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  • The Resurgence of Regional Aircraft: A Market Analysis

    Cirium Ascend Consultancy is trusted by clients across the aviation industry to provide accurate, timely, and insightful aircraft appraisals. The team provides the valuations and analysis the industry relies on to understand the market outlook, evaluate risks and identify opportunities.

    Discover the team’s industry reports & market commentaries. Read their latest expert analysis, viewpoints and updates on Thought Cloud.

    Solayappan-Ganesaan
    Solayappan-Ganesaan

    Solayappan Ganesaan, Aviation Consultancy and Valuations Intern, Cirium Ascend Consultancy

    The latest webinar, Regional Aircraft: Is the Market Bouncing Back? hosted by Cirium Ascend Consultancy, sheds light on key developments in the turboprop and regional jet market. Alex Vathylakis, principal valuations analyst, Arjan Meijer, president and chief executive of Embraer Commercial Aviation, and Ron Baur, president of Azzora, formed the panel, which was moderated by Delphine Wermeister-Levert, senior account manager. The panelists arrived at the following conclusions:

    • In the US regional jet market, there is a noticeable shift from 50-seater aircraft to 70-seaters, but no imminent scope clause changes on the horizon that might drive this shift further towards even larger aircraft.
    • MRO bottlenecks continue to pose challenges for regional turboprops as well as regional jets.
    • The focus of Embraer on the E195-E2 shows the OEM’s intention to expand in the small narrowbody segment and to compete with aircraft types such as the A220-300.
    • Secondary market values of turboprops are trending up, and this trend is also observed for the E190/195-E1s.

    Single-aisle jets are leading the global recovery in the aviation industry post-pandemic. While regional jets and turboprops have initially experienced a faster recovery in terms of utilisation, it has significantly slowed in the past two years.

    Regional Turboprops

    A common challenge currently faced by regional turboprops is MRO bottlenecks, resulting in a significant portion of the fleet being stored, and with only a very small number of ready-to-go aircraft available for sale or lease. In terms of flights tracked, the ATR 72-600 remains in growth mode as the only in-production regional turboprop today. Utilisation of the ATR 72-500 and Dash 8-400 has stagnated below 2019 levels, which, apart from the MRO challenges, can be attributed to part-outs and freighter/firefighter conversions respectively over the past four years.

    The outlook for the turboprop fleet varies by region, with all regions except Africa witnessing a decrease in fleet size. Africa stands out as the region that has fuelled growth by acquiring used aircraft.

    A notable observation is the absence of new orders for turboprops in the North American market, particularly in Canada. In the USA, passengers have long eschewed the use of turboprops in favour of regional jets, but in Canada, airlines may soon look to implement measures to address an aging turboprop fleet issue.

    Shifting the focus to OEMs, ATR is still yet to benefit from its monopoly (as DHC no longer manufactures new aircraft), but they do have a stable orderbook for three to four years as they look to renew aging fleets and enter new markets.

    Leasing activity in the regional turboprop market is influenced by an MRO bottleneck, resulting in a significant number of aircraft awaiting transition and placement. Concurrently, data from Cirium’s Fleets Analyzer indicates that some lessors have offloaded a considerable number of turboprops, mainly Dash 8-400 from their portfolios. Consequently, there is upward pressure on Market Lease Rates in the near future.  

    Regional Jets

    Smaller regional jets, such as the CRJ 100/200 and E145s, have experienced a significant increase in storage of aircraft, primarily due to the departure of several US operators from these fleets. Additionally, challenges like pilot shortage and the difficulty to overhaul the engines have driven the 50-seater aircraft out of the market due to the function of aircraft age. As a result, tracked flights for these aircraft have remained 60% below the levels recorded in 2019. Consequently, many operators have shifted their focus to 70-seater medium regional jets as a more favourable alternative in the scope clause compliant market (Scope clause in the USA, negotiated by pilot unions, limits regional aircraft to a maximum of 76 passengers and introduces a cap to the number of regional jets operated on behalf of major US airlines).

    The E175s have surpassed 2019 utilization levels, driven by two primary factors: increased deliveries of E175 aircraft and very low storage rates.

    This positive trend is expected to continue as the US heavy aircraft market anticipates ongoing demand for new aircraft, underscored by American Airlines’ order for 90 E175s, which may even replace the earlier models of the E175. This development highlights the role of medium regional jets in addressing the gap left by the retirement of the 50-seater fleet while US Scope Clause is not expected to change any time soon.

    With regards to the E2 GTF issues, storage rates are comparatively lower at 16%, in comparison to the storage rates of 22% for A220s and 36% for A320neos powered by GTF engines.

    Orders indicate a potential upward trend comparable to levels seen in 2018 as demand for more efficient and larger capacity regional jets continues to shape the regional aviation market.  If “crossover” types are included, it can be seen that interest has picked up and that competition has stimulated the wider 150 seat segment.

    Several factors contribute to this trend. Ron Baur notes, “The narrowbody market is sold out, and the E2 jets provide a cost-effective alternative to add frequency and open up new markets,” similar to what Scoot has accomplished. Additionally, the E2 offers a 25-30% reduction in trip costs and similar seat costs compared to smaller narrowbodies, according to Arjan Meijer.

    Lease Rates

    Much like most flight paths converge at a major hub, the market review naturally leads us to an analysis of Market Values and Market Lease Rate changes for regional jets over the past few years.

    The fleet weighted Market Value change for the ATR 75-500 is currently about 10% lower than pre-Covid levels. In contrast, the ATR 72-600 appears to be recovering well.

    However, the Dash 8-400 still has significant ground to cover, despite its very low availability. Ready-to-go aircraft in this category command a premium, but this price gap is expected to narrow in the coming months.

    The values for E175s remain stable, and this type continues to enjoy a dominant position in the market. On the other hand, the CRJ-900 has seen its value still significantly below pre-Covid levels, driven by softer demand. The E190 and E195 remain slightly lower than their pre-Covid values but show a slow but steady recovery, as noted by the transaction data gathered by Cirium (increases, especially in Market Lease Rates, were announced after the webinar in our October value review).

    The fleet-weighted Market Lease Rates for the ATR 72-500 have surpassed pre-Covid levels while the ATR 72-600 is showing signs of resilience, with current deals being negotiated north of the $100,000 mark – an amount not seen in the past four years in the secondary market. The Dash 8-400 reflects a similar trend with a slight lag.

    In contrast, the E2 and A220 have shown Market Lease Rates improvements of around 10% compared to pre-Covid levels, indicating a positive demand for these aircraft while the new types are also naturally less volatile.

  • Aviation to Add 45,900 Aircraft Worth $3.3T in 20 Years

    Download an executive summary of the Cirium Fleet Forecast.

    • Cirium’s Fleet Forecast predicts 45,900 new passenger, freighter, and turboprop aircraft will be delivered between 2024 and 2043.
    • The number of active aircraft globally now exceeds pre-pandemic levels.
    • Short-term forecast to 2027 predicts a 5% drop in deliveries due to supply chain issues

    London, 22 October 2024: Cirium, the world’s most trusted source of aviation analytics, has published its annual Fleet Forecast, revealing the future outlook of the global commercial passenger and freighter aircraft market.

    The independent forecast, now in its twelfth year, reveals that 45,900 aircraft are predicted to be delivered globally over the next 20 years, equating to a total value of $3.3 trillion USD, as airlines continue to invest in newer and more sustainable aircraft.

    This year’s forecast by Cirium Ascend Consultancy, comes as the aviation industry continues to face supply chain issues delaying aircraft deliveries, with the report projecting 5% fewer deliveries between 2024-2027 due to a shortage of components (compared to 2023 data).

    Data also reveals that during Q4 2024, a total of 26,100 aircraft are currently in service, which is up 5% on January 2020 when the pandemic first took hold, showing the industry’s strong growth trajectory and recovery.

    This rise has been driven by the delivery and operation of single-aisle aircraft (up 13%), with the number of twin-aisle aircraft sitting 3% below pre-pandemic levels. The number of active regional jets also remains 8% down on pre-pandemic levels, with turboprops having seen the largest drop of 13%.

    Looking ahead to the next 20 years, Cirium’s Fleet Forecast also reveals that of the 45,900 new aircraft set to be delivered between 2024 and 2043, some 98% will be passenger aircraft, as the firm predicts that capacity (ASKs) will grow at 4.4% per year*.

