ISTAT 2012 Europe Takeaways

Last weeks ISTAT meeting in Rome was very educational and interesting.
A few takeaways:

1. Economic Life of aircraft
Many people in the industry fear that with lowering lease rates (especially for the A319/A320) the economic life of aircraft are falling from 25 years as of today to something like 20 years. In fact - finding appropriate funding for older (> 8 years) aircraft can be a challenge. But a panel discussion between lessors found that most of them have no reason to expect that economic life of aircraft are falling in general. There are some exceptions were it can be found that a part-out of a relative young aircraft can be more valuable that trying to lease it (for older A319, B737-700 for example) - but these are exceptions.

2. Financing new aircraft
At last years conference there was the fear that especially french banks, which historically play a crucial role in new aircraft financing, could be forced out of that market. This year it was evident that all are still in the market, some not as much exposed than before. But there are banks from other parts of the world jumping in: japanese banks are back, middle eastern banks are entering the market and chinese banks as well.

3. B737MAX under pressure
Both Ryanair CFO Howard Millar and AirAsia Co-Founder and Director Conor McCarthy called the B737MAX not convincing. This is of course not surprising in the case of Air Asia as they could be called an "Airbus company" and also Michael O'Leary expressed his concern with the B737MAX more than once. But later on I talked to an airline manager who has been in talks with Boeing about the B737MAX and he said that the concept is still not frozen and he does not really know how the aircraft should look like.

4. Don't try to fool your customers
Boeing VP Marketing Randy Tinseth showed some fuel burn comparisons between Airbus and Boeing aircraft. To me it looked a little bit like comparing apples with oranges (for example he compared the B777-300ER with the A340-300). After the presentation there was a panel discussion and some Q&A time with the audience. A Virgin Atlantic fleet manager stood up there and called Randy's comparisons bullshit - not only the models which were compared but the numbers itself! I would think that he should know best how much fuelburn the different aircraft have. Although Virgin Atlantic only flies Airbus aircraft I would guess he also knows a thing or two about the B777-300ER at Virgin Australia.
Of course Tinseth also discredited the A320ceo/neo - market numbers talk a different language though: Airbus showed that the A320 now has 249 customers worldwide, the B737NG "only" 131. And the A320 has sold consistently better than the B737NG.
I really do not understand why Randy Tinseth is doing such obviously flawed comparisons at a conference like ISTAT, where the people in the room have very good knowledge of the market. I cannot believe that your potential customers appreciate such a behavior.

All in all, the worst in terms of the european financial crisis seems to be over - most people are optimistic about the future of aviation!


  1. I have wondered the same thing about Randy. Given his experience it is hard to believe that he isn't aware of more truthful comparisons. But at the same time, it's hard to believe anybody would want to discredit themselves so knowingly. I guess he must just be paid to say wildly crazy things regardless of whether they are true.

    1. I would "guess" that he gets regularly paychecks from a company based in Chicago...;-)