Jetrader - January/February 2013 - 14

Thoughts from
By Andy Carlisle, Aviation-Appraisal Limited

the Front

So, you have decided you want to be in the leasing space but you have looked around and decided that there are just too many big boys doing the “black box” narrow bodies. Everything you read makes you think that the manufacturers are churning out too many of them anyway! So, what to do to be a player? The regional jet market is brutal and widebodies are just too much risk in one big, expensive package that is going to cost a fortune to transition in a few years time. How about turboprops? For years a dead market with a few expert, specialist, lessors making a good, if unspectacular living, suddenly fuel prices have ignited the turboprop market. Where else can you spread risk over a number of operators with relatively cheap assets that still command lease rate factors close to or above unity? What possible clouds could obscure that silver lining? Actually, right now, very little so long as you know what you are doing and are prepared for some eye watering shocks when it comes to managing maintenance costs. These you ignore at your peril. For years during the 90s and noughties the author managed a ﬂeet of regional turboprops, for GECAS and then Magellan. During that period he became used to and, indeed, resigned to, the costs of maintenance and the limited sources of that maintenance and of spares. He also became used to the duopoly of manufacturers that could pretty much serve customers as they felt like, could shut down for the summer months of holidays and could get away with treating lessors as a bloody inconvenient nuisance (nothing changed there then!). There were always workarounds and anyway, the operators were all nice, real aviation folks who helped each other out and became good and ﬁrm friends. It was a pleasant shock to return to the grown up world of jets, good service and real choice of service providers. Was it really true that a 737 landing gear could be overhauled for literally half the price of an ATR 42? Where was the logic in that? How come you didn’t have to scrap half of it at every shop visit? Did engines really stay on wing for more than 5,000 hours? In fact, six or seven times more than 5,000 hours? How could the little 14 The ofﬁcial publication of the International Society of Transport Aircraft Trading

jet engine that is an APU sometimes cost less to maintain than a propeller brake for goodness sake? All true and the cause of a lovely warm sense of well being and order in the world for the author in the ensuing 7 years at a big lessor looking after only jets. Cut to today and back at the turbo coal face. The ATR 72 and , to a lesser extent, the Q 400 have become the poster children of the new austerity as they sip fuel on 2-300 mile sectors worldwide. Ten years ago many pundits said the turbo was dead, passengers demanded jet comfort and wouldn’t ﬂy with old propellers. The RJ outsold the turbo in the 50-70 seat space by 10 to 1. Then fuel began its inexorable rise and airline folk the world over realized the immutable truth, that when it comes to economy, there is no substitute for bypass ratio. The fact is that the most efﬁcient means of propelling an aircraft is by driving a big fan with a turbine, through a gearbox. This has been known since the ﬁrst Rolls Royce Dart ﬂew 60 years ago and has just been “rediscovered” by Pratt and Whitney

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Jetrader - January/February 2013

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