    Despite this, an estimated 3,500 freighters are expected to be delivered in the next 20 years, with the industry’s cargo fleet projected to grow 2.6% per year. This majority (70%) of these will be through passenger-to-freighter (P2F) conversions rather than new deliveries, as airlines look to make the most of the current spike in demand.

    Airbus and Boeing will remain the two largest commercial aircraft OEMs, delivering an estimated 84% of aircraft between them, with this figure projected to rise to 90% by value in 2043, while COMAC is forecast to take a 6% share of demand. There is some $180 billion of demand for other OEMs (ATR, Embraer, etc), in addition to potential new programmes within the next 20 years.

    Asia as a whole will continue to be the leading region for aircraft growth, taking some 45% of deliveries over the next 20 years, of which China will contribute some 20% on its own, almost reaching the North American total.

    This growth is also compounded by the rise of commercial aviation within India, which is forecast to see the country’s passenger aircraft numbers increase from 720 at the end of 2023, to more than 3,800 over the next 20 years. The country is covered separately in the report for the first time.

    Rob Morris
    Rob Morris
    Rob Morris

    “As we continue to enter the next cycle of growth for the aviation industry, our new Fleet Forecast illustrates the continued demand for new aircraft, as airlines look to renew and expand their fleets,” said Rob Morris, Head of Consultancy at Cirium Ascend Consultancy.

    However, it is clear that supply chain issues and other manufacturing will continue to cause delays for OEMs, leading to uncertain delivery schedules for many airlines, and this has been factored into our forecast.

    With markets like India set for significant growth, it is clear that the next 20 years will be increasingly competitive for manufacturers, with airlines continuing to invest in their fleets.

    The forecast also illustrates the challenge of sustainability and net-zero as fleet growth is balanced with new aircraft efficiency to drive reductions in unit emissions.

    As part of the report, Cirium has also revealed that single-aisle are projected to lead the industry’s growth over the next 20 years, with a projected 3.9% annual growth rate, exceeding the 3.3% for twin-aisles, as long-haul traffic continues to see slower growth post-pandemic. Regional aircraft are predicted to rise more modestly at an overall rate of 0.8% per year.

    Download an executive summary of the Cirium Fleet Forecast.

    For Cirium media inquiries please contact media@cirium.com

    Notes to editors
    *compared to 2023

    • The forecast covers aircraft sized from 30 seats upwards and their freighter equivalents.
    • The forecast does not include electric, hybrid or hydrogen-powered aircraft programmes, due to the expectation that the development of existing or all-new commercial aircraft will be centred on conventional propulsion powered by increasing proportions of sustainable aviation fuel (SAF).

    About Cirium 
    Cirium® is the world’s most trusted source of aviation analytics. The company delivers powerful data and cutting-edge analytics to empower a wide spectrum of industry players. It equips airlines, airports, travel enterprises, aircraft manufacturers, and financial entities with the clarity and intelligence they need to optimize their operations, make informed decisions, and accelerate revenue growth. 

    Cirium® is part of LexisNexis® Risk Solutions, a RELX business, which provides information-based analytics and decision tools for professional and business customers.  The shares of RELX PLC are traded on the London, Amsterdam and New York Stock Exchanges using the following ticker symbols: London: REL; Amsterdam: REN; New York: RELX. 

    For more information, follow Cirium® on LinkedIn or visit cirium.com.

  • The US Market Overview: Airlines

    Cirium Ascend Consultancy is trusted by clients across the aviation industry to provide accurate, timely, and insightful aircraft appraisals. The team provides the valuations and analysis the industry relies on to understand the market outlook, evaluate risks and identify opportunities.

    Discover the team’s industry reports & market commentaries. Read their latest expert analysis, viewpoints and updates on Thought Cloud.

    Yinan-Qin
    Yinan-Qin

    Yinan Qin, Senior Aviation Analyst, Cirium Ascend Consultancy

    PART THREE OF THREE – READ PART ONE: TRAFFIC AND PART TWO: AIRCRAFT ABS

    Q2 Financial Performance of US Airlines

    Given that major airlines will issue their Q3 results around the end of October, we are currently focusing on 2024 Q2 results to take a brief look at the financial performance of airlines in the United States.

    US airlines EBIT

    Source: Cirium Core, Airlines 2Q24 Financials

    The majority of the selected US-based airlines experienced moderate revenue increases during the second quarter of 2024, with year-on-year growth ranging from 2.0% to 6.9%.

    However, overall revenue growth momentum slowed compared to the same quarter last year due to softening yields and the slowing of passenger traffic growth from its recent Covid recovery to a longer-term mature market trend.

    JetBlue and Spirit Airlines in particular experienced revenue declines, blaming the intensified competition on domestic routes from market “overcapacity” and high sensitivity to passenger yields in their low-cost carrier (LCC) markets. Both airlines outlined a plan to cut underperforming routes, focus more on core leisure markets and enhance ancillary revenues.

    When it comes to profitability, six of the seven selected US airlines reported positive EBIT with only Spirit reporting losses.

    However, EBIT margins for most airlines narrowed compared to 2023 as most faced higher operating costs, driven primarily by increased labour costs due to new post-Covid contracts for pilots and cabin crew, as well as increased maintenance and fuel expenses associated with increased capacity and expanded fleet size.

    US airlines gross debt
    Leverage (Net Debt / TTM EBITDAR)
     AmericanUnitedDeltaSouthwestSpiritJetBlueAlaska
    23Q23.7x2.4x2.7x-1.3x25.3x3.1x1.6x
    24Q26.1x2.1x2.2x-0.6x717.7x-33.2x1.3x

    Source: Cirium Core, Bloomberg, Airlines 2Q24 Financials

    Several airlines continued their efforts to strengthen their balance sheets, achieving a year-on-year decline in gross debt by consistently paying down their obligations. However, JetBlue and Spirit saw an increase in gross debt. Leverage ratio measured by net debt/ Trailing Twelve Month (TTM) EBITDAR declined for most airlines while Spirit’s leverage ratio soared due to an increase in net debt position.

    On the other hand, Southwest reported a net cash position of $893 million as of June 2024 with substantial liquidity on hand, resulting in a negative leverage ratio.

    The negative leverage ratio position for JetBlue is, however, due to its deteriorated operating results in the first quarter of 2024, which led to a negative TTM EBITDAR. It is critical for carriers to enhance or maintain liquidity positions to rebuild their balance sheet and continue funding near-term aircraft deliveries.

    It is worth mentioning that Spirit’s financial health deteriorated substantially among the selected US airlines. According to Cirium Fleets Analyzer, Spirit is the largest US carrier operating an Airbus A320neo fleet equipped with PW1100G engines (116 out of 217 total aircraft), and the carrier grounded 20 aircraft per month on average during 2024. Although the carrier will receive $150 million to $200 million in credits as compensation from Pratt & Whitney for the full year 2024, this has largely disrupted the carrier’s operation since the onset of the GTF powder coating issue. While the airline failed to return to profitability and generate stable operating cash flow, its liquidity significantly diminished as a result of mounting debt obligations, extensive lease payments and pre-delivery payments. Additionally, the termination of the Spirit-JetBlue merger worsened the situation and left Spirit careening towards an unavoidable liquidity shortfall. As of June 2024, Spirit’s debt maturity schedule showed $1.3 billion in debt principal obligations (40.2% of total long-term debt outstanding) due by the end of 2025. According to a report by the Wall Street Journal on 3 October 2024, Spirit was in talks with its bondholders over the terms of a potential Chapter 11 filing. On the same day, Spirit’s stock price plunged by approximately 40%.

    Near Term Outlook and Countermeasure

    In 2024, US airlines are encountering increasing challenges in both revenue generation and cost management. Cash flows are under significant pressure due to tight profit margins, rising capital expenditure, heightening labour cost and potential spikes in fuel prices. Consequently, US airlines highlighted the near-term plan on the following aspects to weather the industrial headwinds:

    • Adjusting capacity to align with demand expectations: For example, American has scaled down its planned capacity growth, with a 3.5% increase for the second half of 2024. Delta also anticipates a decelerating capacity growth for the same period.
    • Rationalising route networks to improve yields: LCCs such as JetBlue and Spirit are eliminating less profitable routes and prioritising those with higher demand and yields. Additionally, American and Delta are expanding their transatlantic routes in summer 2025 to tap into the potential of this market segment.
    • Implementing effective cost-cutting initiatives: US airlines are focusing on reducing labour costs and fuel expenses to restore profit margins. While employee contract renegotiation is unlikely in the near future, airlines may right-size overhead and non-crew positions to reduce discretionary spending. Additionally, airlines may also need to develop fuel hedging strategies to mitigate the higher volatility in fuel prices amid the Middle East conflicts.
    • Strengthening balance sheet and deleveraging to enhance financial resilience: Carriers remain committed to paying down debt obligations and refinancing existing high interest debt structures. Take the big three airlines for example: American Airlines reduced its total debt by $1.8 billion during the first half of 2024 and highlighted its goal to reduce total debt by $15 billion by the end of 2025. Delta repaid $2.1 billion in debt in the first half of 2024, targeting a return to investment-grade ratings. United Airlines reported $6.2 billion in debt repayment in its six-month cash flow statement to reduce the airline’s interest burden in the years ahead.

