Opinions divided on merits of A320neo

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Airbus has begun racking up orders and commitments for its upgraded A320neo family, but some industry observers have raised questions about the decision to develop the new variants.

Launched in December, the A320neo is due to enter service in 2016. It will be powered by new advanced turbofans from CFM International and Pratt & Whitney. This month Airbus has announced its first two customers for the re-engined family – Indian low-fare airline IndiGo and Virgin America – who between them have signed for 180 aircraft.

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Boeing, which produces the rival 737, has been evaluating upgraded derivatives as well as all-new designs, but is yet to decide how to respond to the Airbus move.

Speaking in Airline Business’s interactive special on aircraft finance, DVB Bank managing director of aviation research Bert van Leeuwen thinks the A320neo could upset the long-running stability of single-aisle values. He says that the aircraft’s introduction could mark an end for “the golden age of aircraft leasing” as it may unsettle the equilibrium that has allowed investors to put billions into purchases of Airbus and Boeing narrowbodies with confidence in their future values.

However Airbus’s executive vice president and head of strategy and future programmes Christian Scherer dismisses such a notion, saying that he sees no reason why it could destroy the financial institutions’ business model: “I would call the opportunity for airlines to cut their fuel bill by 15% progress,

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or value, but I wouldn’t call it uncertainty,” he says. “Their customers are the airlines, and they will buy the Neo because it will burn 15% less fuel,” he says.

Meanwhile Ryanair’s chief financial officer and deputy chief executive Howard Millar tells Airline Business Interactive that he thinks that airframers should focus on developing game-changing new airliners, rather than interim upgrades.

Millar describes Neo as a “very interesting development”, but he believes the development timeframe is “lengthy” and that the money would be better spent on an all-new successor.

“We feel that, on a longer-term basis, the investment in upgrading aircraft would be better spent on the development of a totally new generation of aircraft,” he says.

“That way we can incorporate the latest developments in composite and engine technology, so we get a plane which really delivers very significant cost savings, but also places us well in terms of technology for 2020 and beyond.”