soil,weather and indigenous flora. In aviation’s green biofuel vision,the feedstock of choice in a given region will be processed intoan oil – often referred to as bio-crude – which looks not unlikecooking oil. It will then be refined into biofuel in much the sameway crude oil is turned into kerosene. For aviation use, a numberof criteria must be met, including a freeze point that withstandsthe low operating temperatures at high-altitude. But no matterwhat plant or organism is initially used, the end product will havecharacteristics the same as traditional aviation fuel. It can betransported and stored using existing airport facilities and can bemixed with traditional jet fuel in the tanks of existing aircraftwithout any modifications to the aircraft engines or fuel system.

Aviation Biofuels – the past and the futureAlthough the possibility of deriving fuel from biomass has beenunderstood for many years, it was long thought that it lacked theenergy density or low freeze point to be a viable alternative toJetA1. As recently as 2006, the UK Sustainable Aviation group re-ported that kerosene was likely to remain the fuel of choice ‘for theforeseeable future’. But the pace of change in aviation is remark-able, and just two years later, the first trials of biofuel had begun.

A Virgin Atlantic 747 flew with a 50-50 mix of biofuel in oneengine on a London-Amsterdam flight in January 2008. Althoughthe choice of biofuel – coconut and babassu oil – drew criticism forits sustainability, it proved a valuable first step in proving thatbiofuel could work. The focus then moved to increasing the share


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Thanks to the aviation industry’s tough target to reduce carbonemissions by 50 per cent by 2050, demand for biofuels isexpected to be strong. That, in turn will bring down the price.With an expansion in production volumes, costs are certain tofall. The International Energy Agency (IEA) suggests everydoubling of the scale of capacity for new energy technologiesdelivers a 10-20 per cent reduction in unit costs.

On top of this, carbon will become increasingly expensive. Fuelcosts are expected to remain in a stable band around the $80-$90 per barrel mark for 2011, but the IEA and others anticipatean inevitable long-term increase in price. Added to this will be theincreasing cost of carbon once Emissions Trading Schemes (ETS)come into play. Aviation’s involvement in the European Union ETSstarts in 2012 and this, and any other proposed market-basedsolutions, will put carbon prices up.

Although forecasts predict aviation biofuels will becomeeconomical in around 20 years, it is government support for thefledgling industry that will make all the difference.

For example, the IEA estimates that biofuels will make up about30 per cent of aviation fuel supplies by 2050. But an E4tech reportcommissioned by the UK Committee on Climate Change last yearprojected a significant improvement on this figure if governmentsback biofuels and new technologies come into play. Its centralestimate for aviation biofuels usage in 2050 was 85 per cent.

At the recent Air Transport Action Group Environment Summit inGeneva, Doris Schröcker, policy officer at the Directorate Generalfor Mobility and Transport, European Commission, intimated thatwhile there may not be specific aviation policies regardingbiofuels, discussions on a more general bio-energy policy areadvanced. And the US Department of Agriculture (USDA) and theFederal Aviation Administration (FAA) have stated they will teamup with the airline industry to work on developing renewablejet fuel.

There is also the potential for collaboration with the automotiveindustry, which can use some aviation fuel by-products.Automotive biofuels already receive support worth almost $1 agallon in some countries.

“With certification expected within months, distribution and com-mercialisation are the challenge,” says IATA’s Bisignani. “It is inthe self-interest of every government to get much more involvedand support the commercialisation of biofuels with incentives tofacilitate the needed investments.”

Regional approaches are likely in the first instance. Biofueldevelopment may proceed better this way and, in any case, aglobal approach is already there in the stringent technical andsustainability criteria a fuel must meet. Only by meeting thesespecifications will a biofuel meet the needs of the global market.Local production being ramped up to meet the needs of a localhub would seem a good starting point.

So how soon will airlines be filling their tanks with jatropha oralgae?

“What we want is to have approximately 30 per cent biofuel usagein aviation by 2030,” says Christian Dumas, VP of environmentalaffairs at Airbus. As a first step, biofuels must be certified as safefor use. Aviation experts say that should happen by the end ofthe 1Q of 2011. Flights powered at least partly by biofuels willsoon be a reality; Lufthansa, for example, has announced it willoperate a commercial service between Frankfurt–Hamburg usinga 50-50 mix, starting in 2011.

The hard part will be kick-starting a biofuel industry from scratch,says Darrin Morgan, director of sustainable biofuel strategy atBoeing. Around the world the industry will need producers togrow the plants or algae, processors to turn them into oils andrefiners to turn that green crude into finished fuels. “This is asupply chain that doesn’t exist today,” says Morgan.

“This is not cellphones,” he says. “It’s not a single product that justgets repeated everywhere the same way.” Bankers will have to bepersuaded to finance an industry without a track record, and thatcan only be done with government support, says Morgan. Butthen the same was once true of the wind energy industry, he says.And look where that is today.



This is not cellphones… It’s not a single product that just gets repeated everywhere

the same way. Bankers will have to be persuaded to finance an industry without a

track record, and that can only be done with government support.

– Darrin Morgan, director of sustainable biofuel strategy at Boeing.

“

”


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Project3_Layout 1 31/01/2011 15:29 Page 1

THE STEADY FLOW OF PRIVATE EQUITY-BACKEDaircraft leasing companies entering the market over thelast 18 months has surprised many, but fears of a flooded

market may be premature. A report by market analysts Frost &Sullivan suggests that the number of aircraft owned by leasingcompanies is expected to increase from 6,180 in 2009 to 8,646in 2015, and the proportion of leased aircraft compared to thoseowned by airlines is increasing steadily.

Richard Wiley, president and CEO of the start-up leasingcompany, Jackson Square Aviation (JSA), says: “The lessor marketis probably 30-35 per cent of an airline’s fleet today and that’sgrowing as the airlines look for more flexibility… We expect themarket to hit 40 per cent and continue to increase.”

Indeed, we may even witness more new lessors enter the market.Supporting its report, Frost & Sullivan’s financial analyst, R.Madusudanan, said: “As the leasing cycle has already bottomedout, the market is poised for growth with attractive returns.Hence, many new participants are likely to enter the market.” Headded: “The rentals and market values of the aircraft areexpected to start rising after Q1 2011. Better fleet utilisation andstronger deals with good underlying credit are likely to be themajor factors for sustaining profitability in the long-term.”

THE NEW GENERATIONOF AIRCRAFT LESSORS:

IS THIS AREVOLUTION?

The recent spate of new aircraft leasing companies hassurprised some people, given the instability faced byestablished lessors and the depth of the industry’sdownturn. After the well-reported woes of CIT, RBS,Babcock and Brown and ILFC, a string of new lessors,including Steven Udvar-Hazy’s Air Lease Corp, Avolon,Jackson Square Aviation and KV Aviation, havematerialised. Mary-Anne Baldwin reports on the trend.


TRADING, LEGAL & FINANCE: Start-up lessor

Richard Wiley, CEO, JSA

AFM71_Start up lessor_AFM71 28/01/2011 13:51 Page 34



“At a point of distress in the market there is normally an opportunityfor those with the capital to deploy… With asset values being low and existing

players being to some degree constrained, then you have a compellingmarket opportunity.

– John Higgins, president and chief commercial officer of Avolon”




People [lessors] have said explicitly that they’re not going to place any orders.That to me says that their strategy is to be nimble in the market, to take

advantage of asset recovery so they can sell their business.

– John Higgins, president and chief commercial officer of Avolon

“

”

But, Higgins explains, the reasons people have moved on to formnew companies vary.

Orders and equity: The acid testAvolon, which started trading in May 2010 with an initial capital raise of $1.4bn (including $750m in equity from Cinven,CVC and Oak Hill Capital; $215m debt financing from DVB Bankand a warehouse debt facility of $400m), was built for the long-term, says Higgins. “Other companies have located an asset playand will attempt to build a portfolio quickly at distressed levelsand then sell it.” Not giving names, he suggests that some of thecurrent start-up lessors will only be in the market for two to three years.

Which lessors are here to trade assets and which are here forlong-term sustainability? The size of capital and debt agreementsand the size of aircraft orders may each be a fair indicator ofsustainability and future success.

Avolon has secured its second capital raising of $650m, including$250m in equity and $400m in debt finance. Higgins explainedthat the second round of financing was the ‘acid test’ for thecompany. The fact that equity sponsors and debt providersagreed to supply additional funds “validates the fact that Avolonhas gone from being a start-up business to an establishedbusiness,” says Higgins.

But if established leasing companies were recently battling forsurvival, why are new lessors braving the market? John Higgins,president and chief commercial officer of Avolon, which enteredin May 2010, explains it simply: “At a point of distress in themarket there is normally an opportunity for those with the capitalto deploy.” He points out that older lessors suffered from thefinancial instability of their parent companies, and were thereforeunable to do business at the level they had once been used to.

“With asset values being low and existing players being to somedegree constrained, then you have a compelling marketopportunity,” he says.

Higgins explains that it is normal for new companies to start upin a depressed market and that this has occurred in previousdownturns, not least within aircraft leasing. “The aircraft leasingspace is generally characterised by people who are traders bynature and traders normally want to react to a change in marketdynamics.”

A new breed of lessors?Also on the minds of those within the aviation community is whyso many leasing executives have left their roles at establishedcompanies to start their own. Are we in the midst of a revolutionin aircraft leasing and an uprising against the old way of trading?

A number of the start-ups have arisen due to dissatisfaction withformer employers. Steven Udvar-Hazy, the proclaimed ‘godfather’of the industry and former head of ILFC, left after disputes withthe company and with the belief that he could do better.

Another start-up, KV Aviation, was formed after a meltdown inrelations. David Veal, CEO of KV Aviation, together with JohnKinghorn, both former executives at Allco, claimed legalownership of 60 aircraft traded by Allco. The unusual movesought to fend off bidders in Allco. Although the $140m sale wasdelayed, the company was sold to Hong Kong Aviation Company(HKAC), backed by the Chinese consortium, HNA, in January2010. Veal left to start KV Aviation and continued a legal battlewith Allco.

But according to Avolon’s Higgins, there is no revolution andthere will be no fundamental change to the way the industrydoes business. Indeed, he believes the flow of employees fromexisting companies to new ones is part of a natural progression.

“It’s less about having disregard for established lessors and morethe normal evolution of things, people become more experiencedand on an individual and collective basis have an interest tobranch out and do something by themselves.”

Many of Avolon’s executive staff moved in this way and wereinvolved in the sale or creation of businesses during marketdistress. Denis Nayden, Avolon’s chairman and former presidentand CEO of GE Captial, was involved in the deal that formed GEin the early 90s. Domhnal Slattery, CEO of Avolon, sold hisadvisory business in 2001 to RBS, which then became RBSAviation Capital.

John Higgins, president and chief commercial officer of Avolon




Air Lease Corp is another new leasing company that has walkedthe bridge from being a start-up to a young, but secure company.ALC came to the market with $3bn in capital; $250m of which wasfrom private equity firm Leonard Green, $1bn from investors and$1.5bn through an unsecured debt facility with RBS. At the time ofwriting it was seeking a $100m initial public offering (IPO) to morethan double its portfolio of aircraft. It is thought that TheCommonwealth Bank may invest in the ‘godfather’s’ project and itwas reported in The Sydney Morning Herald that ALC had issued awarrant to the bank for the sale of 268,125 shares for $125m at$20 a share, under a seven-year term.

This was despite the company filing a net loss of $49.4m onrevenue of $21.5m for the period of February to September, 2010.But it seems few doubt Hazy’s ability or ambition. The companycurrently has 40 aircraft and has a further 148, valued at $6.2bn,due to be delivered through to 2017. The lessor plans to have a fleetof 100 aircraft by year-end and up to 500 within the next five years.

JSA entered the market in March 2010 with $500m in privateequity from Oaktree Capital. The company is led by Richard Wiley,Toby Bright and Scott Weiss, the management team thatpreviously headed Pegasus Aviation, which was built in 2004 andsold to AWAS three years later, in 2007.

In December 2010 it announced a $400m long-term debt facilityunderwritten by DVB Bank, Credit Agricole, BNP Paribas and KfWIPEX-Bank. The company said half of the debt will be used to fin-ance existing aircraft and the rest for future narrowbody deliveries.

The company has closed or committed to close before the end ofFebruary, over 48 aircraft with a value in excess of $2bn. Its

forecast, separate to any additional equity or bond issuance, isabout 60 aircraft. The fleet consists of 65 per cent narrowbodyaircraft; 20 per cent widebody and 15 per cent cargo and mid-lifeaircraft and it currently has about 20 airlines in its fleet.

However, other start-ups are yet to firm their second round offinancing. Indeed it is thought that Greenstone Aviation, a conceptof John Slattery, brother of Avolon’s Domhnal Slattery, was unableto obtain the $100m equity, which was to be supplied by Jeffries,and has yet to secure either any aircraft assets or customers.

In April 2010, RPK announced that it was to form a new entity,RPK Capital Partners, with $600m in equity from Carlyle, but itappears the leasing arm is yet to start trading and it has beensuggested that the promise of an equity investment did not cometo fruition.

Aircraft orders are another indication of the durability of newentrant lessors, says Higgins. Avolon has ordered aircraft withdeliveries of up to five years ahead. “Other people have saidexplicitly that they’re not going to place any orders. That to mesays that their strategy is to be nimble in the market, to takeadvantage of asset recovery so they can sell their business.”

JSA’s Wiley has a different take on orders: “We’re a capitalprovider to the airlines… We consider our orderbook to be theairline’s orderbook – and they have the largest backlog ever.”

With the “unprecedented” delivery schedules of Boeing andAirbus, business for JSA is expected to be good. JSA says it plansto finance $2bn worth of Boeing and Airbus passenger and cargoaircraft each year.




“Pegasus had a pipeline for 25 new aircraft and 125 aircraft in itsfleet when it was sold,” says Wiley. “When we started Pegasus in2004, deliveries were about 550 aircraft a year. Between 2004and 2007 we were able to build a fleet of 125 aircraft within athree-year period of time on a lower delivery schedule from themanufacturers… the market for our sale and leaseback businesstoday is double what it was in our cycle in 2004 to 2007.”

Unlike most new entrant lessors, fixated on new-build aircraft,JSA will trade in mid-life aircraft, although its average aircraft ageis under two years. “In order to address fleet planning solutionsfor our customers, it is important to have a window to purchasemid-life aircraft that the airline may wish to have exist their fleetin the next three to four years.” Wiley explains. “Our intention isnot to go out and look for a mid-life asset, but if a package tosolve their financing needs means that we take on one or twomid-life aircraft as well as getting new aircraft, we will do that.”Toby Bright, JSA’s head of marketing corroborates Wiley’ssentiments: “We’ve won some deals in part because we’rewilling to negotiate on a package.”

Equity: red, green or amber?Wiley says he is “not surprised at the number of new entrantlessors over the last 18 months,” adding that there is “plenty ofroom for other participants to deploy their capital and offer theirservices to the airlines”.

Even Higgins agrees that “there is plenty of scope to build long-term sustainable businesses”. He adds: “There is every reason tobelieve these businesses will survive in the medium to long-term.How these businesses survive relative to each other, we will haveto see.”

Higgins believes there will be the finance needed to fund thisgrowth. “There is more capital available to companies that havedemonstrated their ability to deploy it within stringent and prettyaggressive lending criteria,” he says.

During the downturn support from export credit agencies (ECAs)provided essential funding and restored confidence in a volatilemarket. Now, though, lessors are asking for ECAs to lessen theirfinancial input and the Organisation for Economic Co-operationand Development (OECD) plans to wean airlines off ECA fundingby increasing the cost of financing under a new Aircraft SectorUnderstanding (ASU), which is to be firmed and announcedshortly after going to press.

To compensate, Higgins believes that commercial bank lendingwill increase this year if there are no further shocks to the lendingmarket. “The sector has performed very well through what hasbeen a global economic and financial crisis and there have beenvery few cases of banks losing money, so the rationale for banksparticipating in this space is actually very strong.”

But he adds that there will not be a free flow of equity or theability for new leasing companies to continue to enter the sector.

“It’s not a homogenous picture of equity: green light or red light…For the companies with equity return expectations that were veryhigh, I think the window of opportunity has probably passed.”

Additionally, he says that equity will continue to be available tothose who are willing to take a reasonable risk-adjusted return.

“But I don’t think there will continue to be equity available forstart-ups. I think the market generally recognises that with someof the existing players becoming active again and some of thebusinesses that started last year becoming established… therewill not be much equity there for [additional] start-ups.”

He explains that during the downturn, the established lessorswere focused on tending their existing orderbooks, which gaveJSA a greater opportunity to secure sale and leaseback deals.

“Even though you may have a field of 10 to 12 major operatinglease companies, probably more than 50 per cent of that isfocused on their orderbook and the other 50 per cent is splitbetween having an orderbook and providing capital on sale andleaseback transactions.”

Which lessors are here to tradeassets and which are here for long-term

sustainability? The size of capitaland debt agreements and the size of

aircraft orders may each be a fairindicator of sustainability and

future success.

…

…


FLEET FINANCE – Deals reportAircraft transactions December 10 2010 to January 25 2011

Boeing717-2cm Blue1 SAS 55060 Br715a1-30 2000-06 Sub-Leased 2011.01.01737-247 Northrop Grumman Northrop Grumman 19605 JT8d-9a 1968-07 Transferred 2011.01.06737-2x6c Esperanza Aviation Aloha Air Cargo 23124 JT8d-17a 1984-07 Returned 2011.01.11737-33a Viva Aerobus Ansett 25010 CFM56-3c1 1991-02 Leased 2011.01.01737-33a Viva Aerobus Ansett 25032 CFM56-3c1 1991-02 Leased 2011.01.01737-33a CIT Aerospace Int Norwegian Air 25033 CFM56-3b2 1991-03 Returned 2011.01.05737-3y5 BCC Leasing Norwegian Air 25613 CFM56-3c1 1993-02 Returned 2011.01.14737-31s Deutsche Finance Nouvelair Tunisie 29116 CFM56-3c1 1998-02 Returned 2011.01.10737-484 Aersale Olympic A/Lines 25313 CFM56-3c1 1991-07 Sold 2011.01.05737-484 Aersale Olympic A/Lines 25314 CFM56-3c1 1991-08 Sold 2011.01.05737-484 Aersale Olympic A/Lines 25361 CFM56-3c1 1991-08 Sold 2011.01.05737-484 Aersale Olympic A/Lines 25362 CFM56-3c1 1991-09 Sold 2011.01.05737-484 Aersale Olympic A/Lines 25417 CFM56-3c1 1991-10 Sold 2011.01.05737-484 Aersale Olympic A/Lines 25430 CFM56-3c1 1991-10 Sold 2011.01.05737-4b6 Buraq Air Transport Wells Fargo 26531 CFM56-3c1 1993-03 Leased 2011.01.11737-484 Aersale Olympic A/Lines 27149 CFM56-3c1 1993-04 Sold 2011.01.05737-4m0 Sailplane Leasing Garuda 29204 CFM56-3c1 1998-06 Returned 2011.01.01737-4m0 Aercap Ireland Sailplane Leasing 29204 CFM56-3c1 1998-06 Sold 2011.01.15737-4m0 Nok A/Lines Aercap Ireland 29204 CFM56-3c1 1998-06 Leased 2011.01.15737-790(W) Lucky Air ILFC 30663 CFM56-7b24 2003-09 Leased 2011.01.01737-790(W) Ethiopian A/Lines CIT Group 33012 CFM56-7b24 2003-03 Leased 2011.01.09737-790(W) Asky A/Lines Ethiopian A/Lines 33012 CFM56-7b24 2003-03 Sub-Leased 2011.01.10737-8k2(W) Jet2 Transavia A/Lines 28375 CFM56-7b26 1998-07 Sub-Leased 2011.01.05737-85f Macquarie Air Berlin 28821 CFM56-7b26 1998-10 Returned 2011.01.14737-85f Calima De Aviacion Macquarie 28821 CFM56-7b26 1998-10 Leased 2011.01.14737-85f Enter Air Macquarie 28823 CFM56-7b26 1998-11 Leased 2011.01.17737-86n(W) Neos Celestial 34257 CFM56-7b26 2006-07 Leased 2011.01.07737-8u3(W) RBS Aerospace Boeing 39920 CFM56-7b26 2010-12 Delivered 2011.01.14737-8u3(W) Garuda RBS Aerospace 39920 CFM56-7b26 2010-12 Leased 2011.01.14737-8as(W) Ryanair Boeing 40300 CFM56-7b24 2010-12 Delivered 2011.01.13737-8bk(W) CIT Leasing Boeing (23) CFM56-7b26 2013-05 Ordered 2011.01.01737-9bker(W) CIT Leasing Boeing (15) CFM56-7b27 2014-02 Ordered 2011.01.01747-341 Air Atlanta Icelandic Saudi Arabian A/Lines 24108 CF6-80c2b1 1988-04 Returned 2011.01.03747-446 Aersale JAL 25260 CF6-80c2b1f 1991-08 Sold 2011.01.07747-446 Wells Fargo JAL 26362 CF6-80c2b1f 1999-01 Sold 2011.01.01757-23a(Etops) Astraeus A/Lines Saudi Arabian A/Lines 24292 RB211-535e4 1989-02 Returned 2011.01.12757-236(Etops) Santa Barbara A/Lines Pegasus Aviation 24370 RB211-535e4 1989-02 Leased 2011.01.04757-236 Federal Express British Airways 25806 RB211-535e4 1994-01 Sold 2011.01.12757-236 Thomas Cook Wells Fargo 29945 RB211-535e4 1999-05 Leased 2011.01.17767-381er All Nippon Boeing 40566 CF6-80c2b6f 2010-11 Delivered 2011.01.18

