The year 2024 has been noteworthy for air travel in the Asia-Pacific region, marked by significant developments in international routes. Which markets are emerging as top performers this year?
Source: Cirium FM Traffic, data filed Nov 4, 2024
In the first eight months of 2024, Japan remains one of the busiest destinations, with routes connecting to South Korea, China, and Taiwan ranking in the top three for passenger traffic. While passenger numbers on routes between Japan and South Korea, as well as Taiwan, have shown robust double-digit growth, traffic between China and Japan experienced a notable decline of 25%. This decrease is mirrored by a 21% reduction in seat capacity. Overall, China’s international seat capacity continues to lag behind pre-pandemic 2019 levels by 28%, posing ongoing challenges for passenger traffic, with reductions observed across all major routes connecting to China.
Japan remains one of the busiest destinations, while China’s international seat capacity continues to lag behind pre-pandemic 2019 levels by 28%.
Meanwhile, Vietnam-South Korea routes have demonstrated healthy growth, with passenger traffic increasing by 15%, supported by an 11% rise in seat capacity between January and August 2024, compared to 2019. This period saw the launch of five new routes, including Nha Trang–Cheongju, Da Lat–Busan, Phu Quoc Island–Cheongju, Phu Quoc Island–Busan, and Can Tho–Seoul. VietJet Air has emerged as the dominant player in this market, providing 1.1 million out of the 3.9 million total seats. Korean Air and Vietnam Airlines follow with 578,000 and 500,000 seats, respectively.
Another market that saw a similar growth phenomenon is India – United Arab Emirates, where traffic and capacity both grew by 15% between 2024 and 2019. This growth was powered by IndiGo’s (6E) and Air India Express’ (IX) capacity injection of +55% and 21% respectively, and the new entrance of Air Arabia Abu Dhabi (3L), which contributed another additional 407,000 seats from the UAE to India.
Source: Cirium SRS Analyser, data filed Nov 4, 2024
An analysis of the top 10 Asia-Pacific routes by scheduled seat capacity for the first quarter of 2025 reveals that most major markets have surpassed their pre-COVID levels and are now in a growth phase. Notably, routes such as South Korea–Vietnam and India–United Arab Emirates are maintaining strong upward momentum, with seat capacity increasing by 27% and 20%, respectively.
However, China stands as an exception to this trend. Major international routes to Thailand, South Korea, and Hong Kong remain significantly below 2019 levels, with traffic to Thailand still trailing by 22%. While recovery appears possible, it will be heavily influenced by a range of factors, from market demand and policy changes to broader economic conditions. Nevertheless, there is hope that with the right conditions, a gradual rebound could be on the horizon.
Major international routes from China remain significantly lower than 2019 levels, recovery is heavily dependent on the right conditions such as market demand, policy changes and broader economic conditions.
African aviation is experiencing remarkable growth, as detailed in Africa’s Skies in Focus, a new report released today by Cirium, the most trusted source of aviation analytics. Several factors have converged to fuel this rapid growth, including robust government support, increased investment, and a rising demand for air travel.
“African carriers and airports have among them global leaders, and that is not hyperbole. Look at the breadth and development of the Ethiopian Airlines network, or the operational excellence of Safair. That’s African aviation today, with more exciting developments on the way,” said Mike Malik, Chief Marketing Officer of Cirium.
Safair, the South African airline, excels at on-time performance, a key driver of customer satisfaction and a measure of overall operational performance. In 2024, the airline is the undisputed leader in the Middle East and Africa, and a strong performer among the global Low-Cost Carriers.
Passenger traffic in Africa surpassed pre-pandemic numbers in 2023 when total passenger traffic reached 161 million, compared to 144 million in 2019. The busiest airports on the continent are Cairo, Johannesburg, and Cape Town. African-flagged carriers maintain the lion’s share of capacity there, whose fleets are set to more than double by 2043, as detailed in the report.
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Richard Evans, Senior Consultant, Cirium Ascend Consultancy
Most of the largest airlines have reported their quarter three (Q3) results over the past few weeks. These numbers are, by definition, backward looking, but the commentary around the press releases is usually informative about the market environment in general, with some useful data on the near-term outlook.
A few words of explanation about the below chart. The airlines listed are the 10 largest in each region, by revenue, that issue quarterly or bi-annual results in a timely manner. The figures are operating margin (EBIT), with the colours showing the change in relation to the same period in 2023. At the bottom, there is a simple arithmetic average of the 10 airlines’ results, with the colour giving a rough guide to how healthy this profit level is. It is worth remembering that, historically, airlines have exhibited very slim profit margins. According to IATA, the best year for airline profits was 2015, with an operating margin of 8.5%. It forecasts 2024 to achieve 6% margin.
