April/May 2018 – Air Partner

Tony Whitty, managing director at Air Partner, talks about the latest machinations in the world of regional aircraft sales and leasing from 50-seaters to the LCC-driven 150–200 seat market, and the evolving trends shaping its future. This article first appeared in the April/May 2018 edition of LARA. To access the full magazine, please click here

 

Looking into your crystal ball, how do you predict the future performance of the regional aircraft sales and leasing market as it rolls out over the course of 2018 and into 2019?

It’s been a relatively busy start to the year for Air Partner – is that indicative of the market sector overall? It is going to be a couple of tough years in terms of selling or leasing regional aircraft. There are plenty of used E190/5s, ATR 72s and DHC8s available, and orders are at a very low level on new aircraft. A lot of availability lies with lessors, so it is a very good time for airlines to take advantage of this situation.

With the relatively recent arrival into the sector of lessors such as Nordic Aviation Capital, Falko and Avmax Aircraft Leasing, how has this influenced airlines in tailoring their approach to acquire regional aircraft types?

It now means regional airlines do not always have to raise their own finance to acquire new or used aircraft, which then means that they can plan their fleet with a view to getting the right mix of leased and owned aircraft. However, while it is quite tough for these lessors at the moment, there are still not too many regional lessors. So over time it should still be a good sector to be in, and less competitive than the Airbus A320 / Boeing B737 market.

Can you address the regional versus narrow-body versus widebody discussion? How do they compare currently from Air Partner’s perspective?

They are all totally different markets with their own respective strengths and weaknesses, but with the rise of the low-cost carriers over the past 20 years, it is clear that most demand is in the 150–200-seat market. This is where the big orders are made and where the majority of the lessors and investors are active. This sector is dominated by the major lessors so there is often as much sales activity in the regional and widebody sectors, where there are fewer lessors. Air Partner’s strategy remains to provide excellent customer service and diversify our earnings by adding adjacent services that enhance our customer offering.

Do you still see a role for 50-seaters in the regional market going forward? Are they still particularly relevant for start-ups?

Definitely. For example, if you look at the Embraer E145 it was initially very successful in the USA, but aircraft of this type that have come on the market have now found homes all over the world – particularly in Africa. There are a number of regions that can only be effectively connected by air transport, and the 50-seater is ideal for many of these, particularly islands or land-locked areas.

How do you see the passenger-to-freight conversion and the freight market evolving? Is this a trend that you see impacting the overall resale/remarketing sector?

We think it will continue at a steady pace. The ATR 72 and the CRJ200 have been popular conversion types and – on a bigger scale – the classic B737 has enjoyed a good period over the past few years. We are now seeing the B737-800 being converted, with the A320 to follow. Any type that has conversion possibilities has better residual values and gives the type a much longer operational life.

Chris Dare, managing director at Monarch Aircraft Engineering Ltd. (MAEL), talks about how the company has emerged from the ashes of Monarch Airlines’ demise to lay firm foundations for its growth as a third-party MRO player. This article first appeared in the February/March 2018 edition of LARA. To access the full issue, click here.

MAEL announced in early October 2017 it was continuing as a standalone company following the sad demise of Monarch Airlines. What has the reaction been from the commercial aviation sector at recent industry events to MAEL’s efforts to secure new business?

The reaction has been very positive since the demise of the airline. MAEL is a standalone company so we hold our own cash, property and employees. We had always planned to be at the MRO Europe show [in London], for example, but given the recent closure of the airline, it was even more important we had a presence there to let the industry know we are continuing and to begin discussions securing new business.

We have been growing our third-party work significantly over the years, and now we are solely a third-party MRO business we need to continue in our growth. Following a very busy MRO Europe we have had a number of very positive conversations leading to new contract wins.

What are MAEL’s plans going forward, and how competitive is the current market environment?

We are now able to fit third-party work in when and where our customers want, instead of having limited time and space in order to prioritise the Monarch aircraft work as was done previously. MAEL is expanding with the opening of our component maintenance centre in Northampton. We are on target for an August 2018 opening with this state-of-the-art facility being ideally located between our Luton and Birmingham hangars.
The CAA has granted our Subpart G approval for us to operate full CAMO (Continuing Airworthiness Management Organisation) support. This is very important as we are now able to expand and support more business enquiries for CAMO work.

During 2017 we also celebrated our 50-year anniversary. MAEL has developed into one of the world’s leading MROs as well as proudly developing thousands of people who have gained valuable engineering skills and knowledge through training and experience. We are looking forward to the next 50 years.

What is MAEL’s focus in the short- to medium-term?

