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  • Cirium Ascend Base Value Updates July 2024

    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.

    George-Dimitroff
    George-Dimitroff

    George Dimitroff, Head of Valuations, Cirium Ascend Consultancy

    Cirium Ascend released updated Base Value (BV) forecasts on 1 July 2024. They went live in Cirium’s Values Analyzer platform shortly after midnight BST (GMT +1). Some of the key themes in the latest revisions include:

    1. The BV floor is getting higher

      Engine values have been increasing more rapidly than aircraft values and the portion of an aircraft’s value that is attributable to its engines has been increasing steadily over the last few decades. Higher engine values mean higher part-out values toward the end of an aircraft’s life, which means that the floor at which BVs level off (which itself is not a horizontal line) is now higher than it used to be. This has been observed most recently with older generation aircraft but is also expected to apply in the future with new generation aircraft.

      Our single-aisle aircraft BVs have been relatively stable since 2014, with limited (if any) impairments during Covid.

      “However, it is becoming increasingly evident that older aircraft are “cashing out” at retirement, generating proceeds higher than historical trends suggest.”

      This is not just because of the current heated market environment.

      Our new BV curves for single-aisles are shallower to reflect this fact. They take engine values into account alongside other factors. However, the BV does not necessarily equal the Part-Out Value, even if it may be guided by it.

      Current BVs are broadly unchanged for most younger types but increase with age – be it the current BV of an older aircraft, or the future BV of any aircraft, young or old. Due to the compounding nature of increases, projections further into the future will see greater increases in Half Life values.

    2. Engine green time does not depreciate as fast as previously projected

      A thorough analysis of the change of engine overhaul and LLP stack value over time indicates that engine value green time is depreciating less rapidly than projected previously. We specifically focussed our analysis on how this “green time” depreciates in Phase 2 (out-of-production) and Phase 3 (retirement) of an engine’s life, and while some worse performing engines did have significant double digit percentage drops in certain periods of time, the longer-term trend has been one of more gradual decline.

      We have taken these findings into account to modify some (but not all) of the depreciation rates of engine green time, and in most cases the decline is now less steep.

      Please note that the three-phase methodology for treating engine green time value that was introduced in November 2023 remains in place and we have simply modified some of the parameters within that logic to reflect our new expectations for the future.

    3. Current production delays push some inflection points further into the future

      The ongoing supply chain issues and constrained production rates at all OEMs mean that there will be fewer new deliveries in the coming years than previously expected, and consequently fewer aircraft will be retired in the next few years than projected in the 2023 Cirium Fleet Forecast.  Consequently, the engine programmes powering newer generation aircraft will likely have longer production runs, and thus take longer to enter Phase 2 or 3 of their lives, than previously projected.

      Another factor that contributes to later entry into Phase 2 or 3 for engines is that OEMs have now made it clear that some (but not all) of the technological improvements that they are developing currently and in the next few years are expected to be fully retrofittable to in-service engines at their next shop visit, which means that older engines could be upgraded to the latest production standard.

      Therefore, such engines are now not expected to see their values decline prematurely due to replacement by a more efficient version of the same engine.

      Consequently, inflection points for such engines are moving further out into the future than previously expected.

    4. New years of build see annual BV growth above the long-term trend for longer

      In late 2022 we implemented a change to our new aircraft BVs for what was then the next three years of production (up until 2025), so that those years of build showed slower-than-usual declines in new pricing in real terms (or faster increase in absolute terms) than the historical long-term trend suggested. The current supply shortages, full orderbooks, high escalation rates and our projection that the single-aisle market will not return to a supply / demand balance until at least 2028, result in an extension of this “holiday” period by another 3 years (until 2028). Build years from 2029 onwards return to the long-term new value trend, and we will continue to monitor and review them in light of how OEM new pricing and the supply / demand balance evolve over the next few years.

      The net impact of these changes, each of which in themselves can be relatively small, potentially compound to lead to more substantial increases to some BVs, especially for mid-life and older aircraft, or forecasts further out into the future, especially on a Full-Life basis.  Ultimately, our aim is to continue to refine our forecasts to be able to provide expectations of residual value that are as realistic as possible within the dynamic and rapidly evolving industry landscape. We will be publishing a more detailed Inside Track on Values newsletter in the coming week fully detailing the BV changes type by type, which will be available as usual in the publications section of Values Analyzer.

    Learn more about Cirium Values Analyzer.

  • AAM Snapshot July 2024

    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.

    YIRU ZHANG
    Yuri Zhang

    Yiru Zhang, Senior Valuation Analyst, Cirium Ascend Consultancy

    At the mid-point of the year, the Cirium Ascend team has noticed that the advanced air mobility (AAM) sector is getting more and more attention. This is reflected in the number of commitments and orders recorded in Cirium’s database, which has increased to over 14,500 as of 24 June 2024, with over 1,000 new commitments and orders since our last update in April 2024. Data coverage includes:

    MARKET GROUPINGMANUFACTURERTYPECOMMENT
    Regional Electric – SmallAura AeroERA
    Regional Electric – SmallHeart AerospaceES-19Programme cancelled, and revised to ES-30
    Regional Electric – SmallHeart AerospaceES-30
    Regional Electric – SmallLYTE AviationLA-44 Skybus
    Regional Electric – SmallMaeve AerospaceMaeve 01Programme cancelled, OEM revised to M80
    Regional Electric – SmallJektaPHA-ZE 100
    eVTOL – Urban Air MobilityAerofugiaAE200
    eVTOL – Urban Air MobilityDufour AerospaceAero3
    eVTOL – Urban Air MobilityBETA TechnologiesALIA-250
    eVTOL – Urban Air MobilityManta AircraftANN2
    eVTOL – Urban Air MobilityAscendance Flight TechnologiesAtea
    eVTOL – Urban Air MobilityOverair IncButterfly
    eVTOL – Urban Air MobilityHorizon AircraftCavorite X7Newly added
    eVTOL – Urban Air MobilityPlanaCopterPlane CP-01
    eVTOL – Urban Air MobilityWisk Aero LLCCora
    eVTOL – Urban Air MobilityTCab TechE20 eVTOL
    eVTOL – Urban Air MobilityEHangEH216
    eVTOL – Urban Air MobilityEve Air MobilityEve
    eVTOL – Urban Air MobilityCrisalion MobilityIntegrityNewly added
    eVTOL – Urban Air MobilityJaunt Air MobilityJourney
    eVTOL – Urban Air MobilityLilium GmbHLilium Jet
    eVTOL – Urban Air MobilityArcher AviationMidnight
    eVTOL – Urban Air MobilityOdys AviationOdys eVTOL
    eVTOL – Urban Air MobilityAutoFlightProsperity 1
    eVTOL – Urban Air MobilityJoby AviationS4
    eVTOL – Urban Air MobilitySkyDriveSD-05
    eVTOL – Urban Air MobilitySirius AviationSirius Jet
    eVTOL – Urban Air MobilityXTI Aircraft CompanyTriFan 600
    eVTOL – Urban Air MobilityAMSL AeroVertiiaNewly added
    eVTOL – Urban Air MobilityVolocopter GmbHVoloCity
    eVTOL – Urban Air MobilityVolocopter GmbHVoloConnect
    eVTOL – Urban Air MobilityEHangVT-30
    eVTOL – Urban Air MobilityVertical Aerospace Group LtdVX4
    eVTOL – UAV/UASBETA TechnologiesALIA-250c
    Business Electric – Single EngineVoltAeroCassio 330
    Business Electric – Single EngineBETA TechnologiesCX300
    Business Electric – Multi EngineEviationAlice
    Business Electric – Multi EngineBye AerospaceeFlyer 800
    Business Electric – Multi EngineElectraElectra eSTOL
    Business Electric – Multi EngineElectronElectron 5
    Business Electric – Multi EngineAirflowM200

    eVTOLs – Urban Air Mobility (UAM)

    The eVTOL – UAM sector has generated the most activity in the market both in terms of the number of aircraft in development, and commitments received to date. Since the last update in April 2024, the sector has attracted 640 new order commitments. The space now has a total of slightly under 11,000 order commitments captured by Cirium Fleets Analyzer. Eve Air Mobility and Vertical Aerospace continue to lead the sector with 2,900 and 1,553 commitments respectively.

