flight international

28 | Flight International | 8-14 March 2016 flightglobal.com

AIRCRAFT VALUES

cycle, with rising orders for 787s, Airbus

A350s, and the then still-young A330 (which

has sold more units since the launch of the

787 than prior to it).

When all this replacement cycle ordering

began 10-12 years ago, the twin-aisle fleet

consisted mostly of 747s, 767s, 777 Classics

and early A330s and A340s. Newer A330s

and 777s were “like gold dust” at the time, to

quote one industry veteran.

It is difficult to fathom that this year will

mark 24 years since the first A330 flew and

22 years since the 777’s debut. Of course,

there have been many upgrades and

improvements to the reliability, efficiency,

and performance of these aircraft since they

GEORGE DIMITROFF NEW YORK

When the twin-aisle replacement cycle kicked off a decade ago, newer A330s and 777s

were second-hand gold – but today’s market dynamics are a harsh master of values

James D Morgan/REX/Shutterstock

We expect that in the next

five years, values and lease

rates for older 777 Classics

and older A330s will decline

T

win-aisle aircraft and their values

have been a bit of a trending topic in

the last six months or so, and all with

good reason. There has been a lot of

controversy generated by comments like that

made by Delta Air Lines chief executive

Richard Anderson about acquiring a Boeing

777-200ER for $7.7 million, so now is a good

time to assess some of the factors driving

demand and prices in the twin-aisle market.

For several years after the Asian financial

crisis of 1997, there was a continual under-

ordering of new technology twin-aisle air-

craft. There was the dotcom bubble around

2000, then 9/11 and SARS in 2003; it was

only around 2004-2005 that orders for twin-

aisle aircraft started picking up again, largely

led by the rapidly expanding Gulf hub carri-

ers and further boosted by the launch of the

787. Combined with rising fuel prices at the
     time, this helped induce a new replacement

SUPPLY

DEMAND

LIQUIDITY

first entered service, but the fact is, they are

no longer in the prime of their youth.

The order backlog for twin-aisle aircraft has

certainly caught up with the slack from the

1997-2004 period. Today, a lot of the new tech-

nology aircraft that were little more than draw-

ings when they started being sold a decade ago

are now entering service. Thus, the effects of

that replacement cycle are starting to be felt.

Both the 777 and the A330 have had very

good residual value behaviour in the past two

downturns; but they have also experienced

very little used aircraft trading until now,

especially in the case of the 777.

Does the decline in values of 777 Classics

surprise us? Not really; at Ascend Flightglobal

Consultancy, we have been anticipating it for

quite some time. Although the aircraft still

does a fantastic job in service with many of its

original operators, it has a few things that limit

its liquidity: one of them is the availability of

three different powerplants (as in the case of

the A330) – and the market share of each of

It’s thumbs-up for 777-300ER

values until the 777X arrives in

the mid-2020s

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