2 September 2024
In Case You Missed It (ICYMI)
02 Sept 2024
What’s the Potential for Aircraft and the Circular Economy?
Aviation Business News recently included our CEO, Lee McConnellogue in a piece on the importance of following the AFRA best practices. (The Aircraft Fleet Recycling Association’s accreditation system).
The association’s president, Brent Webb, says:
“The guidelines include detailed instructions for managing materials recovered from aircraft at the end of their useful life”.
By doing this we can maximise resource recovery and reduce the environmental impact of our industry.
Reusing components gives airlines a way round the pressures of the supply chain. They can also cost up to 40% less than new parts. This doesn’t have to be a slow process. On average, we can disassemble an aircraft in three to five weeks. We were 24% up on components removed in the first half of 2024, compared to the same period of 2023, and we’re looking forward to an equally busy second half of the year too!
Prime Minister Highlights Industry Skills in Farnborough Speech
Keir Starmer was also at Farnborough, taking to apprentices at Airbus and Rolls Royce. He described the young people as “an incredible reminder of the talent that we have” in the industry. They told him they wanted the new government to ‘think about the value of apprentices’.
Just before Farnborough, our CEO, Lee McConnellogue had also raised the issues of skilled worker shortage in the aviation industry. Lee talks about his own experience as an apprentice at Britannia Airways. He also looks at how an industry that is used to long-term planning can refocus on training.
The full piece is on our website - How Can We Tackle The Skilled Worker Shortage In The Industry? (ecube.aero)
Starmer’s speech at Farnborough - PM's remarks at the Farnborough Airshow: 22 July 2024 - GOV.UK (www.gov.uk)
More certainty and a steady market discussed at ISTAT Hub and Reception Farnborough this year.
And could we possibly see the beginning of the bow wave?
Or has the bow wave of retirements begun? This was pushed out in the years immediately post-Covid. The theme of ISTAT 2023 was lift at any price. Passenger demand was high, and aircraft were needed in the sky. Retirements were pushed out.
We may now be seeing the first signs of a breaking bow wave. At ISTAT Americas 2024 in July, we fielded more enquires about disassemblies than last year. There is more certainty about getting older aircraft out to make way for those coming on stream.
There was also more confidence about deliveries too. There didn’t seem to be many orders being placed for new aircraft, but the industry has now normalised the extended arrival dates. Longer timelines have been factored in. This may be easier to accept as passenger numbers slow up.
The passenger demand trend continues to ease. Growth is at about 1% as spend per head drops, leading to lower revenue per seat. The market is returning to a greater balance between demand and price pressure. We saw this in an uptick in discussions about active storage and transition, especially livery changes. Elsewhere in the industry there have been forecast warnings from airlines in the USA, Europe and the UK.
So, perhaps gently, the brakes have gone on. These trends have been ticking up for a few months, but we noticed at ISTAT that the slowing pace meant more conversations about our core services. Not just disassemblies, but storage, maintenance and transition.
We saw these trends crystalise at ISTAT. There’s more confidence in deliveries, a steadying of passenger numbers, and perhaps the bow wave of retirements beginning to break. We think that this certainty will continue throughout 2024 and into next year.
15 July 2024
Is the pilot shortage easing?
Contrasting news on the skills shortage in the aviation industry. Flying magazine reports that US airlines are slowing up on pilot hiring. There are signs that recruitment is meeting demand, but also that the delays in the Boeing pipeline mean fewer pilots are needed.
American Becomes Latest Airline to Halt Pilot Hiring - FLYING Magazine
Mechanics are still in short supply
In other Flying news it seems that the shortage of aviation mechanics is showing no signs of being alleviated. It cites Boeing, who suggest that the global industry needs to recruit and train 610,000 new maintenance technicians by 2041.
The Aviation Mechanic Shortage Is Worse Than You Might Think - FLYING Magazine
We take a look at what you can do to manage this generation gap in our blog on:
How Can Aviation Bridge the Skills Gap?
04 June 2024
Latest research* predicts a rise in the global commercial aircraft disassembly market.
The global market is estimated at US$6.4 Billion in the year 2023 and is projected to reach a revised size of US$9.7 Billion by 2030. This is a CAGR of 5.3% over the analysis period 2023-2030.