    Source: Cirium Fleets Analyzer, as of 24 June 2024

    At the same time, the first certificated type – EHang – has made it to third place with 500 new commitments (including 50 on orders and 450 on options) from Xishan Tourism gained in May 2024. After the newly placed commitments, Xishan Tourism is now EHang’s largest customer and also its second buyer from China. The EHang EH216 orderbook is still concentrated in Asia, with the above mentioned China’s Xishan Tourism ordering 500 units, Indonesia’s Prestige Aviation at 101, United Arab Emirates’ Wings Logistics Hub at 100, China’s Shenzhen Boling Holding Group at 95 units, Malaysia’s Aerotree Flight Services Sdn Bhd at 61 units and Japan’s AirX Inc at 50 units.

    The global market for eVTOLs shows a varied regional distribution, with strong presence in North America (3,390), Asia-Pacific (3,185) and Europe (1,705), driven by differing levels of technological advancement, regulatory backing and investment interest.

    Source: Cirium Fleets Analyzer, as of 24 June 2024

    By looking at the chart below, North America has been accumulating a large number of orders at an early stage and has continued to lead since. As of 24 June 2024, North America is still leading at over 3,350 orders, driven predominantly by the USA (over 3,200). Asia-Pacific followed with rapid and sustained growth to nearly 3,200 orders, where India (900), China (501), Japan (402), South Korea (220) and Vietnam (200) were the top contributors. Europe’s total orders stood at slightly above 1,700, with Ireland now at 755, becoming the largest share and exceeding that for the UK at 473. Latin America and the Middle East followed, showing substantial orders of 550 and 355 respectively. In Latin America, Brazil dominates with 530 orders. In the Middle East, the known only contributors are UAE and Saudi Arabia with 245 and 110 orders separately.

    North America has been accumulating a large number of orders at an early stage and has continued to lead since.

    Source: Cirium Fleets Analyzer, as of 24 June 2024

    The sector has drawn significant private investments and has also received support from various countries and regions. The research and development of AAM is also part of the technological competition between different countries. In the USA, NASA’s Advanced Air Mobility (AAM) National Campaign and the FAA’s UAM (Urban Air Mobility) Concept of Operations aim to integrate eVTOLs into the national airspace, which involve substantial government investment and collaboration with private industry to develop safe and efficient eVTOL operations. The UK government launched the Future Flight Challenge, a £300 million ($380 million) programme that includes significant investment in eVTOL technologies to revolutionise air transport. The Chinese government is heavily investing in smart city projects, from which EHang received strong support. There are also Germany’s BMVI funding programme, Japan’s Public-Private Conference for Future Air Mobility Revolution, Dubai’s Roads and Transport Authority (RTA) partnership with Volocopter, and South Korea’s K-UAM (Korea Urban Air Mobility) Roadmap, etc.

    All of the above-mentioned programmes and support indicate that the AAM sector will experience rapid growth in the next decade.

    Business Electric – Multi-Engine

    In the business electric sector, Electra’s eSTOL has received almost 1,350 order commitments, including from notable clients like the helicopter lessor Bristow Group. However, the identities of the majority of these order commitments remain undisclosed. Heart Aerospace’s ES-30 follows with over 750 order commitments after the ES-19 programme was cancelled and switched to the ES-30. Aura Aero’s ERA holds third place with nearly 500 order commitments.

    Business electric – multi-engine

    Source: Cirium Fleets Analyzer, as of 24 June 2024

    Learn more about Cirium Fleets Analyzer.

    Sara Dhariwal

    Lead Appraiser – Helicopters & AAM

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

    Tim Chun-hing Li

    Aviation Analyst

    Pascal Chui
    Pascal Chui

    Pascal Chui

    Valuations Analyst

    YIRU ZHANG
    YIRU ZHANG

    Yuri Zhang

    Senior Valuations Analyst

    Eric Tamang
    Eric Tamang

    Eric Tamang

    Valuations Analyst

  • A Hot July for U.S. Travel — And a Surprisingly Cool Destination

    The story last summer in the closely-watched U.S. domestic and transatlantic markets was growth. The story this summer? More — a lot more. The insights below are from an analysis of Cirium Diio Mi schedule data.

    The U.S. Domestic Market: Up 6% in July 2024

    The major U.S. airlines have scheduled around 6% more domestic capacity this July than last year — with a notable exception. This July, JetBlue has scheduled 9.2% fewer domestic capacity compared to last. (JetBlue announced capacity cuts earlier in the year primarily due to staffing and the congested network on the East Coast of the U.S.) Southwest Airlines will schedule only 1.4% more seats for this July compared to last, having reduced its plans due to availability of the Boeing 737 MAX aircraft they rely on.

    The airlines’ plans differ substantially depending on the type of carrier. Three ultra-low cost carriers Frontier, Spirit, and Sun Country will bring significantly more capacity to their markets.

    Breeze Airways — which now boasts a fleet of 40 aircraft (of which 25 are Airbus A220) — shows a 33% increase in scheduled seats. In the aggregate, these carriers fly substantially fewer seats than the Big 4 U.S. airlines. American Airlines will fly the most seats out of any carrier at more than 20.5M scheduled seats, followed closely by Southwest Airlines.

    Scheduled Seats in July 2024

    AirlineJuly 2024July 2023Percentage Change
    Alaska Airlines5,152,7414,789,0667.59%
    Allegiant Air2,263,7162,154,8225.05%
    American Airlines20,519,68018,973,8298.15%
    Avelo Airlines294,490291,9440.87%
    Breeze Airways542,516406,81033.36%
    Delta Air Lines18,659,45317,777,3474.96%
    Frontier Airlines3,989,4722,939,32635.73%
    Hawaiian Airlines1,105,7051,124,554-1.68%
    JetBlue2,993,5423,298,323-9.24%
    Southwest Airlines20,325,41420,051,0831.37%
    Spirit Airlines4,740,1353,906,19421.35%
    Sun Country Airlines576,414462,21024.71%
    United Airlines14,407,78613,987,6543.00%

    Transatlantic Flying: Up 7.8% in 2024

    Airlines increased capacity in summer 2023 compared to 2022 by 18%, and are poised to do the same for July 2024. The transatlantic carriers — including the European operators — will deploy additional capacity from the U.S. to Europe, with schedules showing a 7.8% increase in seats flown over July 2023.

    The top carriers? United and Delta are following the lead they set last summer, finding opportunities for revenue premiums. This summer, watch for the Europe carriers to add — including Air France with a 15% increase in scheduled seats — perhaps betting on the strength of demand for the Paris Olympics.

    Airline NameJuly 2024July 2023Difference% Difference
    United Airlines722,428701,07521,3533.0%
    Delta Air Lines719,985685,49734,4885.0%
    American Airlines565,077533,37731,7005.9%
    British Airways419,169411,5677,6021.8%
    Lufthansa323,584292,85430,73010.5%
    Air France279,426242,50836,91815.2%
    Virgin Atlantic242,973223,51719,4568.7%
    Turkish Airlines209,672187,29122,38111.9%
    Aer Lingus163,591154,6748,9175.8%
    Iberia131,072114,42816,64414.5%
    Icelandair117,360104,60012,76012.2%

    Where Are the Destinations of Choice?

    For the European market, Denmark, Croatia, and Spain show the most growth in capacity from the U.S., with double-digit growth in flying.

