Current generation aircraft: too early for a requiem?

During the last few years the gradual fleet renewal process has become a truly global phenomenon. As airlines struggling to cut down costs continue to demand more fuel efficient aircraft, the largest manufacturers have raised their production rates to a historical maximum and display no signs of downsizing their operations any time soon.  On the one hand, these processes have caused a major headache to the aftermarket players. They have found themselves in an urgent need to develop strategies for optimizing their supply chains in order to support the new generation aircraft. On the other hand, considering the on-going trends in the industry, it seems that it is too soon to forget about the current generation machines.

The manufacturing rates achieved by the major airframers in 2013 are indeed impressive. For example, Airbus managed to deliver a record number of 626 aircraft, and thus underscored its ability to maintain production rates at sustained high levels, responding to its industry-wide record backlog of 5,559 aircraft as in the end of the year. The fact that the manufacturer plans on pushing the limits even further – to 50 aircraft per month – reflects the constantly rising demand for new aircraft among carriers. However, it is currently not the only trend in the industry, albeit it is amongst the most prevalent ones.

“Despite the fact that currently most carriers seem to favour the fleet renewal strategy, when it comes to performance optimization, there are different options available, since the current generation of aircraft supports the expanding capabilities in terms of expenses,” comments Zilvinas Sadauskas, the CEO of Locatory.com “Moreover, such manufacturers as Airbus periodically suggest making most of the current aircraft as well. For example, the company’s representatives have stated that with 475 seats, the A340 would accommodate more passengers while offering a 7% reduction in operating costs. They also remain quite sceptical about the A330 re-engining: Airbus’ representatives are confident that the model can even compete with the Boeing’s Dreamliner, as it offers 35% lower engine maintenance despite the 10-12% higher fuel burn.”

According to TeamSAI, newer aircraft do require more ownership expenses, which can be up to $2 million per year higher than the ones for the current generation aircraft. This seems to be one of the reasons why such carriers as Delta Air Lines tend to invest into the current fleet and postpone the actual investments into purchasing new machines. Recently the carrier has announced its plans to pour $770 million into refreshing cabins and adding both seats and passenger creature comforts on its fleet during the next three years, stating that the idea is to keep older planes reliable whilst maintaining the appeal to passengers. These strategies may also involve buying entire aircraft for parts, and, according to specialists, may in fact prove to be worthy of sticking to.

“If an aircraft is well-maintained, clean, and has new interior, it is really hard to say how old it is. Therefore, the carriers which choose to invest into new aircraft in search of the ways to solve their economic issues may be looking in the wrong direction. After all, many factors suggest that air passengers don’t really care about the age of the aircraft. Nevertheless, it is worth remembering that any aircraft requires maintenance, including spare parts support, and the optimization of the supply chain for the newer model is still a difficult area to manage,” says the CEO of Locatory.com. “Meanwhile, the aftermarket for the current generation aircraft is a lot less problematic, and, considering the fact that the fuel prices are getting lower, in a few years’ time the switch to newer aircraft may prove to have been a hasty move.”