Latest Airline Financial Results Show a Mixed Picture
Source: Airline announcements, Cirium Core, Cirium Ascend Consultancy analysis. * unweighted Airlines: Green = better than same period last year, Red = worse, Amber = within +/- 1%. Regional averages: Green = >7%, Amber = 1-7%, Red = <1% or loss making
At first glance, the chart looks poor, with the majority of airlines being ‘red’. Several major airlines mentioned increased costs as being a contributory factor. In Asia, Singapore Airlines reminded that 2023 was an exceptional year, being the year of ‘rebound’ post-Covid, marked by very high passenger yields.
The US market generally saw lower margins than elsewhere, but there were major contrasts within the results.
In particular, the low-cost airlines struggled, with overcapacity and resultant yield pressures generally.
This trend has been brought to a head with the Chapter 11 filing for Spirit Airlines, which will remove some excess capacity – more of which later.
European airlines had also seen extremely high profitability in summer 2023. Things look worse this year, but the results are actually good when compared to historic averages. Note that SAS emerged from bankruptcy protection in August, and has not filed results for recent quarters.
In China, one might expect to see better profits, given the strong traffic recovery this year, and the recovery in international travel. However, the combined operating margin of the ‘Big 3’ state-owned airlines was just 1-2%. These airlines give no commentary on the market conditions in their stock exchange filings, but it is presumed that profitability is not their number one priority, with the rebuilding of capacity and networks being more of a driver. Anecdotally, it also appears they are poor at yield management and slow to react to market pressures.
Despite some headwinds in Q3, several airlines made more positive statements about the outlook for winter 2024-2025.
In Asia, several pointed to strong forward bookings, and the continued recovery in international traffic. European airlines also generally made upbeat comments on bookings and passenger demand. The story in the US is a little different, with airlines pointing to better capacity management, with several having lowered their capacity growth plans, or even decided to cut year-on-year seat kilometres (ASKs).
The second chart shows Cirium forward schedule data for the coming season, comparing the latest schedule to that in place back in July. The US market has been highlighted, where capacity plans have been cut significantly, led by the low-cost sector. This includes adjustments made at JetBlue, Southwest Airlines and Spirit. The latter had already announced the removal of 23 A320ceo family aircraft from the fleet in a deal with GA Telesis.
Airline Capacity Plans for Winter 2024-2025
Source: Cirium schedules data
Back in July, global capacity for Q4 was up 8.5% over 2023. This has now fallen to 6.5%, even though the July forward schedule still had some airlines with incomplete data. The US airlines have driven this change, as well as those in Latin America. US capacity in December 2024 was due to expand by 6.3% year-on-year, but this has now been cut by more than half, with the latest schedule only up 2.8% over 2023. The accompanying table summarises US airline capacity, by carrier. All carriers except Southwest and Allegiant have cut growth plans, but the absolute figures for December now show a marked contrast between the three largest airlines and the low-cost sector.
US Airline Capacity Growth (December 2024 vs. December 2023)
December 2024 ASKs (as at July)
December 2024 ASKs (as at November)
United
9.7%
6.0%
American
8.0%
4.1%
Delta
9.8%
6.3%
Southwest
-5.2%
-5.1%
Alaska
9.4%
2.9%
JetBlue
-0.7%
-1.3%
Spirit
-0.2%
-17.8%
Frontier
15.1%
2.1%
Allegiant
15.7%
16.2%
Slower capacity growth is undoubtedly a positive for airlines over the coming quarters. Some of this is due to the continued issues with Pratt & Whitney GTF-powered aircraft, where the stored fleet of over 600 A320/A321neos would add around 1.5% to global capacity if they were fully utilised. This, combined with a lack of new deliveries by Boeing, is certainly a factor in airlines’ plans at present, but may provide a bonus for airline investors as we enter 2025.
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.
In aviation, optimal “flight block time” is integral to ensuring smooth, timely and cost-effective airline operations. As competition heightens and passengers demand greater punctuality, airlines rely heavily on accurate block time calculations to optimize schedules and improve overall efficiency. But what exactly is flight block time, and how do airlines leverage it to drive operational success? Moreover, how do innovative analytics, such as those from Cirium, enable airlines to refine their approach?
What is Flight Block Time?
