Sales of used commercial jets buoyant

©Bloomberg

Many aviation experts expect Ryanair to put in an order soon for current generation Boeings rather than Maxes

The second-hand market for narrow-body commercial aircraft is forecast to remain buoyant over the coming decade, in spite of strong demand from airlines for new, more fuel efficient models due to enter service in three or four years’ time.

This is in contrast to past shifts to new models, for example in the 2000s, when the value of second-hand Boeing narrow-body jets fell amid a transition by airlines to the US manufacturer’s “next-generation” aircraft.

Airbus Neo and Boeing Max models, which both boast about a 15 per cent improvement in fuel efficiency, “are essentially re-engined aircraft. They have similar seat numbers and the same range as their predecessors, which makes the switchover much less disruptive,” said Lucas Mollan, chief technical officer at Avolon, the aircraft leasing company, and author of a paper on the upcoming transition. “Airlines will be able to ‘bleed’ these models into their existing fleets.”

The Avolon paper also found that the effect of the Neo and Max models on the value of their predecessors will be limited by the sheer number of current-generation craft in use today and the high portion of the global aircraft fleet approaching retirement. “A deep and renewable pool of ageing aircraft will be available to absorb the replacement element of new deliveries, expected to average 40 per cent of the total over the next decade.”

Mr Mollan and Dick Forsberg, Avalon’s head of strategy, argued that the greatest risk to an orderly transition was Airbus and Boeing ramping up production of the Neos and Maxes or failing to moderate production of older models at an appropriate rate – both because of the strain this could put on a supply chain already stretched at the moment and because of the possibility of it creating a glut in the market.

Some airlines are already hoping to strike deals on current-generation aircraft, with many aviation experts expecting Michael O’Leary, chief executive of Ryanair, to put in an order soon for current generation Boeings rather than Maxes.

The Irish low-cost carrier and its UK-based rival easyJet are both looking this year at increasing their fleets to accommodate growth in passenger numbers, but are keen not to overspend in a period of moderating traffic growth in Europe.

The Avolon authors predict that sharper rises in passenger numbers in developing countries will fuel demand for both Neo and Max models, but also, importantly, current-generation aircraft as airlines seek to add capacity but find themselves at the end of long lines for the new models. Both Airbus and Boeing currently have record-high order backlogs, making the second-hand market an appealing option for fast-growing carriers.