Quite simply, our short-term aim is filling the Monarch aircraft slots we had planned for winter maintenance. There has been a lot of interest in the vacant hangar space and I am confident we will fill the slots.

The company has gained some solid contracts and approvals in recent times, from A320neo and Wizz Air line maintenance approvals, base maintenance agreements with Icelandair (B757 cargo) and Virgin Atlantic (B787s), and A350 maintenance work for China Airlines starting in December this year. How encouraged are you by these endorsements?

These are excellent contract wins and, with big names signing up as new customers, we continue to show the industry we are key players in the MRO sector. MAEL offers world-class engineering services to customers in Europe and around the world. With our Boeing Global Services partnership, we look forward to many more high-calibre wins in 2018.

Another important factor in these contract awards is that they are new customers. As we look to the future it is crucial we continue attracting new customers as well as renewing focus on our existing clients. We are always assessing our capabilities and listening to our customers wants and needs to see how we can improve our services.

How much will the company be focusing on new-technology/new-generation aircraft, and emerging geographical regions?

New-generation aircraft are a big focus for Monarch Aircraft Engineering going forward. Being partnered with Boeing and their Global Fleet Care programme demonstrates recognition of our commitment and investment to supporting the next generation of aircraft. For winter 2017/18 over 20 B787 aircraft will be maintained at our Birmingham hangar.

We are also very proud of the achievement at being awarded ‘Line Maintenance Provider of the Year 2017’ recently. This year we opened new line stations at Edinburgh and Nice, as well as expanding our existing line station in Malaga. This was done to support Boeing Global Fleet Care customers. MAEL currently has 10 line stations across Europe and I am open to the possibility of expanding and supporting the line should there be a demand for it.

LARA editor Mark Thomas interviewed Nicolas Bonleux, managing director and chief sales officer. This article originally featured in the December 2017/January 2018 issue of LARA magazine. To access the full digital edition, please click here.

What systems and services does Liebherr-Aerospace supply that are of most relevance to regional airlines and low-fare carriers for single-aisle and regional aircraft? And how and where is it expanding its worldwide coverage in relation to demand for its services going forward?

We supply integrated air management systems, integrated flight control and actuation systems and landing gear systems, as well as electronics such as customer services (life cycle support) that entail maintenance, repair and overhaul as well as training.

We are expanding by organic and continuous growth, always near to our customers. The Asia-Pacific region is certainly an area that captures a large part of our attention in this regard. While our worldwide network is well established, we are permanently reviewing our worldwide footprint to make sure we adapt it to the development of the market.

Liebherr-Aerospace has a new facility in Canada that it recently opened. What is the facility for, and what opportunities does it open up for the company in the region?

Our 1,400-square metre (15,000 ft2) facility in Laval, Quebec will contribute to reinforcing our relationship with Bombardier for all their future aircraft programmes. The site accommodates the final assembly and testing of the landing gear for the Bombardier C Series aircraft, enabling us to manage just-in-time deliveries directly to the aircraft assembly line in Mirabel, approximately 35 km away. In addition, it increases our footprint in the greater
Montreal area, which is a major worldwide aerospace centre of excellence.

The company has invested €6.5 million in extending its facility at Campsas near Toulouse, France for air management systems. Tell us more about the site, and what the extension has enabled the company to install in terms of state-of-the-art machinery – 3D printing, for example – and how this has benefited its production capacity.

This investment (extending the site by 3,300 square metres and installing production equipment) enabled us to fully deploy the ‘industry 4.0’ concept across our centre of excellence for air
management systems with initiatives such as paperless fabrication, the internet of things, new man/machine interfaces, and new modes of organisation.

This went together with the installation of 3D printing machines, the latest generation 5-axis machining centres, and robotised manufacturing lines. This investment (totalling €3 million on the new production equipment) will enable us to accommodate the ramp-ups of our aircraft manufacturer customers, while further enhancing our quality performance and industrialising highly promising new technologies – among them those that can contribute to the aviation sector reducing its CO2 footprint.

The investment will enable the company to increase its production hours by 10% in 2017.

Liebherr-Aerospace recently sealed an agreement to carry out overhaul activities at its Lindenberg facility for Flybe’s main and nose landing gear systems on its E-Jet family of regional aircraft – systems developed and manufactured by Liebherr-Aerospace Lindenberg. How important are agreements like this going to be for the company going forward in today’s very competitive market?

Agreements like this are very important for us and also for our customers, as we as an OEM know our products and technology best. In addition, customer service is a priority area of development of our revenues, and we are proud that operators such as Flybe award us with their trust.