    Denmark27%
    Croatia17%
    Spain16%

    For the U.S. domestic market, the usual U.S. domestic city-pairs always factor — between New York, Chicago, and Los Angeles. However, it may surprise readers to know that Seattle, Washington to Anchorage, Alaska will have the most seats flown in July 2024 — around 146,000 seats, some 2,000 more seats than between New York-LaGuardia and Chicago O’Hare. Alaska Airlines will fly almost 80% of these north-south flights.

    Learn more about Cirium Diio.

  • Ensuring Top Traveler Experience With Proactive Communication

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

    Jim Hetzel, Director of Product Marketing, Cirium

    The experience of the modern traveler with the complexities of aviation goes beyond the beautiful moments of takeoff and landing. It’s a detailed narrative, influenced by various factors such as weather conditions, service logistics, and occasional unexpected issues that can disrupt travel plans. For the pioneers in the industry – our dedicated travel management companies, online travel agencies, and airlines – mastering seamless communication during trips is not merely an added benefit; it’s the core of building customer loyalty. 

    In this deep-dive into the realm of in-trip communication strategies, we unearth insights that can revamp the parameters of customer satisfaction, illustrating how seamless communication channels can transform disruptions into moments of personalized care, and how your brand’s voice, articulated via digital whispers or automated support, can leave indelible marks on traveler’s experience. 

    The Evolution of In-Trip Communication

    Man on phone at airport

    Gone are the days where radio silence from a travel company or airline would be considered the norm amid a flight disruption. Today, proactive, in-trip communication has evolved from a novelty to an unstated prerequisite for all industry players. Modern travelers not only expect to be kept in the loop, but also to receive contextually relevant updates that reflect the sensitivity of their unique travel situations. Airlines and travel service providers who have embraced this paradigm shift are the true vanguards, navigating their way into their customers’ hearts through a relentless pursuit of communication excellence. 

    To delineate this evolution, consider a traveler, stranded at an airport during adverse weather, receiving a personalized alert that not only informs about the flight’s delay but also provides instructions on how to be reaccommodated. The sense of care and support extended through such communications is immeasurable in its impact and resonates far beyond the immediate challenge. 

    Crafting a Consistent Brand Message 

    While the spontaneity and personalization of messages play critical roles, they must always be underpinned by your brand’s ethos. Pushing promotional content or ancillary sales during times of duress may lead to customer dissonance. Instead, a strategy that predominantly serves to inform and support, alongside the regular exchange of positive and brand-reinforcing content, can create a holistic travel experience reflective of your brand’s core values. 

    Imagine a travel management company disseminating engaging travel inspirations while also skillfully handling a travel disruption issue.

    This mix of content not only helps distract travelers during hiccups but also ingrains your brand firmly in their psyche as a reliable, proactive, and empathetic partner. 

    Data-Driven Approach to Communication

    Data is the compass that steers the ship of in-trip communication. By leveraging analytics to pre-empt and address potential disruptions, you can offer a level of service unmatched in the industry. For instance, using real-time geographical analysis, an airline can predict increased traffic in specific airport areas due to flight delays and recommend alternative routes to those customers. 

    Furthermore, data-driven communication isn’t solely about predicting and informing; it’s about engaging. By understanding traveler preferences and behavior, you can tailor your messages to not just relay critical information, but also offer personalized support that’s both timely and relevant. A succinct message picking up on a traveler’s affinity for a particular café or gift shop, and subtly guiding them there to wait out the delay, transcends conventional customer service into a truly personal space. 

    Improving Disruptions With Traveler Waiver Services

    During major flight disruptions, empowered passengers armed with structured waiver information can make informed, rapid adjustments to their travel itinerary. This not only expedites the re-accommodation process but also arms them with the confidence that their choices are being guided by their rights as passengers, as assured by the weaver services. 

    Travel Management Companies and airlines have noted a considerable reduction in agent time on calls during mishaps – by as much as 20%.

    This substantial efficiency improvement is not just a cost-saving echo – it’s an embodiment of the power of informed choices, which usually are the best one’s customers can make. 

    Best Practices and Case Studies 

    Two industry exemplars, Fox World Travel and Gant Travel, provide case studies that underscore the efficacy of proactive in-trip communication. Fox World Travel reduced the average wait times for disrupted air travelers by a third, while Gant Travel’s lean management system ensured a fleet-footed response to aid distressed travelers, reducing overall agent call times and enhancing customer satisfaction. 

    In their success narratives, we find the blueprint for best practices: seamless integration of communication systems, agile responses to disruptions, and cohesive strategies that intertwine traveler welfare with business goals. 

    The Human Element in the Digital Deluge

    In an era dominated by digital interfaces and AI-driven experiences, do not underrate the irreplaceable touch of human interaction. Behind every flight change alert or waiver notification stands a traveler in need of care. Balancing automated responses with the opportunity for direct human support is the fine line that separates good from exceptional in-trip service. 

    The intuitive leaps of a support agent or the compassion of a travel representative in the face of a service challenge can turn a potentially negative experience into a positive affirmation of customer service. While digital communication is efficient and timely, it is the human touch that lends a memorable aspect to your customer’s travel narrative. 

    Aligning Stakeholders for a Unified Experience

    The harmony of in-trip communications is the sum of its parts, and ensuring these parts harmonize to produce a unified experience is integral. Travel management companies, online travel agencies, and airlines need to align their communication strategies to create a seamless continuum of support for travelers. 

    Looking Ahead – the Future of Proactive In-Trip Communication

    In-flight Wi-Fi, mobile apps, and AI integration – the arsenal of in-trip communication tools is expanding at a rapid pace. The future promises an even more connected, informed, and empowered traveler, offering new opportunities to engage and cater to their individual journeys. 

    The role of data will continue to grow, shaping real-time, hyper-personalized engagements. Human support will complement AI, amplifying the layers of care available to passengers. The stage is set for a new era where in-trip communications will not just manage disruptions but transform them into opportunities to reiterate brand promises and deliver exceptional customer experiences. 

    Take-Away Action Items

    • Employ data analytics to enhance the efficiency and relevance of your in-trip communications. 
    • Develop a robust travel waiver strategy to assist travelers during disruptions effectively. 
    • Ensure your in-trip communications resonate with your brand’s voice and values. 
    • Integrate digital solutions with human support to achieve a harmonious customer experience. 
    • Collaborate with stakeholders to craft communication strategies that serve the traveler’s best interest. 

    The tapestry of in-trip communication is woven from the threads of technological advancement, data sophistication, and the ageless virtues of personalized service. As we steer towards a horizon brimming with new opportunities and challenges, it is these very threads that will fortify our brands, elevate customer satisfaction, and set novel standards in traveler experience. 

    To learn more about Proactive Traveler Services, contact us to speak with our Cirium experts. 

  • Improved On-Time Performance and Competition in Canada

    Improved On-Time Performance 

    It’s not easy operating an airline in Canada — a large country with three major hub airports in Toronto, Montreal, and Vancouver, and a variety of weather challenges no matter the time of year. Nevertheless, the Canadian carriers demonstrated solid on-time performance in spring 2024, which bodes well for summer travel. Indeed, among North American airlines, WestJet was third, and Air Canada sixth, for on-time performance in May 2024. 

    In June 2024 (at the time of writing), the major Canadian carriers had comparatively high completion rates. Completion factor measures the number of flights flown compared to those scheduled. At the time of writing, Porter Airlines had a 99.52% completion factor, Flair Airlines at 99.27%, WestJet at 98.58%, and Air Canada posted 97% — with the latter on a significantly higher number of flights than its Canadian brethren. 