Airbus A319-112 Brussels A/Lines Wells Fargo 4275 CFM56-5b6/3 2010-04 Leased 2011.01.13A320-214 Sky Airline Air Malta 2665 CFM56-5b4/P 2005-12 Sub-Leased 2011.01.03A320-214 Air Arabia Airbus 4539 CFM56-5b4/3 2010-12 Delivered 2011.01.06A320-232 British Airways Airbus 4551 V2527-A5 2010-12 Delivered 2011.01.01A320-214 Easyjet Airbus 4554 CFM56-5b4/3 2010-12 Delivered 2011.01.06A320-214 Easyjet Airbus 4556 CFM56-5b4/3 2010-12 Delivered 2011.01.01A320-214 Lift LB Spain Spring A/Lines 879 CFM56-5b4/P 1998-08 Returned 2011.01.01A320-214 Senegal A/Lines Lift LB Spain 879 CFM6-5b4/P 1998-08 Leased 2011.01.02A321-231 Asiana A/Lines AWAS 1970 V2533-A5 2003-05 Leased 2011.01.07A321-231 Air Busan AWAS 1970 V2533-A5 2003-05 Sub-Leased 2011.01.07A321-231 Lufthansa Airbus 4560 V2533-A5 2011-01 Delivered 2011.01.14A330-343e Aerolinea Principal Chile Iberworld A/Lines 1097 Trent772b-60 2010-02 Sub-Leased 2011.01.05A330-343e Saudi Arabian A/Lines Airbus 1189 Trent772b-60 2010-12 Delivered 2011.01.01A380-842 Qantas Airbus 055 Trent972-84 2010-07 Delivered 2011.01.01A380-842 Qantas Unknown 055 Trent972-84 2010-07 Sale-Leaseback 2011.01.02A380-800 Asiana A/Lines Airbus (8) 2014-04 Ordered 2011.01.06

Detailed Transactions December 10th - 31st

737-3h4 OH Capital Assets Wells Fargo 22945 CFM56-3b1 1985-07 Sold 2010.12.22737-3h4 OH Capital Assets Wells Fargo 22946 CFM56-3b1 1985-08 Sold 2010.12.22737-3h4 Wells Fargo Southwest A/Lines 22947 CFM56-3b1 1985-09 Sold 2010.12.28737-3y0 Bank Of Nyork Mellon Mellon Trust 23497 CFM56-3b1 1986-04 Transferred 2010.12.29737-3y0 Southwest A/Lines Bank Of Nyork Mellon 23497 CFM56-3b1 1986-04 Leased 2010.12.29737-33a Aergo Leasing Safair 23625 CFM56-3b1 1986-08 Returned 2010.12.16737-3b7 Aurora Leasing Merlin One Aircraft 23862 CFM56-3b2 1988-06 Sold 2010.12.22737-3k2 BCC Mafolie Hill Norwegian Air 24326 CFM56-3b2 1989-02 Returned 2010.12.12737-322 Wells Fargo Wilmington Trust 24538 CFM56-3c1 1989-08 Sold 2010.12.22737-3q8 ILFC Celestial 24962 CFM56-3c1 1991-09 Sold 2010.12.14737-33a Webjet Linhas Aereas AWMS 27267 CFM56-3c1 1994-03 Leased 2010.12.16737-4y0 Blue Air-Transport Aerian Dinglewood 24314 CFM56-3c1 1989-01 Leased 2010.12.18


AIRCRAFT DEALS REPORT

Equipment New Owner/ Previous Owner/ Serial No. or No. of Date of Manf orModel Operator Operator (Orders)/(Options) Engine Model First Exp Deliv Equipment Date

AFM71_Deals reset_AF&NM Special Feature 28/01/2011 15:03 Page 40



737-4b7 Aviation Technologies CIT Leasing 24551 CFM56-3b2 1989-09 Sold 2010.12.14737-4c9 Enter Air Volito Aviation 25429 CFM56-3c1 1992-01 Leased 2010.12.22737-429 V37x-737 TEM Enterprises 25729 CFM56-3c1 1992-01 Sold 2010.12.22737-429 Xtra Airways V37x-737 25729 CFM56-3c1 1992-01 Leased 2010.12.22737-48e Yamal A/Lines Unknown 25773 CFM56-3c1 1997-06 Leased 2010.12.21737-4y0 Nok A/Lines Airplanes Finance 26081 CFM56-3c1 1993-02 Leased 2010.12.22737-4q8 Castle Air One 26300 CFM56-3c1 1994-03 Returned 2010.12.22737-4q8 Blue Panorama A/Lines Castle 26300 CFM56-3c1 1994-03 Leased 2010.12.22737-430 ACS Leasing Air One 27001 CFM56-3c1 1992-06 Returned 2010.12.24737-430 German Op Aircraft Leasing Air One 27002 CFM56-3c1 1992-06 Returned 2010.12.22737-430 Blue Air-Transport Aerian Challey 27002 CFM56-3c1 1992-06 Leased 2010.12.22737-430 German Op Aircraft Leasing Air One 27005 CFM56-3c1 1992-08 Returned 2010.12.22737-430 Blue Air-Transport Aerian Challey 27005 CFM56-3c1 1992-08 Leased 2010.12.22737-46j Jordan Aviation Constitution Leasing 27826 CFM56-3c1 1995-01 Leased 2010.12.21737-529 Nok A/Lines Southern Aircraft Consult 25218 CFM56-3b1 1991-08 Leased 2010.12.16737-505 Air North Charter Aerco 27153 CFM56-3c1 1993-08 Leased 2010.12.31737-524(W) Continental A/Lines Wells Fargo 28905 CFM56-3c1 1997-08 Lease-Buyout 2010.12.14737-524(W) Continental A/Lines Continental A/Lines 28905 CFM56-3c1 1997-08 Sold 2010.12.21737-524(W) Wells Fargo Continental A/Lines 28905 CFM56-3c1 1997-08 Sold 2010.12.21737-524(W) Continental A/Lines Continental A/Lines 28916 CFM56-3c1 1998-01 Sold 2010.12.13737-524(W) Wells Fargo Continental A/Lines 28916 CFM56-3c1 1998-01 Sold 2010.12.13737-524(W) Transaero A/Lines Wells Fargo 28916 CFM56-3c1 1998-01 Leased 2010.12.13737-790(W) Lucky Air ILFC 30662 CFM56-7b24 2003-08 Leased 2010.12.21737-7bx(W) Southwest A/Lines ACG 30744 CFM56-7b20 2001-10 Leased 2010.12.14737-790(W) CIT Leasing Georgian Airways 33012 CFM56-7b24 2003-03 Returned 2010.12.23737-790(W) CIT Group CIT Leasing 33012 CFM56-7b24 2003-03 Sold 2010.12.23737-7h4(W) Southwest A/Lines Boeing 36668 CFM56-7b24 2010-12 Delivered 2010.12.23737-76j(W) Air Berlin Boeing 36873 CFM56-7b24 2010-11 Delivered 2010.12.20737-7bc(W) Boeing Wells Fargo 30327 CFM56-7b26 1999-08 Sold 2010.12.29737-7bc(W) Boeing Wells Fargo 30572 CFM56-7b26 2000-01 Lease-Buyout 2010.12.15737-7bc(W) Boeing Wells Fargo 30756 CFM56-7b26 2000-05 Lease-Buyout 2010.12.15737-7ei(W) Banc of America Silverblatt 34683 CFM56-7b26 2006-01 Returned 2010.12.13737-7ei(W) Metrojet Banc of America 34683 CFM56-7b26 2006-01 Sold 2010.12.13737-8k5(W) Orenburg A/Lines BIL Leasing 27992 CFM56-7b27 2000-03 Leased 2010.12.20737-8k2(W) Sun Country A/Lines Transavia A/Lines 28379 CFM56-7b27 2000-02 Sub-Leased 2010.12.16737-86n Aercap Ireland Wells Fargo 28645 CFM56-7b26 2001-04 Sold 2010.12.27737-86n Orenburg A/Lines Aercap 28645 CFM56-7b26 2001-04 Leased 2010.12.27737-823(W) American A/Lines Boeing 29554 CFM56-7b26 2010-11 Delivered 2010.12.16737-823(W) American A/Lines Wilmington Trust 29554 CFM56-7b26 2010-11 Sale-Leaseback 2010.12.17737-823(W) Wilmington Trust Wilmington Trust 29565 CFM56-7b26 2009-06 Sold 2010.12.15737-823(W) American A/Lines Wilmington Trust 29565 CFM56-7b26 2009-06 Leased 2010.12.15737-823(W) Wilmington Trust Wilmington Trust 29577 CFM56-7b26 2010-04 Sold 2010.12.15737-823(W) American A/Lines Wilmington Trust 29577 CFM56-7b26 2010-04 Leased 2010.12.15737-8q8 Caribbean A/Lines ILFC 30645 CFM56-7b26 2002-04 Leased 2010.12.17737-823(W) American A/Lines Wilmington Trust 31111 CFM56-7b26 2010-11 Sale-Leaseback 2010.12.13737-824 Continental A/Lines Boeing 31652 CFM56-7b26 2010-11 Delivered 2010.12.29737-8fz(W) Delta Air Lines Boeing 31793 CFM56-7b26 2010-12 Delivered 2010.12.22737-8fz(W) Babcock & Brown Delta Air Lines 31793 CFM56-7b26 2010-12 Sold 2010.12.22737-8fz(W) Malaysian Airline System Babcock & Brown 31793 CFM56-7b26 2010-12 Leased 2010.12.22737-86n(W) Celestial AMC A/Lines 32669 CFM56-7b26 2006-02 Returned 2010.12.22737-8q8(W) Midwest A/Lines ILFC 32841 CFM56-7b27 2005-04 Leased 2010.12.17737-8as(W) Okay Airways RBS Aerospace 33554 CFM56-7b24 2003-11 Leased 2010.12.24737-8as(W) Jet Airways RBS Aerospace 33556 CFM56-7b24 2003-12 Leased 2010.12.13737-8as(W) Jet Lite RBS Aerospace 33556 CFM56-7b24 2003-12 Sub-Leased 2010.12.13737-881(W) All Nippon Boeing 33903 CFM56-7b26 2010-11 Delivered 2010.12.20737-86n(W) Celestial AMC A/Lines 34257 CFM56-7b26 2006-07 Returned 2010.12.22737-8k5(W) Sunwing A/Lines Thomson Airways 35138 CFM56-7b27b1 2008-01 Sub-Leased 2010.12.15737-8eh(W) GOL Boeing 35838 CFM56-7b27 2010-12 Delivered 2010.12.21737-86n(W) GECAS Boeing 36808 CFM56-7b26 2010-12 Delivered 2010.12.22737-86n(W) Garuda GECAS 36808 CFM56-7b26 2010-12 Leased 2010.12.22737-8k5(W) Tui Travel Boeing 37247 CFM56-7b27b1 2010-11 Delivered 2010.12.17737-8k5(W) Tuifly Tui Travel 37247 CFM56-7b27b1 2010-11 Leased 2010.12.17737-8gj(W) Spicejet Boeing 37361 CFM56-7b24 2010-12 Delivered 2010.12.23737-8gj(W) Nbb Dunlin Boeing 37361 CFM56-7b24 2010-12 Sold 2010.12.23737-8gj(W) Spicejet NBB Dunlin 37361 CFM56-7b24 2010-12 Leased 2010.12.23737-8k2(W) CIT Leasing Boeing 37820 CFM56-7b24 2010-11 Delivered 2010.12.20737-8k2(W) KLM CIT Leasing 37820 CFM56-7b24 2010-11 Leased 2010.12.20737-8ho(W) ALAFCO Boeing 37932 CFM56-7b26 2010-11 Delivered 2010.12.16737-8ho(W) Okay Airways ALAFCO 37932 CFM56-7b26 2010-11 Leased 2010.12.16737-8ho(W) ALAFCO Boeing 37934 CFM56-7b26 2010-11 Delivered 2010.12.13737-8ho(W) Okay Airways ALAFCO 37934 CFM56-7b26 2010-11 Leased 2010.12.13737-8jp(W) Norwegian Air Boeing 39165 CFM56-7b26 2010-12 Delivered 2010.12.21737-8jp(W) DY1 Leasing Boeing 39165 CFM56-7b26 2010-12 Sold 2010.12.21737-8jp(W) Norwegian Air DY1 Leasing 39165 CFM56-7b26 2010-12 Leased 2010.12.21737-8kg(W) Dubai Aerospace Boeing 39450 CFM56-7b26 2010-11 Delivered 2010.12.15737-8kg(W) Gate Capital One Boeing 39450 CFM56-7b26 2010-11 Sold 2010.12.15737-8kg(W) Virgin Blue Gate Capital One 39450 CFM56-7b26 2010-11 Leased 2010.12.15737-8h6(W) Malaysian Airline System Boeing 40130 CFM56-7b26 2010-11 Delivered 2010.12.17737-846(W) JAL Boeing 40349 CFM56-7b26 2010-11 Delivered 2010.12.12



737-8v3(W) Copa A/Lines Boeing 40361 CFM56-7b26 2010-11 Delivered 2010.12.20737-823(W) American A/Lines Boeing 40584 CFM56-7b26 2010-11 Delivered 2010.12.23737-823(W) American A/Lines Wilmington Trust 40584 CFM56-7b26 2010-11 Sale-Leaseback 2010.12.27737-82y(W) MC Aviation Boeing 40713 CFM56-7b26 2010-11 Delivered 2010.12.21737-82y(W) Skymark A/Lines MC Aviation 40713 CFM56-7b26 2010-11 Leased 2010.12.21737-866(W) Egyptair Boeing 40760 CFM56-7b26 2010-11 Delivered 2010.12.15737-89m(W) Air Austral Boeing 40910 CFM56-7b27 2010-11 Delivered 2010.12.17737-89m(W) Chiara Bail Gie Boeing 40910 CFM56-7b27 2010-11 Sold 2010.12.17737-89m(W) Air Austral Chiara Bail Gie 40910 CFM56-7b27 2010-11 Leased 2010.12.17737-89m(W) Air Austral Boeing 40911 CFM56-7b27 2010-12 Delivered 2010.12.21737-89m(W) Unknown Boeing 40911 CFM56-7b27 2010-12 Sold 2010.12.21737-89m(W) Air Austral Caroline 40911 CFM56-7b27 2010-12 Leased 2010.12.21737-924er(W) Continental A/Lines Boeing 31643 CFM56-7b27 2010-09 Delivered 2010.12.20737-924er(W) Continental A/Lines Boeing 31655 CFM56-7b27 2010-08 Delivered 2010.12.20737-9jaer(W) Adex Wells Fargo 37560 CFM56-7b27 2008-06 Sold 2010.12.23737-9bqer(W) Boeing Business Jets Boeing 37632 CFM56-7b27 2009-06 Delivered 2010.12.22737-9bqer(W) Kuwait Government Boeing 37632 CFM56-7b27 2009-06 Sold 2010.12.22747-446d Wells Fargo JAL 26352 CF6-80c2b1f 1993-04 Sold 2010.12.15747-446 Aersale JAL 26355 CF6-80c2b1f 1994-02 Sold 2010.12.13747-446 GE Engine Leasing Aersale 26355 CF6-80c2b1f 1994-02 Sold 2010.12.30747-4f6 Babcock & Brown South African Airways 28960 CF6-80c2b1f 1998-06 Sold 2010.12.20747-4f6 Transaero A/Lines Babcock & Brown 28960 CF6-80c2b1f 1998-06 Leased 2010.12.20747-4b5 Boeing Korean Air Lines 24619 PW4056 1990-05 Sold 2010.12.14757-28a Aerolinea Principal Chile Mint Airways 24544 RB211-535e4 1990-03 Sub-Leased 2010.12.29757-2q8 Federal Express BCC Leasing 25131 PW2040 1992-04 Sold 2010.12.22757-2q8(Etops) Astraeus A/Lines Saudi Arabian A/Lines 25621 RB211-535e4 1992-04 Returned 2010.12.22757-256 Privilege Style Safi Airways 26241 RB211-535e4 1993-07 Returned 2010.12.23757-256 Aerolinea Principal Chile Privilege Style 26252 RB211-535e4 1999-10 Sub-Leased 2010.12.28757-2q8 Federal Express BCC Leasing 26270 PW2040 1993-05 Sold 2010.12.22757-2g5 Jazz Air Thomas Cook 26278 RB211-535e4 1995-03 Sub-Leased 2010.12.15757-204 Abbey National Thomson Airways 26967 RB211-535e4 1993-01 Returned 2010.12.18757-258(Etops) Astraeus A/Lines Saudi Arabian A/Lines 27622 RB211-535e4 1997-02 Returned 2010.12.22757-28a(Etops) Jazz Air Thomas Cook 28203 RB211-535e4 1998-04 Sub-Leased 2010.12.13757-256(Etops) Atlasjet Saudi Arabian A/Lines 29307 RB211-535e4 2000-04 Returned 2010.12.23757-256(Etops) Atlasjet Saudi Arabian A/Lines 29308 RB211-535e4 2000-06 Returned 2010.12.23757-256(Etops) RAK Airways Sun Air 29311 RB211-535e4 2000-08 Returned 2010.12.15757-28a US Airways North American A/Lines 32448 RB211-535e4 2001-05 Sub-Leased 2010.12.22767-246 AU7 JAL 23213 JT9d-7r4d 1985-04 Sold 2010.12.20767-3y0er Aerousa Avianca 24948 PW4060 1991-06 Returned 2010.12.20767-33aer Aerosvit A/Lines Royal Brunei A/Lines 25536 PW4056 1993-06 Sold 2010.12.17767-306er(W) ILFC ILFC 27610 CF6-80c2b6f 1996-02 Sold 2010.12.13767-306er(W) Neos ILFC 27610 CF6-80c2b6f 1996-02 Leased 2010.12.13767-306er(W) ILFC ILFC 27958 CF6-80c2b6f 1995-07 Sold 2010.12.13767-306er(W) Neos ILFC 27958 CF6-80c2b6f 1995-07 Leased 2010.12.13767-304er Air Italy Saudi Arabian A/Lines 28039 CF6-80c2b7f 1996-03 Returned 2010.12.19767-33aer Ansett Cameroon A/Lines 28138 PW4060 2000-12 Returned 2010.12.23767-341er Nordwind A/Lines GE Capital 30342 CF6-80c2b6f 1999-10 Leased 2010.12.27767-346er JAL Boeing 40365 CF6-80c2b7f 2010-11 Delivered 2010.12.14777-222er U.S. Bank Air India 26935 PW4090 1997-07 Returned 2010.12.24777-260lr Ethiopian A/Lines Boeing 40771 GE90-110b1l 2010-11 Delivered 2010.12.14777-3dzer Qatar Airways Boeing 38247 GE90-115b 2010-12 Delivered 2010.12.22777-36ner GECAS Boeing 38289 GE90-115b 2010-11 Delivered 2010.12.14777-36ner Egyptair GECAS 38289 GE90-115b 2010-11 Leased 2010.12.14777-319er Air New Zealand Boeing 38405 GE90-115b 2010-10 Delivered 2010.12.20777-319er Air New Zealand Dubai Aerospace 38405 GE90-115b 2010-10 Sale-Leaseback 2010.12.20777-3f2er Turk Hava Yollari Boeing 40709 GE90-115b 2010-11 Delivered 2010.12.22

