Jetrader - Summer 2015 - 13

AWAS has been around for 30 years.
We have really good long-term
relationships. We leverage that to do the
harder deals-the deals that require a
bit more flexibility and innovation.

aircraft. In regards to passenger comfort,
you see much nicer interior specs on aircraft. Likewise, airlines are focused on
keeping their costs down, which drives a
lot of demand for used aircraft right now,
which is really wonderful for AWAS to be
able to respond in that respect.
The OEMs have responded very strongly;
they've taken the leadership in building,
evolving, and advancing their products to
respond to customer and airline demand
for enhanced service, efficiency and
performance.
These new aircraft are also flying more
efficiently and farther than ever, opening
up new sustainable city pairs, enabling
people to go point to point, as opposed to
flying to hubs, which is incredibly beneficial. The mega-hubs have the A380, which
the passengers just love, and the 787s and
A330s/A350s will continue to open up and
grow international traffic.
Then there's the growth in airline models in a way that we have not seen historically-not only the low-cost carriers,
but the ultra-low-cost models are growing. Given the growth of the emerging

middle class in developing regions, that's
incredibly helpful. We're seeing passenger
traffic grow in newer jurisdictions that
are demanding air travel; even in Russia
domestic travel is holding up very well.
India is doing quite well in terms of passenger demand.
The ultra-low-cost carriers are giving
people who have never been able to fly,
the opportunity to fly cheaply. On the other
end, you have the ultra-luxury flag carriers
like Etihad, putting in three-room suites on
their A380s. The airlines are really catering
for every price point and for every customer, which is quite impressive.
JT: How is AWAS responding to the drop
in fuel prices and airlines' increasing margins?
RS: It is very positive for AWAS, but it's a
cyclical business. We've seen it before, and
we will see it again. We think that lower fuel
prices is a longer-term trend. We agree with
Adam Pilarski that with the growing level of
global reserves over 50 to 60 years, there is
no scarcity of supply. Lower fuel prices are
always attractive for airlines, but it means

the cost of fuel as a percentage of their
total cost base is falling dramatically. As
a result, that means that demand for used
aircraft holds up very strongly.
It's great for a lessor who tends to be
the second owner of an aircraft to be able
to see strong demand for aircraft through
the entire lifecycle. I think it's good for
the whole industry; for the mega-lessors
with large new orders because they can
focus on being new aircraft acquirers and
the demand for their aircraft when they are
ready to sell holds up well. Likewise, it is
good to have a full lifecycle of demand from
the OEM's products. Everybody really benefits from these lower fuel prices, not only
the airlines in increased profitability and
passengers in lower ticket costs, but also
the aircraft financing and leasing industry.
JT: How long will interest rates stay low?
RS: We think there's no near-term reason
why they won't stay reasonably low. If that
were to change and we had a downturn happen, that would have an enormous impact
on our industry, particularly those airlines
and lessors who had made large orders.
Jetrader * Summer 2015 13

Jetrader - Summer 2015

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