  • The Right Way to Shape Your Digital Transformation

    Andrew Shanks
    Andrew Shanks

    Andrew Shanks, VP of Cirium Sky, Cirium

    Digital transformation isn’t something new, the rise of Artificial Intelligence (AI), Machine Learning (ML), and data-driven decision-making have been on the lips of many airline and airport operations executives. The reality, however, is that there has been little movement in some of the key functional areas, which if untapped could significantly impact the digital transformation initiatives of the airline or airport.

    One key functional area that is close to my heart is operations, given that I come from an operations background! An airline or airport operations centre serves as the control hub and the people in this operational heartbeat have taken on the role of superheroes. There is more pressure on these teams to improve planning and real-time collaboration and that is where the new superhero enters the room – the operations analytics teams.

    Operations analytics teams are on the rise and are integral to the success of a digital transformation strategy. The teams can tap into a wealth of data and derive invaluable insights to surface to teams across the operational teams and significantly accelerate the planning, real-time collaboration and post-ops analysis at an airline or airport.

    This is where I have been focusing my time as VP of the Cirium Sky product, which acts as a digital gateway to Cirium’s high quality aviation data and analytics. I have been listening to airlines and airports globally to understand how data can truly make a difference. Through our discovery at Cirium, we see positional analytics as a key area of focus which if delved into could have a big impact on digital transformation.

    Positional Analytics

    Most operations centres use maps to track flights and aircraft in real time but there’s so much more that can be analyzed. What if the operations teams could examine what was planned against what route was flown in both distance and time? And, what if those insights could be benchmarked against the competition? This would enable teams to see how consistent plans are and where they can be adjusted, and in the real-time, use the positional analytics to predict arrival times and provide more accurate insights to the teams that need it.

    The key to doing this is to access data that can be trusted, fuse multiple datasets together and make it interconnected across the teams that need it.

    Cirium is working with airlines doing this and the insights are fascinating. Two major airlines are examining Cirium’s positional data and analytics through Cirium Sky Warehouse, building a story of their flights and analyzing where others might be taking a different approach to their flying. The initial focus is centred on particular events such as weather or runway closures and learning how that affects their program. This valuable information is then being fed back into planning departments for future events of those types.

    Together we can transform the future of travel.

  • The US Market Overview: Aircraft ABS

    Cirium Ascend Consultancy is trusted by clients across the aviation industry to provide accurate, timely, and insightful aircraft appraisals. The team provides the valuations and analysis the industry relies on to understand the market outlook, evaluate risks and identify opportunities.

    Discover the team’s industry reports & market commentaries. Read their latest expert analysis, viewpoints and updates on Thought Cloud.

    Yinan-Qin
    Yinan-Qin

    Yinan Qin, Senior Aviation Analyst, Cirium Ascend Consultancy

    PART TWO OF THREE – READ PART ONE: TRAFFIC AND PART THREE: AIRLINES

    The aviation asset-backed securities (ABS) market has encountered considerable challenges during and since Covid-19, further exacerbated by geopolitical conflicts and a relatively gloomy global economic outlook. These factors have collectively led to the downgrade of several ABS portfolios and a silent ABS market in the past two years, with a total of less than five portfolios issued in 2022 and 2023.

    After two years of market stagnation, lessors are now cautiously re-entering the market. In the first nine months of 2024, six new ABS portfolios were issued. Four of these consist purely of passenger aircraft, while the two PKAIR portfolios are essentially loan pools. The basic information of these portfolios are as follows:

    Note: *No information available for this tranche from Bloomberg Source: Cirium Core, Bloomberg

    Several Key Changes Observed Between Current Market vs Pre-pandemic Market

    Covid-19 has altered investor’s risk appetite with respect to airlines and aircraft, with an emerging preference for airline with robust credits and assets with higher liquidity. Comparing the four 2024-issued portfolios with those from 2019 within Cirium’s watchlist, there has been a notable shift towards next-gen aircraft. As more airlines upgauge and modernize their fleets with newer generation aircraft for better fuel efficiency and operational performance, lessors are naturally following this trend and building portfolios that feature these advanced aircraft.

    Single-aisle aircraft remained the dominant type in the new 2024 portfolios, representing 94% of the total asset pool measured by aircraft count.

    Popular variants continue to be the Boeing 737 Max 8, Airbus A320ceo and A320neo. On the twin-aisle side, all variants in the asset pool are newer generation aircraft, including the 787-9, A330-900neo and A350-900. This contrasts with the 2019 market where the A330-300 and 777-300ER were popular options.

    With regard to aircraft operating regions, lessees based in Asia-Pacific, Europe and North America were the top three in 2019 while Latin American lessees have become the largest market segment in the 2024 portfolio. There are no aircraft operating in Russia due to sanctions, while exposure to the Chinese market has declined significantly in 2024. This reflects investor concerns about the stagnant Chinese economy and increasing political tension between the USA and China.

    Coupon rates have inevitably increased for comparable tranches to reflect the higher interest rate environment. For instance, examining Carlyle’s ABS portfolio over the last couple of years reveals that the tranche A coupon rate has risen from around 4.0% (AASET 2019-1, AASET 2019-2, AASET 2020-1) to over 6.0% (AASET 2022-1, AASET 2024-1). Additionally, the tranche structure has been simplified with limited subordinate tranches and E notes issued after 2022.

    Overall, it is quite evident that the market preference is now leaning towards single-aisle, advanced technology younger aircraft with limited exposure to secondary market deals.

    Meanwhile, investors require higher yields during the post-pandemic period to mitigate the risk associated with higher interest rates and market volatility.

    Near-term ABS Market Outlook

    The ABS market has shown several positive signs that have further improved investor confidence. Meanwhile there is robust recovery in global traffic, an undersupplied market and an increasing presence of newer generation aircraft driven by fleet modernisation. Additionally, airlines have shown improved financial performance, bottom-line growth and balance sheet deleveraging, which have enhanced their credit ratings since the pandemic.

    More importantly, a confirmed interest rate drop will further enhance the market.

    The recent Federal Reserve interest rate cut of 50 basis points (rather than the expected 25 basis points) reflects improvements in inflation and employment rates and indicates lower likelihood of a tightening monetary market again. This reduction in interest rates will increase margins in asset pricing. Therefore, an increase in aviation ABS portfolios is anticipated in the future, although a return to levels seen pre-pandemic is unlikely in the near term. Investors are expected to re-enter the market cautiously, focusing more on asset quality than quantity.

  • Delta’s Recovery From Tech Challenges Earns Platinum

    By Mike Malik, Chief Marketing Officer at Cirium

    Technology disruptions are always a challenge, but when they hit during the peak summer travel season, like Delta experienced, the stakes are even higher. This past summer, on July 19th, Delta’s operations were upended by a worldwide malfunction of computers running Microsoft Windows, caused by a flawed software update by the cybersecurity firm CrowdStrike. Airlines from around the world were affected, but none more so than Delta, a big user of both Windows and CrowdStrike software.

    The Atlanta-based airline had to cancel nearly 7,000 flights over five days, costing it an estimated $500 million. That included roughly $380 million in lost revenue, plus $120 million in additional costs. At the same time, Delta suffered damage to its reputation as an airline renowned for operational reliability. Just last year, it was the recipient of Cirium’s prestigious Platinum Award, given to carriers that excel in on-time performance while navigating considerable operational complexities. Delta won the award in 2021 and 2022 as well. As Cirium CEO Jeremy Bowen said at the award ceremony, “Delta’s achievement sets a high standard for operational performance in the airline industry, and it is an inspiration for others.”

    Delta

    Ed Bastian (center) and team receiving the Cirium’s Platinum Award for the third year in a row.

    The Delta team representatives proudly show the award to their colleagues.

