Instead of buying a new range of Boeing or Airbus aircraft, American Airlines has jumped the industry trend and looked into expanding its fleet of Airbus A319s through the second-hand market, saving on money, training and order time.
How do airlines expand their fleet?
There are several challenges airlines face when it comes to fleet expansion. Those like capital can be solved through an equity raise, others like staffing can be done through pilot programs, but actually ‘getting’ the aircraft is harder than you think.
There are several ways for an airline to get new aircraft; buying them from Boeing or Airbus (and perhaps the smaller companies too), hiring them for a lessor, or acquiring them from a merger deal. They can also wet-lease aircraft from another airline or a wet-lease firm like Hi Fly, but these are not permanent solutions.
But these have their own problems. Take, for example, Dubai Aerospace, an aircraft lessor company who dropped plans to make a big order with Airbus or Boeing because the airframe builders have too many orders. Several years of delays.
“[A gap] so large that it doesn’t make any sense to have any hope that the gap narrows in the near future.” – DAE to Reuters
For an airline to expand, they must truly be patient and long-term focused. Emirates has already made orders for their 777-300ER replacement aircraft (the 777X), despite not even taking delivery of their last 777-300ER.
American Airlines has found itself with a unique opportunity. It has found a solution to its own fleet expansion woes that few other airlines can take advantage of: purchasing second-hand A319s.
What is the American Airlines A319 plan?
According to CH-Aviation, American Airlines currently operates 133 A319 aircraft across its network. Because they operate so many, they are ideally set up to take more on board.
“We are the largest operator of the A319 in the world. As there are more and more of these kinds of planes [i.e. small narrowbodies] that come online it effectively lowers the market value of the A319s at a time when so many A319s are aging out of their initial lease terms… That creates a unique opportunity for us where our decision isn’t necessarily to go buy a brand new small narrowbody, we can still be players in the used narrowbody space,” Raja said in an internal company-wide letter listed aviation blog View from the Wing.
There are several advantages to this plan rather than ordering brand new narrowbodies;
The first is that they won’t need to train pilots, cabin crew and maintenance staff in the new type, as they have all the infrastructure in place.
The second is that they already have the aircraft perfectly configured for their network (or vice-versa) and won’t need to change their logistics, routes or flight planning.
Plus with more and more airlines retiring the A319 over the new few years, American Airlines will be able to have their pick of the best.
Lastly, they already know the economics of the aircraft, and with a cheaper price to acquire them, they will be able to realize economic advantages long before their competitors.
What do you think of this plan? Let us know in the comments!