Airbus A300b4-605r Wells Fargo American A/Lines 606 CF6-80c2a5 1991-03 Sold 2010.12.22A300b4-622r Wells Fargo JAL 637 PW4158 1992-04 Sold 2010.12.15A300b4-622r Wells Fargo JAL 711 PW4158 1993-09 Sold 2010.12.16A319-111 Airblue PAFCO 3364 CFM56-5b5/3 2008-01 Leased 2010.12.27A319-111 Airblue PAFCO 3403 CFM56-5b5/3 2008-02 Leased 2010.12.27A319-100(W) LAN A/Lines Airbus (6) 2017-05 Ordered 2010.12.21A319-100 Unknown Airbus (1) 2017-10 Ordered 2010.12.20A320-232 Jetblue Airways Wells Fargo 1257 V2527-A5 2000-05 Leased 2010.12.17A320-232 Nomura Babcock & Brown Easyjet 2137 V2527-A5 2003-10 Returned 2010.12.22A320-232 Zest Airways Nomura Babcock & Brown 2137 V2527-A5 2003-10 Leased 2010.12.22A320-232 Cyprus Airways CIT Aerospace Int 2275 V2527-A5 2004-08 Leased 2010.12.17A320-214 Chengdu A/Lines Air Berlin 2820 CFM56-5b4/P 2006-06 Sold 2010.12.29A320-214 Azerbaijan A/Lines Air Berlin 2846 CFM56-5b4/P 2006-07 Leased 2010.12.24A320-214 Azerbaijan A/Lines Air Berlin 2853 CFM56-5b4/P 2006-07 Leased 2010.12.24A320-212 Wells Fargo Gaif Ii Ireland Nine 325 CFM56-5a3 1992-04 Sold 2010.12.21A320-212 Wells Fargo Wells Fargo 325 CFM56-5a3 1992-04 Sold 2010.12.21A320-231 Wells Fargo AERCO 362 V2500-A1 1992-09 Sold 2010.12.16A320-231 Wells Fargo Wells Fargo 362 V2500-A1 1992-09 Sold 2010.12.23A320-214 Airblue Airbus 3974 CFM56-5b4/3 2009-07 Delivered 2010.12.15A320-231 Sky Airline Wells Fargo 406 V2500-A1 1993-01 Leased 2010.12.29A320-216 Avolon Airbus 4075 CFM56-5b6/3 2009-10 Sold 2010.12.21





Source: OAG Fleet iNET, 2011

A320-216 Alitalia Avolon 4075 CFM56-5b6/3 2009-10 Leased 2010.12.21A320-216 Avolon Airbus 4108 CFM56-5b6/3 2009-10 Sold 2010.12.22A320-216 Alitalia Avolon 4108 CFM56-5b6/3 2009-10 Leased 2010.12.22A320-214 Uzbekistan Airways Airbus 4417 CFM56-5b4/3 2010-09 Delivered 2010.12.21A320-232 China Eastern A/Lines Airbus 4423 V2527-A5 2010-11 Delivered 2010.12.21A320-214 Uzbekistan Airways Airbus 4485 CFM56-5b4/3 2010-10 Delivered 2010.12.21A320-214 Uzbekistan Airways Airbus 4492 CFM56-5b4/3 2010-10 Delivered 2010.12.21A320-214 GECAS Airbus 4501 CFM56-5b4/3 2010-11 Delivered 2010.12.13A320-214 Saudi Arabian A/Lines GECAS 4501 CFM56-5b4/3 2010-11 Leased 2010.12.13A320-214 Gulf Air Airbus 4502 CFM56-5b4/3 2010-11 Delivered 2010.12.21A320-214 GECAS Airbus 4517 CFM56-5b4/3 2010-11 Delivered 2010.12.23A320-214 Saudi Arabian A/Lines GECAS 4517 CFM56-5b4/3 2010-11 Leased 2010.12.23A320-214 ALAFCO Airbus 4519 CFM56-5b4/3 2010-12 Delivered 2010.12.22A320-214 Saudi Arabian A/Lines ALAFCO 4519 CFM56-5b4/3 2010-12 Leased 2010.12.22A320-214 Afriqiyah Airways Airbus 4521 CFM56-5b4/3 2010-11 Delivered 2010.12.17A320-214 Air Arabia Airbus 4524 CFM56-5b4/3 2010-12 Delivered 2010.12.15A320-214 Libyan A/Lines Airbus 4526 CFM56-5b4/3 2010-12 Delivered 2010.12.22A320-232 Qantas Airbus 4527 V2527-A5 2010-12 Delivered 2010.12.18A320-232 Jetstar Airways Qantas 4527 V2527-A5 2010-12 Leased 2010.12.18A320-214 Uzbekistan Airways Airbus 4528 CFM56-5b4/3 2010-11 Delivered 2010.12.31A320-214 Uzbekistan Government Uzbekistan Airways 4528 CFM56-5b4/3 2010-11 Leased 2010.12.31A320-232 Shenzhen A/Lines Airbus 4531 V2527-A5 2010-12 Delivered 2010.12.20A320-232 Tiger Airways Airbus 4532 V2527-A5 2010-12 Delivered 2010.12.21A320-232 Zest Airways Airbus 4533 V2527-A5 2010-12 Delivered 2010.12.15A320-232 Indigo Airbus 4535 V2527-A5 2010-12 Delivered 2010.12.23A320-232 Indigo White Skye Leasing 4535 V2527-A5 2010-12 Sale-Leaseback 2010.12.23A320-216 Aircraft Purchase Fleet Airbus 4536 CFM56-5b6/3 2010-12 Delivered 2010.12.20A320-216 Alitalia Aircraft Purchase Fleet 4536 CFM56-5b6/3 2010-12 Leased 2010.12.20A320-214 Cebu Pacific Air Airbus 4537 CFM56-5b4/3 2010-12 Delivered 2010.12.22A320-214 Gulf Air Airbus 4541 CFM56-5b4/3 2010-12 Delivered 2010.12.22A320-214 TAM Linhas Aereas Airbus 4544 CFM56-5b4/3 2010-12 Delivered 2010.12.16A320-233 LAN A/Lines Airbus 4546 V2527e-A5 2010-12 Delivered 2010.12.21A320-233 LAN A/Lines Torcaza Leasing 4546 V2527e-A5 2010-12 Sale-Leaseback 2010.12.21A320-214 Avianca Airbus 4547 CFM56-5b4/3 2010-12 Delivered 2010.12.22A320-214 Avianca GECAS 4547 CFM56-5b4/3 2010-12 Sale-Leaseback 2010.12.22A320-214 Aerolineas Galapagos Avianca 4547 CFM56-5b4/3 2010-12 Sub-Leased 2010.12.22A320-233 LAN A/Lines Airbus 4549 V2527e-A5 2010-12 Delivered 2010.12.22A320-233 LAN A/Lines Torcaza Leasing 4549 V2527e-A5 2010-12 Sale-Leaseback 2010.12.22A320-232 Indigo Airbus 4552 V2527-A5 2010-12 Delivered 2010.12.23A320-232 Indigo Crescent Leasing 4552 V2527-A5 2010-12 Sale-Leaseback 2010.12.23A320-214 Unknown Air Jamaica 624 CFM56-5b4/P 1996-11 Returned 2010.12.29A320-200 China Aviation Supplies Airbus (50) 2015-04 Ordered 2010.12.29A320-200 Aercap Aviation Solutions Airbus (2) 2014-07 Ordered 2010.12.21A320-214 Easyjet Airbus (15) CFM56-5b4/3 2012-06 Ordered 2010.12.31A320-200(W) LAN A/Lines Airbus (34) 2017-01 Ordered 2010.12.21A320-200(W) Avolon Airbus (8) 2014-07 Ordered 2010.12.16A320-200(W) Virgin America Airbus (29) 2013-03 Ordered 2010.12.29A320-200neo(W) Virgin America Airbus (31) 2016-07 Ordered 2010.12.29A321-231 Donbassaero Easyjet 1869 V2533-A5 2002-11 Leased 2010.12.24A321-211 Turkuaz A/Lines Alwafeer Air 1905 CFM56-5b3/P 2003-01 Returned 2010.12.14A321-231 Mihin Lanka Easyjet 3106 V2533-A5 2007-05 Leased 2010.12.13A321-211 Aeroflot Airbus 4500 CFM56-5b3/3 2010-12 Delivered 2010.12.21A321-212 Swiss Intair Lines Airbus 4534 CFM56-5b1/3 2010-11 Delivered 2010.12.14A321-213 Air China Airbus 4538 CFM56-5b2/3 2010-12 Delivered 2010.12.22A321-231 Lufthansa Airbus 4545 V2533-A5 2010-12 Delivered 2010.12.21A321-231 Atlasjet Int Saudi Arabian A/Lines 968 V2533-A5 1999-02 Returned 2010.12.21A321-200(W) LAN A/Lines Airbus (10) 2016-03 Ordered 2010.12.21A330-243 Hi Fly Garuda 1008 Trent772b-60 2009-03 Returned 2010.12.20A330-202 CIT Leasing Airbus 1174 CF6-80e1a4b 2010-11 Delivered 2010.12.14A330-202 Qantas CIT Leasing 1174 CF6-80e1a4b 2010-11 Leased 2010.12.14A330-203 MTAD Airbus 1183 CF6-80e1a3 2010-11 Delivered 2010.12.15A330-243 CIT Leasing Airbus 1184 Trent772b-60 2010-11 Delivered 2010.12.15A330-243 Garuda CIT Leasing 1184 Trent772b-60 2010-11 Leased 2010.12.15A330-243 Monarch A/Lines Garuda 261 Trent772b-60 1999-03 Returned 2010.12.20A330-223 Atlasjet Int Saudi Arabian A/Lines 343 PW4168a 2000-05 Returned 2010.12.22A330-243 Thomas Cook Thomas Cook 456 Trent772b-60 2002-02 Returned 2010.12.21A330-343e Swiss Intair Lines Airbus 1181 Trent772b-60 2010-11 Delivered 2010.12.16A330-343x Thomas Cook Garuda 349 Trent772b-60 2000-06 Returned 2010.12.20A330-343x Thomas Cook Garuda 356 Trent772b-60 2000-07 Returned 2010.12.20A330-343x Thomas Cook Garuda 357 Trent772b-60 2000-08 Returned 2010.12.21A330-343x Iberworld A/Lines Garuda 670 Trent772b-60 2005-06 Returned 2010.12.21A330-343e Iberworld A/Lines Garuda 833 Trent772b-60 2007-03 Returned 2010.12.19A330-343e ILFC Iberworld A/Lines 833 Trent772b-60 2007-03 Returned 2010.12.23A330-343e Orbest ILFC 833 Trent772b-60 2007-03 Leased 2010.12.23A330-343e Xl Airways Iberworld A/Lines 833 Trent772b-60 2007-03 Sub-Leased 2010.12.23A330-300 China Aviation Supplies Airbus (6) 2014-07 Ordered 2010.12.29A350-900xwb Air China Airbus (10) Trentxwb-83 2018-08 Ordered 2010.12.29A380-842 Qantas Airbus 047 Trent972-84 2009-08 Delivered 2010.12.16A380-842 Qantas Unknown 047 Trent972-84 2009-08 Sale-Leaseback 2010.12.16





TWO DAYS AFTER HE WAS EXPECTING TO BE INDallas holding his new granddaughter, Colin Turnerfound himself in the unusual position of being

interviewed by the BBC on the relative merits of sleeping inHeathrow terminals three or five. Like thousands of otherunfortunates, Turner was caught in the chaos caused by heavysnowfall in December, which led to the closure of Heathrowand days of cancellations and delays.

For the record, he declared the airport’s sparkling Terminal 5 thebetter choice for discerning airport lodgers, but what heprobably did not realise was that his unwelcome sojourn mighthave been avoided had Heathrow’s prized new passengergateway been matched with developments airside, namely athird runway.

Graham Bolton is a director at Arup, one of the world’sforemost airport consultancies. Reflecting on the disruption atHeathrow, the world’s second-busiest airport, he says: “If youhave two runways, or for that matter any other assets that youhave to use to its full capacity, then as soon as you have fog, orsnow, or anything else, your flexibility to respond is verylimited.”

A third runway at Heathrow has been ruled out by the UKgovernment due to environmental concerns and vociferouscampaigning from local residents, but as passenger demandresumes its inexorable rise in Europe and around the world, thishas come under review again. Worldwide, airport developmentis critical, raising issues and conflicts over land ownership,planning, noise and the environment.

Meeting demand in the 21st centuryWith air traffic set to double in the next 20 years, worldwideairport capacity will need to increase proportionally. Yet whileregions like the Middle East have poured huge sums into theirair infrastructure – investing, say some critics, even beyond theirrequirements – other future traffic hot-spots lag behind.

“We have countries like Brazil where growth is extraordinary andthe infrastructure is not fit for that at all,” says Andreas Schimm,director of economics at industry body Airports CouncilInternational (ACI). “Even if Brazil had average growth itsinfrastructure wouldn’t be up to date. But with growth of upto 40 per cent at some airports it’s obviously getting worse andwith the World Cup in 2014 and Olympics in 2016 it’s a worryhow they will cope. Traffic is already spilling over from the largehubs into secondary, peripheral airports. For domestic point-to-point traffic that might work temporarily, but for internationaltraffic it poses a massive problem.”

In the next two decades up to $1tn must be spent on airports worldwide to accommodate a two-foldincrease in air traffic. But where that money comesfrom and how it is spent remains a complex matter,with conflicting priorities on land use, sustainabilityand security all requiring compromise. Alex Derberindentifies the major issues and takes a look atIstanbul’s second airport, Sabiha Gökçen, only adecade old but already a success.


AIRPORTS & ROUTES: Airport development

Far from singling Brazil out, Schimm is cautious aboutEurope’s prospects, too. “If we look five or 10 years aheadat the growth we are expecting, it’s a certainty that thesituation is not going to improve; it’s going to get worse,meaning that the infrastructure on the ground will notbe able to keep up with demand. Europe is a verysensitive system; it only takes a handful of congestedhubs to cause severe knock-on effects.” he says.

Of key importance, according to Schimm, is thedevelopment of airside infrastructure, such as newrunways. Well-designed runways, taxiways, and rampsavoid aircraft holding in the air and idling on the ground,maximising throughput and lowering emissions andnoise. In 2010, Tokyo Haneda opened its fourth runwayand Shenzhen in China will invest $3.6bn in a secondrunway and third terminal. Of others, Brisbane, Australia,is pumping more than $1bn into doubling terminalcapacity and a new runway.

However, airport design is always a compromise,requiring a balance of sometimes conflicting objectives,and it is rarely possible to simply lay down the idealrunway and taxiing network. For instance, a hub likeHong Kong uses its vast single terminal to speedpassenger transfers, but that design does not allow forthe most efficient airfield layout.

AFM71_Airport development_AFM71 28/01/2011 13:23 Page 44

AIRPORT DEVELOPMENT:

SABIHA GÖKÇEN AND 21ST CENTURYSUCCESS






The [global economic] crisis has put a stop to private investment in airports

pretty much. And so far I don’t see any case which would give that a new impetus. Many

governments say they need to involve the private sector but I don’t yet see

clear and tangible action for that.

“

”terminal capacity in Istanbul. The Asian population of Istanbul issix or seven million people so even if there is a third airport on theEuropean side, Sabiha still possesses a significant catchment area.Also, looking at the Turkish transport strategy the expansion ofSabiha is independent of whether or not one builds a thirdairport,” he says.

Along with plans to link Sabiha to Istanbul’s metro network, theairport is designed for further expansion, through enlargement ofthe new terminal and development of the old terminals. Oncethat is complete, along with the airport’s second runway, Sabihacould match Ataturk’s present passenger volumes of 35 millionper year. With current facilities, it is expected to reach its 25million capacity by 2023. With Turkey boasting average flighttraffic growth of 10 per cent annually over the past seven years,Sabiha’s expansion does appear to be a matter of when, not if.

But not only passengers are gravitating towards Sabiha. TurkishTechnic is nearing completion of its $400m HABOM maintenancefacility, which will eventually comprise hangar space for 12narrowbody and three widebody aircraft. The first part of theproject opened in November 2010: a joint venture betweenTurkish Technic and Pratt & Whitney, Turkish Engine Center offerscomplete MRO services for CFM56 and V2500 engines and hasthe capacity to overhaul 250 engines per year. Also alreadyoperating at the airport is MyTechnic, which focuses on A300,737 and MD-80 maintenance, as well as on the CF6 engine.

Footing the billReturning to worldwide development, to increase capacity, mostupcoming projects will be developments of existing infrastructurerather than all-new airports. ACI estimates that capitalexpenditure by airports worldwide in 2010 was $38.5bn, but itforecasts that close to $1tn will be spent on airport infrastructureover the next two decades.

Often part of national infrastructure projects, airportdevelopment is overwhelmingly funded by governments.However, as austerity programmes begin to bite in certain partsof the world, the private sector will need to take part of thestrain. Yet Schimm doubts that it will be able to: “The [globaleconomic] crisis has put a stop to private investment in airportspretty much. And so far I don’t see any case which would givethat a new impetus. Many governments say they need to involvethe private sector but I don’t yet see clear and tangible actionfor that.”

Lack of access to credit, competition regulation and, in somecases, antagonistic government policy towards airports are allfactors that deter private investment. Spain is attempting a €9bn($12bn) privatisation of a 30 per cent stake in state-run AENA,the world’s largest airport operator, but has encountered littleinterest. Of concern to potential investors are losses totallingroughly €600m ($800m) in 2010, militant air traffic controllers,public sector opposition to the move and the fact that only nineof AENA’s 47 airports were profitable in 2009.

Sabiha GökçenAs a symbol of successful airport development in the 21stcentury, there are few better examples than Istanbul’s SabihaGökçen airport.

Originally opened in 2001 on the Asian side of Istanbul as analternative to ‘European’ Ataturk Airport, Sabiha grew slowly untila boom in 2005 that saw it handle four million passengers.Spotting potential, the Turkish government opened a build-operatetender for a new terminal. This was won by a private consortiumof India’s GMR, Turkey’s Limak and Malaysia Airport HoldingBerhad, which opened the new, 25 million passenger capacityterminal in 2009. Airside infrastructure is owned by the Turkishstate, which is currently planning a second runway for the airport.

Arup is working on the new runway and was the engineer for thenew terminal, which due to Turkey’s propensity for earthquakes,is the largest seismically-isolated building in the world. Anotherchallenge for designers was the speed with which the Turkishgovernment and operating consortium expected to close theproject – only 18 months from planning to completion – abouthalf the time usually taken for a project of a similar scale.

“Sabiha Gökçen is a great story,” comments Schimm. “They havegrown leaps and bounds and not necessarily at the expense ofAtaturk [airport]. It will probably reach its capacity sooner ratherthan later and planning for a third airport in Istanbul appears tobe underway. The majority of Istanbul is on the Asian side andnot on the European, so it probably has its own market whichdoesn’t have as much overlap with Ataturk as one might think. Itis also a different business model of point-to-point traffic.”

Whether or not a third airport is built in Istanbul, Bolton believesfurther expansion of Sabiha will happen. “If you look at the scaleof Istanbul, its airport capacity compared with a city like Londonis actually remarkably small, so there is a massive need for air


Arup has been involved in aviation development for more than 50 years, working on a wide range of assignments at more than 100 airports worldwide. Through strong internal networks we capture and share the learning from our aviation and other sector experience to deliver better solutions for our clients. We are committed to delivering cost-effective and high-quality professional service consistently worldwide.

Sabiha Gökçen International Airport, Istanbul, Turkey© Cemal Emden/Tekeli-Sisa Mimarlık

www.arup.com

We shape a better world

But there is also cause to hope. Pension funds increasinglyrecognise that the steady long-term returns of airports suit theirportfolio requirements (provided those airports are correctlymanaged) and some airlines, often low-cost operators, areexploring the potential to develop their own terminals andsometimes even airports.

Bolton is fairly upbeat about private sector involvement. “It’sdependent on a regulatory regime that provides an environmentinto which someone would intelligently invest,” he says. “Youneed some degree of certainty or understanding of the risks soyou can make a sensible business case.”

He continues: “A large part of UK aviation capacity is private. InTurkey the majority of terminal development is privately funded.And there’s some successful private development in India so thereare clear examples of how it’s possible to do it.”

Sustainability and securityThe priorities of any given airport development will differ: a newterminal in the Middle East may strive for unmatched levels ofservice, while a low-cost hub in Kuala Lumpur will look tomaximise passenger throughput. A necessity of all projects,however, is to ensure a safe and sustainable environment.

The past decade has witnessed a slew of new securityregulations, some unwelcome according to Schimm. “Security isa challenge but it’s a constant companion. As with many otherfactors it’s not in the hands of the airport to decide. If it was, itwould be a different system. Airlines and airports alike are a littlefrustrated with the way things get responded to. When there’s anew threat there’s always a new measure just for the sake ofresponding to the threat – it’s always reactive and never pro-active,” he says.