    How Badly Did the CrowdStrike Disruption Impact Delta’s Relative Operational Performance?

    During June, the month before the CrowdStrike incident, Delta recorded an on-time performance rate of 80.05%. This was best among all airlines in North America, based on data from the Cirium On-Time Performance Program. It was eighth best among all airlines worldwide. For comparison, United’s on-time rate in June was 77%, American’s 74%, and Southwest’s 72%. Delta’s completion factor, which measures the percentage of flights operated rather than cancelled, topped 99%.

    What about July? Unsurprisingly given all the CrowdStrike-related cancellations, Delta’s monthly completion factor dipped below 95%, the lowest rate among U.S. airlines. But for flights that did operate, punctuality remained solid. Delta’s July on-time rate was 72.36%, a decline from its normal rate but still third best across all of North America. Only Alaska Airlines and United posted a better July rate. Cirium’s monthly on-time performance reports provide an even more detailed look at the numbers. Delta, for example, operated 74% of its July flights within their scheduled block times (this was 77% in June). Its planes during the month departed on-time rate of 72.36% (80.5% in June). They arrived on time at a rate of 72.85% (79.88% in June).

    North American Airlines: On-Time Performance in June 2024

    North American Airlines: On-Time Performance in July 2024

    What About August and September?

    Delta’s operational performance quickly bounced back after the difficult month of July. Cirium’s August report on industry on-time performance showed the Atlanta airline once again atop the North American charts, registering an on-time arrival rate of 80.9%. Its completion factor rebounded to 98.2%. In September too, it was number one in North America, lifting its punctuality to 87.81%. This was good enough to rank Delta number four on Cirium’s global ranking for September.   

    Speaking at a Morgan Stanley event on September 12th, Delta’s chief financial officer Dan Janki told investors, “The operations continue to run very well. Delta remains the industry leader. If you look across all on-time performance metrics, we lead all carriers in that position. On completion factor, we’re number one related to network carriers. And that’s even with a tough five days that we had [from] the tech outage in July… the Delta team managed to return us to an industry-leading position.” CEO Ed Bastian gave the same message during the carrier’s third quarter earnings call on Oct. 10th. “Year-to-date, our on-time performance is best in the industry, and our completion factor leads the network carriers even when including the impact of the outage.”

    North American Airlines: On-Time Performance in August 2024

    North American Airlines: On-Time Performance in September 2024

    AC – Air Canada, AS – Alaska, AA – American Airlines, F9 – Frontier Airlines, B6 – JetBlue, WN Southwest, NK – Spirit Airways, UA – United, WS – Westjet

    Where Does Delta Go From Here?

    Janki said the airline is reviewing how it handled the CrowdStrike disruption. “There’s definitely a set of learnings related to all elements: people, process, policy.” The airline will continue, he added, to invest heavily in new operations technology. Looking ahead, Cirium’s Diio network planning system shows that Delta is planning to operate more than 430,000 flights in the fourth quarter of 2024, with more than 60 million seats. Both figures represent a roughly 5% increase from last year’s fourth quarter. Running an airline with that much capacity and complexity is no easy task!

    What’s Delta’s Secret?   

    How exactly did Delta win Cirium’s Platinum Award three years in a row? How did it bounce back from July’s IT disruption to once again lead North America in on-time arrivals during August and September? One answer is close cooperation with its most important hub airports. Cirium, in addition to its monthly on-time performance reports for airlines, publishes monthly reports for airports too.

    Atlanta, Delta’s busiest hub, which is also the world’s busiest airport, ranked 16th in the world among global airports during both August and September.

    Other important Delta airports like Minneapolis-St. Paul (MSP), Detroit (DTW), Los Angeles International (LAX) and Salt Lake City ranked high on Cirium’s latest rankings as well.

    Ever since merging with Northwest in 2008, Delta has strived to improve its operational reliability. Many of its efforts are described in the 2016 book Glory Lost and Found, How Delta Climbed from Despair to Dominance in the Post-9/11 Era, by Seth Kaplan and Jay Shabat. The airline has since continued to adopt new technology and is now exploring new applications that use artificial intelligence. Delta speaks often about leveraging data and empowering employees. It owns Delta Tech Ops, which calls itself the largest airline maintenance, repair, and overhaul (MRO) provider in North America. This is particularly helpful with so many current challenges in the aviation supply chain, including parts and engine shortages.

    The in-house maintenance expertise also helps Delta deliver strong reliability on older planes, even as it introduces many new planes.

    According to Fleets Analyzer, Cirium’s leading analytics database of worldwide aircraft data, Delta has more than 300 new Airbus and Boeing planes on order, including A350s, A330s, A321s, B737 Max 10s, and A220s.

    https://infogram.com/deltas-monthly-on-time-arrival-rate-2024-1h7v4pdpjlel84k?live

    More Platinum Awards on the Horizon?

    Managing a global airline with a diverse fleet is no small task, yet Delta continues to set the standard for reliability, as highlighted in Cirium’s monthly on-time reports. While the CrowdStrike issue in July posed a challenge, Delta quickly regained its stride, delivering strong operational performances in August and in September. As the year unfolds, the question remains: how high can Delta climb? Stay tuned to our monthly reports to track their continued success.

    Learn more about Cirium On-Time Performance. View all the Monthly On-Time Performance Airlines reports.

  • Cirium Unveils Aircraft Maintenance Tracking & Projection Tool

    Cirium Ascend’s new Ground Events analytics tool is set to revolutionize the aviation aftermarket by providing the first truly global view of historical and projected aircraft maintenance events using satellite-based flight tracking.

    Ground Events, the latest addition to the Cirium Ascend portfolio, provides MROs, OEMs, aircraft parts suppliers and airlines with the ability to generate comprehensive analytics which includes market share trends, turnaround times to derive strategic insights on markets for airframe maintenance, cabin retrofits and aircraft paint work.

    The solution’s easy access to data makes Ground Events a powerful tool, helping users better understand aircraft maintenance events. Businesses such as MRO providers can analyse market share, forecast future ground events, and improve cost efficiency.

    Mehmet Erdogan
    Mehmet Erdogan

    “We collaborated with the market, including a major European OEM, to launch a first-of-its-kind solution which pinpoints when the last maintenance check actually occurred and predicts future events based on this. It’s our mission to support the industry to inform their analysis of aircraft maintenance and better plan for future checks and events, saving significant time and costs,” said Mehmet Erdogan, VP of Ascend.

    Cirium’s Ground Events tracks aircraft locations and dates on the ground, along with maintenance contract details, to analyze why a commercial aircraft has been grounded for seven or more consecutive days. It also offers insights into historical maintenance patterns and usage trends, allowing for future maintenance projections at the tail number level.

    In accessing Ground Events users can select from a range of maintenance events such as C-checks, Heavy checks, strip/painting, retrofits and/or a combination of any of the above for a customizable search over a chosen date range.

    The results can then be filtered by a variety of different fields such as operator, MRO provider, location, aircraft and engine data. The results are then displayed in an easily digestible format of tables and charts that can be compared to historical data and exported as required.

    The tool enables businesses to analyze the data to precisely place aftermarket services and parts where they are needed, understand maintenance patterns of different aircraft types, identify retrofit opportunities and overall, optimize how aircraft are being utilized.

    Ground Events shows, for example, that FedEx Express, a global delivery service company, permanently retired 22 Boeing 757s between March and May 2024 for fleet modernization. This anticipated the supply chain issues involving heavy maintenance for the 757 which peaked from Q2 2021 to Q1 of the following year, with a decline in fleet size and flight hours by the end of 2022.

    Similarly, the tool shows over 450 Airbus A330-200/300s are expected to undergo C or Heavy maintenance checks during the next eight quarters. For this, Cirium tracked nearly 650 A330ceos undergoing checks with 47 MRO providers in the past two years.

    Ground Events uses detailed data on aircraft maintenance from around 57,000 ground events dating back to 2018 to help predict trends and upcoming peaks and troughs in demand.

    It integrates proprietary fleet maintenance intelligence and satellite-based flight tracking to ensure precise locations and dates of aircraft on the ground. The data is supported by a team of fleet data experts and flight data analysis to ensure accurate and up to date information is shared, with an average of 2,700 updates per week.

    Find out more about Cirium Ascend Ground Events, and access a demonstration video of the tool.

