Claims that aircraft lifespans are not being impacted by younger asset retirements are "self-serving", says an aviation financier.
"With the technology available, we should be talking about lengthening the life of aircraft, if anything, but that clearly is not the case," says the financier, citing figures from MBA that were made available at the recent International Society of Transport Aircraft Trading conference in Rome
According to the appraisal firm, since 2008, the average retirement age of aircraft is down 8%. This compares with an increase of 66% in the average retirement age between 1980 and 2008, according to MBA.
"I don't think there is a leasing company out there that is not looking at their book values very carefully," says the financier. "Rather than dismiss the claims, the market should be asking how did this happen and what are we going to do about it," he says.
According to the financier, airline economics are the part of the problem.
"Airlines, on a very good day, do not generate significant income for the assets they are buying and, by allowing this behaviour, we are ruining the values of 10-year old aircraft," he says.
This is made "worse" by the financial community "which favours financing newer assets."
"A bank credit committee is always going to lean towards a new aircraft and a tier-one airline, particularly after the 2008 financial crash."
The manufacturers are the other part of the problem, he says.
"They are overproducing themselves into a very tough situation, but they are getting a lot of aircraft out the door, so it is hard for them to stop," he says. "However, with global GDP on the decline, I hope some rational steps will be taken."
Earlier this week, aircraft leasing firm Avolon said young aircraft retirements are the exception not the norm.
The leasing company says that more than 350 aircraft under the age of 15 are slated to be retired in the next decade, which is double the rate the industry has seen in the past five to 10 years. However, it sees this as a rare occurrence that should not significantly impact the average aircraft retirement age.
Avolon forecasts that the introduction of the Boeing 737 Max and Airbus A320neo will not start influencing fleet retirements for current production aircraft until the middle of the next decade.
The data shows that some younger aircraft do retire well below 25 years, yet Avolon says that number will increase as the entire fleet ages. For example, regional Bombardier and Embraer 50-seat jets are averaging retirements at 12 years, which is less than half the lifespan of the 25 year average. Avolon offers the caveat that the sample size is small and says that the aircraft are too young to signal a pattern in the data. It expects that to increase to close to 19 years within the next decade.
(Additional reporting by Kristin Majcher)