    Toronto-Pearson Airport: Marked Improvement 

    Toronto-Pearson Airport has faced challenges related to on-time performance in recovery from the pandemic. However, the airport has demonstrated consistent and improved departure performance in 2024 to date — even in the winter months of 2024. Toronto-Pearson’s D14% — the percentage of flights scheduled that departed within 14:59 of the scheduled departure time — consistently averaged around 70% in the first half of 2024 and into late June 2024. (Last June, Pearson’s D14% was around 59%). In May 2024, Toronto-Pearson had 70.96% of its flights depart on time, on around 14,500 flights. By way of comparison, the best performing U.S. airport in May 2024 was Salt Lake City, with 82.69% of flights departing on-time on around 10,000 flights. The best performing Canadian airport, Calgary International Airport, had a D14% of 77.07% on around 6,000 flights.  

    The Canadian Domestic Market: Seats Flown Up 6% in 2024 

    The Canadian airline industry has witnessed many changes in 2024 to date. Indeed, ultra-low cost carrier Lynx departed the market in bankruptcy, and long-time premium carrier Porter Airlines has taken delivery of Embraer E2-195 jets. At the time of writing, Porter has 33 jets in service, and is primed to increase its Canadian domestic flying by 63% (measured on seats flown) this July compared to last. WestJet will increase their July seats flown by 8% compared to last July. In contrast, ultra-low cost carrier Flair will fly 7.5% fewer seats this July 2024, compared to last July.  

    Transatlantic Flying from Canada to Europe: Up Almost 7% in 2024 

    Air Canada, Transat, and WestJet are the perennial airlines flying Canadian customers to European destinations, and vice-versa. Air Canada will fly twice as many seats as Air Transat, increasing its seat count by 3.3% this July compared to last. (These carriers will benefit from the general transatlantic demand, and phenomena such as North American customers seeking to enjoy Taylor Swift concerts or the Paris Olympics). Transat is up 6.2% on seats in July 2024 compared to July 2023, with WestJet increasing its seats flown by almost 20,000 seats in the month of July 2024 alone compared to July 2023.  

     Jul 2024 Jul 2023 Diff Percent Diff 
    Airline Name Seats Seats Seats Seats 
    Air Canada 451,984 437,607 14,377 3.3% 
    Air Transat 216,433 203,756 12,677 6.2% 
    WestJet 71,428 52,480 18,948 36.1% 
    TOTAL 739,845 693,843 46,002 6.6%  

    Learn more about Cirium On-Time Performance Reports.

  • Journey to Net-Zero: The ‘Fleet Inertia’ Challenge

    Andrew Doyle
    Andrew Doyle

    Andrew Doyle, Senior Director – Market Development, Cirium

    Global jet fuel demand is forecast to hit almost half a billion tonnes by 2050 – a more than 40% increase over 2024 – bringing into stark focus the challenge the industry faces in achieving its self-imposed net zero emissions target. This is based on the prediction by Cirium sister data and analytics provider ICIS, that growth in the fleet of conventionally powered aircraft will see overall fuel usage increase by an average of 1.5% annually over the next 25 years.

    ICIS Jet fuel demand forecast

    Although incremental aircraft and engine technology advances will continue to bring some efficiency improvements, the overall expansion of the commercial fleet – coupled with the fact that aircraft being delivered today are likely to remain in service for an average of around 25 years – means huge volumes of sustainable aviation fuel (SAF) will be needed if the industry is to have any hope of achieving net-zero by 2050 (the specific challenges relating to the scale-up of SAF supply will be examined in more detail in the next instalment of this series).

    The ICIS fuel demand forecast is supported by Cirium Ascend Consultancy’s projection that as far out as 2042 more than two-thirds of the global single-aisle mainline passenger jet fleet will be comprised of the same generation of aircraft and engines being produced today, while on the widebody side the figure will be in excess of 60%.

    The trend for advances in aircraft and engine efficiency to be outpaced by overall fleet growth has persisted for decades. According to an analysis published by the Air Transport Action Group, emissions per revenue tonne kilometre fell by 54% between 1990 and 2019, and yet absolute emissions doubled.

    Fleet Inertia Presents a Huge Challenge to Decarbonisation From a Technology Perspective

    Fleet inertia presents a huge challenge to decarbonisation from a technology perspective

    The latest edition of the Cirium Fleet Forecast (CFF) predicts the delivery of some 46,260 new commercial passenger and freighter jet and turboprop aircraft over the 20 years between 2023 and 2042. Forecast traffic growth will require the global passenger fleet to increase by around 23,000 units, which equates to a 3.2% annual growth rate, taking the inventory to some 49,320 jet and turboprop aircraft at the end of 2042, according to the CFF. The freighter fleet will grow by 2.6% annually to reach almost 4,200 aircraft.

    The turboprop sector is the only one with realistic potential to deliver a fundamental step change in propulsion technology during this timeframe. While there are no electric or hybrid-electric airliners specifically included in the CFF, these will likely be the next powerplant directions for this market, albeit at the smaller end of the sector. Programmes in development include a 30-seat battery electric airliner, hydrogen-electric powertrains for retrofit on nine to 80 seaters and a hydrogen fuel cell powered 50-seater, which is in flight test with retrofits planned for DHC Dash 8s and ATRs.

    However, currently just 3% of CO2 emissions are from aircraft with 100 seats or fewer flying sectors below 1,000km. Conversely, long-haul twin-aisles made up 51% of CO2 emissions in 2019, and are by far the hardest to replace with electric/hydrogen-powered aircraft.

    Timescales for New Technology Aircraft Introduction

    Timescales for new technology aircraft introduction

    The path to achieving net-zero emissions by 2050 for the aviation industry is fraught with significant challenges, in large part due to the ‘fleet inertia’ problem and the substantial increase in global jet fuel demand. While advancements in aircraft and engine technology will contribute to incremental efficiency gains, they are unlikely to counteract the rapid growth of the commercial fleet.

    Sustainable aviation fuel (SAF) will play a critical role in bridging this gap, but its scale-up poses considerable obstacles that require urgent attention.

    The future may hold promise for electric and hydrogen-powered aircraft, particularly in the turboprop sector, yet these technologies remain limited in scope and impact.

    As we look ahead, it is imperative for industry stakeholders to accelerate carbon mitigation initiatives and explore innovative solutions to meet the ambitious 2050 targets. Stay tuned for the next installment in our series, where we will examine the specific challenges and potential solutions related to the scale-up of SAF supply.

    Contact us for more information.

  • Airline Failures – Opportunity for Some?

    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.

    Chris Seymore aviation market analysis
    Chris Seymore aviation market analysis

    Chris Seymour, Head of Market Analysis, Cirium Ascend Consultancy

    The recent failure of Australian low cost carrier Bonza, after less than 18 months of flying, highlights the fragility which startups can face in their first years. In an environment of delivery delays and capacity squeeze, airline failures can provide other airlines with opportunities to add capacity at short notice by leasing aircraft which suddenly become available. What is the recent experience?

    Over the past 18 months, since the start of 2023, looking at operators of the popular A320 and 737 family aircraft in particular, 18 carriers operating 177 aircraft have suspended or ceased operations.

    To date, some 50 of these aircraft, or just under 30%, have returned to service, while only three have been parted out.

    Bonza’s four leased 737-8s have ferried to Europe awaiting new lessees. With lessors accounting for over three quarters of the 177 total, returning aircraft represent a problem in dealing with the cost of an unexpected return, but also an opportunity to place with a better credit at increased rates in a capacity constrained market.

    It has averaged around 120 days to get these 50 aircraft placed and back in service and the average age of these aircraft is around 8 years.

    When Norwegian low cost airline Flyr ceased at the start of 2023, its six Max 8s were idle for only around seven weeks before rival Norwegian snapped them up; and its six 737-800s took a little longer but are all flying, most with Jet2.

    The Colombian market saw the cessation by Ultra Air and then Viva Air in March-May 2023, putting 29 A320s into the market. All but one are back in service, these have averaged 144 days to place and the majority have stayed in the local market with Avianca and LATAM Airlines Colombia, thereby minimising the cost of transition for the lessors.