  • The US Market Overview: Airline Passenger Traffic

    Cirium Ascend Consultancy is trusted by clients across the aviation industry to provide accurate, timely, and insightful aircraft appraisals. The team provides the valuations and analysis the industry relies on to understand the market outlook, evaluate risks and identify opportunities.

    Discover the team’s industry reports & market commentaries. Read their latest expert analysis, viewpoints and updates on Thought Cloud.

    Yinan-Qin
    Yinan-Qin

    Yinan Qin, Senior Aviation Analyst, Cirium Ascend Consultancy

    PART ONE OF THREE – READ PART TWO: AIRCRAFT ABS AND PART THREE: AIRLINES

    US Market Traffic Overview

    Passenger traffic

    Source: Cirium Core

    Airline passenger traffic in the US market has seen a robust recovery post-Covid and through 2023, with key segments such as US-Europe, US-Latin America and domestic US fully rebounding and surpassing capacity from the same month in 2019. In contrast, the recovery of trans-Pacific routes remains sluggish with volume still significantly below pre-Covid levels as of today.

    One factor contributing to this slow recovery is the heightened political tensions between US and China – one of the main markets in Asia contributing 31% of total flights in 2019. These tensions have created unfavorable market conditions, dampening travel demand between the two countries and perhaps making routes unprofitable for US carriers. According to the Cirium SRS Analyzer, the number of US-China direct flights original-destination (OD) pairs declined by 57.8% from 64 in 2019 to 27 in 2024. Meanwhile, the number of flights dropped from over 11,600 in 2019 to below 3,800 in 2024, marking a 67.4% decrease. It is reported that American Airlines, Delta Air Lines and United Airlines requested another extension from the US Transportation Department (DOT) in September 2024 for unused flights frequencies on routes connecting China to avoid losing those routes.

    Another factor to consider is that the US in-service twin-aisle fleet has hardly grown since 2019. Flights between the US and China require approximately two widebody aircraft just to service a single daily frequency.

    Considering that US carriers have redeployed a lot of capacity formerly serving China to other markets in the last five years, and also retired some older aircraft during Covid, and considering slow deliveries of 787s and A350s, the US carriers wouldn’t have the necessary aircraft anytime soon to return to their full, pre-Covid China timetable even if they wanted to and the demand existed. In light of this, we do not expect US-China capacity to return to pre-Covid levels in the short-to-medium term.

    US-based Airlines Fleet Overview

    Source: Cirium Core

    The current passenger fleet operated within the US market has grown from just over 6,200 aircraft in September 2019 to almost 7,000 in September 2024, reflecting a 2.3% CAGR. Meanwhile, the stored fleet ratio has declined from a peak of 51.9% in April 2020 to 8.6% as of September 2024, albeit still being 2.8 percentage points higher than pre-Covid levels. Both single-aisle and twin-aisle fleets maintained a below-average storage rate while turboprops and regional jets experienced a more sluggish recovery primarily due to a shortage of pilots and flight crews. The rise in inactive single-aisle aircraft since early 2024 is attributed to the temporary grounding of 47 Boeing 737 Max 9s following the door plug incident in January 2024 and A320neo GTF engine issue, which has grounded a monthly average of 32 US-operated A320neos equipped with PW1100G engine over the past nine months, most of which are from Spirit’s fleet. This situation is expected to persist until at least 2026 when the engines can be inspected, and any necessary parts can be replaced.

    Overall, the size of the current fleet in the American market is expected to continue growing, with 2,586 aircraft on order and 798 aircraft on option as of September 2024.

    The growth will be at a slower pace due to a stagnant production ramp-up from major OEMs, stemming from supply chain challenges and labour strikes (particularly at Boeing). The ongoing GTF engine issue will further exacerbate the under-supplied market dynamic in the near-term. However, on a positive note, the constrained supply should continue to underpin lease rate strength.

  • Generative AI: Transforming Data Insights Into Aviation Magic

    Niha Shaikh, VP of Product, Cirium Journey

    “Any sufficiently advanced technology is indistinguishable from magic”.

    This quote from Arthur C. Clarke rings truer than ever as we experience unprecedented technological advancements. The world we live in today feels almost magical with everything at our fingertips. Gone are the days when a phone call would disrupt your internet connection. Technology is at the heart of everything and with the renewed interest in Artificial Intelligence (AI) due to the rise of generative AI, things have never been so magical!

    Historically, aviation has been a cornerstone of technological innovation, setting the pace for advancements across various domains. We’ve seen the aircraft design evolve from the Wright Flyer to the modern-day jets and witnessed the advancements in avionics, including GPS navigation and autopilot systems that profoundly improved flight safety and operational efficiency. As e-commerce gained traction, the first airline ticket was sold online in 1995. 4 years later, you could check-in online and get your boarding pass. The passenger experience became much more seamless with AI chatbots, multiple booking options and various conveniences. However, as these foundational technologies matured, the pace of innovation in aviation began to slow down compared to the rapid advancements seen in mainstream technology.

    And not all sectors of aviation equally reaped the benefits of new tech. The operational side is still fraught with challenges.

    The logistics of moving goods and people from point A to point B with good performance consistently is extremely challenging as the operational landscape is ever-changing with lots of variables. Working on gut feel is no longer viable given that the global travel and economic landscape is changing rapidly. It is far too time-consuming to look for the needles (useful insights) in a haystack (mountains of data). Airlines and Airports often miss key pieces of context that often contribute to a lack of situational awareness eventually leading to operational inefficiencies. Often, the operations teams struggle to gauge their performance accurately as they lack comparative information from similar days or situations, making it hard to understand their performance within a broader context. The time and effort required to consistently perform a deep multi-layer analysis is often cost-prohibitive. This is compounded with by long feedback loops that make it incredibly challenging to understand the cause and effect of actions taken and decisions made over time.

    In recent years, we have seen a resurgence in aviation innovation with the digital transformation movement that began during the pandemic.

    It continued to gain momentum and was further boosted with the advent of generative AI which lends itself well to the type of use cases that call for dynamic problem solving. This is much needed and timely considering the change in passenger expectations, increasing focus on greener travel and the ever-rising demand. The need for efficiency, and cost reduction, whilst delivering an enhanced passenger experience has never been greater.

    The market for AI-driven decision support tools in aviation is expanding, with airlines, airports, and service providers actively seeking solutions to optimize operations with most major airlines investing heavily in data science and analytics teams, striving to put data at the heart of key organisational decisions. The AI in aviation market was valued at $686.4M in 2022 and is projected to register a CAGR of over 20% each year between 2023 and 2032 (Wadhwani, 2023).  The “Generative AI and Aviation” report by the International Air Transport Association (IATA) showcases that over 40% of its members are interested in leveraging GAI for disruption management-related use cases. While generative AI has seen widespread adoption in customer support, predictive maintenance, and pricing, its integration into operational processes remains slower. How do we unlock the efficiencies in the actual logistics of moving people and goods around?

    Closer collaboration between airlines, airports and technology providers is even more crucial to unlock the data silos where every actor in the system holds a different piece of the overall puzzle. Data sharing, organisation and contextualisation will be key to unlocking the unearned gains and unmet potential in the wider ecosystem. A robust foundation of comprehensive data is needed to support predictive and prescriptive analytics that can truly enhance operations across the ecosystem.

    It has always been said that Data is the new fuel, but Generative AI might just be that brand new engine that harnesses its power and propels the industry to another new era of rapid innovation and seamless experience for the passengers. In another decade or so, the experience of flying could be magical again!

    Bibliography

    *Wadhwani, P. (2023, August). Artificial Intelligence in Aviation Market Size. Retrieved from Global Market Insights : https://www.gminsights.com/industry-analysis/artificial-intelligence-in-aviation-market

  • The CrowdStrike Outage: What Does It Mean for Airlines?

    JIm Hetzel Director of Product Marketing
    JIm Hetzel Director of Product Marketing

    Jim Hetzel, Director of Product Marketing, Cirium

    Key Impacts on Global Aviation

    The recent CrowdStrike IT outage on July 19, 2024, caused significant disruptions across various sectors. The global aviation industry was particularly hard hit, leading to widespread delays and operational challenges worldwide, affecting aviation operations in numerous regions.

    • Europe: Key airports in London, Paris, and Frankfurt were affected, causing a ripple effect through European airspace.
    • North America: Major hubs like Atlanta, New York, Los Angeles, and Chicago saw significant disruptions, affecting both domestic and international flights.
    • Asia-Pacific: Busy transit points such as Tokyo, Singapore, and Sydney experienced significant delays and cancellations, impacting both regional and long-haul flights.
    • Latin America: Airports in cities like São Paulo, Buenos Aires, and Mexico City were not spared, with many flights being delayed or canceled.

