Arrival of more planes should facilitate international travel in the 2nd half – 03/15/2023 – Market

Arrival of more planes should facilitate international travel in the 2nd half – 03/15/2023 – Market

Next month, the island of Mallorca, in the Mediterranean, will receive a major visitor: a Boeing 747-400, capable of carrying up to 416 passengers

Instead of crossing the ocean, as it would without difficulty, this Lufthansa 747 is scheduled to go from Frankfurt, Germany, only to the Spanish island. The plane, capable of flying more than ten hours without stopping, will make a journey of just two hours, to meet demand at the beginning of the hot season in Europe.

The scene of a Jumbo making short trips is an example of how the lack of aircraft affects the aviation sector, especially the international one, which demands larger models.

The problem, which marked the sector in 2021 and 2022, should be left behind this year, expect company representatives. This year, manufacturers are expected to deliver 1,540 new aircraft — 125 of which in Latin America. In 2009, the last year before the pandemic, 1,240 were delivered, according to data from IATA (International Air Transport Association).

“Things are quite normal. There may be some specific delay problems with some model, but the industry will deliver more than 1,500 planes in a year. It is something above average”, points out Jose Ruiz, director of Operations and Safety at IATA for the Americas.

Despite the projections, there are still bottlenecks. Latam, for example, had to postpone by one month, from July to August, the start of a route from São Paulo to Los Angeles that will use a Boeing 787. (See an art comparing the plane models at the end of the report).

“It was an adjustment due to a delay of one month in the arrival of the aircraft”, said Jerome Cadier, president of Latam, in a press conference. He also said that the uncertainty about deliveries makes the company not sure about being able to expand the offer of international flights this year.

Boeing recognizes the problem, but has said it seeks to prioritize product quality in the face of a hasty resumption. “Our reality is still a difficult supply chain. While, on average, deliveries meet our targets, we continue to face downtime on our production lines,” said David Calhoun, president of Boeing, in an earnings presentation at the end of January.

The arrival of more aircraft will help with the resumption of flights abroad from Brazil, especially on routes that existed before the pandemic, but which have not yet returned to operation, such as several flights abroad that departed from Rio de Janeiro and Belo Horizonte, and more direct connections to other US and European cities.

With fewer aircraft, companies seek to allocate available planes on more profitable routes. Thus, Brazil, whose currency has less purchasing power than destinations such as the United States and Europe, ends up being harmed.

In practice, a company operating globally needs to decide issues such as placing a plane on a stretch where it can charge US$ 1,000 per seat or on another where it can only charge US$ 500, for the same distance, due to purchasing power.

During the pandemic, airlines had to make another difficult choice: whether or not to keep their fleet active. Leaving a plane parked incurs costs: these machines are made to stay on almost 24 hours a day. If they stop on the ground for weeks or months, the expense to rehabilitate them is high: for a large plane, capable of making intercontinental trips, the recovery can cost something around US$ 1 million.

Thus, many companies chose to give up the planes altogether, ending leasing contracts or selling the aircraft. But as the pandemic subsided, demand for travel quickly recovered, and planes were short of service in 2021 and 2022.

To complicate the scenario, Covid has generated problems in the production and logistics chains. As a result, the lack of parts and bottlenecks at ports delayed the delivery of new aircraft orders.

Thus, one of the solutions was to go back to using older aircraft, such as the 747, which had its first version launched in 1969, and the Airbus A380, the largest commercial passenger aircraft, which debuted in 2005 and has already been manufactured.

Another advantage of the 747 and A380 is that, as they have more space, they can receive more business and first class seats, which give companies more profit. Companies such as Lufthansa, Qantas, Etihad, Korean and Singapore have returned to operating with retired A380 models, according to a survey carried out by Bloomberg.

Despite the return of some old planes, the trend in the sector is one of renewal, say company representatives and industry analysts.

At the beginning of the pandemic, in March and April 2020, there were 18,000 planes parked on the ground, according to IATA data. Today, around 6,000 remain parked. “I don’t see many of them returning to the air in the future. Most airlines took advantage of parts of their fleet that had to stop. [na pandemia] to make an effort and buy new and more fuel efficient aircraft”, says Ruiz.

The 747 and A380 lost prominence because they were too big and used more fuel than more modern models. Both have four engines, while newer models like the 787 have two. As consumption is higher, flying them half empty generates more damage, which led airlines to send them into exile, often in large areas in the desert.

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