    A320s and 737s From Ceased/suspended Operations – Current Status

    A320s and 737s from ceased/suspended operations – current status

    Source: Cirium Fleets Analyzer (data since Jan 1 2023)

    MYAirline in Malaysia ceased last November but six of its ten mid-life A320s averaged just 90 days before re-entering service, with Air Asia, GlobalX and Corendon Dutch, while three others are placed with IndiGo and Vueling and due to re-enter service.

    So what of the remaining 120 aircraft, which have an average age of 13 years and are averaging 267 days inactive to date?

    Cirium Fleets Analyzer records only 11 as being placed to date. These include five of nine leased 737-8s with Lynx Air, which stopped in February, going to fellow Canadian carrier WestJet. Six young A320s returned by Pacific Airlines of Vietnam after it suspended flights in March have yet to find new homes.

    54 aircraft (44%) are from the fleet of GoFirst of India, perhaps the highest profile casualty, which suspended flying in May 2023.

    With an average age of under 5 years and all but five being A320neos, these are obvious candidates for quick placement.

    But the drawn out process the lessors are having to go through to get them back, with courts ordering deregistration only last month, as well as issues with the GTF engines, mean that they all remain parked, frustratingly as the peak 2024 season is in progress.

    At the other end of the spectrum, the 30-strong fleet of charter carrier iAero Airways of North Carolina, which entered Chapter 11 and stopped flying in April, average almost 30 years old, being mainly 737-300/400s. Eastern Air Express has acquired these assets.

    So there is limited availability of young and newer generation aircraft available in the short term, with the prospect of the GoFirst fleet coming back into service in the coming year(s). Most recently the failure of Air Vanuatu has seen a young 737-800 returning to its lessor and one would expect that to be quickly placed.

    LEARN MORE ABOUT CIRIUM FLEETS ANALYZER.

  • Aircraft Value Dynamics

    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.

    YIRU ZHANG
    Yuri Zhang

    Yiru Zhang, Senior Valuation Analyst, Cirium Ascend Consultancy

    Let’s begin by examining where values and lease rates stand today by aircraft category, and how they’ve moved during the last 12 months and last 60 months. The last 60 months effectively represents a benchmark against 2019, meaning pre Covid.

    Let’s begin by examining where values and lease rates stand today by aircraft category, and how they've moved during the last 12 months and last 60 months.

    You can see that in the last year, there were very large improvements in values and lease rates of narrowbody and widebody jets. For narrowbodies, the increases have been in the high teens on a fleet-weighted average basis.

    For widebodies, lease rates on a fleet-weighted average basis have risen almost 30%.

    But given the significant decreases during Covid, on a weighted average basis this shouldn’t be a surprise.

    And in fact, you can see that for widebody lease rates there is almost no visible rent bar, which means they’ve only just come back to the pre-Covid level.

    Values are still almost 20% down over 2019 and we think that is because a big portion of the fleet were relatively young A330ceos and 777s, production of which concluded during the Covid period. Some of these young fleets, i.e. aircraft that are seven to 10 years old, had significant value declines which may never be fully recovered.

    Narrowbodies on the other hand have seen lease rates recover to 2019 levels, but values are actually ahead, by about 15%.

    The regional aircraft market remains significantly below 2019 levels.
    That’s largely driven by a lack of flying activity in the USA, largely due to the pilot shortage, especially for the regional jet sector. There are also additional factors contributing to this decline, such as rising fuel costs and increasing operational expenses. And in the turboprop market, production has now ended for a lot of types. The DHC 8-400, for which production has been suspended, has seen a lot of market availability.

    And in the turboprop market, production has now ended for a lot of types. The DHC 8-400, for which production has been suspended, has seen a lot of market availability.

    Source: Cirium Core, passenger jets only

    To appreciate this chart, the concept of base value must first be understood. Base value is defined as the theoretical market where supply and demand are exactly balanced. So in good economic times when demand exceeds supply, market to base value should be above one, while in the obverse market value will be lower base and therefore the ratio is below one.

    The chart illustrates the “hot” market that existed at the beginning of 2019, then the downturn triggered by Covid, followed by the recovery starting in Q3 2021 leading through to today. Single-aisle market value exceeds base by 25%, while twin-aisle market value is also more than 15% above base. The twin-aisle increases are driven by some recent market value revisions, the latest of which being the A330ceo, which obviously has a large inventory that impacts the fleet-weighted result here.

    The twin-aisle increases are driven by some recent market value revisions, the latest of which being the A330ce.

    Source: Cirium Core Current Market Values, Current Base Values and fleet counts as at 14 Jun 2024

    Meantime the single-aisle ratio is largely being driven upwards by mid-life and older aircraft where demand remains very strong as a consequence of new aircraft delivery deficits which is presently driving strong demand and hence strong market values for those older aircraft. As shown in the above chart, the single-aisle MV/BV ratio is close to parity for new aircraft but increases with age, reaching approximately 160% by retirement age.

    Source: Cirium Core, passenger jets only

    Source: Cirium Core, passenger jets only

    The long term picture using the same data illustrates how today’s MV/BV ratios are at record levels. It also shows how widebody aircraft ratios did not fully recover after the global financial crisis of 2007/2008. They never even exceeded base for an entire 15-year period, only finally transitioning to positive from late last year, beginning of this year.

    Read more Ascend Consultancy articles. Learn more about Cirium Fleets Analyzer.

  • Lessor Direct Orders – A Good Bet Paying Off

    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.

    Thomas Kaplan Senior Valuations Analyst, ISTAT Appraiser
    Thomas Kaplan Senior Valuations Analyst, ISTAT Appraiser

    Thomas Kaplan, Senior Valuations Consultant, Cirium Ascend Consultancy

    During the depths of the pandemic, airlines and operating lessors with new aircraft deliveries due from Airbus or Boeing were typically happy to defer those deliveries if they could. The strategy of lessors having speculative orderbooks was in question as there was increased risk of having to accept delivery of unplaced aircraft, or placing those deliveries at depressed lease rates.   In today’s strong demand environment with reduced delivery rates of new aircraft, a near term delivery slot is suddenly rare and highly prized. With strengthening Market Lease Rates, the lessor strategy of having speculative orders now appears to be paying off.

    Who are the lessors with the largest orderbooks and who have access to the prized near-term slots?

    We will limit the analysis to Airbus and Boeing as they are the most backed-up in terms of orders with almost no availability before 2030, especially in the narrowbody segment. The operating lessor orderbook with Airbus and Boeing is over 2000 aircraft, with most due for delivery this decade.

    Who are the lessors with the largest orderbooks and who have access to the prized near-term slots?

    Source: Cirium Fleets Analyzer fleet data; Airbus and Boeing aircraft

    As we expect the current supply and demand imbalance to persist at least through 2026, the conditions for placing lessor orders should remain favourable in this period. The below chart shows which lessors have scheduled deliveries from their orderbooks from now to the end of 2026. Avolon has the largest lessor orderbook with over 400 aircraft, however only a quarter of these are expected to be delivered in the next two and a half years. This also includes 32 A330-900neos, which do not have the same supply constraints as other types and thus lessens their early-slot advantage.

    The below chart shows which lessors have scheduled deliveries from their orderbooks from now to the end of 2026.

    Source: Cirium Fleets Analyzer fleet data; Airbus and Boeing aircraft

    Air Lease Corporation and AerCap have the largest number of aircraft delivering in this time frame at over 200 and 150 respectively. However, in both cases according to Cirium fleet data, two thirds of these are already placed with airline lessees. If these placements were not negotiated recently during the tighter market conditions, that leaves only around 60 available jets with each lessor to place at good rates. Our database estimates that SMBC Aviation Capital has 75 unplaced narrowbodies due for delivery by 2026 which puts them in a strong position in this seller’s market. Our database may not capture all the negotiated placements and letters of intent, so remaining availability may be even less.