    Flight Cancellations

    Airlines around the world, including major carriers like American Airlines, British Airways, Delta Air Lines, Lufthansa, and United Airlines, faced the cancellation of thousands of flights. This widespread disruption affected not only countless passengers but also posed significant operational challenges for the airlines..

    According to Cirium data, out of 411,009 globally scheduled passenger flights over a 72-hour period, approximately 16,896 flights were canceled, representing just over 4% of global flights.

    This cancellation rate was double that of the previous week, which stood at 1.9%.

    Delta Air Lines, for instance, encountered a backlog in customer service and rescheduling, as reported by CNBC. American Airlines faced crew availability and logistical challenges, leading to numerous delays and cancellations, as highlighted by The Wall Street Journal. United Airlines had to navigate a complex web of cancellations and reassignments, straining their resources and impacting overall efficiency, according to Forbes.

    This cascade of disruptions underscores the intricate logistics of the airline industry and the pressing need for robust contingency plans to manage such widespread issues effectively.

    Even flights that were not canceled experienced significant delays. These delays rippled through busy airports, further disrupting scheduled operations and inconveniencing passengers. Travelers found themselves stranded for hours, and in some cases, days, as airlines scrambled to restore their operations. Long waits at terminals, missed connections, and the general uncertainty compounded frustrations, leaving many passengers stressed and exhausted.

    These delays affected not only immediate travel plans but also had lasting impacts on schedules and commitments, emphasizing the necessity for more resilient and responsive airline recovery strategies.

    One of the most immediate and visible impacts of the outage has been the stranding of travelers. Thousands found themselves stuck in airports with limited information on when they might be able to continue their journeys. Many of these travelers were left with no choice but to bed down in the terminals, using makeshift sleeping arrangements as they awaited re-accommodations. The scene was one of frustration and fatigue, as people spread out on benches, floors, and any available space, trying to find some semblance of comfort amid the chaos. Airport staff worked tirelessly to assist and provide updates, but the uncertainty left many feeling anxious and stranded far from their destinations.

    Travel Refunds and Waivers

    To tackle the significant challenges posed by recent travel disruptions and to sustain customer trust, airlines have rolled out a comprehensive strategy including widespread travel refunds, waivers, and vouchers for affected passengers. This proactive approach is vital for maintaining positive customer relations during difficult times.

    Major airlines like American Airlines, British Airways, Delta, Lufthansa, and United not only issued refunds but also introduced flexible rebooking options to accommodate passengers whose travel plans were disrupted. These measures allowed travelers to adjust their itineraries without additional fees, fostering a sense of security and flexibility amid uncertainty.

    While these efforts are necessary for rebuilding and maintaining customer trust, they inadvertently introduced another layer of complexity to the already strained operations of airlines. The influx of refund requests has placed a significant burden on customer service departments, requiring them to manage a high volume of inquiries efficiently. This situation has necessitated the development of streamlined processes to handle rebooking logistics effectively, ensuring that passengers receive timely updates and assistance.

    Beyond managing requests, airlines must ensure clear and informative communication. Keeping passengers informed about their options and refund statuses is crucial to prevent frustration and dissatisfaction.

    Airlines are diligently working to balance addressing immediate customer needs with maintaining operational efficiency, all while adapting to evolving travel regulations and safety protocols.

    These efforts underscore the need for airlines to enhance operational capabilities and customer service strategies. By doing so, they can navigate current complexities and emerge stronger, fostering long-term customer loyalty.

    Industry Response

    The airline industry’s response to the CrowdStrike IT outage has been comprehensive, focusing on managing the immediate crisis while also strategizing for long-term resilience.

    Immediate Measures

    The first line of response was to cancel flights to prevent further complications and manage the surge of stranded travelers in airports. Airlines have also focused on providing timely information and support to affected passengers.

    Compensation

    To maintain customer trust and alleviate frustration, airlines have issued travel refunds, waivers and vouchers. These measures aim to compensate for the inconvenience caused and offer flexibility to passengers whose travel plans have been disrupted.

    Operational Adjustments

    In addition to these compensations, airlines are revisiting their IT infrastructures to prevent future outages. This includes assessing current systems, investing in more robust technologies, and developing contingency plans to ensure smoother operations in the face of similar disruptions.

    What Does a CrowdStrike-type Event Mean for the Airline Industry

    Technology has significantly benefited aviation, enabling it to meet the growing demand for air travel. However, the CrowdStrike IT outage has exposed the industry’s vulnerability due to its heavy dependence on technology. While the immediate priority involves addressing cancellations, delays, and customer compensation, the incident underscores the urgent need for airlines to develop more resilient IT systems.

    To prevent or lessen the effects of technology outages, airlines need to implement several crucial measures:

    • Invest in redundant systems: Airlines must consider implementation of dual or even triple redundancy in their IT infrastructure. This means having backup systems, leveraging different vendors, ready to take over immediately if the primary system fails, ensuring minimal disruption to operations.
    • IT vendor accountability: Airlines are at the mercy of their IT providers in many cases. Implementing more stringent Service Level Agreement’s (SLA)  ensuresIT providers share in the pain and the financial impact that their actions have on their airline customers in terms of operational costs and customer compensation.
    • Enhance cybersecurity measures: Frequent and rigorous cybersecurity assessments and upgrades are essential. Investing in advanced security protocols, including intrusion detection systems, regular vulnerability testing, and employee training on cybersecurity awareness will enable airlines to prevent breaches that could lead to outages.
    • Develop comprehensive response plans: Airlines would benefit by regularly updating incident response plans that detail the procedures to follow during a technology outage. These plans should include clear lines of communication, designated response teams, and step-by-step protocols for managing situations efficiently.
    • Foster inter-departmental collaboration: A technology outage can affect various departments, from operations to customer service. Cultivating closer collaboration between IT, operations, and customer service teams allows airlines to streamline response efforts and ensure everyone is prepared to handle the fallout.
    • Implement continuous monitoring: Proactive monitoring of IT systems can help identify potential issues before they escalate into significant problems. Airlines can leverage real-time analytics to keep an eye on system performance and receive alerts for unusual activity.
    • Testing and simulation exercises: Regularly conducting tests and simulations of systems can prepare airlines for potential outages. These exercises should mimic real-world scenarios to ensure response teams can effectively handle disruptions with minimal impact.
    • Engage with technology partners: Airlines must build closer relationships with their technology providers to ensure they have priority support during outages. This collaboration can lead to quicker resolutions and shared insights on improving system resilience.
    • Educate and train staff: Regular training sessions for employees on emergency protocols and the importance of IT resilience can empower them to act quickly and efficiently during an outage.

    By prioritizing these strategies, airlines can strengthen their technological infrastructure and more effectively manage unexpected disruptions like the CrowdStrike incident. This approach ensures smoother operations and enhances customer satisfaction when facing technology challenges.

  • Cirium & RouteZero Partner to Integrate EmeraldSky for Travel

    Cirium and RouteZero have unveiled a pioneering partnership to integrate Cirium’s EmeraldSky, specifically designed for corporate travel. This innovative offering represents a major leap forward in enabling companies to monitor, improve and report their air travel emissions reductions with unmatched accuracy and transparency.

    RouteZero logo
    RouteZero

    Historically, corporations estimated the environmental impact of their air travel programs using broad assumptions based on scheduled air services. These rough estimates hindered accurate emissions tracking, and the reduction of their carbon footprints, leading to costly offsetting. The new partnership between Cirium and RouteZero transforms this process by offering post-flight emissions monitoring and reporting via EmeraldSky. This service provides precise, actionable insights based on actual flown operations, including the specific aircraft used, load factors, and the fuel consumption and CO2 emissions.

    Through this collaboration, corporations will benefit from highly accurate insights into their air travel emissions, powered by the EmeraldSky emissions system, which is applied after each flight. EmeraldSky is not just another methodology; it is a groundbreaking system that leverages exclusive data from the actual tail number of the aircraft used, incorporating critical details such as aircraft age, engine type, winglets, tarmac time, load factor and flight duration. Combined with our precise methodology tailored for the aviation and aerospace sectors, EmeraldSky has demonstrated an impressive accuracy margin of up to 99% of flown emissions compared to actual airline-recorded fuel and emissions measurements.

