• Currently, leasing plays an important role in aircraft acquisition and is expected to remain high, underscoring the importance of reputations and relations with lessors. The industry is likely to be faced with challenges stemming from rising interest rates as well as fuel price volatility. But for now, airlines are taking advantage of lower fuel prices and investing in technology in order to accommodate changing trends.


    In order to understand current trends, challenges and outlook for commercial airlines, Harris Poll, on behalf of CIT, a leader in financing and advisory services to the aerospace industry, conducted research from February to May among 100 global airline fleet and finance executives.

    Key Headlines from the Research

    • Interest rates and fuel prices are expected to rise - creating risk for airlines
    • Fleet leasing is expected to remain high; responsiveness and reputation of lessor is a must
    • Airlines are comfortable with their total fleet size and order book commitments
    • Innovations and technological advances are highly anticipated
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    Airlines are enjoying a period of relative prosperity with both financing costs and fuel prices low, driving strong demand for aircraft leasing.

    A generation shift in technology is spawning the twin-aisle evolution. In this decade, eight twin-aisle types will enter into service. Both new and used aircraft types are creating opportunities for airlines to evolve their business model, increasing travel options for passengers. Here's how…

    Recent attention given to the availability of used twin-aisle aircraft has demonstrated a critical point: size matters. Small and intermediate twin-aisles are the right-sized aircraft to expand international networks. Lower trip cost and less revenue risk appeal to a broader operator base, supporting a secondary market. Sophisticated owners of twin-aisle aircraft will leverage connections and technical expertise to create value in transitioning current generation aircraft and placing new-technology types.

    Some of the other trends being spurred by the twin-aisle evolution include:

    Generational Shift in Technology:  As the 767, 777-300ER and A330ceo approach the end of production, the improved performance and economics of new-technology types, such as the 787, A350 and A330neo, are enabling service to new markets by new airline business models.

    More Non-Stop Routes:  Boeing promotes the 787 as having already opened 90 new non-stop routes -- with less than one-third of ordered aircraft delivered. The improved performance and operating economics of new-technology aircraft enable direct connections for city pairs that were previously served by one- or more-stop itineraries. Network opportunities enabled by new-technology aircraft allow carriers to differentiate their service from competitors, growing revenues while reducing costs.

    The Sweet Spot for Aircraft Size:  Small and intermediate twin-aisles, such as the 767, 787, A330 and A350, have broad appeal. With the right size to either feed international gateways or serve point-to-point markets, a variety of airline business models deploy these aircraft. New-technology types offer the range capabilities of current generation large twin-aisles at a fraction of the trip cost.

    The End Result - Growth and Choice:  Instead of siphoning travelers from established carriers, new airline business models will open international travel for a new class of passengers. A diversity of carriers will offer improved global links at competitive fares with passenger experiences tailored to a variety of price points. Network carriers, Low-Cost Carriers (LCCs) with international ambition and LCCs with a home market focus will all have growth opportunities in an expanding market.

    To learn more, read our full article, "The Twin-Aisle Evolution."

    Steve Mason is Vice President of Aircraft Evaluation and Strategy at CIT Aerospace. Steve is responsible for aircraft investment analysis, new aircraft strategy, airline market assessment and aircraft valuations. James K.D. Morrison is an Assistant Vice President at CIT Aerospace.

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