Bolton agrees that airports must be designed with a degree offlexibility to respond to emerging threats, but warns: “If you wereto build in every response to every possible threat you’d buildsomething that would be more like a prison rather thansomething that works for the passenger.”

Although he feels security regulation is closer to a commonstandard than ever before, the Arup director also notes howdifferent approaches are taken around the world. He says: “Tenyears ago in Europe we already had systems that screened everybag that went into the hold and we started that in the mid-90s.At the time of 9/11 some US airports were looking at adoptingsome of the baggage screening technologies that we were usingin the UK, but the US regulatory regime developed solutions thatwere different from the approach we were using in the UK,Europe and in other parts of the world.”

In the case of sustainability however, a global approach is essential.But although sustainability is a major concern for airport planners,they do not view it as a simple environmental calculation. Boltonsays: “Sustainability is about the balance between social,environmental and economic factors and the combination of thethree. It’s been important in airport design for an awfully long timebecause of the impact of airports, because of the impact of landuse, and because a sustainable design makes good economic sensefor the developer as well as the community.”

The layout of a runway demonstrates how airport planners canaddress all aspects of sustainability. Allowing aircraft to makecontinuous descent approaches reduces emissions, lowers noisepollution, shortens journey times and limits fuel costs.

Terminal design is also important. Exploiting natural features cangenerate ventilation, while intelligent building controls canreduce energy loads in areas less used during off-peak periods,such as baggage systems.

Streamlining surface access to an airport through metro and railconnections benefits people living near an airport, lowering trafficcongestion and noise, while also reducing carbon emissions.

Bolton sums up his approach to sustainability and airport planning:“It’s about understanding and responding to the needs of the

stakeholders and that means stakeholders in the wider sense: thelocal community, the airlines and the large number of people whoboth work at the airport and are economically dependent on it.”



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FPA_check 104:ATEM 7/4/10 14:52 Page 3


AIRPORTS & ROUTES: Low-cost long-haul

LOW-COST LONG-HAUL:

SQUARE PEG…

AirAsia X CEO Azram Osman-Rani is flanked by Malaysian transport minister Dato’ Ong Te Keat andAirbus CEO Tom Enders at the delivery ceremony for the airline’s first A330-300 in October 2008.

AFM71_Low cost long haul_AFM71 28/01/2011 13:21 Page 50

The conventional view that low-cost and long-haul aremutually exclusive has been reinforced by recentfailures, but some low-cost carriers have not given up thetask of proving it can work. Bernard Fitzsimons reports.



ROUNDHOLE?

AirAsia X cites high density seating aboard itsA330-300s and rapid turnaround as principalfactors in achieving its low-cost base.

THE LOW-COST MODEL FOR SHORT-HAUL AIRLINEoperations has been established in the US for decades andfollowing the European Union’s removal of restrictions on

cross-border operations it transplanted readily to the other sideof the Atlantic. More recently, it has taken root in Australia andsouth east Asia, using local affiliates and joint ventures to avoidrestrictions that would hamper single-nationality operators. Butcan it be applied successfully to long-haul operations?

When the UK Civil Aviation Authority (CAA) examined theconcept in 2007 (CAP 771, Connecting the Continents) it foundthat the sort of high frequency, economy-only operation typicalof no-frills carriers was unlikely to be successful on all but thethickest of long-haul routes. Elsewhere, the scope for cost-cutting is simply too limited to compensate for the reduced yield.

Long-haul airlines have the same opportunities as their short-haulcounterparts to reduce passenger costs such as baggagetransfers and free meals, and to reduce distribution costs byselling non-flexible tickets directly to passengers. Those activities,though, account for only about five per cent and 10 per cent(respectively) of the typical total cost. User charges typicallyaccount for 30 per cent of costs, but runway length requirementsand restrictions imposed by air service agreements (ASAs) makeit harder for long-haul carriers to reduce them by using thesecondary airports favoured by their short-haul counterparts. Atthe same time, smaller fleets and strong demand for long rangetwins means there is less scope for discounted aircraftacquisitions to reduce the 15 per cent of costs represented byownership costs.

The yield management systems applied by low-cost airlines,which reward early bookers and penalise those buying ticketsclose to departure, can be used for long-haul operations. Butpremium class passengers typically contribute a much higherproportion of revenue on long than on short routes. And withoutconnecting traffic there are a limited number of routes that couldgenerate the necessary volume of point-to-point traffic. The low-cost operators currently pursuing long-haul expansion seem tohave arrived at the same conclusion.




Upstairs, downstairsQantas’ low-cost subsidiary, Jetstar, started operations in 2004. Bythe end of 2005, Qantas was planning to add long-haul servicesstarting with four A330-200s as interim equipment; at that stagethey were due to be replaced by 787s from 2008. A330 servicesstarted in November 2006, initially from Melbourne to Bangkokand Phuket, and Sydney to Ho Chi Minh City.

By December 2010, Jetstar International was operating sevenA330s from Melbourne to Bali and Bangkok, from Sydney to Bali,Honolulu and Phuket, and from Cairns and Gold Coast to Osakaand Tokyo Narita. In that month, the airline launched its firstlong-haul services from Singapore’s Changi airport, with dailyflights to Melbourne and Auckland and twice weekly flightsbetween Melbourne and Queenstown, New Zealand. Plannedadditions in the first few months of 2011 include Auckland-Singapore, Cairns-Auckland and Darwin-Manila.

Jetstar is currently due to take the first of 15 787-8s in mid-2012,but will use the 787-9, expected in 2014-15, to expand its inter-national operation. Qantas’ CEO, Alan Joyce, says the aircraft willbe used on medium-density routes and will enable the subsidiaryto move into southern Europe while building on its Asiannetwork. The new aircraft will replace Jetstar’s A330-200s, whichin turn will replace Qantas’ 767-300ERs. The A330s areconfigured to carry 303 passengers in two classes; the StarClassinternational business class product is based on the Qantasdomestic business class product, offering wide leather seats andother perks, but no beds. Qantas says the 787-8s will seat 313passengers, 38 of them in StarClass.

Local rival, Virgin Blue, formed its own long-haul subsidiaryfollowing the February 2008 US-Australia Open Skies agreement.V Australia launched flights between Sydney and Los Angeles inFebruary 2009 using the first of seven new 777-300ERs. Itscurrent network extends from Brisbane and Melbourne toPhuket, Fiji and Johannesburg, though those destinations have

proved unprofitable and are due to be dropped from February. Inits last financial year, ending June 2010, V Australia lost A$42.8mon revenue of A$324.3; the load factor was 80.3 per cent.

Instead, the airline plans to consolidate its strategic hubs in LosAngeles and Abu Dhabi and develop a “virtual global network”through alliances with Delta Air Lines, Etihad and Air NewZealand. The last two were approved by the Australian Compet-ition and Consumer Commission in December: Virgin Blue’s CEOand MD, John Borghetti, says the Abu Dhabi hub will enable VAustralia to offer a one-stop alternative to more than 14destinations in Europe, plus the Middle East and Africa, withoutbacktracking or going via Heathrow. Three weekly flights betweenSydney and Abu Dhabi are due to start in February this year, witha similar frequency from Brisbane to be added within 12 months.

V Australia’s 777s are configured with 33 lie-flat beds in businessclass plus 40 premium economy and 288 economy seats atrespective pitches of 38in and 32in. They feature bars, ladies-onlylavatories with piped music and the same top-of-the-range in-flight entertainment system as Virgin America.

Ryanair’s CEO, Michael O’Leary, who has been blowing hot andcold about the possibility of starting his own long-haul operationsince the EU-US Open Skies agreement came into effect in 2008,is equally emphatic that business class is a requirement. Whilesuggesting transatlantic economy fares could be as little as €10($13.5), he has insisted that the business class would be veryexpensive: “I don’t believe just long-haul, low-fares works.Because there will always be 10 or 15 per cent of the market inlong-haul who will pay whatever it costs for business class service,a wide seat, all that kind of stuff.” Inability to source competitivelypriced aircraft has seen the scheme recede into the future.

All-economy A380sJust over the horizon, meanwhile, are the pair of 826-seat all-economy A380s that Réunion-based Air Austral plans to introducein 2014. The airline’s CEO, Gérard Ethève, says the aircraft will beused to link the Indian Ocean island, an administrative region ofFrance and consequently part of the Eurozone, with Paris.

“I think I convinced Airbus that the A380 was not just designed tolet passengers take showers on board, but that a majority ofpassengers would choose this aircraft if it would offer a highdensity configuration,” Ethève said at the last Dubai Air Show,where the order was confirmed. “They were a bit surprised butfinally they joined our project and with Airbus we now think theA380 is a cost-saving answer to the need for a democratic meansof transportation.”

Jetstar hopes to start replacing itsA330s with Boeing 787s in 2012.

V Australia started operations with its firstBoeing 777-300ER in February 2009.




Réunion has a population of around 850,000 but annual traffic onwhat is classed as a domestic route amounts to one millionpassengers. “Future traffic growth on such segments will bedirectly related to airlines’ ability to offer lower priced tickets,responding to customer demand for cheaper travel,” Ethève said.“The lowering of prices necessitates the use of lower cost tools.We are very proud to be first to launch a high-density A380, andwe are convinced that we will not be the last.”

Ethève predicts that Air Austral’s lower-cost A380 operations willdraw feed traffic to the airline’s hub at Réunion from otherdestinations throughout the southwest Indian Ocean: “I amconvinced the A380 will play an important role on other high-density routes as well, and I believe that in co-operation with myFrench airline industry colleagues it could also be used on flightsbetween Paris and the French Antilles in the Caribbean.”

X factorPerhaps the most dynamic of the current crop of low-costers inlong-haul is AirAsia X. The offshoot of AirAsia ordered its first 15A330-300s in June 2007; by the time the first was delivered inOctober 2008 it had added another 10, and in June 2009 itsigned for 10 A350-900s. By the end of 2010, the airline had nineA330s operating to destinations in Australia, China, India, SouthKorea and Taiwan, plus two A340s used for the Kuala Lumpur-London route. It was due to add a four-times weekly service toParis Orly in February.

In 2009, despite the global economic crisis and the AH1N1 fluoutbreak, AirAsia X made a net profit of $28m on revenues of$234m. CEO, Azran Osman-Rani, says that success – achieved onthe back of a barely there seat-mile cost of just 2.8 US cents perseat-kilometre (that compares favourably even with AirAsia’s ownimpressively skinny three cents) – is due largely to “theinnovativeness of a team of Malaysians [which he led] to constructa completely new business model for long-haul aviation instead ofjust adjusting the existing model.”

‘Completely new’ may be pushing it slightly, but there is nodenying the claim to innovation. To achieve the 60 per centreduction in established carriers’ operating costs seen as necessaryfor a sustainable operation, Azran says, the airline operates itsA330s in high-density configuration, with nine-abreast economyseating and 30 per cent more seats in total, and it turns themround quickly to increase utilisation by 35 per cent.

Neither AirAsia nor AirAsia X hedges against fuel price or currencymovements, Azran adds: “We burn 2.5 litres of fuel per seat per100 km. By contrast, a legacy carrier in the region burns five litres.

A big part of that is seat density. So that to us is a much biggercushion.”

As well as licensing the brand, the long-haul operation sharesAirAsia’s pilots, cabin crew, guest services staff, website, ITplatform, marketing and distribution, while the short- and long-haul networks also feed each other. That is set to change in thewake of an initial public offering (IPO) planned for later this yearor 2012, following which AirAsia X will employ its own widebodyaircraft pilots, cabin crew, ground staff and commercial andmarketing team, while continuing to use the AirAsia brand andwebsite.

In the meantime, AirAsia X has not hesitated to revise its onboardproduct, replacing the problematic fixed-back shell seats andblack leather upholstery originally specified with a new design ingrey and red. The seats are pitched at 31in on the A330s and32in on the A340s. At the same time, it scrapped the 28 38inpitch premium economy seats in favour of 12 lie-flat beds. Andto eliminate the cost of equipment and content, and the weightand wiring complexity of the original seat-back IFE system, it hasopted to switch to portable entertainment systems.

Is it viable?So, are long-haul and low-cost a viable combination? Theprojected AirAsia X IPO, aimed at raising funds to pay for the newaircraft on order, and freeing AirAsia of the need to continuefunding its offspring’s growth, may represent the acid test. Azranpointed out when the IPO was announced last June it will belooking to international institutional investors for the estimated$500m-plus it aims to raise. While AirAsia is reaching the stageof maturity when it should start returning cash to investors, hesaid; “We have a more exciting growth story for investors with adifferent appetite.”

For the future, continuing globalisation looks likely to keepfuelling labour mobility and the accompanying growth in peopletravelling to visit friends and relatives. Such traffic has grownparticularly robustly in Europe since the enlargement of theEuropean Union in 2004 and is the main component of the Paristraffic that has encouraged Air Austral to invest in A380s.

The principal barriers continue to be ASAs and the shortage oflong-range aircraft. Both seem likely to diminish in the medium-term with the spread of Open Skies agreements and 787deliveries increasing the supply of equipment. But the lowestpossible cost base will be needed to survive the sort of challengesthat have seen Oasis Hong Kong, Flyglobespan and Zoom Airlinesfail in recent years.

Australia’ s Jetstar started operating A330-200s from its new Singapore base in December 2010.



MAINTENANCE OPERATIONS: OEMs

CHASING PROFIT IN ACROWDED MRO MARKET

OEMs:

AFM71_MRO_AFM 68 B&B 28/01/2011 13:42 Page 54

Original equipment manufacturers (OEMs) are chasingprofits in the increasingly crowded MRO field. Whyhave the big OEMs entered the field? It is for profits,pure and simple. Scott Hamilton asks how far they canand will go for the extra buck.



AIRBUS, BOEING, GE AVIATION AND ROLLS-ROYCEEngines are among the OEMs with major business efforts

in MRO, competing with legacy companies such as Timcoand Aviation Technical Services (the former Goodrich operation)and airline-affiliated MROs such as Lufthansa Technik and DeltaTechOps.

Well before the emerging competitors arose in China, Russia andCanada, Airbus and Boeing started providing MRO services;indeed the engine companies have long been in the market.

For the engine makers, the reason is simple: there’s money inMRO. The billions of dollars spent on research and development(R&D) to bring a new engine to market as well the as pressure tobe competitive can mean the return on investment from the saleof an engine is nil-to-negative. The profit is made in the sale ofparts, servicing and overhaul.

For the airframers, the provision of aftermarket services is a formof customer support, but it is also lucrative and has less need forcapital investment than is the case for the R&D and manufactureof aircraft, which require about a decade before the return oninvestment (ROI) is realised.

Boeing: servicing is part of the pieSome years ago, Boeing purchased MRO Aviall and the companyhas an active Customer Aviation Services (CAS) unit to supportmaintenance requirements. It has also put together GoldCare forthe 787 programme, which offers a suite of options. So far, onlyBritain’s TUI has signed up for GoldCare, but the low level ofinvestment is a result of interminable delays to the 787, not themaintenance programme itself.

Nicole Piasecki, VP for business development and strategicintegration for Boeing, told an employees group in November thatBoeing Commercial Airplanes now regards production andservicing in one “pie” when making presentations to thecompany’s board of directors.

Our airline customers are changing their

business models. In order to reduce cost,

they are outsourcing as much as they can of the

infrastructure… They are coming to Boeing

and they are saying, ‘Our core business as an

airline is to take a passenger from A to B,it is not to manage this airplane. Please, Boeing,

help us do this part of it.

Nicole Piasecki, VP for business developmentand strategic integration, Boeing.

“This is actually an unusual way for us to show our market,”Piasecki said of a recent board presentation. “I don’t recall whenwe actually combined both the airplane and the servicesmarketplace together in one pie, or one description, but we didfor the board and we did it for a very important reason and thatis because our airline customers are changing their businessmodels. In order to reduce cost, they are outsourcing as much asthey can of the infrastructure.

“[It’s] not just things like IT services, or financial services, or payroll,they are actually looking to outsource the maintenance and theengineering of the airline… and it’s accelerating. They are comingto Boeing and they are saying, ‘Our core business as an airline isto take a passenger from A to B, it is not to manage this airplane.Please, Boeing, help us do this part of it and give us ways that wecan focus on our core business and we can look for even moreefficiencies in managing the operations of the airline’.”

“Boeing in our CAS business is acquiring new capabilities to beable to respond to airlines to do that,” she continued. “Themarket is actually quite large. We don’t have 50 per cent of theservices market. It is very, very crowded and in some cases we’recompeting against customers like Lufthansa and Delta TechOps,so it’s a delicate strategy for us to move into this marketplace. Butit is absolutely where we feel we need to go over the next 20years.”

The ‘mega-lessor’, GECAS, recently asked for Boeing’s help inmaking aircraft transitions simpler and faster. Sean Flannery, aGECAS EVP, told CAS managers that aircraft transitions are vital.

“Simplification and speed are key,” Flannery said. “The faster thetransition time, and the lower the cost, the greater the value ofthe aircraft.” Lou Mancini, SVP for CAS, said his team members

“will continue stretching ourselves to provide our valued partnersthe support they need.”

“

”




Boeing has a component support programme with Air FranceKLM for the 777 and 737NG and a component managementcontract with Spicejet and Norwegian AS, according toAeroStrategy, a consulting firm that specialises in MRO.

Airbus has taken a somewhat different approach to Boeing,creating a network of 16 MROs and support based on flighthours and a tailored support programme. The latter have A330contracts with Singapore, Vietnam and Sichuan airlines.

OEMs claim their pieceGE Aviation, Rolls-Royce and Pratt & Whitney (as well as jointventure companies International Aero Engines and CFMInternational through their primary partners) have long offeredfull MRO and power-by-the-hour contracts. Selling engines canbe such cut-throat competition that OEMs have been known togive the engines, free of charge, to airlines in return for thespares and maintenance contracts. Sole-source engine suppliers,of course, do not have to resort to this extreme.

GE, which has sole-source supplier status on the 737 Classic andNG and the 777-200LR and 777-300ER, and which powers 90per cent of the entire Boeing product line, has a vast engine MROoperation. For the CF6, for example, which powers everythingfrom the first McDonnell Douglas DC-10 through to the currentA330 family, GE provides a menu of MRO services.

GE Aviation’s Chuck Williams, CF6 product line manager, saysthat the OnPoint Solutions MRO programme is highly flexible.

“We allow for virtually unlimited customisation,” he says. “It canbe an agreed upon (cost) the rate the airline can count on goingforward. It can be quite long-term – 10, 15 or 20 years in

duration. It can be based on their number of flight hours. It caninclude everything such as on-wing support, LLP [life-limitedparts], hot sections, or it can be customised downward. Thisreduces one significant source of risk for them.”

“The main competitive battleground remains between the OEMsand component O&R [overhaul and repair] integrators,”AeroStrategy said during a European conference in September2010. “Component OEMs are adopting an ‘authorised servicecentre model’ to protect aftermarket and spares flow,” theconsultancy said.

A US aerospace financial analyst, speaking with anonymitybecause his employer does not allow press interviews, said OEMsacross the board are interested in MRO and spares.

“Most of the money they make is in the aftermarket. The marginsare much, much higher,” the analyst commented. Although thebig airframe and engine OEMs are most known in this context,the analyst cited Honeywell and Rockwell Collins as examples ofother OEM suppliers that seek aftermarket business.

“The business model [for OEMs] is a 10 per cent margin on originalequipment and 30 to 40 per cent on the spare parts. The marginsare huge on engine spare parts,” the analyst said. “This is allabout the aftermarket. It’s up to 40-50 years, and if that meansgiving the engines away, so be it.

“For the rest of the supply chain, I don’t think it’s that extreme, butit’s the same model. There’s not a lot of margin on the originalequipment but there are a ton of dollars in spare parts andservices,” the analyst said.

Dividing the portionsAeroStrategy created a breakdown of the MRO market in 2009,the most recent full-year data available. According to its findings,15 per cent of the market covered airframes, seven per centmodifications, 36 per cent engines, 22 per cent for componentsand 20 per cent for line maintenance. This represents a $42.7bnmarket. Excluded from this analysis are maintenance control,technical services and inventory carrying costs, representinganother $13bn.

The $42.7bn in market worth is $2.3bn below the 2007 peaksince 2003 and clearly reflects the global recession. Lookingforward through to 2019, AeroStrategy forecasts a totalcompound annual growth rate (CAGR) of 3.2 per cent, withmodifications growing at 7.2 CAGR and engines at four per cent.Airframe MRO will have the lowest growth rate, of just 1.2 percent, as old aircraft are retired. The Asia-Pacific regions, andnotably China and India, will drive the growth.

