ANALYSIS: Why Icelandair is sticking with the 757

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Icelandair is planning to operate the Boeing 757 until at least 2025, as the legacy twinjet for which no equal replacement is in sight is central to a business model under which it has carved a niche as a transatlantic airline with a hub in Reykjavik.

All of the Icelandic flag carrier's flights – from medium-haul flights serving European destinations up to 8h operations to Seattle – are operated with the narrowbody, which went out of production in 2004.

Neither the in-development Airbus A321neo nor the Boeing 737-9 Max will have enough range, while a potential widebody would be too large for Icelandair’s routes, says vice-president of technical operations Jens Thordarson.

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FlightMaps Analytics

Icelandair route map for September 2013

A modern medium-sized long-haul aircraft such as the 787 would not be suitable due to Icelandair’s particular route scheduling. When the airline’s flight arrives in Seattle, for example, the aircraft stays on the ground for 22h before it returns, to ensure appropriate flight connections in Reykjavik. Such long downtimes would not be economically viable with new aircraft, due to their high capital costs.

Arguing that no adequate replacement is available for the 757, Thordarson says the airline will use the type until 2025. But he adds that it may even have a role in the fleet thereafter.

Icelandair operates 24 Rolls-Royce RB211-powered 757-200s and -300s, both as passenger and freighter variants. The aircraft were built between 1990 and 2002.

The carrier also has a 737-700, a 737-800 and two 767-300ERs, Flightglobal’s Ascend Online database shows. However, these aircraft have been wet-leased to other operators.

In 2012, Icelandair ordered eight 737-8s and nine -9s, which are to be delivered from 2018. The aircraft will replace older 757s on shorter routes. However, the legacy type will remain in service on flights to long-haul destinations such as Denver, Orlando and Seattle, as they cannot be reached by 737s, says Thordarson.

The requirement for long-range aircraft is to grow even further in future, as the airline wants to expand its network to such destinations. For example, Vancouver will be added in 2014.

The 737 fleet introduction and 757 replacement plan has not been finalised yet, he says. The timing of deliveries will depend on market conditions.

Thordarson has no doubt that the airline’s MRO division will be able to keep the 757s up-to-date – both in technical and cabin-interior terms – without excessive costs. All airframe maintenance is conducted in-house, while component support is evenly split between own and external repair shops.

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As Icelandair has been operating 757s since 1990, he says that the MRO department has built up substantial experience in maintaining the type to a high standard at reasonable costs. This allowed the airline to lengthen check intervals and increase dispatch reliability.

The aircraft are operated for 3,000-3,500 flight hours a year, with about 99% dispatch reliability – slightly higher than the industry average for the type, says Thordarson – while the airline’s fleet has an average age of around 16 years.

However, receiving engineering support from manufacturers can be a challenge, as OEMs lose interest in servicing their legacy equipment, he says. While some manufacturers are highly supportive when it comes to keeping their products in the air, others are “extremely bad”, he adds. Potentially innovative maintenance procedures, such as equipment testing methods, may thus be deliberately held back, because the manufacturers do not want to give up control of that market.

Despite the 757 production having reached some 1,050 aircraft, Thordarson expects sourcing of spare parts to become more difficult in future.

Icelandair is evaluating whether to expand its MRO capacity or outsource more work under long-term contracts. Maintenance work volume is yet to peak, says Thordarson, as the 757s are getting older. But this is expected to shrink again when the 737s arrive and older 757s are phased out.

The decision how to handle the increasing workload will be taken within the next few months, he says.