Flight block time refers to the total time an aircraft is *blocked*, or occupied, from the moment it leaves the gate at the departure airport to the moment it arrives at the gate of the destination airport. It consists of four key phases:
Taxi-out: Time spent from pushback to taking off.
Takeoff to touchdown: Time spent in the air, known as airborne time.
Taxi-in: Time spent taxiing to the gate after landing.
Additional variables: Includes delays, air traffic control (ATC) considerations and runway congestion, which can fluctuate and impact the total block time.
Accurate block time is crucial not just for efficient scheduling but also for delivering reliable and punctual services. Airlines need a fine balance—overestimating block times can cause inefficient scheduling, higher operational costs, and poor use of aircraft assets; while underestimating it can result in cascading flight delays and impact aircraft turn times that can result in customer dissatisfaction and increased penalties.
How Airlines Optimize Schedules Using Block Time
Airlines use flight block time to optimize flight schedules in numerous ways:
Precision in scheduling: By fine-tuning block times, airlines can better align their departure and arrival schedules, minimizing gaps and improving aircraft utilization. The goal is to ensure that flights operate within the allocated time, factoring real-life operational events reducing the chance of delay-induced disruption.
Resource management: Accurate block time calculations help airlines maximize resources, including aircraft, crew and ground personnel. This ensures seamless transitions between flights and reduces the likelihood of extended ground times.
Fuel efficiency and emission reduction: Block time directly affects fuel consumption. Precise planning reduces the need for extra fuel reserves carried and the added carrying weight, leading to more efficient fuel use, sustainable climate-friendly flights and lower operational costs.
On-Time Performance (OTP): Airlines are measured by individual OTP—how often scheduled departure and arrival times are met. Properly calculated block times help airlines maintain and/or improve OTP, thus enhancing customer satisfaction and loyalty.
Minimizing Delays: By anticipating block time variability due to factors like weather or ATC delays, airlines can adjust schedules to mitigate the ripple effect of delays on subsequent flights.
How Cirium’s Analytic Solutions Empower Airlines
Given the myriads of variables affecting flight operations, airlines are turning to data analytics to improve the accuracy and reliability of block time calculations. This is where Cirium – the global leader and trusted source of aviation data and analytics- plays a transformative role.
Cirium provides a range of analytic solutions to enable airlines to make data-driven decisions, optimize block time and drive operational efficiency:
Flight status data: Cirium’s real-time flight status data allows airlines to monitor block time performance. By providing precise departure and arrival information, airlines can recalibrate schedules to prevent or minimize delays or disruptions from cascading across their network.
Historical data analysis: Cirium’s analytics leverage vast amounts of historical flight data so that airlines can model future schedules. This includes identifying patterns related to airport congestion, seasonal traffic, weather impacts and even route inefficiencies. Airlines use these insights to fine-tune block time estimates, reducing unnecessary buffers and improving OTP.
Predictive analytics: With predictive insights, airlines can anticipate irregularities like weather disruptions or ATC constraints, allowing for dynamic adjustments in block time. Cirium’s predictive tools enable airlines to build in contingency plans or react to anticipated disruptions without overcommitting resources, thereby maintaining both operational efficiency and customer satisfaction.
Benchmarking performance: Cirium’s analytics also provide benchmarking capabilities, allowing airlines to compare OTP and scheduling efficiency against themselves and competitors. This helps to pinpoint opportunities for improvement in block time planning.
Disruption management: When disruptions do occur, Cirium’s analytics can assist airlines to manage rerouting and scheduling adjustments quickly, ensuring minimal impact on operations and passenger experience.
Enhancing Airline Efficiency With Advanced Block Time Analytics
Accurate flight block time calculation is essential for airlines striving to operate efficiently in a highly competitive industry. Airlines must consider multiple dynamic factors when estimating block time, including airborne time, ground operations, weather and ATC delays. With the help of advanced analytics from Cirium, airlines can better predict, optimize and respond to fluctuations in block time, leading to improved punctuality, resource management, and customer satisfaction.
In an industry where time truly is money, solutions like Cirium’s provide airlines with the tools they need to not only optimize block time but also enhance their overall performance and remain competitive in the market. By embracing data-driven insights, airlines can ensure their flight schedules are as precise and efficient as possible, paving the way for more reliable and profitable operations.
As we race towards the end of the year, I’ve examined how values and lease rates for spare engines have evolved in 2024, and what has driven the significant movements in this market.