AeroStrategy sees engine OEMs capturing 50 per cent of themarket by 2020, from 44 per cent in 2009, with airline third party(ATP) and independents increasing market share from 34 per centto 40 per cent. The share of MRO by the airlines will shrink from22 per cent to just 10 per cent, according to the forecast.

“The recession resulted in a 10 to 20 per cent drop in revenue formany in the MRO supply chain,” AeroStrategy said at a Europeanconference in September. “However, MRO is set for long-termgrowth,” the result of increased outsourcing, more OEM-centricMRO supply chain and a growing presence of the airframe OEMs.

Even so, airframe OEMs will represent a miniscule portion of themarket share in coming years. They covered less than one percent of the market in 2009 and will only account for around threeper cent in 2020, AeroStrategy forecasts.

AeroStrategy sees engine OEMs capturing 50 per

cent of the market by 2020, from 44 per cent in 2009,

with airline third party (ATP) and independentsincreasing market share from 34 per cent to

40 per cent. The share of MRO by the airlines will

shrink from 22 per cent to just 10 per cent,

according to the forecast.

“

”


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Contract Owner Operator Event Date S/N A/C Model Variant Reg No Name Name Remarks21/10/2010 25213 Boeing 747 400D (GE) N894DB Aircraft Solutions Airframe 2010 LLC Universal Asset Mgmt Inc Purch’d - sub to existing lease - pkd21/10/2010 24774 Boeing 757 200 (RR) N802PG FedEx FedEx Purchased - parked21/10/2010 25060 Boeing 757 200 (RR) N949FD FedEx FedEx Purchased - parked21/10/2010 26154 Boeing 757 200 (RR) N763CA National Air Cargo Group Inc National Air Cargo Purchased - parked22/10/2010 675 Airbus A300 600R (GE) N80084 Squadron Leasing II LLC Apollo Aviation Group Purchased - parked22/10/2010 724 Airbus A300 620R (P&W) N1724 Aircraft Solutions (Offshore) LLC Universal Asset Mgmt Inc Purchased - parked22/10/2010 4476 Airbus A320 230 (IAE) CC-BAD Torcaza Leasing Ltd LAN Airlines Purch’d - sale & lease-back on del22/10/2010 378 Airbus A340 310 (CFM) ZS-SXG South African Airways South African Airways Purchased22/10/2010 34263 Boeing 737 (NG) 700 Winglets N426HZ San Nicolas Leasing LLC San Nicolas Leasing Trust Purchased - parked24/10/2010 626 ATR ATR 72 500 XY-AIS Air Bagan Air Bagan Purchased25/10/2010 30907 Boeing 737 (NG) 800 Winglets N857NN NAS Investments 2 Inc American Airlines Purch’d - sale & lease-back on del25/10/2010 33748 Boeing 747 400F (GE) JA401J Aircastle Advisor LLC Aircastle Advisor LLC Purchased - parked25/10/2010 27144 Boeing 757 200SF (RR) N904FD Federal Express Canada Ltd FedEx Purch’d - subject to existing lease26/10/2010 363 Airbus A340 310 (CFM) CC-CQC LAN Airlines LAN Airlines Purch’d off lease / fin term comp26/10/2010 33556 Boeing 737 (NG) 800 Winglets EI-DAW RBS Aerospace Ltd RBS Aviation Capital Purchased - parked26/10/2010 7394 Bombardier (Canadair) CRJ RJ 200LR C-GGDR Bombardier Inc Bombardier Inc Purchased - parked26/10/2010 10314 Bombardier (Canadair) CRJ700 RJ Challenger 870 NG N870DC RBS Asset Finance Inc Dow Chemical Co Purch’d - sale & lease-back on del27/10/2010 24273 Boeing 737 (CFMI) 500 LN-BRJ SAS SAS Purch’d off lease / fin term comp27/10/2010 24959 Boeing 737 (CFMI) 400 N959PR Global Jet Ltd Global Jet Ltd Purchased - parked27/10/2010 40237 Boeing 737 (NG) 800 Winglets A6-FDJ BBAM LLC FlyDubai Purch’d - sale & lease-back on del27/10/2010 24426 Boeing 747 400 (GE) N264AS AerSale AerSale Purchased - parked27/10/2010 8057 Bombardier (Canadair) CRJ RJ Challenger 850 EW-301PJ Belavia Belavia Purchased28/10/2010 2236 Airbus A319 110 (CFM) N928FR MSN 2236 Trust Frontier Airlines Purch’d - sub to existing lease28/10/2010 24649 Boeing 737 (CFMI) 500 M-AZIZ Azizi Group Azizi Group Purchased - parked28/10/2010 30904 Boeing 737 (NG) 800 Winglets N858NN NAS Investments 2 Inc American Airlines Purch’d - sale & lease-back on del28/10/2010 31743 Boeing 737 (NG) 800 Winglets N BBAM LLC BBAM LLC Purchased28/10/2010 31743 Boeing 737 (NG) 800 Winglets JA73NC NBB Humming Bird Skymark Airlines Purch’d - sub to existing lease28/10/2010 24797 Boeing 767 300 (GE) N789AS AerSale AerSale Purchased - parked28/10/2010 7002 Bombardier (Canadair) CRJ RJ 100ER XA- Nacional Aeronautica de Queretaro Nacional Aeronautica de Queretaro Purchased - parked28/10/2010 387 Bombardier (de Havilland) Dash 8 100 N824EX Frontier Alaska Aviation Trust Frontier Alaska Aviation Trust Purchased - parked28/10/2010 4235 Bombardier (de Havilland) Dash 8 400 NextGen N721AL Aerographics Inc Aerographics Inc Purch’d off lease / fin term comleted28/10/2010 4235 Bombardier (de Havilland) Dash 8 400 NextGen N721AL US Department of Justice US Department of Justice Purchased29/10/2010 0421 Airbus A320 210 (CFM) EI-DNP Aerlift Leasing Ireland MSN 421 Ltd Wind Jet Purch’d - subject to existing lease29/10/2010 1240 Airbus A320 230 (IAE) N507JT AFS Investments 54 LLC GECAS Purch’d - sub to existing lease - pkd29/10/2010 4480 Airbus A320 210 (CFM) N836VA AFS Investments 52 LLC Virgin America Purch’d - sale by lessor on del - pkd29/10/2010 4488 Airbus A320 230 (IAE) VT-IGU Crescent Leasing 10 Limited IndiGo Airlines Purch’d - sale & lease-back on del29/10/2010 007 Airbus A340 310 (CFM) EI-ELH Magellan Aviation Services Ltd Magellan Aviation Services Ltd Purchased - parked29/10/2010 919 ATR ATR 72 500 VT-JCS Injet Leasing Company Ltd Jet Airways Purch’d - sale & lease-back on del29/10/2010 924 ATR ATR 72 500 VT-JCT Injet Leasing Company Ltd Jet Airways Purch’d - sale & lease-back on del29/10/2010 23749 Boeing 737 (CFMI) 300 N373PA Qwest Air Parts Inc Qwest Air Parts Inc Purchased - parked29/10/2010 23749 Boeing 737 (CFMI) 300 N373PA AeroUSA Inc AeroUSA Inc Purchased - parked1/11/2010 920 ATR ATR 72 500 VT-JCR Injet Leasing Company Ltd Jet Airways Purch’d - sale & lease-back on del1/11/2010 30389 Boeing 737 (NG) 800 Winglets PH-HZJ VGS Aircraft Holding (Ireland) Ltd Transavia Airlines Purch’d - sub to existing lease1/11/2010 740 Airbus A300 620R (P&W) EI-EOT GA Telesis Ireland Ltd GA Telesis LLC Purchased - parked1/11/2010 4481 Airbus A320 230 (IAE) VT-IGV RBS Aerospace Ireland Leasing 2 Ltd IndiGo Airlines Purch’d - sale & lease-back on del1/11/2010 4495 Airbus A320 230 (IAE) VH-VGH Arcu Aircraft Leasing Ltd Jetstar Purch’d - sale to S.P.C. by lessor on del1/11/2010 0434 Airbus A321 110 (CFM) EI-IXU Aircraft Purchase Comp No.12 Ltd Alitalia Purchased - sale & lease-back1/11/2010 1171 Airbus A330 240 (RR) N382HA AWAS Leasing Two LLC Hawaiian Airlines Purch’d - sub to existing lease1/11/2010 39109 Boeing 737 (NG) BBJ1 N1TS Undisclosed Bank / Broker / Lessor First Virtual Air II LLC Purch’d -sale & lease-back on del - pkd1/11/2010 24036 Boeing 767 300ER (GE) N355AA AirTrust OP LLC American Airlines Purch’d - sub to existing lease1/11/2010 35816 Boeing 767 300ERF (GE) N524LA Celestial Aviation Trading 47 Ltd GECAS Purchased - parked1/11/2010 568 Bombardier (de Havilland) Dash 8 300 N568AW Bombardier Services Corp Bombardier Services Corp Purchased - parked1/11/2010 0495 Airbus A321 110 (CFM) EI-IXO Aircraft Purchase Comp No.12 Ltd Alitalia Purchased - sale & lease-back1/11/2010 2074 Airbus A319 110 (CFM) EI-IMD Aircraft Purchase Comp No.12 Ltd Alitalia Purchased - sale & lease-back1/11/2010 21467 Boeing 737 (JT8D) 200C Advanced C-GMAI Air Inuit Air Inuit Purchased - parked1/11/2010 21929 Boeing 737 (JT8D) 200QC Adv (Stg3Hk)C- Unconfirmed Canadian Operator Unconfirmed Canadian Operator Purchased - parked1/11/2010 29555 Boeing 737 (NG) 800 Winglets N859NN NAS Investments 7 Inc American Airlines Purchased - sale & lease-back1/11/2010 40239 Boeing 737 (NG) 800 Winglets A6-FDL General Electric Capital Corp FlyDubai Purch’d - sale & lease-back on del1/11/2010 24528 Boeing 757 200 (RR) N549AX FedEx FedEx Purchased - parked1/11/2010 568 Bombardier (de Havilland) Dash 8 300 N568AW TKC Aerospace TKC Aerospace Purchased - parked1/11/2010 568 Bombardier (de Havilland) Dash 8 300 N568AW US Department of State - Florida US Dept of State - Florida Purchased - parked1/11/2010 1332 Airbus A320 230 (IAE) LV-BSJ LAN Airlines LAN Argentina Purch’d off lease / fin term comp1/11/2010 398 Airbus A300 600 (GE) EK-30098 Vertir Airlines Vertir Airlines Purchased - parked1/11/2010 401 Airbus A300 600 (GE) D-AIAK Cyrrus Air Cyrrus Air Purchased - parked1/11/2010 401 Airbus A300 600 (GE) EX- Kyrgyz Trans Avia Kyrgyz Trans Avia Purchased - parked1/11/2010 401 Airbus A300 600 (GE) EX- Bukovyna Airlines Bukovyna Airlines Purchased - parked1/11/2010 2037 Airbus A319 110 (CFM) G-EZAM HSH Global Aircraft Fund 1 easyJet Purch’d - sub to existing lease1/11/2010 2043 Airbus A319 110 (CFM) G-EZDC HSH Global Aircraft Fund 1 easyJet Purch’d - sub to existing lease1/11/2010 2050 Airbus A319 110 (CFM) G-EZNC HSH Global Aircraft Fund 1 easyJet Purch’d - sub to existing lease1/11/2010 2053 Airbus A319 110 (CFM) G-EZMH HSH Global Aircraft Fund 1 easyJet Purch’d - sub to existing lease1/11/2010 2057 Airbus A319 110 (CFM) EI-IMC Aircraft Purchase Comp No.12 Ltd Alitalia Purchased - sale & lease-back1/11/2010 2062 Airbus A319 110 (CFM) G-EZSM HSH Global Aircraft Fund 1 easyJet Purch’d - sub to existing lease1/11/2010 1856 Airbus A320 230 (IAE) TC-JLJ Archway Aviation Turkish Airlines (THY) Purch’d - sub to existing lease1/11/2010 1909 Airbus A320 230 (IAE) TC-JLK Archway Aviation Turkish Airlines (THY) Purch’d - sub to existing lease1/11/2010 1996 Airbus A320 230 (IAE) TC-JLL Archway Aviation Turkish Airlines (THY) Purch’d - sub to existing lease1/11/2010 3293 Airbus A320 210 (CFM) EC-KKT Undisclosed Bank / Broker / Lessor Vueling Airlines Purch’d - sub to existing lease1/11/2010 038 Airbus A340 210 (CFM) JY-AIA Gladiator Leasing Ltd Royal Jordanian Purch’d - sub to existing lease1/11/2010 043 Airbus A340 210 (CFM) JY-AIB Gladiator Leasing Ltd Royal Jordanian Purch’d - sub to existing lease1/11/2010 016 Airbus A380 860 (EA) A6-EDC Doric Nimrod Air One Emirates Airline Purch’d - sub to existing lease1/11/2010 543 ATR ATR 72 500 I-ADLM Nordic Aviation Capital Nordic Aviation Capital Purch’d - parked1/11/2010 24413 Boeing 737 (CFMI) 300 PK-TXJ Aero North International Ltd Aero Nusantara Indonesia (ANI) Purchased - parked1/11/2010 28915 Boeing 737 (CFMI) 500 N14654 Continental Airlines Continental Airlines Purchased - parked1/11/2010 21839 Boeing 737 (JT8D) 200 Adv (Stg 3 Hk) Undisclosed Bank / Broker / Lessor Undisclosed Bank / Broker / Lessor Purchased - parked1/11/2010 30746 Boeing 737 (NG) 700 Winglets N554WN ALC Aircraft Holdings I LLC Air Lease Corporation Purchased - parked1/11/2010 33015 Boeing 737 (NG) 700 Winglets VH-VBV ALC Aircraft Holdings I LLC Virgin Blue Airlines Purch’d - sub to existing lease1/11/2010 35215 Boeing 737 (NG) 800 Winglets B-5345 Undisclosed Bank / Broker / Lessor Shenzhen Airlines Purch’d - sub to existing lease1/11/2010 40348 Boeing 737 (NG) 800 Winglets JA333J SMFL A/c Capital Corp Japan Airlines Intl Purch’d - sale & lease-back on del1/11/2010 27204 Boeing 757 200 (P&W) N410JR Boeing Capital Corp Boeing Capital Corp Purchased - parked1/11/2010 4256 Bombardier (de Havilland) Dash 8 400 D-ABQH Nordic Aviation Capital LGW - Luftfahrtgesellschaft Walter Purchased - sale & lease-back1/11/2010 4264 Bombardier (de Havilland) Dash 8 400 D-ABQI Nordic Aviation Capital LGW - Luftfahrtgesellschaft Walter Purchased - sale & lease-back

AIRCRAFT TRANSACTIONS – Boeing, Airbus, ATR, and Bombardier. 21Oct 2010 to18 Jan 2011