    “Leading companies are making radical, proactive changes to the way they travel to enable them to meet their Net Zero goals. Deploying RouteZero, customers travel more miles to meet more customers whilst cutting emissions. Using the most robust and accurate data available, empowers travelers to get to their destination in the most sustainable way, whilst getting their companies closer to Net Zero. Decarbonization is possible if we work together,” said Dan Brown, CEO of RouteZero.

    “The level of precision and accuracy of Cirium’s EmeraldSky CO2 emissions calculations for flights far exceeds estimates available today and leveraging this flight emission system via RouteZero enables corporations to fulfill their sustainability objectives faster and more cost effectively,” said Jeremy Bowen, CEO of Cirium.

    This innovative service not only enhances the accuracy of emissions reporting but also helps corporations better align their travel practices with their sustainability initiatives. By leveraging Cirium’s comprehensive flight emissions data and RouteZero’s expertise in sustainability, RouteZero’s service powered by EmeraldSky sets a new standard for environmental stewardship in corporate travel management.

    Get more information about the RouteZero and Cirium’s EmeraldSky and hear how it can benefit your corporate travel program.

    About Cirium 
    Cirium® is the world’s most trusted source of aviation analytics. The company delivers powerful data and cutting-edge analytics to empower a wide spectrum of industry players. It equips airlines, airports, travel enterprises, aircraft manufacturers, and financial entities with the clarity and intelligence they need to optimize their operations, make informed decisions, and accelerate revenue growth. 

    Cirium® is part of LexisNexis® Risk Solutions, a RELX business, which provides information-based analytics and decision tools for professional and business customers.  The shares of RELX PLC are traded on the London, Amsterdam and New York Stock Exchanges using the following ticker symbols: London: REL; Amsterdam: REN; New York: RELX. 

    For more information, follow Cirium® on LinkedIn or visit cirium.com.

    About RouteZero
    RouteZero is dedicated to helping corporations achieve their sustainability goals through innovative solutions and technologies. By providing accurate and reliable emissions data, RouteZero empowers businesses to take meaningful action towards reducing their environmental impact. For further information please visit RouteZero.com.

  • The A330neo: Is Airbus’s Middle Child Fighting Back?

    Cirium Ascend Consultancy is trusted by clients across the aviation industry to provide accurate, timely, and insightful aircraft appraisals. The team provides the valuations and analysis the industry relies on to understand the market outlook, evaluate risks and identify opportunities.

    Discover the team’s industry reports & market commentaries. Read their latest expert analysis, viewpoints and updates on Thought Cloud.

    Ascend analyst Tim Chun Hing Li
    Ascend analyst Tim Chun Hing Li

    Tim Li, Aviation Analyst, Cirium Ascend Consultancy

    Since July’s Farnborough air show, the Airbus A330neo has recorded 57 new firm orders and 60 options from four customers, surpassing all other models as the most ordered widebody aircraft in the past four weeks. This begs the questions: Is the A330neo – Airbus’s ‘middle child’ – making a comeback, and how so? Furthermore, how will a change in operator base affect the development of the type?

    Until recent weeks, Airbus’s order books have been dominated by the A320neo family and the A350, with backlogs of over 7,000 and 650 aircraft to date respectively. However, the A330neo is finally making its presence felt, especially with options from Flynas, additional orders from Virgin Atlantic, and particularly striking, new firm orders for 20 aircraft from VietJet Air and 30 from Cathay Pacific. These orders push the A330neo total order tally to 360 aircraft, with a current backlog of more than 200. This also positions Cathay as the second biggest airline customer for the A330neo programme, following Delta Air Lines and preceding TAP Air Portugal.

    Among all these new orders, Cathay Pacific’s is a particularly big shot in the arm for the previously moribund A330neo programme. As the fifth largest A330ceo operator, Cathay is expecting these A330neos to “progressively replace” its existing fleet of A330ceo and 777 classics, a motive which Airbus believed would bring orders from its vast A330ceo operator base due to its “low-risk” and commonality when it launched the re-engined family a decade ago. Looking back, 21 of the 51 airline A330ceo operators with more than five A330ceos originally selected the Boeing 787 as their next generation mid-gauge widebody – a clean-sheet design that entered service some seven years before the A330neo.

    Airbus A330neo and Boeing 787 Fleet Size of the Top 51 A330ceo Operators

    Airbus A330neo and Boeing 787 Fleet Size of the Top 51 A330ceo Operators

    Source: Cirium Fleets Analyser

    Cathay was one of the remaining 20 operators with a fleet of more than five A330ceos that had not placed orders for either the 787 or the A330neo. While ‘significant price concessions’ undoubtedly played a role in this final decision, one can infer that Cathay had the bargaining power to negotiate a similar discount from Boeing for the 787 or Airbus for more A350s. Therefore, it appears that primary drivers for Cathay to opt for the A330neo were the smaller backlog and more-favourable mix of operating and ownership costs and payload-range performance.

    The A330neo’s smaller backlog enables an earlier delivery timeline compared with the 787 and A350. OEMs have struggled for some time to crank up their production rate to go through their backlogs.

    The 787 backlog is 780 aircraft currently. Coupled with concerns over Boeing’s quality control arising from multiple incidents recently, even if Boeing was to increase its production rate to 10 per month, the earliest availability would not be until the end of the decade. In contrast, delivery for A330neo is achievable as early as 2028, given a delivery rate of four per month. Given that Cathay’s oldest aircraft is now 24 years old, beginning replacement three years earlier seems timely.

    Expected Number of Delivery and Current Yearly Delivery Rate

    Expected Number of Delivery and Current Yearly Delivery Rate

    Source: Cirium Fleet Analyser, Airbus, Boeing

    Although Cathay’s 48-strong A350 fleet can support all its operations, the airline needed an optimal solution to scale up capacity for its high-demand regional network. This is where the A330neo comes in. Ascend’s opinion on current delivery value suggests that an A330-900 is 33% cheaper than an A350-900. Even though the type is currently a less popular option comparing to the A350, it has seen lower volatility during downtime as its new generation technology allows a more efficient operation which is more attractive to operators when demand softens. Furthermore, the operating cost is reduced due to its commonality with the rest of Cathay’s Airbus fleet.

    Value Trends of A330-900 neo and A350-900

    Source: Cirium Value Time Series, On Delivery Market Value as of 22nd August 2024

    With all the above in mind, which of the remaining A330ceo operators would be expected for another major A330neo replacement order? Among the next 10 biggest A330ceo operators that have neither the 787 nor the A330neo, Air Transat and Aer Lingus are switching strategy to narrowbody long haul; Asiana is merging with Korean Air which operates 787s; Aeroflot is under sanction; Swiss’s fleet is younger and its mother group Lufthansa opted for the 787 though “had no immediate plans to introduce 787s to its fleet”, and Philippine Airlines just streamlined its fleet after recovering from Chapter 11. This leaves just Iberia, Sichuan Airlines, Brussels Airlines and Discover Airlines, with Sichuan the only one that does not have to follow a parent group decision. Operating both types simultaneously is unlikely either, with Virgin Atlantic being the only example, potentially joined by Hainan Airlines which hinted that in its stock exchange filing in April this year. The “Big Three” Chinese operators can be on watch as well since their 787 fleets are relatively small, though that also depends on the recovery pace of the Chinese aviation market.

    Instead of viewing it strictly as a replacement for the A330ceo, the A330neo presents itself as an ideal type for operators looking to scale up their network and operations.

    Prime examples include TAP, Condor, Cebu Pacific, ITA Airways and the newly joined VietJet Air. Notably, none of these top 10 A330neo operators have ever had a fleet of more than 10 A330ceos. The induction of the A330neo not only allows them to expand into the long-haul market, even for LCCs, but it also boosts the capacity of their trunk routes.

    These observations suggest that the A330neo operator base may end up being quite different from the A330ceo’s, composed of a higher proportion of mid-tier credit and smaller scale operators, particularly given the model is still in the early stages of its product cycle. This may dissuade some of the more conservative banks from financing the aircraft, leading to less presence in SLB, JOL/JOLCO or other financial markets, and potentially impacting its liquidity and value in the long term.

    Learn more about Cirium Fleets Analyzer.

    Monitor and benchmark key value and liquidity metrics by different aircraft asset classes. FIND OUT MORE ABOUT VALUE TRENDS.

  • Condor Chooses Cirium as Strategic Partner for Aviation Analytics

    London, 3 September, 2024: Cirium is now Condor’s new partner for aviation analytics, with the new agreement making Cirium the airline’s single source of external aviation data, providing end-to-end data services. 