Overall, Market Values for engines that power narrowbody aircraft have risen by around 12.3% over the last five-year period (on a fleet-weighted average basis). With the demand for single-aisle passenger aircraft rebounding post the pandemic, coupled with expensive new materials and high inflation on OEM list pricing, new-generation engine values have strengthened. Further, as the engine shop visit turnaround times increased, attention has turned to the green time remaining on the previous-generation engines that could be deployed into service, thereby increasing the value of maintenance on these engines as well as the asset market value. Lease Rates have exhibited strong increases as well over the last five years.
Meanwhile, values for engines powering other asset classes such as regional jet, regional turboprop and widebody have not yet returned fully to pre-pandemic levels (on a fleet-weighted average basis).
In the regionals sector, demand has been slower to trickle through; and on the twin-aisle sector, OEMs tend to tie in list prices with comprehensive engine maintenance programmes, coupled with lower utilisation on twin-aisles meaning fewer spares are needed. Widebody engine Lease Rates, however, have risen over the last few years and surpassed their pre-pandemic levels.
Source: Cirium Core, Ascend Consultancy analysis
Looking more closely at the key single-aisle associated engines over the last year, we can observe the correlation between Values and Lease Rates for previous-generation powerplants (CFM56-5B, -7B, V2527) rising strongly on the back of more modest increases or stability in the Values and Lease Rates of the new-generation engines (PW1127G, Leap-1A and Leap-1B). A notable exception here is the PW1127G, where Lease Rates saw increases of up to 30% as a result of the scale of the powder-metal contamination issues resulting in the wide-scale aircraft grounding (564 A320neo family aircraft stored) and the removal of an average of around 1,100 engines throughout 2024.
Source: Cirium Core, Ascend Consultancy analysis
Turning to the twin-aisle sector, there is less correlation between the technology of the engines. Rather, the notable increases in both Market Value and Market Lease Rates have been on the engines that support the Airbus A330ceo or the Boeing 777-200LR/300ER platforms, both of which have seen substantial improvement in their values in 2024.
As long-haul traffic recovered in 2024, these workhorses of the twin-aisle segment have proven the preferred choice for airlines re-deploying this capacity.
In addition, both aircraft types offer conversion potential to freighter configuration, increasing the demand for spare engines. Of the A330 engine choices, although the GE CF6-80E1 has shown the largest increases this year, it trails behind both the Pratt & Whitney PW4168 and the Rolls-Royce Trent 772 when compared to pre-pandemic levels, with only the latter engine seeing its values and lease rates higher than pre-pandemic due to these engines typically having more green time available, with several examples still on their first run.
Source: Cirium Core, Ascend Consultancy analysis
The increase in the value of maintenance particularly, for the engines that power single-aisles, has led us to increase our expectations for their longer-term values as well. In fact, our analysis of the depreciation of the value of the engine overhaul and life-limited part stack has shown that these are falling less rapidly than before, and consequently we made several changes to how much we depreciate these into the future. For key single-aisle engine types such as the CFM56-5B, CFM56-7B, and the IAE V2500-A5, depreciation through their Phase 2 (stable phase) has been reduced to 4% per annum, resulting in stronger residual values for the Airbus A320ceo and Boeing 737NG platforms they power. Furthermore, engine OEMs have advised that the technological improvements that are in development currently are expected to be retrofittable. 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.
To find out more about how these affect aircraft values and lease rates, or to find a similar summary of our aircraft values, please join the Cirium Ascend Consultancy webinar on 12 December where I will be joined by Rob Morris and George Dimitroff to take stock of this year and look ahead to 2025. In the meantime, if you enjoyed this analysis, please take a moment to consider voting for us as your Appraiser of the Year; you can cast your vote here.
On the back of growth in global trade, especially the booming e-commerce, and continuing capacity constraints on maritime shipping, international cargo market is showing strong growth in 2024 again. According to IATA’s figures, demand for air freight rose by 11.4% in August, representing the ninth consecutive month of double-digit year-on-year growth, with overall levels reaching heights not seen since the record peaks of 2021. Just one month later, IATA’s figures shows that air freight rose again by 9.4% in September, representing the 14th consecutive month of growth.
According to Cirium’s tracked utilization data, in terms of tracked number of departing freighter aircraft, tracked aircraft number has increased by 32% globally between the first 10 months of 2024, over the same period of 2019.
For the top 10 ranking air freight markets, China’s growth leads the way with 85% growth, followed by United Arab Emirates at 48% and Hong Kong SAR at 45%. as shown in the below chart. The United States is still the largest air freight market with growth of 28%. The United Kingdom is the only country that has declined at -2% in the top 10 list.