    While stock prices move based on many factors, we note that Air Lease (AL) and AerCap (AER) stocks have performed well this year, increasing by ~10% and ~24% respectively since January.

    In contrast, BOC Aviation, another publicly traded large lessor but with a fewer near-term orderbook positions, has seen its stock more flat, down around 4% YTD. Of course, these stock movements are not just because of an OEM backlog, but investors may want to take note of the current advantage these positions hold.

    Given the lack of lessor orders for 2029 and beyond, lessors will need to order quickly if they want to make furthers bets on speculative delivery slots. Otherwise, the Purchase and Leaseback market will remain the only option for lessors to grow their fleet of new aircraft organically. This has historically been a far more competitive market and if lessors are not able to renew their speculative orderbooks, then it can only become even more competitive with consequences for pricing. But that is a story for another day.

    Learn more about Cirium Fleets Analyzer.

  • Is A330neo Coming to China? – A Suitability 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.

    Yuanfei Zhao (Scott) Aviation Analyst
    Yuanfei Zhao (Scott) Aviation Analyst

    Yuanfei Zhao (Scott), Senior Aviation Analyst, Cirium Ascend Consultancy

    Recent market developments suggest the potential introduction of the A330neo, the successor to the popular twin aisle type A330ceo, to China. A June release from Bloomberg indicate discussions are ongoing between Airbus and Chinese airlines for the sale of over 100 A330neo aircraft. While Airbus has yet to confirm these discussions, the market awaits further developments.

    This raises the interest to examine the potential of this type to be introduced to the China market. From a cost and performance perspective, the A330 family has been designed primarily for short to medium range dense routes while offers competitive pricing relative to its counterparts, such as the A350s. Cirium’s data illustrates this, with the full life market value of a Trent-powered A330-900neo (built in January 2024) and devoid of additional specifications, estimated at approximately USD107 million. In contrast, the equivalent figure for an A350-900 stands at USD158 million..

    “This pricing strategy positions the A330neo favourably in terms of unit cost, operational expenses, and performance balance within its designated market segment, despite its capability to operate long-haul routes.”

    Such characteristics clearly differentiates itself from other main twin-aisle types such as the A350, or the 787 and the 777, which primarily target longer-range routes.

    The chart below demonstrates the average block range for each of the aforementioned aircraft type operated by Chinese airlines on all flights departing from China since 2015, encompassing both domestic and international routes.

    Cirium Schedules data

    Source: Cirium Schedules data

    The average block range flown by the Chinese A330ceo fleet is 2,250km, whereas for the A350, 787 and 777, the ranges are 2,530km, 2,920km and 3,780km respectively.

    This underscores that not only does the A330ceo fleet operate on shorter routes on average compared to other main twin-aisle types in China, but the average block range of other long-haul types operated by Chinese airlines is also not significantly longer than that of the ceo fleet.

    Analysis of flights operated by Chinese airlines between 2015 and 2023 reveals that only 14% of these flights exceed 5,000km. Given this context, it appears economically prudent for Chinese airlines to utilise more of the A330 fleet on the majority of their short to medium-range routes.

    Cirium Fleets Analyzer

    Source: Cirium Fleets Analyzer

    From a fleet planning perspective, out of the 212 in-service and stored A330ceo aircraft in China, 33 units (15% of the total fleet)  are currently aged 15 years or older.

    “These aircraft are likely to face fleet planning decisions before the end of this decade. Additionally, approximately 22% of the fleet is on operating leases with foreign lessors, including Chinese fund-backed lessors registered outside of China.”

    The destinies of these leased aircraft upon lease expiries are subject to higher uncertainties, with lessors having the flexibility to decide whether to extend leases, relocate assets to more lucrative markets, retire and part out the aircraft for better value extraction, or covert them from passenger aircraft to freighters based on prevailing market dynamics.

    In summary, the cost and performance characteristics of the A330 family aircraft align well with the Chinese market, offering a balanced combination of asset unit cost, operational cost (on a per-seat basis) and type/route suitability. If Chinese airlines intend to maintain or even expand their A330 fleet in the long run, it is advisable to commence planning for the new generation neos. However, major considerations include the scarcity of delivery slots and production rate constraints of OEMs, which have resulted in virtually no available delivery slots for aircraft like the A350 and 787 before the end of this decade. While there may be a limited number of A330neo delivery slots still available during this decade due to the relatively small orderbook of this type, they are unlikely to be plentiful.

    Consequently, it may be until the next decade before new A330neos can establish a sizeable fleet within Chinese airlines for replacement or growth, even if orders are confirmed and placed promptly.  

    Learn more about Cirium Schedules, Cirium Fleets Analyzer.   

  • Path to Net Zero: Rising Carbon Footprint in Aviation, Part 3

    EmeraldSky logo representing aircraft and flight emissions
    Andrew Doyle
    Andrew Doyle

    Andrew Doyle, Senior Director – Market Development, Cirium

    Please note: this is part three of a three-part series. Read part one and two.

    Taking a look at the Airbus and Boeing passenger types that made up the global in-service fleet in April 2024 – compared with the previous emissions peak in July 2019 – most notable has been the introduction of approaching 1,500 latest-generation 737 Max aircraft (since the type’s worldwide grounding order was lifted in late-2020), and the addition of almost 1,800 A320neo and A321neo aircraft. Meanwhile the in-service fleet of previous-generation A320ceos has declined by more than 500 and more than 450 737-800s have been removed. 

    On the widebody side, only 20 ageing passenger-configured 747-400s remain in service – down from 130 – and the legacy 767-300 fleet is reduced by approaching 190 units. The active A380 fleet has fallen from 233 to 160 and there are over 110 fewer A330-300s in service. These have been replaced and supplemented by almost 400 additional latest-generation A350s and A330neos, together with more than 270 787s. The combined in-service Airbus and Boeing passenger jet fleets have grown by over 1,000 units to almost 21,000 over this five-year period, which has more than offset the per-flight efficiency gains resulting from the increasing prevalence of latest-generation engine technology. 

    Here’s our take. 

    The commercial aviation industry stands at a crossroads, facing the dual challenge of meeting growing travel demand while drastically reducing its environmental impact. The path forward requires a concerted effort from airlines, aircraft manufacturers, governments, and stakeholders to invest in sustainable technologies and fuels.

    Addressing the urgency of the situation, embracing innovation, and committing to ambitious carbon reduction targets are essential steps to ensure that the future of air travel aligns with the planet’s health. The journey towards sustainability is a complex one, but with proactive measures and collaborative initiatives, the aviation industry can rise to meet this critical challenge. 

    Learn more about accurate aircraft and flight emissions insights; Emerald Sky Aircraft and Flight Emissions.  

  • Predicting Delays: How Airlines Use AI to Minimize Disruptions

    Alex Brooker, VP of Research, Development and Discovery, Cirium

    Time is a precious commodity, the skies are more crowded than ever, and flight delays have become a common headache for travelers. The ripple effects of these disruptions extend far beyond frustrated passengers, costing airlines many millions of dollars annually in crew expenses, fuel consumption, and damaged reputations. However, a quiet evolution is underway in the aviation industry, as airlines and airports harness the power of big data, machine learning, and artificial intelligence to predict and minimize flight delays like never before.