INDUSTRY DATA: FLEET FINANCE, FIRM ORDERS, AIRCRAFT TRANSACTIONS, LIST PRICES AND LEASE RATES

AFM71_Data_AFNM 28/01/2011 13:34 Page 58

Contract Owner Operator Event Date S/N A/C Model Variant Reg No Name Name Remarks1/11/2010 4274 Bombardier (de Havilland) Dash 8 400 D-ABQJ Nordic Aviation Capital LGW - Luftfahrtgesellschaft Walter Purchased - sale & lease-back1/11/2010 535 Bombardier (de Havilland) Dash 8 300 LN-WFS Wideroe Wideroe Purch’d off lease / fin term comp1/11/2010 1489 Airbus A320 210 (CFM) EI-IKL Aircraft Purchase Comp No.12 Ltd Alitalia Purchased - sale & lease-back1/11/2010 4506 Airbus A320 230 (IAE) VT-IGW Crescent Leasing 7 Ltd IndiGo Airlines Purch’d - sale & lease-back on del1/11/2010 0494 Airbus A321 110 (CFM) EI-IXI Aircraft Purchase Comp No.12 Ltd Alitalia Purchased - sale & lease-back1/11/2010 21691 Boeing 727 200F(M) Adv (Stg3 Hk) N785AT Rio Airlines USA Inc Rio Linhas Aereas Purchased - parked1/11/2010 21692 Boeing 727 200F(M) Adv (Stg3 Hk) N786AT Rio Airlines USA Inc Rio Linhas Aereas Purchased - parked1/11/2010 7394 Bombardier (Canadair) CRJ Regional Jet 200LR VQ-BGX PL Panorama Leasing Limited UTair Purch’d - sale & lease-back - pkd1/11/2010 7394 Bombardier (Canadair) CRJ Regional Jet 200LR VQ-BGX UTair UTair Purchased - parked1/11/2010 0526 Airbus A321 110 (CFM) EI-IXC Aircraft Purchase Comp No.12 Ltd Alitalia Purchased - sale & lease-back1/11/2010 26350 Boeing 747 400BCF (GE) N743CK Kalitta Air Kalitta Air Purchased - parked1/11/2010 24039 Boeing 767 300ER (GE) N358AA AirTrust OP LLC American Airlines Purch’d - sub to existing lease1/11/2010 27619 Boeing 767 300ER (P&W) EI-EED ILFC Aircraft 76B-27619 Limited Blue Panorama Airlines Purch’d - sub to existing lease1/11/2010 28111 Boeing 767 300ER (P&W) EI-CXO ILFC Aircraft 76B-28111 Limited Blue Panorama Airlines Purch’d - sub to existing lease1/11/2010 7367 Bombardier (Canadair) CRJ RJ 200ER N75994 Squadron Leasing V LLC Apollo Aviation Group Purch’d - pkd1/11/2010 0524 Airbus A321 110 (CFM) EI-IXB Aircraft Purchase Comp No.12 Ltd Alitalia Purch’d - sale & lease-back1/11/2010 674 ATR ATR 72 500 VT-JCF ASL Aviation Jet Airways Purch’d - sub to existing lease1/11/2010 679 ATR ATR 72 500 VT-JCG ASL Aviation Jet Airways Purch’d - sub to existing lease1/11/2010 681 ATR ATR 72 500 VT-JCH ASL Aviation Jet Airways Konnect Purch’d - sub to existing lease1/11/2010 928 ATR ATR 72 500 VT-JCU Injet Leasing Company Ltd Jet Airways Purch’d - sale & lease-back on del1/11/2010 28915 Boeing 737 (CFMI) 500 VP-BVQ Airfield Investments Ltd Airfield Investments Ltd Purchased - parked1/11/2010 33440 Boeing 737 (NG) 800 Winglets N BBAM LLC BBAM LLC Purchased1/11/2010 33440 Boeing 737 (NG) 800 Winglets JA73ND NBB Ostrich Skymark Airlines Purch’d - sub to existing lease1/11/2010 26360 Boeing 747 400 (GE) N914UN VEBL-767-300 Ltd VEB-Leasing JSC Purchased - parked1/11/2010 29435 Boeing 767 300ER (P&W) EI-CZH ILFC Aircraft 76B-29435 Limited Blue Panorama Airlines Purch’d - sub to existing lease1/11/2010 37943 Boeing 777 300ER (GE) VH-VPH VB LH 2008 No 2 Pty Ltd V Australia Purch’d - sale & lease-back on del1/11/2010 2086 Airbus A319 110 (CFM) EI-IMG Aircraft Purchase Comp No.12 Ltd Alitalia Purchased - sale & lease-back1/11/2010 24539 Boeing 737 (CFMI) 300 N370UA Brickell Asset Mgmt X LLC Brickell Asset Mgmt X LLC Purchased - parked1/11/2010 24539 Boeing 737 (CFMI) 300 N370UA Q737 Aircraft Ltd Q737 Aircraft Ltd Purchased - parked1/11/2010 24637 Boeing 737 (CFMI) 300 N372UA Brickell Asset Mgmt IX LLC Brickell Asset Mgmt IX LLC Purchased - parked1/11/2010 24637 Boeing 737 (CFMI) 300 N372UA Q737 Aircraft Ltd Q737 Aircraft Ltd Purchased - parked1/11/2010 40583 Boeing 737 (NG) 800 Winglets N860NN NAS Investments 7 Inc American Airlines Purch’d - sale & lease-back on del1/11/2010 33749 Boeing 747 400F (GE) N402AL Aircastle Advisor LLC Aircastle Advisor LLC Purchased - parked1/11/2010 22911 Boeing 757 200 (P&W) N621DL FedEx FedEx Purchased - parked1/11/2010 7318 Bombardier (Canadair) CRJ RJ 200LR N27318 Squadron Leasing V LLC Apollo Aviation Group Purchased - parked1/11/2010 4327 Bombardier (de Havilland) Dash 8 400 NextGen G-PTHH MIG Aviation (UK) Ltd Olympic Air Purch’d-sale & lease-back on del - pkd2/11/2010 2033 Airbus A319 110 (CFM) EI-IMB Aircraft Purchase Comp No.12 Ltd Alitalia Purchased - sale & lease-back2/11/2010 4509 Airbus A320 230 (IAE) CC-BAE Torcaza Leasing Ltd LAN Airlines Purch’d - sale & lease-back on del2/11/2010 31109 Boeing 737 (NG) 800 Winglets N861NN NAS Investments 7 Inc American Airlines Purch’d - sale & lease-back on del2/11/2010 7137 Bombardier (Canadair) CRJ RJ 200LR N650ML Squadron Leasing XI LLC Apollo Aviation Group Purchased - parked2/11/2010 0532 Airbus A321 110 (CFM) EI-IXD Aircraft Purchase Comp No.12 Ltd Alitalia Purch’d - sale & lease-back2/11/2010 22944 Boeing 737 (CFMI) 300 N304SW AeroTurbine Inc AeroTurbine Inc Purchased - parked2/11/2010 23292 Boeing 737 (JT8D) 200C Advanced ZS-IAD Outsourcing for Africa CC Africa Charter Airline Purchased2/11/2010 29093 Boeing 737 (NG) 700 LN-TUH Xylodell Ltd SAS Purch’d - sub to existing lease2/11/2010 24523 Boeing 757 200 Winglets (RR) N910AW US Airways US Airways Purch’d off lease / fin term com2/11/2010 27250 Boeing 777 200ER (RR) A6-EMI Veling Ltd Emirates Airline Purchased - sale & lease-back2/11/2010 27251 Boeing 777 200ER (RR) A6-EMH Veling Ltd Emirates Airline Purchased - sale & lease-back2/11/2010 7266 Bombardier (Canadair) CRJ RJ 200LR C-GGDQ Bombardier Inc Bombardier Inc Purchased - parked2/11/2010 0537 Airbus A320 210 (CFM) JY-PTB Petra Airlines Petra Airlines Purchased2/11/2010 4497 Airbus A320 230 (IAE) VH-VGF Arcu Aircraft Leasing Ltd Jetstar Purcha’d - by lessor on delivery2/11/2010 0516 Airbus A321 110 (CFM) EI-IXG Aircraft Purchase Comp No.12 Ltd Alitalia Purchased - sale & lease-back2/11/2010 627 Airbus A330 240 (RR) 7O-ADX Whitney Leasing Ltd Yemenia Purch’d - sub to existing lease2/11/2010 1745 Airbus A319 110 (CFM) EI-IMI Aircraft Purchase Comp No.12 Ltd Alitalia Purchased - sale & lease-back2/11/2010 24885 Boeing 747 400 (GE) N805AS AerSale AerSale Purchased - parked2/11/2010 1770 Airbus A319 110 (CFM) EI-IMO Aircraft Purchase Comp No.12 Ltd Alitalia Purchased - sale & lease-back2/11/2010 0661 Airbus A320 230 (IAE) EI-EEI ILFC Aircraft 32A-661 Ltd AviaNova Purch’d - sub to existing lease2/11/2010 1173 Airbus A330 300HGW (GE) OH-LTU Finnair Aircraft Finance Ltd Finnair Purch’d - sale & lease-back on del2/11/2010 197 Airbus A340 310 (CFM) ZS-SXH South African Airways South African Airways Purchased2/11/2010 4321 Bombardier (de Havilland) Dash 8 400 NextGen G-PTHG MIG Aviation (UK) Ltd Olympic Air Purch’d - sale&lease-back on del - pkd2/11/2010 4337 Bombardier (de Havilland) Dash 8 400 NextGen LN-WDK SAS Norge AS Wideroe Purch’d - sale&lease-back on del2/11/2010 1779 Airbus A319 110 (CFM) EI-IMJ Aircraft Purchase Comp No.12 Ltd Alitalia Purch’d - sale & lease-back2/11/2010 4516 Airbus A320 230 (IAE) CC-BAF Torcaza Leasing Ltd LAN Airlines Purch’d - sale & lease-back on del2/11/2010 34263 Boeing 737 (NG) 700 Winglets N426HZ Aviation Capital Group Aviation Capital Group Purch’d off lease / fin term comp - pkd2/11/2010 447 Bombardier (de Havilland) Dash 8 200 N447YV Avmax Aircraft Leasing Inc Avmax Aircraft Leasing Inc Purchased - parked2/11/2010 1217 Airbus A320 210 (CFM) EI-IKU Aircraft Purchase Comp No.12 Ltd Alitalia Purchased - sale & lease-back2/11/2010 28477 Boeing 737 (CFMI) 400 VQ-BID UTair UTair Purchased2/11/2010 28477 Boeing 737 (CFMI) 400 VQ-BID Sberbank Leasing UTair Purchased - sale & lease-back2/11/2010 26345 Boeing 747 400D (GE) N895DB CF6-80 Parts Ltd Universal Asset Mgmt Inc Purchased - parked2/11/2010 7361 Bombardier (Canadair) CRJ RJ 200ER N75995 Squadron Leasing V LLC Apollo Aviation Group Purchased - parked3/11/2010 643 Airbus A300 600R (GE) N7082A Global Aviation Services FZE Rus Aviation Purchased - parked3/11/2010 2101 Airbus A319 110 (CFM) EI-IMH Aircraft Purchase Comp No.12 Ltd Alitalia Purchased - sale & lease-back3/11/2010 1257 Airbus A320 230 (IAE) N508JL AFS Investments 54 LLC GECAS Purchased - parked3/11/2010 4518 Airbus A320 230 (IAE) VT-IGX Crescent Leasing 7 Limited IndiGo Airlines Purch’d - sale & lease-back on del3/11/2010 28478 Boeing 737 (CFMI) 400 VQ-BIC UTair UTair Purchased3/11/2010 24870 Boeing 747 400 (GE) N248AS AerSale AerSale Purchased - parked3/11/2010 24875 Boeing 767 300ER (GE) N875AW Omni Aviation Leasing LLC Omni Aviation Leasing LLC Purchased - parked3/11/2010 610 Airbus A300 600R (GE) N7076A Squadron Leasing II LLC Apollo Aviation Group Purchased - parked3/11/2010 1226 Airbus A320 210 (CFM) EI-IKB Aircraft Purchase Comp No.12 Ltd Volare S.p.A. Purchased - sale & lease-back4/11/2010 4487 Airbus A320 210 (CFM) HC-CJW General Electric Capital Corp Aerogal Purch’d - sale & lease-back on del4/11/2010 240 Airbus A330 220 (P&W) F-ZWUG French Air Force French Air Force Purch’d off lease / fin term comp4/11/2010 23862 Boeing 737 (CFMI) 300 N527AU Merlin One Aircraft LLC Merlin One Aircraft LLC Purchased - parked4/11/2010 38287 Boeing 777 300ER (GE) G-STBC British Airways British Airways Purch’d off lease / fin term comp5/11/2010 0515 Airbus A321 110 (CFM) EI-IXF Aircraft Purchase Comp No.12 Ltd Alitalia Purchased - sale & lease-back5/11/2010 40238 Boeing 737 (NG) 800 Winglets A6-FDK BBAIR 2007-1 FlyDubai Purch’d - sale & lease-back on del5/11/2010 35817 Boeing 767 300ERF (GE) N526LA Celestial Aviation Trading 51 Ltd GECAS Purchased - parked7/11/2010 29729 Boeing 747 400F (RR) 4K-800 Silk Way Airlines Silk Way Airlines Purchased8/11/2010 2083 Airbus A319 110 (CFM) EI-IMF Aircraft Purchase Comp No.12 Ltd Alitalia Purchased - sale & lease-back8/11/2010 654 ATR ATR 72 500 F-HAPL Air Corsica Air Corsica Purchased8/11/2010 654 ATR ATR 72 500 F-HAPL Air Vendee Investissements Air Corsica Purchased - sale & lease-back8/11/2010 26345 Boeing 747 400D (GE) N895DB Aircraft Solutions Airframe 2010 LLC Universal Asset Mgmt Inc Purch’d - sub to existing lease - pkd





Contract Owner Operator Event Date S/N A/C Model Variant Reg No Name Name Remarks9/11/2010 1740 Airbus A319 110 (CFM) EI-IME Aircraft Purchase Comp No.12 Ltd Alitalia Purch’d - sale & lease-back9/11/2010 21710 Boeing 737 (JT8D) 200C Advanced 5N-BMS Unconfirmed Nigerian Airline Unconfirmed Nigerian Airline Purchased9/11/2010 442 Bombardier (de Havilland) Dash 8 300 C-GMWT Goldcorp Canada Ltd Wasaya Airways Purchased - sale & lease-back1/12/2010 2127 Airbus A319 110 (CFM) EI-IML Aircraft Purchase Comp No.12 Ltd Alitalia Purchased - sale & lease-back1/12/2010 1351 Airbus A320 230 (IAE) LV-BRY LAN Airlines LAN Argentina Purch’d off lease / fin term comp1/12/2010 25040 Boeing 737 (CFMI) 300 LN-KKP Tag Aviation (Stansted) Ltd Tag Aviation (Stansted) Ltd Purchased - parked1/12/2010 24044 Boeing 767 300ER (GE) N363AA AirTrust OP LLC American Airlines Purch’d - sub to existing lease1/12/2010 24496 Boeing 767 300ER (GE) 8Q-MEG Mega Global Air Services (Maldives) Pvt Ltd Mega Maldives Airlines Purchased - parked1/12/2010 343 Bombardier (de Havilland) Dash 8 100 N851EX Avmax Aircraft Leasing Inc Avmax Aircraft Leasing Inc Purchased - parked1/12/2010 4289 Bombardier (de Havilland) Dash 8 400 NextGen YL-BAE Nordic Aviation Capital airBaltic Purchased - sale & lease-back1/12/2010 4293 Bombardier (de Havilland) Dash 8 400 NextGen YL-BAF Nordic Aviation Capital airBaltic Purchased - sale & lease-back1/12/2010 4296 Bombardier (de Havilland) Dash 8 400 NextGen YL-BAH Nordic Aviation Capital airBaltic Purchased - sale & lease-back1/12/2010 4302 Bombardier (de Havilland) Dash 8 400 NextGen YL-BAI Nordic Aviation Capital airBaltic On order-sale & lease back arranged1/12/2010 4309 Bombardier (de Havilland) Dash 8 400 NextGen YL-BAJ Nordic Aviation Capital airBaltic On order-sale & lease back arranged1/12/2010 4313 Bombardier (de Havilland) Dash 8 400 NextGen YL-BAQ Nordic Aviation Capital airBaltic On order-sale & lease back arranged1/12/2010 4324 Bombardier (de Havilland) Dash 8 400 NextGen YL-BAX Nordic Aviation Capital airBaltic On order-sale & lease back arranged1/12/2010 4331 Bombardier (de Havilland) Dash 8 400 NextGen YL-BAY Nordic Aviation Capital airBaltic On order-sale & lease back arranged1/12/2010 448 Bombardier (de Havilland) Dash 8 200 N448YV Undisclosed Bank / Broker / Lessor Avmax Aircraft Leasing Inc Purchased - parked2/12/2010 24834 Boeing 737 (CFMI) 300 N919GF Aurora Leasing Inc Aurora Leasing Inc Purchased - parked2/12/2010 28318 Boeing 737 (NG) 800 LN-RCN SAS SAS Purch’d off lease / fin term comp2/12/2010 30469 Boeing 737 (NG) 800 LN-RPL SAS SAS Purch’d off lease / fin term comp2/12/2010 30905 Boeing 737 (NG) 800 Winglets N862NN NAS Investments 7 Inc American Airlines Purch’d - sale & lease-back on del3/12/2010 401 Airbus A300 600 (GE) EP-MNG Mahan Air Mahan Air Purchased3/12/2010 3684 Airbus A319 110 (CFM) N529VA JSA Aircraft 3684 LLC Virgin America Purchased - sale & lease-back3/12/2010 3686 Airbus A319 110 (CFM) N530VA JSA Aircraft 3686 LLC Virgin America Purchased - sale & lease-back3/12/2010 423 ATR ATR 72 210 C-GLHR First Air First Air Purchased - parked3/12/2010 20551 Boeing 727 200F(M)Adv(D.AirStg3Sys) N251FL Intl Trad Comp of Yukon Inc Intl Trad Comp of Yukon Inc Purchased - parked3/12/2010 25133 Boeing 757 200 (RR) N522NA FedEx FedEx Purchased - parked6/12/2010 932 ATR ATR 72 500 VT-JCV Injet Leasing Company Ltd Jet Airways Purch’d - sale & lease-back on del6/12/2010 26531 Boeing 737 (CFMI) 400 N563MS Celestial Aviation Trading 63 Ltd GECAS Purchased - parked6/12/2010 20536 Boeing 737 (JT8D) 200C Advanced N808TA Trans Air Trans Air Purchased - parked6/12/2010 30903 Boeing 737 (NG) 800 Winglets N863NN NAS Investments 7 Inc American Airlines Purch’d - sale & lease-back on del6/12/2010 26353 Boeing 747 400BCF (GE) N744CK Kalitta Air Kalitta Air Purchased - parked7/12/2010 316 ATR ATR 72 200 F-WKVF ATRiam Capital Ltd ATR Purchased - parked7/12/2010 40240 Boeing 737 (NG) 800 Winglets A6-FDM BBAIR 2007-1 FlyDubai Purch’d - sale & lease-back on del7/12/2010 22379 Boeing 747 200B (SUD) (GE) N729SA Commercial A/c Services Inc Commercial A/c Services Inc Purch’d - parked7/12/2010 35544 Boeing 777 300ER (GE) F-GZNH ALC B773 35544 LLC Air France Purch’d - sale & lease-back on del7/12/2010 15258 Bombardier (Canadair) CRJ900 RJ 900ER NextGen 5A-LAN Libyan Airlines Libyan Airlines Del - purchase of used / demo. a/c8/12/2010 28322 Boeing 737 (NG) 600 OY-KKS SAS SAS Purch’d off lease / fin term comp8/12/2010 7266 Bombardier (Canadair) CRJ RJ 200LR VQ-BGT UTair UTair Purchased - parked8/12/2010 7266 Bombardier (Canadair) CRJ RJ 200LR VQ-BGT PL Panorama Leasing Limited UTair Purchased - parked8/12/2010 244 Bombardier (de Havilland) Dash 8 300 PH-ABQ Capital Aviation Services BV CHC Airways Purch’d - sub to existing lease - pkd8/12/2010 437 Bombardier (de Havilland) Dash 8 200 N437YV Undisclosed Bank / Broker / Lessor Undisclosed Bank / Broker / Lessor Purchased - parked9/12/2010 468 ATR ATR 72 500 OY-CIM Danske Aviation Group Ltd Cimber Sterling Purchased - sale & lease-back9/12/2010 39004 Boeing 737 (NG) 800 Winglets LN-DYF DY1 Leasing LLC Norwegian Purch’d - sale & lease-back on del9/12/2010 21705 Boeing 747 200B (P&W) N623US Baltia Air Lines Baltia Air Lines Purchased - parked9/12/2010 25207 Boeing 747 400 (GE) N599MS Undisclosed Bank / Broker / Lessor Deucalion Aviation Funds Purchased - parked9/12/2010 25212 Boeing 747 400 (GE) N151AS AerSale AerSale Purchased - parked9/12/2010 7139 Bombardier (Canadair) CRJ RJ 200LR N651ML Squadron Leasing XI LLC Mesa Airlines Purchased - parked10/12/2010 547 Airbus A310 300 (GE) EK- Unconfirmed Armenian Airline Unconfirmed Armenian Airline Purchased - parked10/12/2010 1355 Airbus A320 230 (IAE) CC-COF LAN Airlines LAN Airlines Purch’d off lease / fin term comp10/12/2010 934 ATR ATR 72 500 9M-FYH Showa Leasing FireFly Airlines Purch’d - sale & lease-back on del10/12/2010 23153 Boeing 737 (JT8D) 200Adv(Stg 3 Hk) N126EA Engage Helicopters LLC Engage Aviation LLC Purch’d - sale & lease-back - pkd10/12/2010 23158 Boeing 737 (JT8D) 200 Adv(Stg 3 Hk) N127EA Engage Helicopters LLC Engage Aviation LLC Purch’d - sale & lease-back - pkd13/12/2010 0184 Airbus A320 210 (CFM) F-GHQI Undisclosed Bank / Broker / Lessor Undisclosed Bank / Broker / Lessor Purchased - parked13/12/2010 28916 Boeing 737 (CFMI) 500 N14655 Airfield Investments Ltd Airfield Investments Ltd Purchased - parked13/12/2010 28916 Boeing 737 (CFMI) 500 N14655 Continental Airlines Continental Airlines Purchased - parked13/12/2010 31111 Boeing 737 (NG) 800 Winglets N864NN NAS Investments 8 Inc American Airlines Purch’d - sale & lease-back on del13/12/2010 26355 Boeing 747 400 (GE) N356AS AerSale AerSale Purchased - parked13/12/2010 19004 Bombardier (Canadair) CRJ1000 RJ 1000ER NextGen F-HMLA Brit Air Brit Air Del - purchase of used / demo. a/c14/12/2010 24551 Boeing 737 (CFMI) 400 N429US Aviation Technologies Inc Aviation Technologies Inc Purchased - parked14/12/2010 28905 Boeing 737 (CFMI) 500 Winglets N17644 Continental Airlines Continental Airlines Purch’d off lease/fin term comp - pkd14/12/2010 24619 Boeing 747 400 Combi (P&W) N790BA Boeing Aircraft Holding Co Boeing Aircraft Holding Co Purchased - parked14/12/2010 7345 Bombardier (Canadair) CRJ RJ 200ER C-GIXU Bombardier Inc Bombardier Capital Inc Purchased - parked14/12/2010 7393 Bombardier (Canadair) CRJ RJ 200ER C-GIXT Bombardier Inc Bombardier Capital Inc Purchased - parked14/12/2010 7434 Bombardier (Canadair) CRJ RJ 200ER C-GIXR Bombardier Inc Bombardier Capital Inc Purchased - parked14/12/2010 8097 Bombardier (Canadair) CRJ RJ Challenger 850 C-FVPF ACASS Canada Ltd ACASS Canada Ltd Purchased - parked15/12/2010 637 Airbus A300 620R (P&W) N3740 Aircraft Solutions (Offshore) LLC Universal Asset Mgmt Inc Purchased - parked15/12/2010 1173 Airbus A330 300HGW (GE) OH-LTU NBB Pintail Co. Ltd Finnair Purch’d - sub to existing lease15/12/2010 29565 Boeing 737 (NG) 800 Winglets N801NN MSN 29565 Trust American Airlines Purch’d - sub to existing lease15/12/2010 29577 Boeing 737 (NG) 800 Winglets N835NN MSN 29577 Trust American Airlines Purch’d - sub to existing lease15/12/2010 30572 Boeing 737 (NG) BBJ1 N835BA Boeing ShareJet Purch’d off lease / fin term comp15/12/2010 30756 Boeing 737 (NG) BBJ1 N836BA Boeing Boeing Purch’d off lease / fin term comp15/12/2010 39450 Boeing 737 (NG) 800 Winglets VH-VUY Gate Capital (Delaware) One LLC Virgin Blue Airlines Purch’d - sale & lease-back on del15/12/2010 26352 Boeing 747 400D (GE) N896DB CF6-80 Parts Ltd Universal Asset Mgmt Inc Purchased - parked15/12/2010 26361 Boeing 747 400BCF (GE) N745CK Kalitta Air Kalitta Air Purchased - parked15/12/2010 256 Bombardier (de Havilland) Dash 8 300 G-WOWE Undisclosed Bank / Broker / Lessor Air Southwest Purchased - sale & lease-back15/12/2010 286 Bombardier (de Havilland) Dash 8 300 G-WOWD Undisclosed Bank / Broker / Lessor Air Southwest Purchased - sale & lease-back15/12/2010 311 Bombardier (de Havilland) Dash 8 300 G-WOWC Undisclosed Bank / Broker / Lessor Air Southwest Purchased - sale & lease-back15/12/2010 485 Bombardier (de Havilland) Dash 8 300 C-FIAI Bombardier Inc Bombardier Inc Purchased - parked16/12/2010 711 Airbus A300 620R (P&W) N7151 Aircraft Solutions (Offshore) LLC Universal Asset Mgmt Inc Purchased - parked16/12/2010 0362 Airbus A320 230 (IAE) N362BV AeroTurbine Inc AeroTurbine Inc Purchased - parked16/12/2010 047 Airbus A380 840 (RR) VH-OQG QF ECA 2010 No.2 Pty Ltd Qantas Purch’d - sale & lease-back on del16/12/2010 25218 Boeing 737 (CFMI) 500 PK- Aero North International Ltd Aero North International Ltd Purchased - parked16/12/2010 27002 Boeing 737 (CFMI) 400 EI-COI Challey Ltd Pembroke Group Purch’d off leasefin term comp - pkd16/12/2010 27005 Boeing 737 (CFMI) 400 EI-COJ Challey Ltd Pembroke Group Purch’d off leas/fin term comp - pkd16/12/2010 27610 Boeing 767 300ER Winglets (GE) I-NDOF ILFC NEOS Purch’d - sub to existing lease16/12/2010 27958 Boeing 767 300ER Winglets (GE) I-NDMJ ILFC NEOS Purch’d - sub to existing lease