Source: Cirium Core, commercial widebody & single aisle freighters
China as the global manufacturing centre, benefits hugely from the surge in e-commerce demand given the country’s dominating position in global trade and export, which therefore has led to the booming of its air freight sector. However, China’s current dedicated cargo fleet especially the widebody fleet seems to be lagging the pace in which international trade demand has been grown and appeared to be not matching the country’s status as a global manufacturing centre.
Various comments have gone around in the market recently, about that there are plenty of widebody freighter requests in Asia, especially in China/Hong Kong.
The logistics companies are eager to get more space, but the operators cannot offer enough capacity which has consequently driven up shipping prices.
To understand the magnitude of Chinese carriers’ freighter capacity supply shortfall towards the above mentioned situation, number of tracked outbound freighter aircraft from China by domestic carriers is assessed below, and is compared with number of tracked outbound freighter aircraft by foreign carriers from China.
Source: Cirium Core, commercial widebody & single aisle freighters
As shown in the above chart, number of tracked outbound freighter aircraft by domestic freight carriers has been more than doubled during the first 10 months of 2024, compared with the pre-pandemic level.
During this period, according to Cirium’s fleet data, China’s freighter fleet (including both narrowbody and widebody) has grown from just less than 160 aircraft in 2019 to around 230 in 2024, with widebody freighter fleet grown from less than 50 aircraft to around 90.
The growth of domestic freighter fleet seems to be fast but is such growth enough to fulfill the demand?
As shown in the below chart, when compared with the above chart, number of tracked outbound freighter aircraft from China by foreign freight carriers is 126% more than domestic freight carriers.
In addition, when compare with pre-pandemic level, number of tracked outbound freighter aircraft from China by foreign freight carriers has grown by 51% after the pandemic.
Source: Cirium Core, commercial widebody & single aisle freighters
In the short term, the outlook for air cargo market is positive, with businesses replenishing inventories in preparation for the year-end festive season. In the longer term, if China can withhold its position as the global manufacturing centre as well as sustaining the robust development momentum of its e-commerce sector, despite the challenges it also faces with ongoing geopolitical tensions with other countries and regions which may impact China’s export and international trading, the country will need to further expand its domestic freighter fleet power especially in the widebody category as a means to compete with foreign operators for dominance in the local market.
Nevertheless, persistent OEM delays and supply chain disruptions continue to pose challenges to carriers in acquiring either new freighters or converted freighters.
This requires domestic carriers to have a long-term strategic vision in terms of anticipating future growth needs, and decisively place orders with OEMs to lock in earlier future delivery slots before OEMs’ slots are filled by orders from other carriers.
Chinese carriers currently have around 10 remaining orders for the current generation 777 freighters, but no orders have been placed yet for the new A350F and 777-8F. The latter two types have a combined orderbook of well over 100 aircraft to date, and deliveries are expected to only begin after 2026 and 2028 respectively.
Cirium Ascend Consultancy’s recent webinar on the freighter market is available to view on demand. WATCH NOW.
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.
Eric Tamang, Valuations Analyst, Cirium Ascend Consultancy
Towards the end of the year, the advanced air mobility (AAM) market reflected the changing seasons with a gradual cooling, influenced by spiking interest rates and the rising cost of capital. Yet, in the face of these headwinds, the number of commitments recorded in Cirium’s database increased to over 14,815 as of 11 October 2024, with over 900 secured since our last update in July 2024.
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 July 2024, the sector has attracted 416 new order commitments. The space now has a total of slightly over 11,000 order commitments captured by Cirium Fleets Analyzer. Eve Air Mobility and Vertical Aerospace continue to lead the sector with 2,900 and 1,550 commitments respectively.
Source: Cirium Fleets Analyzer, as of 11th October 2024
The global market for eVTOLs shows a varied regional distribution, with strong order commitments in North America (4,686), Asia-Pacific (3,903) and Europe (1,938), driven by differing levels of technological advancement, regulatory backing and investment interest.
Source: Cirium Fleets Analyzer, as of 11th October 2024
Certification Issues Delay Demonstration
There have been a number of exciting announcements where we hoped to see the AAM sector take off. One such instance was the Paris Olympics, where Volocopter intended to operate an air taxi service, but this did not happen due to delays in certification of the aircraft’s engines.
Another much anticipated event is the 2025 World Expo in Osaka, where there were plans to operate flying taxis.