    Traditionally, airlines have relied on historical data analysis and weather forecasts to anticipate potential delays. But these methods often fall short in providing the granular, real-time insights needed to make proactive operational decisions. “The most obvious clue, of course, is checking the weather,” says airline pilot Patrick Smith. “There are, however, lots of variables here. Some hubs are more prone to delays than others. A few inches of snow in Denver or Detroit aren’t a big deal. Snow in Washington or Dallas, on the other hand, can cause problems.”[1]

    Enter the new era of AI-powered delay prediction. By analyzing vast troves of data from sources like satellite imagery, radar, aircraft sensors, and weather stations, machine learning algorithms can identify patterns and forecast delays with unprecedented accuracy. These systems continuously learn and refine their models with each new data point, enabling airlines to make smarter, faster decisions that minimize the impact of disruptions.[2]

    Leading the charge in this space are airlines like JetBlue[3], Delta, and United. JetBlue has partnered with weather intelligence provider Tomorrow.io to develop a system that can predict delays hours or even days in advance.

    By providing hyper-accurate forecasts tailored to specific airports and flight paths, the system allows JetBlue to proactively adjust schedules, reroute aircraft, and keep passengers informed.

    The results have been impressive, with the airline reporting savings of $300,000 to $600,000 per hub per year.[4]

    Delta Airlines, meanwhile, has developed its own proprietary app that leverages real-time weather data to set threat index alerts. United Airlines has taken a similar approach with its investment in micro-weather technology, which provides localized forecasts that help optimize flight routes and fuel efficiency.

    The benefits of these AI-driven systems extend beyond just operational efficiency. By minimizing delays and cancellations, airlines can significantly improve the passenger experience and build stronger brand loyalty. In an industry where a single negative incident can turn a customer away for life, this is no small feat. “What the airline is trying to do is delay the flight as little as possible, as late as possible,” explains Flighty app founder Ryan Jones. “And what we’re trying to do is tell the truth as soon as possible.”[5]

    Of course, implementing these advanced prediction systems is not without its challenges. Integrating AI into existing aviation infrastructure requires significant investment in both technology and personnel training. There are also valid concerns around data privacy and security that must be addressed through robust governance frameworks.

    But for airlines willing to make the leap, the potential rewards are immense. A 2019 analysis by Cirium found that every minute of block time delay costs European low-cost carriers around $60. Extrapolated across an entire fleet, this can add up to tens of millions of dollars in annual losses. By leveraging AI to minimize these delays, airlines can boost their bottom lines while also enhancing the travel experience for their customers.

    average cancellation rate

    However, realizing this potential will require close collaboration between airlines, airports, technology providers, and regulators. Data sharing and interoperability standards will be key to unlocking the full value of these systems across the aviation ecosystem. There must also be a concerted effort to ensure that the benefits of AI are distributed equitably, rather than concentrating among a handful of major players.

    At the same time, it’s important to recognize that AI is not a panacea for all of aviation’s challenges. Factors like infrastructure constraints, labor shortages, and rising fuel costs will continue to put pressure on airlines’ operations. Addressing these issues will require a holistic approach that combines technological innovation with sound policy and strategic investments.

    For travelers, the message is clear: the days of being left in the dark about flight delays may soon be a thing of the past.

    With AI working behind the scenes to keep planes running smoothly and on time, passengers can look forward to a future where air travel is more predictable, more efficient, and more enjoyable than ever before. And that is a future worth getting excited about.

    How is Cirium Traveler Services enabling travel providers to create better traveler experiences? Read more here.

    [1] How to Find Out If Your Flight Will Be Delayed Before It’s Even Announced (travelandleisure.com)
    [2] Q&A – Power travel applications with best-in-class data – Cirium
    [3] JetBlue Case Study | Tomorrow.io
    [4] 4 Ways Weather Intelligence Can Improve Operations for Airlines and Airports (tomorrow.io)
    [5] How to Find Out If Your Flight Will Be Delayed Before It’s Even Announced (travelandleisure.com)

  • The Helicopter Leasing Industry: Room for More?   

    Sara Dhariwal Valuations Manager
    Sara Dhariwal Valuations Manager

    Sara Dhariwal, Senior Aviation Analyst, Lead Appraiser – Helicopters & AAM, Cirium Ascend Consultancy

    While lessors have established themselves in the commercial fixed-wing market for around 40 years, the civil helicopter market is relatively new. The emergence of Milestone Aviation Group in 2010 marked the beginning of the growth of specialized leasing companies in this sector. Helicopters became an attractive investment due to their long lifespan and strong value retention. Initially, the focus was on the offshore support market, which presented an ideal opportunity for leasing as it required capacity for a specific period with the ability to return the asset to the lessor afterwards. Twin turbine helicopters are particularly sought after by lessors and often require significant financing.

    The leasing model experienced significant growth during the expansion of the offshore sector between 2012-2014, driven by high oil prices.

    Operating lessors have become increasingly important players for manufacturers, having received nearly 300 new civil twin turbine helicopters over the past decade. This accounts for almost 10% of all civil twin turbine deliveries. Additionally, lessors serve as a crucial source of finance for operators through sale-and-leaseback arrangements involving both new aircraft and those available on the second-hand market.

    Operating lessors have become increasingly important players for manufacturers, having received nearly 300 new civil twin turbine helicopters over the past decade.

    Source: Cirium Fleets Analyzer

    With hindsight, it can be argued that there was an excessive number of orders and subsequent deliveries of offshore-configured helicopters driven by the market demand. The unprecedented downturn in the oil and gas industry which started in 2014 resulted in overcapacity as oil production, and thereby demand for helicopters to transport workers to and from rigs, reduced.

    A considerable increase in number of available aircraft put significant pressure on asset values.

    For lessors, the downturn exposed a vulnerability for lessors who had a fleet model heavily concentrated in one sector.

    As the downturn persisted longer than expected, both offshore operators and lessors faced challenges to stay financially viable. By the end of 2018, Waypoint, the second-largest lessor at that time, filed for Chapter 11 bankruptcy protection.

    In response to these challenges and in an effort to mitigate risk, the lessor industry has undergone fleet diversification. The proportion of offshore-configured twin turbine helicopters in the lessor fleet has reduced from approximately 60% in 2014 to around 40% by the end of 2023. Emergency medical services (EMS) now account for about 30% of the twin turbine lessor owned fleet, while the utility sector represents around 20%.

    In response to these challenges and in an effort to mitigate risk, the lessor industry has undergone fleet diversification.

    Source: Cirium Fleets Analyzer

    Since 2017, the proportion of the leased fleet has remained relatively stable at 20%. Furthermore, there has been a stabilization in the offshore sector over the past few years. This was achieved by reassigning excess capacity and redeploying a significant portion of the fleet as the oil and gas industry began to recover. Additionally, modest new deliveries have helped in bringing the overall fleet size back to a more appropriate level.

    Source: Cirium Fleets Analyzer

    The decline in delivery numbers of helicopters to the offshore sector cannot solely be attributed to the industry’s caution and restraint. Several factors have contributed to this decline, including:

    • Scarce financing: The downturn in the oil and gas industry has made investors wary, resulting in limited access to financing for new helicopter purchases. This scarcity of financing options has hindered the ability of operators to acquire new equipment.
    • Disparity in contract terms: There is often a disparity in perception regarding contract terms between operators and contracting oil companies. This discrepancy can be seen as increased investment risk for new helicopters.
    • Supply chain challenges: The supply chain for helicopters faces its own set of challenges, leading to lengthy lead times for the delivery of new aircraft. These extended lead times require long-term investment commitments, which may further contribute to a decrease in delivery numbers.
    • Future use of fossil fuels: the debate about decreasing the reliance on fossil fuels and the emphasis on ‘green financing’ is affecting the investment case for oil and gas support.

    The consequence of these factors is that the current fleet is aging with a limited pipeline of new equipment entering service.

    According to the Cirium Helicopter Forecast, it is predicted that approximately 20% of the total helicopter fleet will need replacement within the next 10 years. Within this figure, the offshore sector is expected to account for around 5%, which translates to under 400 helicopters. This projection suggests that an average of 40 new deliveries per year will be required for the offshore sector alone over the next decade.

