IBA Outlines Global Aviation Trends To Japanese Investment Community

In a webinar delivered yesterday to over 100 representatives from Japanese financial institutions and lessors, Dr Stuart Hatcher, IBA's Chief Revenue Officer, Mike Yeomans, Director of Valuations and John Duley, its Tokyo-based Business Development Manager, presented a range of insights on key challenges facing the aviation sector today.

These included aircraft utilisation levels globally - which have now recovered to 65% of pre-pandemic levels for domestic routes, but are still half those of the most recent peak in 2019 when including international routes. With many international borders remaining closed, domestic flights currently account for 80% of all aircraft movements, according to data from IBA's InsightIQ platform. IBA forecasts a difficult Northern Hemisphere summer ahead as some countries grapple with growing Covid-19 infection rates whilst others push forward with advanced vaccination programmes.

Since the start of 2020, 44 airlines have either gone into administration or are restructuring, affecting a combined fleet of around 1,500 aircraft. IBA believes that these figures would be significantly higher were it not for different forms of government intervention across the globe to financially support airlines.

This has affected the number of aircraft being retired each year, which IBA forecasts will rise from under 600 in 2020 to around 800 in 2024. At the same time, the age of aircraft at retirement has decreased in 2020, in the narrowbody, regional jet and turboprop categories.

The pandemic has also driven a drop in aircraft trading and leasing activity in the past year. In 2020, around 2,500 sale and lease events were recorded by IBA's InsightIQ platform, compared to 3,700 events in 2019 - a decline of 31% year-on-year.

Aircraft deliveries have also fallen dramatically in 2020 to under 800 aircraft, compared to around double that figure in 2018. IBA forecasts that deliveries won't return to that level until 2025. It also anticipates that COMAC will surpass Embraer and will rank behind Airbus and Boeing.

While the values of all narrowbody aircraft have fallen, performance has varied significantly with a steeper value fall for the Boeing 737 MAX8 from US$51 million in January 2020 to US$45.2 million 12 months later. By contrast, the value of the Airbus A320neo fell from US$52.1 million in January to US$48.7 million six months later, but had already recovered slightly to US$48.9 million by January 2021.

Values of new build examples of new generation widebody aircraft such as the Boeing 787-8 and Airbus A350-900 have remained relatively stable, particularly in the second half of 2020, falling between just 5-7%. By contrast, the value new build current generation aircraft such as the Boeing 777-300ER fell by almost 14%.

Stuart Hatcher, IBA's Chief Revenue Officer, says: "The aviation industry has always proven resilient, and it will prevail through this challenging environment. The only difference from previous crises is the length of the recovery which we believe will take up to five years."

IBA Webinar

The IBA webinar slides can be downloaded from here.

About IBA
IBA has over 30 years' experience in delivering independent, expert business analysis and data on the aviation sector. Established in 1988, it provides a wide range of services including InsightIQ, a one-stop intelligence platform combining speed, accuracy, visual analytics and intuitive navigation

IBA advises prominent investment funds and banks, aircraft leasing companies, operators, manufacturers and MROs. In April 2021, IBA was named 'Appraiser of the Year' by Airline Economics.

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