Contract Owner Operator Event Date S/N A/C Model Variant Reg No Name Name Remarks16/12/2010 7165 Bombardier (Canadair) CRJ RJ 200LR C-GGDO Bombardier Inc Bombardier Inc Purchased - parked16/12/2010 449 Bombardier (de Havilland) Dash 8 200 N449YV Undisclosed Bank / Broker / Lessor Undisclosed Bank / Broker / Lessor Purchased - parked17/12/2010 21255 Boeing 747 200F (SCD) (GE) N752SA Look San Chee Look San Chee Purchased - parked17/12/2010 27252 Boeing 777 200ER (RR) A6-EMG Veling Ltd Emirates Airline Purchased - sale & lease-back17/12/2010 27253 Boeing 777 200ER (RR) A6-EMJ Veling Ltd Emirates Airline Purch’d - sub to existing lease17/12/2010 7034 Bombardier (Canadair) CRJ RJ 200LR N407SW Wells Fargo Equipment Finance Inc SkyWest Airlines Purch’d - sub to existing lease17/12/2010 7034 Bombardier (Canadair) CRJ RJ 200LR N407SW Wells Fargo Bank NA SkyWest Airlines Purch’d - sub to existing lease17/12/2010 7154 Bombardier (Canadair) CRJ RJ 100ER N154SF Universal Asset Management Inc Universal Asset Mgmt Inc Purchased - parked18/12/2010 921 ATR ATR 72 500 3B-NBN Nordic Aviation Capital Air Mauritius Purch’d - sale & lease-back on del20/12/2010 805 Airbus A300 620R Freighter (P&W) N120UP UPS Airlines UPS Airlines Purch’d off lease / fin term comp20/12/2010 806 Airbus A300 620R Freighter (P&W) N121UP UPS Airlines UPS Airlines Purch’d off lease / fin term comp20/12/2010 1248 Airbus A320 230 (IAE) N460UA United Airlines United Airlines Purch’d off lease / fin term comp20/12/2010 1266 Airbus A320 230 (IAE) N461UA United Airlines United Airlines Purch’d off lease / fin term comp20/12/2010 1272 Airbus A320 230 (IAE) N462UA United Airlines United Airlines Purch’d off lease / fin term comp20/12/2010 1282 Airbus A320 230 (IAE) N463UA United Airlines United Airlines Purch’d off lease / fin term comp20/12/2010 1343 Airbus A320 230 (IAE) N466UA United Airlines United Airlines Purch’d off lease / fin term comp20/12/2010 29554 Boeing 737 (NG) 800 Winglets N865NN NAS Investments 7 Inc American Airlines Purch’d - sale & lease-back on del20/12/2010 26352 Boeing 747 400D (GE) N896DB Aircraft Solutions Airframe 2010 LLC Universal Asset Mgmt Inc Purch’d - sub to existing lease - pkd21/12/2010 0325 Airbus A320 210 (CFM) N223AT AeroTurbine Inc AeroTurbine Inc Purchased - parked21/12/2010 4075 Airbus A320 210 (CFM) EI-DTK Avolon Aerospace (Ireland) AOE 1 Ltd Alitalia Purch’d - sub to existing lease21/12/2010 309 Airbus A330 240 (RR) OY-VKF Mermaid Aircraft Leasing Ltd Thomas Cook Airlines Scandinavia Purch’d - sub to existing lease21/12/2010 28905 Boeing 737 (CFMI) 500 Winglets N17644 Continental Airlines Continental Airlines Purch’d - parked21/12/2010 28905 Boeing 737 (CFMI) 500 Winglets N17644 Undisclosed Bank / Broker / Lessor Undisclosed Bank / Broker / Lessor Purchased - parked21/12/2010 30746 Boeing 737 (NG) 700 Winglets N554WN ALC B377 30746 LLC Air Lease Corporation Purchased - parked21/12/2010 39165 Boeing 737 (NG) 800 Winglets LN-DYG DY1 Leasing LLC Norwegian Purch’d - sale & lease-back on del21/12/2010 19004 Bombardier (Canadair) CRJ1000 RJ 1000ER NextGen F-HMLA Constellation Finance Ltd Brit Air Purch’d - sale & lease-back on del22/12/2010 0585 Airbus A320 210 (CFM) HB-IJJ 32A-585 Aircraft Inc Swiss Purch’d - sub to existing lease22/12/2010 0782 Airbus A320 210 (CFM) HB-IJS 32A-782 Aircraft Inc Swiss Purch’d - sub to existing lease22/12/2010 4108 Airbus A320 210 (CFM) EI-DTL Avolon Aerospace (Ireland) AOE 1 Ltd Alitalia Purch’d - sub to existing lease22/12/2010 4547 Airbus A320 210 (CFM) HC-CJV General Electric Capital Corp Aerogal Purch’d - sale & lease-back on del22/12/2010 933 ATR ATR 72 500 VT-JCW Injet Leasing Company Ltd Jet Airways Purch’d - sale & lease-back on del22/12/2010 24538 Boeing 737 (CFMI) 300 N369UA Undisclosed Bank / Broker / Lessor Undisclosed Bank / Broker / Lessor Purchased - parked22/12/2010 31793 Boeing 737 (NG) 800 Winglets N BBAM LLC BBAM LLC Purch’d - sale & lease-back on del23/12/2010 37560 Boeing 737 (NG) BBJ3 HZ- Adex Holding Group Adex Holding Group Purchased - parked23/12/2010 26356 Boeing 747 400BCF (GE) N356NA B26356 LLC B26356 LLC Purchased - parked23/12/2010 23213 Boeing 767 200 (P&W) N767DA AU7 LLC AU7 LLC Purchased - parked23/12/2010 564 Bombardier (de Havilland) Dash 8 300MPA JA726A Japan Coast Guard Japan Coast Guard Purchased24/12/2010 1869 Airbus A321 230 (IAE) UR-DAF Donbassaero Donbassaero Purchased27/12/2010 40584 Boeing 737 (NG) 800 Winglets N866NN NAS Investments 8 Inc American Airlines Purch’d - sale & lease-back on del27/12/2010 22221 Boeing 767 200SF (GE) N744AX Cargo Aircraft Management Inc ABX Air Purchased - sale & lease-back27/12/2010 22226 Boeing 767 200SF (GE) N749AX Cargo Aircraft Management Inc ABX Air Purchased - sale & lease-back28/12/2010 22947 Boeing 737 (CFMI) 300 N307SW AeroTurbine Inc AeroTurbine Inc Purchased - parked28/12/2010 23076 Boeing 737 (JT8D) 200 Adv (Stg3 Hk) N304DL Adv European Technologies Ltd Adv European Technologies Ltd Purch’d - pkd28/12/2010 23081 Boeing 737 (JT8D) 200 Adv (Stg 3 Hk) N309DL Adv European Technologies Ltd Adv European Technologies Ltd Purch’d - pkd28/12/2010 23095 Boeing 737 (JT8D) 200 Adv (Stg 3 Hk) N323DL Adv European Technologies Ltd Adv European Technologies Ltd Purch’d - pkd28/12/2010 33214 Boeing 737 (NG) 800 Winglets N854NN The Fifth Third Leasing Co American Airlines Purch’d - sub to existing lease29/12/2010 30327 Boeing 737 (NG) BBJ1 N796BA Boeing Boeing Purch’d off lease / fin term comp3/01/2011 2820 Airbus A320 210 (CFM) B-6729 China Aircraft Leasing (HK) Comp Ltd Chengdu Airlines Purchased3/01/2011 939 ATR ATR 72 500 VN-B240 Vietnam Aircraft Leasing Comp Vietnam Airlines Purch’d - sale & lease-back on del3/01/2011 23497 Boeing 737 (CFMI) 300 N665WN The Bank of New York Mellon Southwest Airlines Purch’d - sub to existing lease3/01/2011 22213 Boeing 767 200SF (GE) N740AX Cargo Aircraft Mgmt Inc ABX Air Purchased - sale & lease-back4/01/2011 20665 Boeing 727 200F(M)Adv(Stg3Hk) N745DH Astar Air Cargo Holdings LLC Astar Air Cargo Purch’d - sale & lease-back - parked4/01/2011 21290 Boeing 727 200F(M)Adv(Stg3Hk) N742DH Astar Air Cargo Holdings LLC Astar Air Cargo Purch’d - sale & lease-back - parked4/01/2011 21393 Boeing 727 200F(M)Adv(Stg3Hk) N793DH Astar Air Cargo Holdings LLC Astar Air Cargo Purch’d - sale & lease-back - parked4/01/2011 21954 Boeing 727 200F(M)Adv(Stg3Hk) N760AT Astar Air Cargo Holdings LLC Astar Air Cargo Purch’d - sale & lease-back - parked4/01/2011 21958 Boeing 727 200F(M)Adv(Stg3Hk) N788AT Astar Air Cargo Holdings LLC Astar Air Cargo Purch’d - sale & lease-back - parked4/01/2011 21998 Boeing 727 200F(M)Adv(Stg3Hk) N782DH Astar Air Cargo Holdings LLC Astar Air Cargo Purch’d - sale & lease-back - parked4/01/2011 22001 Boeing 727 200F(M)Adv(Stg3Hk) N784DH Astar Air Cargo Holdings LLC Astar Air Cargo Purch’d - sale & lease-back - parked4/01/2011 22006 Boeing 727 200F(M)Adv(Stg3Hk) N780DH Astar Air Cargo Holdings LLC Astar Air Cargo Purch’d - sale & lease-back - parked4/01/2011 22008 Boeing 727 200F(M)Adv(Stg3Hk) N754DH Astar Air Cargo Holdings LLC Astar Air Cargo Purch’d - sale & lease-back - parked4/01/2011 22013 Boeing 727 200F(M)Adv(Stg3Hk) N749DH Astar Air Cargo Holdings LLC Astar Air Cargo Purch’d - sale & lease-back - parked4/01/2011 22253 Boeing 727 200F(M)Adv(Stg3Hk) N747DH Astar Air Cargo Holdings LLC Astar Air Cargo Purch’d - sale & lease-back - parked4/01/2011 22440 Boeing 727 200F(M)Adv(RbkStg3Sys)N748DH Astar Air Cargo Holdings LLC Astar Air Cargo Purch’d - sale & lease-back - pkd4/01/2011 22468 Boeing 727 200F(M)Adv(Stg3Hk) N753DH Astar Air Cargo Holdings LLC Astar Air Cargo Purch’d - sale & lease-back - parked4/01/2011 22982 Boeing 727 200F(M)Adv(Stg3Hk) N751DH Astar Air Cargo Holdings LLC Astar Air Cargo Purch’d - sale & lease-back - parked5/01/2011 22466 Boeing 727 200F(M)Adv(Stg3Hk) N752DH Astar Air Cargo Holdings LLC Astar Air Cargo Purch’d - sale & lease-back - parked5/01/2011 25314 Boeing 737 (CFMI) 400 N134AS AerSale AerSale Purchased - parked5/01/2011 25361 Boeing 737 (CFMI) 400 N761AS AerSale AerSale Purchased - parked5/01/2011 25362 Boeing 737 (CFMI) 400 N362AS AerSale AerSale Purchased - parked5/01/2011 25417 Boeing 737 (CFMI) 400 N741AS AerSale AerSale Purchased - parked5/01/2011 25430 Boeing 737 (CFMI) 400 N304AS AerSale AerSale Purchased - parked5/01/2011 27149 Boeing 737 (CFMI) 400 N148AS AerSale AerSale Purchased - parked6/01/2011 21999 Boeing 727 200F(M)Adv(Stg3Hk) N783DH Astar Air Cargo Holdings LLC Astar Air Cargo Purch’d - sale & lease-back - pkd6/01/2011 25131 Boeing 757 200 (P&W) N594BC FedEx FedEx Purchased - parked6/01/2011 26270 Boeing 757 200 (P&W) N595BC FedEx FedEx Purchased - parked7/01/2011 25260 Boeing 747 400 (GE) N269AS AerSale AerSale Purchased - parked9/01/2011 27733 Boeing 777 200 (RR) HS-TJH Thai Airways International Thai Airways International Purch’d off lease / fin term comp10/01/2011 27102 Boeing 737 (CFMI) 400 N197SF Undisclosed Bank / Broker / Lessor Undisclosed Bank / Broker / Lessor Purchased - parked10/01/2011 24258 Boeing 767 300ER (P&W) N584HA Flying Fortress US Leasing Inc Hawaiian Airlines Purch’d - sub to existing lease11/01/2011 0987 Airbus A321 110 (CFM) HB-IOK Aircraft 32A-987 Inc Swiss Purch’d - sub to existing lease11/01/2011 29119 Boeing 747 400 (RR) ZS-SAZ South African Airways South African Airways Purch’d off lease / fin term comp11/01/2011 19006 Bombardier (Canadair) CRJ1000 RJt 1000ER NextGen F-HMLC Constellation Finance Limited Brit Air Purch’d - sale & lease-back on del12/01/2011 25806 Boeing 757 200 (RR) N950FD FedEx FedEx Purchased - parked12/01/2011 4021 Bombardier (de Havilland) Dash 8 400 G-ECOW Undisclosed Bank / Broker / Lessor 1314401 Alberta Inc Purchased - parked14/01/2011 055 Airbus A380 840 (RR) VH-OQI QF ECA 2010 No.4 Pty Limited Qantas Purch’d - sale & lease-back on del14/01/2011 29945 Boeing 757 200 (RR) G-TCBB Thomas Cook Airlines Thomas Cook Airlines Purchased - parked15/01/2011 1171 Airbus A320 210 (CFM) RP-C3230 Celestial Aviation Trading 68 Ltd GECAS Purchased - parked




Data supplied courtesy of Ascend Online Fleets / Ascend V1 database.


ENGINE DATA CHANGES 20th October 2010 to 18th January 201120 Oct 2010 18 Jan 2011 20 Oct 2010 18 Jan 2011 20 Oct 2010 18 Jan 2011

Type Engine Full-life value Full-life value % Current half-life Current half-life % Mkt lease Mkt lease %mkt value mkt value change rate rate change rate rate change

FIRM ORDERS – 21st October 2010 – 18th January 2011

Airbus A319 130 (IAE) Sharklets LAN Airlines 21/12/2010 Order 6 V2500-2524-A5SelectOne 130 (IAE) Sharklets V2500-2524-A5SelectOneAirbus A319 CJ (Engines Unannounced) Unannounced non-commercial customer 20/12/2010 Order 1 Unannounced-Unannounced CJ (Engines Unannounced) Unannounced-UnannouncedAirbus A319 110 (CFM) Aircraft Purchase Fleet Ltd 15/12/2010 Type Swap 5 CFM56-5B6/3 110 (CFM) CFM56-5B6/3Airbus A320 210 (CFM) easyJet 31/12/2010 Order 15 CFM56-5B4/3 210 (CFM) CFM56-5B4/3Airbus A320 210 (CFM) easyJet 31/12/2010 Type Swap 20 CFM56-5B4/3 210 (CFM) CFM56-5B4/3Airbus A320 200 neo (Engines Unannounced) Virgin America 29/12/2010 Order 30 Unannounced-Unannounced 200 neo (Engines Unannounced) Unannounced-UnannouncedAirbus A320 200 (Engines Unannounced) AerCap 21/12/2010 Order 2 Unannounced-Unannounced 200 (Engines Unannounced) Unannounced-UnannouncedAirbus A320 210 (CFM) Sharklets LAN Airlines 21/12/2010 Order 34 CFM56-5B4/3 210 (CFM) Sharklets CFM56-5B4/3Airbus A320 200 (Engines Unannounced) Sharklets Avolon Aerospace Leasing Ltd 16/12/2010 Order 8 Unannounced-Unannounced 200 (Engines Unannounced) Sharklets Unannounced-UnannouncedAirbus A320 200 (Engines Unannounced) Unannounced commercial customer 15/12/2010 Type Swap 1 Unannounced-Unannounced 200 (Engines Unannounced) Unannounced-UnannouncedAirbus A320 230 (IAE) Volaris 15/12/2010 Type Swap 2 V2500-2527E-A5SelectOne 230 (IAE) V2500-2527E-A5SelectOneAirbus A320 210 (CFM) Aircraft Purchase Fleet Ltd 07/12/2010 Order 1 CFM56-5B6/3 210 (CFM) CFM56-5B6/3Airbus A320 200 Prestige (Engines Unannounced)Unannounced non-commercial customer 01/12/2010 Order 1 Unannounced-Unannounced 200 Prestige (Engines Unannounced) Unannounced-UnannouncedAirbus A320 230 (IAE) Volaris 15/11/2010 Type Swap 2 V2500-2527E-A5SelectOne 230 (IAE) V2500-2527E-A5SelectOneAirbus A320 210 (CFM) Iberia 08/11/2010 Order 5 CFM56-5B4/3 210 (CFM) CFM56-5B4/3Airbus A320 200 (Engines Unannounced) BOC Aviation 29/10/2010 Order 25 Unannounced-Unannounced 230 (IAE) V2500-2527-A5SelectOneAirbus A320 200 (Engines Unannounced) BOC Aviation 29/10/2010 Order 4 Unannounced-Unannounced 200 (Engines Unannounced) Unannounced-UnannouncedAirbus A320 230 (IAE) BOC Aviation 29/10/2010 Order 1 V2500-2527-A5SelectOne 230 (IAE) V2500-2527-A5SelectOneAirbus A321 210 (CFM) LAN Airlines 21/12/2010 Order 10 CFM56-5B3/3 210 (CFM) CFM56-5B3/3Airbus A321 200 (Engines Unannounced) RBS Aviation Capital 15/12/2010 Type Swap 1 Unannounced-Unannounced 200 (Engines Unannounced) Unannounced-UnannouncedAirbus A321 200 (Engines Unannounced) Unannounced commercial customer 15/12/2010 Type Swap 6 Unannounced-Unannounced 200 (Engines Unannounced) Unannounced-UnannouncedAirbus A321 200 (Engines Unannounced) TransAsia Airways 16/11/2010 Order 6 Unannounced-Unannounced 200 (Engines Unannounced) Unannounced-UnannouncedAirbus A330 200 (Engines Unannounced) Hawaiian Airlines 29/11/2010 Order 6 Unannounced-Unannounced 240 (RR) Trent-772B-60EPAirbus A330 300HGW (Engines Unannounced) TransAsia Airways 16/11/2010 Order 2 Unannounced-Unannounced 300HGW (Engines Unannounced) Unannounced-UnannouncedAirbus A380 800 (Engines Unannounced) Asiana Airlines 06/01/2011 Order 6 Unannounced-Unannounced 800 (Engines Unannounced) Unannounced-UnannouncedATR ATR 72 500 Air Mauritius 15/12/2010 Order 1 PW100-127M 500 PW100-127MBoeing 737 (NG) 800 Winglets CIT Aerospace 29/12/2010 Order 23 CFM56-7B26/3 800 Winglets CFM56-7B26/3Boeing 737 (NG) 900ER CIT Aerospace 29/12/2010 Order 15 CFM56-7B26/3 900ER CFM56-7B26/3Boeing 737 (NG) BBJ2 Unannounced non-commercial customer 29/12/2010 Order 1 CFM56-7B27/3 BBJ2 CFM56-7B27/3Boeing 737 (NG) 800 Winglets AerCap 22/12/2010 Order 10 CFM56-7B26/3 800 Winglets CFM56-7B26/3Boeing 737 (NG) 900ER Unannounced commercial customer 08/12/2010 Order 4 CFM56-7B26/3 900ER CFM56-7B26/3Boeing 737 (NG) 800 Winglets Unannounced commercial customer 02/12/2010 Order 1 CFM56-7B26/3 800 Winglets CFM56-7B26/3Boeing 737 (NG) 800 Winglets Unannounced commercial customer 30/11/2010 Order 5 CFM56-7B26/3 800 Winglets CFM56-7B26/3Boeing 737 (NG) 700 Winglets Unannounced commercial customer 08/11/2010 Order 3 CFM56-7B22/3 700 Winglets CFM56-7B22/3Boeing 777 200LRF (GE) LAN Airlines 11/11/2010 Order 1 GE90-110B1L 200LRF (GE) GE90-110B1LBoeing 777 300ER (GE) BOC Aviation 29/10/2010 Order 8 GE90-115BL 300ER (GE) GE90-115BLBoeing 787 8 (Engines Unannounced) Unannounced commercial customer 17/12/2010 Order 1 Unannounced-Unannounced 8 (Engines Unannounced) Unannounced-UnannouncedBoeing 787 9 (Engines Unannounced) Saudi Arabian Airlines 04/11/2010 Order 8 Unannounced-Unannounced 9 (Engines Unannounced) Unannounced-UnannouncedBombardier (Canadair) CRJ700 RJ701ER NextGen SkyWest Airlines 04/01/2011 Order 4 CF34-8C5B1 701ER NextGen CF34-8C5B1Bombardier (Canadair) CRJ900 RJ900ER NextGen Estonian Air 29/10/2010 Order 3 CF34-8C5 900ER NextGen CF34-8C5Bombardier (de Havilland) Dash 8400 NextGen SpiceJet 09/12/2010 Order 15 PW100-150A 400 NextGen PW100-150ACASA C-295 Egyptian Air Force 29/10/2010 Order 3 PW100-127G PW100-127GEmbraer 170 LR ARAMCO Associated Co 15/11/2010 Order 3 CF34-8E5 LR CF34-8E5Embraer 190 CDB Leasing Company 10/01/2011 Order 10 CF34-10E5 CF34-10E5Embraer 190 AR Republic Airlines 04/11/2010 Order 6 CF34-10E6 AR CF34-10E6Embraer 195 LR Lufthansa CityLine 09/12/2010 Order 8 CF34-10E5A1 LR CF34-10E5A1Kawasaki Heavy Industries P-1 Japan Maritime SDF 15/11/2010 Order 10 XF7--10 XF7--10Lockheed Hercules C-130J-30 Republic of Korea Air Force 02/12/2010 Order 4 AE 2100-D3 C-130J-30 AE 2100-D3Viking Air DHC-6 TO 400 Peruvian Air Force 29/11/2010 Order 12 PT6A-34 400 PT6A-34