    In comparison, over the past decade, there has been an average of 30 new offshore deliveries per year. Therefore, meeting the forecasted demand would require a production increase of just over 30% in order to accommodate these additional deliveries.

    This data highlights the potential growth and demand in the offshore sector and indicates a need for increased production capacity to meet future requirements.

    This data highlights the potential growth and demand in the offshore sector and indicates a need for increased production capacity to meet future requirements.

    Source: Cirium Fleets Analyzer

    In early 2024, Norway expressed growing concerns about the limited pipeline of new helicopters and the lack of diversity in available types. As a response to this issue, Equinor, an oil major, made a rare move by announcing their own fleet order. While such actions are not unheard of, they are relatively uncommon.

    Towards the end of April 2024, a new player entered the helicopter leasing market with GD Helicopter Finance (GDHF). Spearheaded by Michael York, who gained experience in the industry at Milestone Aviation over the past decade, GDHF is backed by Chinese helicopter lessor and operator GDAT. Notably, GD Helicopter Leasing aims to primarily focus on serving the offshore market.

    GDHF positions itself as offering “near-term availability of the newest technology” indicating that they recognize the opportunity that exists.

    The lessor has currently earmarked 20 H175 and 50 H160 through a mix of firm orders and LoIs. Would all the aircraft be delivered, they would make up nearly 20% of the forecasted replacement demand.

    The growth of lessor portfolios does not solely rely on new deliveries but also involves providing financing options such as sale-and-leaseback arrangements both upon delivery and in the secondary market.

    In the commercial fixed-wing sector, leased fleets comprise about 50% of the total thus a comparison indicates the helicopter sector has potential for growth. However, such growth, does not necessarily equal more market participants. There has been some consolidation amongst the lessors in the past decade with Macquarie acquiring Waypoint along with most of its portfolio following the bankruptcy. LCI acquired a portfolio from Lobo Leasing in 2022 and some asset trading between lessors continuing.

    It begs the question of whether existing lessors can withstand increased competition without comprising their stability? Or is it just what the market needs to signal optimism for growth and innovation?

    Learn more about Cirium Ascend Consultancy and Ascend Fleets Analyzer.

  • Emirates’ Unstoppable Ascent: Navigating the Skies Post-Covid

    Mike Malik, Chief Marketing Officer, Cirium

    On May 13th, the Emirates Group announced its best-ever financial performance. Not bad for an airline that launched in the 1980s! In its latest fiscal year, Emirates enjoyed record revenues, record profits, and record levels of cash. Net profit for the 12 months that ended in March was US$5.1 billion, up 71% from the year before. Revenues were up 15% to US$37.4 billion. It’s quite a feat after two years of crisis in our industry, brought on by the Covid-19 pandemic.

    Historic Growth and Fleet Expansion

    Four decades ago, when Emirates was a small startup airline in Dubai, no one could have imagined it becoming what it is today. As Cirium Diio® airline planning data shows, it’s currently the largest airline in the world outside of the United States, measured by scheduled ASKs (available seat kilometers). Only United, American, and Delta are larger by this measure. According to Cirium Ascend Fleets Analyzer® data, Emirates today has nearly 250 planes, all of them either Airbus A380s or Boeing 777s. It’s the largest operator of both models. Soon, it will start receiving Airbus A350s, followed by Boeing 787s and Boeing’s next-generation 777s.

    Adapting and Innovating

    Like any strong company, Emirates is changing and adapting to meet the challenges ahead.

    It’s now in the process of retrofitting and upgrading the interiors on nearly 200 of its planes. This will include all-new Business Class seats and its new Premium Economy product, to go along with its famous first-class showers on A380s. As Emirates President Sir Tim Clark recently said, “We’re topping up our multi-billion-dollar investment in the retrofit program to introduce cutting-edge cabin products on more of our A380s and Boeing 777s, demonstrating a clear commitment to elevating the customer experience with a best-in-class suite of products across every cabin.”

    Expanding Loyalty and Partnerships

    Emirates is also expanding its Skywards loyalty plan, which now has 2.5 million members.

    Earlier this year, the head of Skywards, and Divisional Senior Vice President, Dr. Nejib Ben Khedher unveiled what he called a “landmark partnership” with Visa, a world leader in digital payments. “This agreement,” he said, “is a major milestone for Emirates Skywards as it continues to lead the industry with innovative digital-first products and experiences.” One important benefit for Skywards members is free inflight Wi-Fi.

    Sustainability Initiatives

    To help achieve IATA’s goal of net-zero carbon emissions by 2050, Emirates is working to improve fuel efficiency, invest in sustainable aviation fuels (SAF), and electrify ground vehicles, and a host of other initiatives. The new planes arriving from Airbus and Boeing will also be more fuel-efficient. The company has also committed to spending US$200 million on researching and developing new fuel and energy solutions for aviation. Making the airline industry more environmentally friendly is certainly a hot topic here at Cirium, where we just introduced Emerald Sky™, a revolutionary methodology that seamlessly integrates Cirium’s comprehensive data, advanced analytics, and innovative techniques to achieve unmatched precision in measuring both current and forecasted CO2 emissions from flights.

    Global Network and Market Presence

    There’s perhaps nothing more important to the success of Emirates than its expansive global network from Dubai.

    Based on an analysis using Cirium Diio, the United Kingdom is the airline’s most important country market outside of the United Arab Emirates (measured by total seat capacity). A close second is India, followed by the United States, Australia, and Saudi Arabia. Emirates currently flies 19 times a day from Dubai to the U.K., serving London’s Heathrow, Gatwick, and Stansted airports, in addition to Manchester, Birmingham, Newcastle, and Glasgow. It flies to nine airports in India and 12 airports in the U.S.

    Dubai to Heathrow is the airline’s single busiest route by total seat capacity. Next is Dubai to Bangkok. Rounding out the top ten routes are Mumbai, Cairo, Manchester, London Gatwick, Jeddah, Paris, Delhi, and Kuwait. The airline’s newest destination is Colombia’s capital Bogotá, served from Dubai with a stop in Miami. It will be its fourth destination in South America, joining São Paulo, Rio de Janeiro, and Buenos Aires. It’s starting to get hard to find a major world city that Emirates doesn’t serve!

    The longest route in its system is currently Dubai to Auckland, which is about 8,810 miles, or 14,178 kilometers.

    We can also use Cirium Diio to track connecting passenger flows. Our FM Traffic tool, for example, shows that many of the passengers flying from Dubai to Bangkok on Emirates are connecting from Europe, led by cities like Manchester, Paris, and Amsterdam. A lot of passengers on its Heathrow flights are connecting to and from Australia, the Maldives, and the Indian subcontinent. One other fun fact about Emirates that we can see from analyzing Cirium Diio data: The longest route in its system is currently Dubai to Auckland, which is about 8,810 miles, or 14,178 kilometers.

    Future Prospects

    I’m sure Emirates will add many more destinations in the years to come. Eventually, it will move to Dubai World Central airport, envisioned to become the world’s largest. Last year, Dubai began constructing a nearly US$1 billion engineering facility at the new airport. This year, it’s moving forward on a new passenger terminal. It will support the airport’s plan to handle as many as 260 million passengers annually! In 2023, the current airport handled 83 million.

    Emirates will face many competitive challenges in the years ahead.

    It’s very ambitious for sure, but that’s nothing new for Dubai and its national airline. Of course, Emirates will face many competitive challenges in the years ahead. Other countries like Saudi Arabia, India, and Turkey are also investing heavily in their aviation sectors, hoping to create their own global airlines and hubs. Low-cost airlines are expanding in the Gulf region as well.

    However, competition is something Emirates has faced before. A long history of success shows it can smoothly fly through stormy weather. Personally, I can’t wait to see what’s next!

    Largest Markets for Emirates

    Largest Markets for Emirates

    Source: Cirium Diio

    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. 

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