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Wed, Feb 25, 2009

Economy Grounding Planes In Record Numbers

'Percentage of Global Fleet in Storage Close to 9/11 Peak'

With nearly 1200 aircraft taken out of service in 2008 alone, only the aircraft boneyards will benefit... so says a study released by an aviation info-broker.

The impact of the global economic downturn continues to be felt by the aviation industry, as new figures reveal that a record total of almost 2,300 jet airliners are now parked. 1,167 aircraft were grounded last year, making 2008 the worst year for cutbacks since 2001.

According to data from aero-info-broker Ascend, more than 11 percent of the global aircraft fleet of 20,293 is now in storage. Taking into account future decommissioning, that figure may even rise to match the 13% reached at the end of 2001, following the 9/11 terrorist attacks on the US Then, the global fleet comprised only 15,950 planes, so a similar share in 2009 could mean a total of some 3,000 idle airliners.

Chris Seymour, Head of Market Analysis at Ascend, says, “The aviation fleet data shows that at least 400 more aircraft are scheduled to be cut during 2009, with groundings being announced almost daily. This is having a negative effect on aircraft values and lease rates, and creating real challenges for the aircraft financing community.”

Regional breakdowns also suggest that most regions have felt the impact of a weakening global economy. North American carriers have announced fleet reductions totaling almost 800 aircraft since mid-2008, while European carriers have parked over 450 aircraft and Asia/Pacific airlines at least 230. The Middle East region has not been affected to the same degree however, with Emirates airline announcing a planned 14 percent increase in capacity in 2009.

According to Seymour, the severe increase in aircraft groundings is a clear indication of drastic cost-cutting measures by airlines as they adjust to the challenging global economic climate, consumer belt-tightening and reduction in cargo traffic.

“Some reduction in capacity is typical over winter months as passenger traffic decreases. But this season’s fleet cuts were far more severe than those of the recent past.”

Planes On Ice In Desert Sand

One benefactor of increased plane groundings is set to be the aviation storage business, based primarily in the Arizona and Californian deserts of America.

Aircraft boneyards are a good barometer of the state of the arirline industry, Seymour says. “Generally speaking, the fuller the aircraft boneyards, the tougher the market conditions. Storage facilities are already filled with a surplus of older technology 727s, 737s and MD-80s, many of which will never fly again. However some younger aircraft and many of the 250 current generation aircraft will eventually be returned to service once the industry recovers.”

Ascend's Seymour adds that, “The increase in groundings shows the extent to which consumer demand has lessened, and is necessary if airlines are to adjust to the more challenging operating environment... With new deliveries still likely to be around 1,000 this year, subject to financing, airlines also have to park older aircraft to avoid even more surplus capacity.”

FMI: www.ascendworldwide.com

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