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Five questions to…

In every issue, the LARA team catches up with an industry figure to discuss their company’s latest activities, investments, upcoming challenges and opportunities. 



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.