Narrow Body is expected to record 5.6% CAGR and reach US$6.6 Billion Wide-Body is estimated at 4.9% CAGR for the next 8-year period.
The U.S. Market is Estimated at $1.9 Billion, While China is Forecast to Grow at 4.8% CAGR
Within Europe, Germany is forecast to grow at approximately 4.3% CAGR.
Encouraging news as it’s a slightly shorter timeframe than the KMPG Report we cited in the last newsletter, although the CAGR is not as high. KPMG said: ‘The global commercial aircraft disassembling, dismantling, and recycling market is projected to grow to over USD14 billion by 2032, a CAGR of almost 8%’.
Aviation in Europe is showing some capacity softening.
Routes Online has reported numbers which show a softening from the post-Covid travel of the last year or so in Europe. Based on schedules filled by airlines, capacity recovery in Europe fell in the first quarter of this year. This report suggests that the improving trend of Europe RPKs as a percentage of 2019 volumes may be flattening off.
The question is whether this will indicate a similar trend for traffic. Is traffic now returning to being mainly GDP-driven?
Some key stats:
Official inflation data for the EU shows that the price of passenger air travel grew by just 2.5% year-on-year in Dec-2023.
The UK's air transport inflation was only 0.8% in Dec-2023, after falling from a peak of 44.1% in the 12 months earlier.
In 2019 international seats accounted for 75.7% of all capacity in Europe, whereas this grew to 77.0% in 2023.International capacity is much more important than domestic capacity in the European market.
Is the uptick in post-covid travel levelling out?
The Financial Times is reporting ‘normalised demand’ in US travel as post-pandemic travel eases off. This seems to be in leisure travel, rather than business. Southwest Airlines’ RASM was at the low end of the forecast for Q1.
However, the US Travel Association expects and uptick of 7% in business travellers taking domestic trips. It compares this to a likely 1.9% for leisure travellers.
The FT expects this gap to continue. It cites Delta Air Lines and Hilton Worldwide as two companies with international reach catering to business travellers. Both have ‘outperformed their group peers’ in the last year.
Are part-outs up or down in 2024?
We’re servicing a bigger mix of aircraft than ever before with disassemblies at ecube expected to be up by the end of the year.
We’re doing more and we’re doing it differently.
We talk about disassembly, where other companies offer ‘teardown’. Our aim is to reverse manufacture an aircraft, so that as many precision parts as possible can be returned to the flying fleet. We discuss this in our blog When Parts Are At A Premium Here’s Why Disassembly Is More Than Just Teardown
In contrast to recent comments in Aviation Week, we’re seeing more part-outs to support the flying fleet. We’re enabling airlines and lessors to keep their aircraft in the air for longer, because we can renew them with precision parts. This helps aircraft to come out of storage and be transitioned back into the fleet.
19 April 2024
The Potential For Aircraft And The Circular Economy
KPMG says the circular economy in aviation is ‘a concept whose time has come’. In its report on Circularly in Flight, published in March, it looks at:
- How airlines can achieve their ESG goals
- The expected size of the market in the next decade
- The rate of retiring aircraft by 2038
- The need for industry collaboration to effect meaningful change.
We give our own analysis on these ideas here and the full report can be downloaded from their website here https://kpmg.com/ie/en/home/insights/2024/03/circularity-in-flight-fs-aviation.html
Passenger Numbers Up, But Can Airlines Keep Pace?
Cirium released its latest research in March. It shows the rise in passenger numbers, but Kevin O’Toole (Chief Strategy Officer) also asks an important question about whether airlines can respond while supply remains slow?
‘The ongoing recovery in Asia should help to keep world traffic moving upwards through 2024. The bigger question is perhaps whether airlines will be able to keep supply and demand in balance, especially as the input costs continue to rise. Going in to 2024, analysis of the Cirium forward-looking schedule suggests that capacity growth remains modest at around 4% for the year and likely to run a point or two behind demand, as it has during 2023.’
How Will The P&W Issues Affect The Industry?
Our CEO, Lee McConnellogue takes a look at the issues at Pratt & Whitney. Does its affect on the industry depend on where you sit? Do grounded aircraft tend to be more of an issue for airlines that rely on market share?
You can read Lee’s thoughts here: How Will The P&W Issues Affect The Industry? | LinkedIn
There’s also more on this issue in Aviation Week.