Jetrader - March/April 2013 - 30

see their aircraft’s value fall to less than
10 percent of the book value?
Since its formation in 2006, the Aircraft
Fleet Recycling Association (AFRA) and its
members have been actively promoting the
case for dismantling aircraft in the most
environmentally and sustainable manner, as
well as making the case for the financial
reasons justifying the dismantling and
recycling option. AFRA accredited members
note that their customers and potential
customers increasingly respond favorably to
their commitment to environmental excellence and industry leading quality of work.

Asset owners are keen to ensure that the
dismantling and recycling of their aircraft
assets is undertaken by experts whose skills
sets are independently certified.

Accelerated Fleet Renewal,
Fuel Costs & Re-leasing Options
There is a growing industry acceptance
that there will be more aircraft available for dismantling in the coming years.
Speaking at AFRA’s 2012 Annual Meeting
Larry Schneider, Boeing’s vice president
for product development, said he expected
the number of airplanes leaving the global

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fleet to nearly double in the next decade,
up from the rate of close to 400 a year.
Schneider added that accelerated fleet
replacement would “rapidly increase the
demand for aircraft dismantling and recycling services and introduce unique challenges to the sector.”
Boeing believes that accelerated fleet
renewal is largely being driven by higher
fuel burn costs. Around 44 percent of the
global fleet is expected to be replaced in
the next 20 years, amounting to more than
13,000 airplanes.
Airlines’ growing preference for younger,
more fuel-efficient aircraft is also shifting
the balance between those aircraft likely to
be remarketed and those that will now be
considered for dismantling. With airline fuel
costs now accounting for up to 40 percent
of overall operating costs, the appeal of
and demand for newer, more fuel-efficient
aircraft is clear to see.
Meanwhile, the financial sector is offering more favorable terms for those purchasing new or younger aircraft, which
again brings into question the remarketing
options for those middle-aged aircraft of
15 years plus. Of course, if an aircraft is
facing the considerable financial cost of a
major overhaul and maintenance, such as a
D-check or engine overhauls, its chances of
being remarketed significantly diminishes,
particularly in a climate where there are
concerns regarding obtaining operators for
older aircraft.
The re-leasing options for middle-aged
aircraft have not been helped by the trend
of countries introducing age restrictions
on aircraft that operate out of their airports. Indonesia is the latest country to
introduce an age restriction of 20 years
for aircraft active in its territory, meaning
the opportunity for leasing to second- or
third-tier airlines are diminishing as these
restrictions take their toll.

Dismantling Decisions

“Set Your
Expectations High”

ACCREDITED

AIRLINE SUPPLIERS
A S S O C I A T I O N

435 Investment Court, Verona, WI 53593 • (608) 848-8100 • www.contrail.com

30 The
584275_Contrail 1

official publication of the International Society of Transport Aircraft Trading
23/04/12

Aircraft Demolition’s CEO Tim Zemanovic
notes that he is having more and more
conversations with aircraft owners who
are more open to the dismantling option.
“I tell them it is better to get some
maximum realistic value from dismantling
the airplane rather than keeping them
parked, losing value and building up costs,
especially when the value is an unrealistic
book value,” he said.
continued on page 32
11:46 PM


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Jetrader - March/April 2013

Table of Contents for the Digital Edition of Jetrader - March/April 2013

A Message from the President
Calendar/News
ISTAT Honors Renowned Airline Executive
State of the Regions: North America
Q&A: Paul A. Jacobson
Investment Thesis: Why Airplanes are Great Assets?
Remarket or Dismantle: That is the Question
What's Going On?
Aircraft Appraisals
Letter of Intent: Crafting Road Maps for Success
ISTAT Members on the Move
Advertiser.com/Advertiser Index
Jetrader - March/April 2013 - Cover1
Jetrader - March/April 2013 - Cover2
Jetrader - March/April 2013 - 3
Jetrader - March/April 2013 - 4
Jetrader - March/April 2013 - A Message from the President
Jetrader - March/April 2013 - 6
Jetrader - March/April 2013 - 7
Jetrader - March/April 2013 - Calendar/News
Jetrader - March/April 2013 - 9
Jetrader - March/April 2013 - ISTAT Honors Renowned Airline Executive
Jetrader - March/April 2013 - 11
Jetrader - March/April 2013 - 12
Jetrader - March/April 2013 - 13
Jetrader - March/April 2013 - 14
Jetrader - March/April 2013 - 15
Jetrader - March/April 2013 - State of the Regions: North America
Jetrader - March/April 2013 - 17
Jetrader - March/April 2013 - 18
Jetrader - March/April 2013 - Q&A: Paul A. Jacobson
Jetrader - March/April 2013 - 20
Jetrader - March/April 2013 - 21
Jetrader - March/April 2013 - 22
Jetrader - March/April 2013 - 23
Jetrader - March/April 2013 - Investment Thesis: Why Airplanes are Great Assets?
Jetrader - March/April 2013 - 25
Jetrader - March/April 2013 - 26
Jetrader - March/April 2013 - 27
Jetrader - March/April 2013 - 28
Jetrader - March/April 2013 - Remarket or Dismantle: That is the Question
Jetrader - March/April 2013 - 30
Jetrader - March/April 2013 - 31
Jetrader - March/April 2013 - 32
Jetrader - March/April 2013 - What's Going On?
Jetrader - March/April 2013 - 34
Jetrader - March/April 2013 - Aircraft Appraisals
Jetrader - March/April 2013 - 36
Jetrader - March/April 2013 - 37
Jetrader - March/April 2013 - Letter of Intent: Crafting Road Maps for Success
Jetrader - March/April 2013 - 39
Jetrader - March/April 2013 - ISTAT Members on the Move
Jetrader - March/April 2013 - 41
Jetrader - March/April 2013 - Advertiser.com/Advertiser Index
Jetrader - March/April 2013 - Cover3
Jetrader - March/April 2013 - Cover4
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