What technologies or innovations does Liebherr-Aerospace see as being of most significance in the next few years? What is the company developing itself that could be of most relevance?

There are several fields of technology innovation that will be of high relevance for the next generation of aircraft that we are dedicating significant investment to.

They are mostly related to the way our air management, flight control and landing gear systems can better enable more electrical aircraft types, higher efficiency electronics and materials, as well as the health management of our on-board systems and to enhanced passenger and crew comfort.

Neil McGuinness, Air BP’s global offer development manager, talks about the company’s commercial jet biofuel solution and how it is helping the global aviation sector on its journey towards a low-carbon future.

Air BP has made some encouraging announcements about the availability of commercial jet biofuel in Norway and Sweden. How does the company envisage the pace of adoption globally of jet biofuel by the commercial aviation sector?

Jet biofuel is a key part of our environmental solutions offer and we are delighted with our recent announcements that Air BP biojet is now available at Bergen Airport in Norway and Halmstad Airport in Sweden. This follows our announcement last year, which was an industry first, when together with Avinor we made Air BP biojet available to airlines at Oslo Airport through the existing hydrant system. The pace of adoption of biojet is currently restricted by its limited availability, which is why we have entered into a strategic partnership with Fulcrum BioEnergy, a company that is well advanced in its goal to produce and supply scalable jet biofuel.

BP’s decision late last year to invest $30 million in jet biofuel supplier Fulcrum BioEnergy was a real statement of intent for biofuel in North America. Can you give more insight into the strategic partnership you have entered into with them?

Our strategic partnership with Fulcrum BioEnergy was ground-breaking for both Air BP and for the industry, in that we are investing, alongside airlines, to be able to bring jet biofuel at scale to market. It’s another important first step. We have secured a 10-year offtake agreement with Fulcrum for 50 million US gallons per year from its North American development programme. We will distribute and supply biojet into aircraft at key hubs in North America. We invested in Fulcrum to secure supply of jet biofuel for our customers to help them meet their lower carbon goals.

Can you give more insight into the achievement last year of carbon neutrality for into-plane fuelling operations at Air BP’s 250 global airport operations? How was this certification achieved, and what does it mean for the airports?

We were the first aviation fuel supplier to achieve carbon neutrality for our into-plane fuelling services across an international network of over 250 Air BP-operated facilities in October 2016. It was quite the achievement following an intensive two-year process. It was assured by the independent sustainability specialist company ERM CVS Ltd.

Carbon credits were purchased and retired, with the support of BP Target Neutral, which invests in low-carbon development projects around the world to offset the emissions.

We have also made a 10-year commitment to retaining the accreditation through adhering to a carbon reduction plan. The plan targets a 5% reduction in carbon emissions for Air BP over that 10-year period using several initiatives. These include driving efficiency in technologies such as start/stop technology on vehicles; improving operational efficiency of waste management and stock management; maximising the options for supplying biofuel; and introducing initiatives on which to develop a lower carbon future. Residual emissions, following these reductions, will be offset through BP Target Neutral.

What are the main challenges or obstacles in the way of increasing the supply of commercial jet biofuel?

At Air BP, we are supporting our customers with their aspirations to achieve their carbon goals. It is early days for the industry. The production of jet biofuel is still limited and higher penetration levels require customer demand, potentially driven by consumer-led initiatives, pricing support,  regulatory support, and yet unknown breakthroughs in technology. BP supports changes in policy that bring governmental support, allowing biojet to be on an equal footing with other biofuels such as renewable diesel.

The aviation industry’s push for a lowcarbon future to meet IATA’s aim of carbon neutral growth by 2020 – and a longer-term target to cut the industry’s carbon emissions in half by 2050 – is ambitious. How is Air BP helping to make this happen?

We are supportive of the aviation industry trying to achieve its ambitious environmental targets with innovative solutions. We are providing capabilities and knowledge to help our customers including airlines, airports and general aviation operators try and achieve their carbon goals.

Last May we launched our environmental solutions offer at the European Business Aviation Convention and Exhibition (EBACE) in Geneva. The offer, which works across both the commercial and general business aviation sectors, helps customers to achieve their carbon goals through a ‘reduce, replace and neutralise’ management approach. The key elements are focused on the production of lower carbon fuels, for example biojet; supporting lower carbon operations; and carbon offsetting through BP Target Neutral, through which we provide a voluntary market-based mechanism to offset carbon emissions. In short, it gives our customers the tools to help reduce their carbon footprint while improving efficiency, which is good for the environment and good for business too.