    The partnership between Cirium, the aviation analytics firm, and Condor, will empower the German carrier to further improve its operations, driving quality insights aimed at improving the businesses efficiency and overall customer satisfaction. 

    As part of this new agreement, Cirium will provide the airline with three key data sets: historical flight data, schedules data, and real-time flight data. 

    Having utilised Cirium’s historical flight data for two years, Condor’s decision to now integrate Cirium’s additional suite of products presents a unique opportunity to further streamline operations, driving direct improvements for both the business and its customers. 

    This investment in data will enable the business to swiftly identify operational trends, allowing for quick solutions that reduce costs and enhance efficiency. It will empower teams to optimise fleet management, network planning, connections, and crew scheduling, driving significant improvements across all aspects of operations. 

    Cirium’s highly regarded flight schedules product is also part of the deal, offering deeper insights into service opportunities and market demand. With the up-to-date data, Condor will be able to optimise network and crew planning, boosting efficiency and profitability across the business. 

    The addition of Cirium’s real-time flight data will also provide live updates on aircraft around the world, meaning flights can be tracked and monitored with greater detail.  

    This will support Condor’s investment in its customer experience proposition, with Cirium’s live flight data feeding directly into customer-facing digital platforms, giving travellers precise departure and arrival times so they can plan their onward journeys. The addition of real-time flight data will also transform disruption management, offering even faster rebooking options to those with missed connections. 

    “We are very excited to announce this expanded collaboration with Condor, a leading global leisure airline. Condor has been a client of Cirium, benefiting from our historical flight data, and this strengthened partnership is a testament to both the quality of our data and the dedication of the Cirium team. Through this extended relationship, we will provide Condor with the most precise and reliable industry data, helping them enhance operational performance and, most importantly, deliver timely insights to their passengers worldwide,” said Jeremy Bowen, CEO of Cirium.

    As Germany’s most popular leisure airline, Condor has been flying customers to the world’s most beautiful destinations since 1956. With a fleet of over 50 aircraft, the airline serves around 90 destinations from Germany and Switzerland. This partnership with Cirium marks the latest step in Condor’s ongoing commitment to operational excellence and customer satisfaction.

    Cirium is the world’s most trusted source of aviation analytics, delivering powerful data and cutting-edge analytics to empower a wide spectrum of industry players.  

    Equipping airlines, airports, travel enterprises, aircraft manufacturers, and financial entities, the company provides the clarity and intelligence needed to optimise operations, make informed decisions and accelerate revenue growth. 

    To learn more about Cirium’s products, and how they can benefit your business, visit www.cirium.com

    For Cirium media inquiries please contact media@cirium.com

    About Condor
    As Germany’s most popular leisure airline, Condor has been taking its guests to the world’s most beautiful holiday destinations since 1956. Condor operates a fleet of over 50 aircraft, which are maintained by the company’s own maintenance operation, Condor Technik GmbH, according to the highest safety standards at the Frankfurt and Dusseldorf locations. In spring 2022, Germany’s most popular leisure airline unveiled its new brand identity. This illustrates the development from a leisure airline to a unique and unmistakable vacation brand. The new design was unveiled with the first A330neo, which has been operated by Condor since December 2022. As the German launch customer, Condor will then be flying 21 A330neo long-haul aircraft. Thanks to state-of-the-art technology and maximum efficiency, the latest-generation 2-liter aircraft is the European front-runner with 2.1 liters per passenger per 100 kilometers and maximum customer comfort. Condor will also receive 43 brand-new short- and medium-haul aircraft of the A32Xneo family from 2024. 

    About Cirium 
    Cirium® is the world’s most trusted source of aviation analytics. The company delivers powerful data and cutting-edge analytics to empower a wide spectrum of industry players. It equips airlines, airports, travel enterprises, aircraft manufacturers, and financial entities with the clarity and intelligence they need to optimize their operations, make informed decisions, and accelerate revenue growth. 

    Cirium® is part of LexisNexis® Risk Solutions, a RELX business, which provides information-based analytics and decision tools for professional and business customers.  The shares of RELX PLC are traded on the London, Amsterdam and New York Stock Exchanges using the following ticker symbols: London: REL; Amsterdam: REN; New York: RELX. 

    For more information, follow Cirium® on LinkedIn or visit cirium.com.

  • Reshaping Air Routes: Focus on the Greater Bay Area

    Cirium Ascend Consultancy is trusted by clients across the aviation industry to provide accurate, timely, and insightful aircraft appraisals. The team provides the valuations and analysis the industry relies on to understand the market outlook, evaluate risks and identify opportunities.

    Discover the team’s industry reports & market commentaries. Read their latest expert analysis, viewpoints and updates on Thought Cloud.

    Lionel Olonga
    Lionel Olonga

    Lionel Olonga, Senior Valuations Analyst, Cirium Ascend Consultancy

    The Hong Kong Airport Authority’s initiative to incentivize airlines to establish new routes and increase flight frequencies is a strategic measure aimed at enhancing the region’s competitive edge. However, while this approach is a positive development, it may prove insufficient in addressing the broader challenges of manpower shortages and regional connectivity. Compounding these issues, some foreign carriers have withdrawn services from China, citing unfair competition due to restrictions on using Russian airspace. These unfavourable conditions in Greater Bay Area (GBA) airports raise questions about the region’s near-term prospects.

    Despite these efforts, Hong Kong International Airport (HKG) continues to operate below pre-pandemic capacity levels. Cirium data indicates that seat capacity departing from Hong Kong in Q2 2024 is 29% lower than in the same period in 2019. HKG is grappling with significant reductions in flights across all regions, with the most pronounced declines seen in routes to Africa, Europe, and Australasia. These challenges may be attributed to various factors, including political instability, economic pressures, and increased competition from neighbouring airports. However, the primary obstacle remains the persistent shortage of human resources.

    For instance, Cathay Pacific has revised its forecast for achieving full passenger capacity recovery, now aiming for the first quarter of 2025 rather than the end of 2024. This delay is attributed to a shortage of pilots and cabin crew. Additionally, ground handling service providers are grappling with staffing deficiencies, which are causing them to either reject flights from foreign carriers or impose excessively high service fees. These labour shortages are notably impeding the city’s connectivity and hindering its overall recovery within the global aviation industry. As a result, ticket prices are expected to stay high, with limited route options available to travellers.

    The Departing Seat Capacity of Major GBA Airports

    The departing seat capacity of major GBA airports

    Source: Cirium Core

    On the other side, the seat capacity of other two major Greater Bay Area (GBA) airports, Guangzhou Baiyun International Airport (CAN) and Shenzhen Bao’an International Airport (SZX), have exceeded the pre-COVID levels, thanks to the strong domestic market recovery. CAN shows overall growth in flight and seat capacity, with particularly strong growth in the Asian markets. However, there is a notable decrease in flights to North America and Australasia. The available-seat-kilometres (ASK) indicates that the recovery of the inter-continental traffic at CAN is still lagging. SZX has seen significant growth, particularly in flights to Asia, Europe, and the Middle East, reflecting its increasing importance as an international hub. However, it also experienced a sharp decline in Australasia and North America.

    The Capacity in Terms of Available-seat-kilometres (ASK) of Major GBA Airports

    Source: Cirium Core

    Flight Capacity by Region From Major GBA Airports

    Flight capacity by region from major GBA airports

    Source: Cirium Core

    Hong Kong is encountering intensified competition from within the Greater Bay Area (GBA), where international airlines are increasingly choosing direct routes to other regional hubs, potentially diverting traffic away from the city. To address this challenge, it is essential for Hong Kong to create a financially appealing environment for airlines to maintain their operations. A key component of this strategy involves addressing the ongoing staffing shortages, including those for pilots, cabin crew, and ground handlers. The government’s Labour Importation Scheme for the aviation sector is expected to alleviate these resource constraints in the near term, thereby supporting Hong Kong’s competitive position in the region. CAN and SZX both demonstrated growth between Q2 2019 and Q2 2024, with CAN increasing by 6.85% and SZX by a significant 18.39%. This suggests that both airports have been strengthening their positions as key regional hubs. The sharp growth in Shenzhen may indicate a strategic shift, potentially capturing market share from Hong Kong. However, both airports have seen a decline in flights to North America, reflecting the impact of geopolitical tensions. Overall, the expansion in these two GBA underscores their growing importance in the region, even as they navigate the challenges posed by shifting global dynamics.