Mfr & Type Variant Customer Order Order/ Number Engines at Order Variant at delivery Engines at deliverydate TypeSwap

B737-300 CFM56-3B1 $2.33m $2.33m 0.0% $0.80m $0.80m 0.0% $0.030m $0.030m 0.0%B737-400 CFM56-3B2 $2.53m $2.53m 0.0% $1.00m $1.00m 0.0% $0.032m $0.032m 0.0%B737-500 CFM56-3C1 $2.93m $2.93m 0.0% $1.40m $1.40m 0.0% $0.035m $0.035m 0.0%A321-200 CFM56-5B3/P $8.39m $8.19m -2.4% $6.40m $6.20m -3.1% $0.080m $0.075m -6.3%A319-100 CFM56-5B5/P $6.69m $6.49m -3.0% $4.70m $4.50m -4.3% $0.060m $0.055m -8.3%A340-300 CFM56-5C4/P $7.75m $7.25m -6.5% $5.50m $5.00m -9.1% $0.068m $0.058m -14.7%B737-600 CFM56-7B22 $6.96m $6.96m 0.0% $5.05m $5.05m 0.0% $0.064m $0.059m -7.8%B737-700 CFM56-7B24 $7.51m $7.51m 0.0% $5.60m $5.60m 0.0% $0.067m $0.062m -7.5%B737-800 CFM56-7B26 $8.01m $8.01m 0.0% $6.05m $6.05m 0.0% $0.070m $0.065m -7.1%B737-900ER CFM56-7B27 $8.46m $8.46m 0.0% $6.50m $6.50m 0.0% $0.072m $0.067m -6.9%CRJ-200 CF34-3B1 $2.63m $2.55m -3.0% $1.50m $1.50m 0.0% $0.020m $0.020m 0.0%CRJ-700 CF34-8C1 $3.55m $3.85m 8.5% $2.20m $2.20m 0.0% $0.027m $0.027m 0.0%E170 CF34-8E5 $4.06m $4.33m 6.7% $2.68m $2.68m 0.0% $0.035m $0.033m -5.7%B767-200ER CF6-80A2 $4.58m $4.69m 2.4% $1.50m $1.50m 0.0% n/a n/aA300-600R CF6-80C2A5 $7.15m $7.13m -0.3% $3.75m $3.75m 0.0% n/a n/aMD-11 CF6-80C2D1F $7.93m $7.91m -0.3% $4.40m $4.40m 0.0% $0.085m $0.070m -17.6%A330-200 CF6-80E1A3 $13.98m $14.07m 0.6% $9.35m $9.35m 0.0% n/a n/aB777-300ER GE90-115B $26.44m $26.77m 1.2% $20.70m $20.70m 0.0% $0.210m $0.210m 0.0%A320-200 V2527-A5 $7.82m $7.32m -6.4% $5.70m $5.20m -8.8% $0.080m $0.058m -27.5%MD-82 JT8D-217C $1.70m $1.70m 0.0% $0.60m $0.60m 0.0% $0.023m $0.023m 0.0%B747-400 PW4056 $7.34m $7.34m 0.0% $3.75m $3.75m 0.0% $0.065m $0.060m -7.7%B767-300ER PW4060 $7.69m $7.69m 0.0% $4.10m $4.10m 0.0% $0.070m $0.065m -7.1%A310-300 PW4152 $6.84m $6.84m 0.0% $2.80m $2.80m 0.0% $0.060m $0.055m -8.3%B757-200 RB211-535E4 $7.52m $7.52m 0.0% $3.90m $3.90m 0.0% $0.050m $0.050m 0.0%Fokker 100 RB183 Tay 650-15 $2.53m $2.50m -1.2% $1.50m $1.40m -6.7% $0.026m $0.026m 0.0%A340-600 Trent 556-61 $13.38m $13.38m 0.0% $8.14m $8.14m 0.0% $0.110m $0.110m 0.0%A330-300 Trent 772B-60 $13.78m $13.78m 0.0% $8.60m $8.60m 0.0% $0.120m $0.120m 0.0%B777-200ER Trent 895 $20.29m $20.29m 0.0% $14.00m $14.00m 0.0% $0.155m $0.155m 0.0%ERJ-145 ER AE3007-A1P $2.60m $2.50m -3.8% $1.50m $1.40m -6.7% $0.030m $0.030m 0.0%B717-200 BR715A $3.33m $3.33m 0.0% $2.00m $2.00m 0.0% $0.045m $0.045m 0.0%



Data supplied courtesy of Ascend Online


Data supplied courtesy of Ascend Online Fleets / Ascend V1 database

Mfr & type Fleet Stored Total Fleet Fleet Stored % Seats Stored Total Seats Seats Stored%

STORED AIRCRAFT 18th January 2011

ATR ATR 42 32 355 9.01% 1416 13685 10.35%ATR ATR 72 34 491 6.92% 2226 30307 7.34%Aerospatiale 262 15 18 83.33% 53 53 100.00%Airbus A300 74 372 19.89% 13724 41093 33.40%Airbus A310 41 192 21.35% 5409 23451 23.07%Airbus A318 14 71 19.72% 1261 6595 19.12%Airbus A319 42 1270 3.31% 4033 163775 2.46%Airbus A320 99 2459 4.03% 15429 390490 3.95%Airbus A321 13 625 2.08% 2659 117735 2.26%Airbus A330 23 748 3.07% 6254 203441 3.07%Airbus A340 22 370 5.95% 4542 98310 4.62%Airbus A380 3 45 6.67% 1374 21178 6.49%Avcraft 328JET 2 2 100.00% 20 20 100.00%BAE SYSTEMS (Avro) RJ Avroliner 37 163 22.70% 3413 14878 22.94%BAE SYSTEMS (BAC) One-Eleven 3 13 23.08% 65 330 19.70%BAE SYSTEMS (HS) 146 71 167 42.51% 6489 12124 53.52%BAE SYSTEMS (HS) 748 19 67 28.36% 264 713 37.03%BAE SYSTEMS (HS) ATP 17 54 31.48% 456 716 63.69%BAE SYSTEMS (Jetstream) Jetstream (HP/Scottish) 1 8 12.50% 0 0 %BAE SYSTEMS (Jetstream) Jetstream 31 77 251 30.68% 1280 4338 29.51%BAE SYSTEMS (Jetstream) Jetstream 41 29 93 31.18% 834 2583 32.29%Boeing 707 45 196 22.96% 1943 5584 34.80%Boeing 717 32 155 20.65% 3239 17716 18.28%Boeing 720 1 1 100.00% 0 0 %Boeing 727 160 445 35.96% 8870 16644 53.29%Boeing 737 (CFMI) 266 1769 15.04% 34115 224071 15.23%Boeing 737 (JT8D) 224 500 44.80% 23455 49553 47.33%Boeing 737 (NG) 64 3496 1.83% 6712 537063 1.25%Boeing 747 180 948 18.99% 40230 209010 19.25%Boeing 757 96 1009 9.51% 16395 156782 10.46%Boeing 767 88 929 9.47% 14085 177290 7.94%Boeing 777 11 908 1.21% 2566 267379 0.96%Boeing (McDonnell-Douglas) C-17 1 226 0.44% 0 0 %Boeing (McDonnell-Douglas) DC-10 38 206 18.45% 3277 7430 44.10%Boeing (McDonnell-Douglas) DC-3 15 75 20.00% 522 2745 19.02%Boeing (McDonnell-Douglas) DC-8 57 100 57.00% 68 165 41.21%Boeing (McDonnell-Douglas) DC-9 176 305 57.70% 10606 21129 50.20%Boeing (McDonnell-Douglas) MD-11 7 192 3.65% 100 5143 1.94%Boeing (McDonnell-Douglas) MD-80 277 940 29.47% 39705 135026 29.41%Boeing (McDonnell-Douglas) MD-90 29 108 26.85% 4137 15934 25.96%Bombardier (Canadair) 580 1 2 50.00% 0 0 %Bombardier (Canadair) CL-415 20 70 28.57% 0 0 %Bombardier (Canadair) CL-44 1 1 100.00% 0 0 %Bombardier (Canadair) CRJ Regional Jet 143 1036 13.80% 6506 48444 13.43%Bombardier (Canadair) CRJ700 Regional Jet 3 333 0.90% 210 22609 0.93%Bombardier (Canadair) CRJ900 Regional Jet 2 243 0.82% 176 19742 0.89%Bombardier (Shorts) 330 4 47 8.51% 0 60 0.00%Bombardier (Shorts) 360 14 105 13.33% 346 1001 34.57%Bombardier (Shorts) SC.5 Belfast 1 1 100.00% 0 0 %Bombardier (Shorts) SC.7 Skyvan 11 61 18.03% 73 129 56.59%Bombardier (de Havilland) DHC-5 Buffalo 15 51 29.41% 0 38 0.00%Bombardier (de Havilland) DHC-6 Twin Otter 50 550 9.09% 867 8262 10.49%Bombardier (de Havilland) Dash 7 6 57 10.53% 248 2364 10.49%Bombardier (de Havilland) Dash 8 68 944 7.20% 3592 49527 7.25%CASA 212 59 249 23.69% 990 3272 30.26%CASA C-295 1 71 1.41% 0 %CASA CN-235 7 187 3.74% 80 382 20.94%Carstedt Aviation CJ600 1 1 100.00% 0 0 %Embraer 170 3 186 1.61% 154 13490 1.14%Embraer 190 6 334 1.80% 592 32319 1.83%Embraer 195 1 65 1.54% 108 7555 1.43%Embraer EMB-110 Bandeirante 53 264 20.08% 741 1753 42.27%Embraer EMB-120 Brasilia 69 268 25.75% 2008 7186 27.94%Embraer ERJ-135 56 305 18.36% 1825 6991 26.10%Embraer ERJ-145 34 683 4.98% 1679 33390 5.03%Fairchild F-27 4 4 100.00% 87 87 100.00%Fairchild (Swearingen) Metro 52 491 10.59% 633 5170 12.24%Fairchild/Dornier 228 27 175 15.43% 460 2025 22.72%Fairchild/Dornier 328 21 100 21.00% 631 3070 20.55%Fairchild/Dornier 328JET 47 109 43.12% 1301 3029 42.95%Fokker 100 67 240 27.92% 6477 23551 27.50%Fokker 50 41 188 21.81% 1950 8416 23.17%Fokker 70 4 47 8.51% 274 3577 7.66%Fokker F.27 39 132 29.55% 1150 3473 33.11%Fokker F.28 52 93 55.91% 3300 5878 56.14%General Dynamics (Convair) 580 15 71 21.13% 43 437 9.84%Gulfstream Aerospace Gulfstream I 18 49 36.73% 127 366 34.70%Handley Page Jetstream (HP/Scottish) 1 4 25.00% 18 18 100.00%Harbin Embraer Aircraft Industry ERJ-145 1 38 2.63% 50 1900 2.63%Hawker Beechcraft 1900 48 620 7.74% 890 9791 9.09%Hawker Beechcraft 99 9 146 6.16% 43 321 13.40%Indonesian Aerospace 212 11 69 15.94% 221 847 26.09%Indonesian Aerospace CN-235 8 48 16.67% 254 406 62.56%Israel Aerospace Industries Arava 15 73 20.55% 19 116 16.38%Lockheed Galaxy 2 111 1.80% 0 0 %Lockheed Hercules 208 1560 13.33% 0 274 0.00%Lockheed L-1011 TriStar 17 34 50.00% 4126 7057 58.47%Lockheed L-188 Electra 6 19 31.58% 89 89 100.00%NAMC YS-11 14 40 35.00% 335 399 83.96%Saab 2000 4 58 6.90% 200 2706 7.39%Saab 340 97 406 23.89% 3198 11781 27.15%Viking Air DHC-6 Twin Otter 1 1 100.00% 19 19 100.00%




Average CMV Dry Lease RateManufacturer List Price Type Oldest Newest %Change Oldest Newest %Change

LIST PRICES AND LEASE RATES

Airbus A300-600R $7.00m $13.50m -4.0% $0.140m $0.180m 0.0% 267

Airbus A310-200 $2.00m $2.00m -9.1% $0.070m $0.070m 0.0% 210

Airbus A310-300 $4.50m $8.00m -15.0% $0.120m $0.160m 0.0% 210

Airbus $62.50m A318-100 $14.00m $27.10m -3.4% $0.155m $0.245m 0.0% 108

Airbus $74.40m A319-100 $11.80m $31.10m -1.4% $0.130m $0.260m -4.6% 124

Airbus $81.40m A320-200 $5.40m $38.90m -3.1% $0.090m $0.315m 0.0% 150

Airbus A321-100 $11.95m $18.75m -7.9% $0.150m $0.185m 0.0% 185

Airbus $95.50m A321-200 $19.20m $43.10m -1.9% $0.195m $0.365m 0.0% 185

Airbus $191.40m A330-200 $43.00m $84.00m 2.4% $0.420m $0.725m 0.0% 250

Airbus $212.40m A330-300 $27.00m $92.75m 1.0% $0.330m $0.790m 4.9% 300

Airbus A340-200 $18.00m $18.00m -23.4% $0.340m $0.340m 0.0% 280

Airbus $228.00m A340-300 $20.00m $59.75m -17.8% $0.350m $0.715m 0.0% 295

Airbus $250.80m A340-500 $56.00m $79.50m -5.0% $0.550m $0.800m 0.0% 280

Airbus $263.80m A340-600 $61.00m $91.00m -4.7% $0.600m $0.915m 0.0% 350

Airbus $225.20m A350-800 270

Airbus $254.50m A350-900 314

Airbus $346.30m A380-800 $146.00m $185.00m 0.1% $1.450m $1.700m 0.0% 525

Boeing B717-200 $7.90m $11.45m -4.7% $0.110m $0.150m 0.0% 117

Boeing B737-300 $2.50m $6.45m -3.9% $0.055m $0.090m -9.2% 134

Boeing B737-400 $4.00m $7.55m -10.3% $0.090m $0.120m -6.5% 144

Boeing B737-500 $2.70m $5.50m -5.1% $0.060m $0.080m -6.8% 104

Boeing $56.90m B737-600 $11.00m $19.50m -7.8% $0.150m $0.200m 0.0% 103

Boeing $67.90m B737-700 $15.30m $32.10m -1.3% $0.165m $0.280m 0.0% 134

Boeing $80.80m B737-800 $19.50m $40.50m 1.3% $0.235m $0.340m 0.0% 160

Boeing B737-900 $18.90m $26.25m 0.3% $0.200m $0.235m 0.0% 180

Boeing $85.80m B737-900ER $32.90m $44.40m 0.4% $0.330m $0.385m 0.0% 215

Boeing B747-400 $19.00m $59.25m -1.9% $0.380m $0.675m 0.0% 412

Boeing $317.50m B747-8 467

Boeing B757-200 $6.00m $20.60m 0.0% $0.120m $0.230m 6.9% 188

Boeing B767-200ER $4.50m $14.50m -1.7% $0.160m $0.250m 0.0% 158

Boeing $164.30m B767-300ER $9.50m $54.90m -3.8% $0.200m $0.500m 0.0% 190

Boeing B777-200 $22.00m $38.25m -6.9% $0.375m $0.465m 0.0% 313

Boeing $232.30m B777-200ER $47.50m $117.75m 1.0% $0.580m $0.995m 0.0% 313

Boeing $262.40m B777-200LR $90.00m $135.00m 0.4% $0.820m $1.035m 0.0% 313

Boeing B777-300 $44.00m $65.50m -2.2% $0.600m $0.750m 0.0% 382

Boeing $284.10m B777-300ER $82.00m $140.00m -0.5% $0.850m $1.250m 0.0% 350

Boeing $185.20m B787-8 243

Boeing McDonnell Douglas MD-11 $11.70m $13.10m 0.0% $0.190m $0.190m 0.0% 285







Bombardier (Canadair) CRJ-100/200 $3.00m $8.65m -3.0% $0.040m $0.085m 0.0% 50

Bombardier (Canadair) $35.57m CRJ-700/705 $10.80m $19.80m -6.9% $0.120m $0.220m 0.0% 70

Bombardier (Canadair) $40.81m CRJ-900 $14.30m $25.55m -0.4% $0.150m $0.240m 0.0% 86

Bombardier Q200 $3.70m $8.50m -1.1% $0.055m $0.085m 11.1% 37

Bombardier Q300 $3.70m $15.40m 2.5% $0.055m $0.130m 7.0% 50

Bombardier $28.85m Q400 $8.50m $18.80m 3.0% $0.120m $0.190m 4.5% 70

Embraer ERJ-135ER $4.00m $4.50m -12.2% $0.045m $0.045m -12.5% 37

Embraer ERJ-145ER $4.80m $8.70m -7.6% $0.050m $0.105m 0.0% 50

Embraer $34.18m E170 LR $13.80m $23.05m -2.0% $0.150m $0.225m 0.0% 70

Embraer $34.20m E175 LR $15.90m $24.75m -0.5% $0.165m $0.230m 0.0% 82

Embraer $38.00m E190 LR $19.50m $29.00m 0.3% $0.210m $0.250m 4.6% 98

Embraer $40.10m E195 LR $21.10m $30.60m 0.3% $0.225m $0.270m 6.8% 108

Fokker Fokker 70 $3.50m $3.50m -5.4% $0.055m $0.055m 0.0% 79

Fokker Fokker 100 $3.15m $4.00m -11.5% $0.060m $0.070m -11.1% 108

ATR $16.90m ATR42-500 $5.20m $13.10m -6.4% $0.070m $0.125m 0.0% 48

ATR $20.50m ATR72-500 $5.20m $18.25m 2.1% $0.070m $0.170m 0.0% 70

Seating*(Typical C+Y)

Data supplied courtesy of Ascend Online

Region Net Delivered Leased Purchased Fleet as of Orders new 2nd hand 3rd November 2010

WORLDWIDE FLEET SUMMARY BY REGION — October 2010 to January 2011

Undisclosed orders 11 2 NA 17 21Africa NA 18 21 32 2556Asia-Pacific 158 84 93 18 7308Central America NA 7 15 4 1274Europe 50 61 127 119 7945Middle East 8 37 22 14 2001North America 153 107 110 528 17581South America 63 20 33 29 3095

Source: OAG Fleet iNET, january 2011




FPA_check:ATEM 29/1/09 11:00 Page 3

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AFM71: Airline Fleet Management

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