However, all four operators (Japan Airlines, ANA Holdings, Marubeni and SkyDrive) have cancelled these plans due to safety certification delays, and the operators are still planning to conduct demonstration flights without passengers.
So What Are the Different Aspects That Need Certification?
Governing bodies like EASA, CAA and FAA collaborate with aircraft manufacturers to develop a set of regulations that guarantee the safety and airworthiness of an aircraft throughout its design, production, and modification phases. Manufacturers are required to carry out extensive testing programmes to demonstrate compliance with these standards.
eVTOLs are a new type of aircraft with technologies and concepts that have never been certificated before. As such, authorities are collaborating with manufacturers to write the rulebook on eVTOL certification.
According to David Solar, head of general aviation and vertical take-off and landing at EASA, the certification process for an eVTOL propeller differs from that of a conventional aircraft.
The design of the propeller is tailored to the specific aircraft configuration, considering factors such as the aircraft’s objectives and the transition from vertical to horizontal flight.
Manufacturers must evaluate loading conditions, perform fatigue tests, and demonstrate that the propeller is suitable for flight.
In addition, the different flight paths of cargo and passenger aircraft could result in different certification requirements. Cargo aircraft operating outside of cities can have lower security standards, but more stringent requirements could apply to passenger aircraft and cargo operations over congested areas.
Another aspect to certify is the use of modern electric powertrains. One major challenge is balancing battery energy density with payload capacity. The battery’s weight affects the propulsion required to keep the aircraft airborne, ultimately impacting range performance. Advances in battery weight-to-power ratio and aerodynamic efficiency are crucial for improving eVTOL performance.
Last but not least are certification of the infrastructure needed to support the operation of these aircraft such as the airspace and vertiports. With vertiports being scattered around the city, the impact of noise could be detrimental. As for airspace, these aircraft would utilise low attitude airspace which is already quite congested in certain cities with general aviation aircraft. Ensuring proper airspace management and separation could be a challenge.
Rolls-royce to Divest Electric Engine Division
Engines for eVTOLs will be provided by specialist engine manufacturers rather than the aircraft OEM, following the same model as traditional aircraft designs. In the market, there are several electric engine suppliers, including both traditional engine OEMs and new entrants.
Towards the end of 2023, Rolls-Royce, a high-profile engine OEM, announced that it was open to offers from prospective buyers for its Electrical engine division.
However, at the end of September 2024, Rolls-Royce made an announcement stating that it had elected to shut down its electrical propulsion unit called Rolls-Royce Electrical. This decision came after failing to find a buyer for the business, according to Aviation Week.
As a result of this development, UK-based Vertical Aerospace’s VX4 is now left searching for alternative options since Rolls-Royce was its chosen engine partner. Despite this setback, Vertical Aerospace insists that they are still on track to meet the CAA certification timeline which has been revised from 2024 to either 2025 or 2026.
According to Aerospace Global News reports, Rolls-Royce’s decision to divest from its electrical propulsion unit is “driven by their need to readdress their balance sheet and focus on investments with short- and medium-term returns”. This suggests that Rolls-Royce anticipates any returns in the electric space will be a long-term prospect, which begs questions such as –
Will there be a domino effect, with more similar announcements of divestment or changes in strategy, from other major players within the industry? Such announcements could have cascading effects on the overall landscape of electric aviation, including the eVTOL sector.
Will the announcement affect investor confidence in the electric aviation industry? Investor sentiment plays a crucial role in the growth and development of emerging industries, and any shifts in sentiment may have repercussions on funding and future investments.
Will this divestment announcement alter the competitive dynamics within the eVTOL industry? It could create gaps or opportunities that other companies or new entrants may seek to fill. New partnerships or collaborations could also emerge as companies reevaluate their strategies and seek alternative solutions.
Time will be the ultimate judge of how sentiments regarding this divestment will resonate across the eVTOL industry.
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. Aura Aero’s ERA holds second place with 570 order commitments. Heart Aerospace’s ES-30 follows in third place with over 530 order commitments after the ES-19 programme was cancelled and switched to the ES-30.
Source: Cirium Fleets Analyzer, as of 11th October 2024
The Cirium Ascend Consultancy AAM team will continue to provide valuable insight to the market. We would be pleased to hear any thoughts, comments or feedback you may have, so do not hesitate to contact us.
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.
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.
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
“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.
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.
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.
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.
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.
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.
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.
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.
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.
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.”
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.
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.
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.
“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.
