“Aircraft don’t make money on the ground”.
Owing to the industry downcycle brought forward by the current COVID-19 pandemic, this statement rings truer than ever, as airlines around the world report record-level losses. Global air travel restrictions and lockdowns have forced passenger demand into a freefall, resulting in the world’s largest drop in air traffic.
In April 2020, an average of 29,439 commercial flights were flown per day, down 73.7% from April of 2019. With such a significant drop in flights came increased demand for parking space for an estimated 16,000 dormant passenger aircraft, placing hundreds of airports in an over-capacity state globally.
The balance of aircraft in the air versus aircraft on the ground is intricately managed so that airports are not in a state of overcapacity. However, during these unprecedented times where there are more aircraft on the ground than in the sky, what challenges are airlines facing to effectively store their surplus assets whilst ensuring their safety, at a cost not too heavy to bear?
In this month’s piece, we will revisit some of the solutions major airlines have adopted for aircraft storage, outline some core considerations airlines must be wary of, and provide a commentary on the related costs associated with the storage of an aircraft.
WHERE ARE AIRCRAFT BEING STORED?
With little to no time to plan, airlines were caught off-guard and scrambled to find suitable parking space for their aircraft. Base locations soon exceeded capacity, in-house maintenance teams and their capabilities became stretched – and pressure was added on ground teams to park aircraft in the most space-savvy way possible.
Base airports and popular storage locations including Tarbes, Victorville, Goodyear Phoenix and Teruel quickly filled up their aprons, taxiways, and disused runways – and as such, airlines were forced to look elsewhere.
Consequently, quiet airports quickly became some of the busiest airports in terms of number of aircraft on the ground. Take Bournemouth, UK, as an example. British Airways flew 10% of its fleet for storage at this usually quiet airport. BA have reportedly sent a further 25% of their fleet to Spain for long term storage.
In Australia, Toowoomba Brisbane West Airport is the usual home of general aviation aircraft but has welcomed Virgin Australia’s mothballed B777 fleet for long-term storage.
Back in Europe, Spain is home to an estimated 300 stored and preserved aircraft. Ciudad Real Airport, in central Spain has proved a popular choice when it comes to airlines and lessors looking for parking solutions. The semi-arid climate, large apron space and available technical facilities make this an ideal location to store aircraft on a short to long-term basis. Castello and Lleida are also popular choices.
CONSIDERATIONS FOR STORING AIRCRAFT
Parking an aircraft is not as simple as parking your car at the airport for a 2-week vacation. Aircraft require a lot of work to ensure their airworthiness and value is maintained. As per IATA’s guidance, there are multiple considerations for airlines to be mindful of when putting an aircraft into storage.
All aircraft entering storage are not subjected to a blanket preservation process. Each is treated differently, depending on the storage period assigned to the asset. IATA identifies four categories of aircraft on ground (AOG) events; normal parking, active parking, prolonged parking and storage.
As normal parking and active (short-term) parking are not of relevance under the current circumstances, we will shift our focus towards the safety and maintenance considerations attached to the remaining two types of AOG events; prolonged parking and aircraft storage.
Prolonged Parking (Long-term)
Aircraft that are taken out of operation for a duration that exceeds a few weeks (or up to several months at a time), and for a reason not relating to the performance of a scheduled maintenance event, modification or any other predetermined action, are considered to be in a state of prolonged parking.
Aircraft should be parked with standard necessary precautions: engine intakes and exhausts need to be covered to protect the engine from any debris, dust or wildlife. Static ports and sensors need to be blocked. Small ports and access points must be sealed to protect against humidity, preventing corrosion and interior damage.
The preservation process may include the lubrication of the landing gear, and the preservation of the auxiliary power unit (APU) and the engine fuel circuit. Depending on the actual duration of the AOG event, in addition to the periodic maintenance tasks, the removal of line replaceable units (like engines or APU batteries) may also be required. Owing to the complexity of the preservation process in this event, an aircraft’s ability to return to operation on a short notice is not possible – an extensive process for the aircraft to be deemed as airworthy is required.
Aircraft that are taken out of operation for a duration that exceeds a period of 3 to 6 months, and for a reason not relating to the performance of a scheduled maintenance event, modification or any other predetermined action, are considered to be in a state of storage.
In addition to the standard safety precautions that aircraft must undergo in the event of a prolonged parking as mentioned above, aircraft in storage are subjected to a more comprehensive and extensive preservation process. Many components in this AOG event are preserved or removed from the aircraft – which may include engines and the APU. This prevents the aircraft from returning to service without an advanced notice.
Airlines must have an effective fleet strategy in place to “right-size” their fleet and maintain an active pool of aircraft appropriate for the passenger demand, in the short to long-term. For surplus aircraft, it is imperative that such assets are preserved in a way that is not detrimental to the lifespan or the value of the asset.
COST OF PARKING
The cost of parking an aircraft varies significantly and is market-driven. Favourable locations (with ideal climates and good local service providers) are in higher demand, and are either sold out or charging a premium. Less favourable locations can be secured for more affordable rates.
In our experience, the storage of an A320 ranges from as low as USD 50 per day in Eastern European locations to as high as USD 600 per day in Southern Europe. Cheaper rates are typically found at smaller airports.
Airports are all competing to attract airlines, lessors and other asset owners by offering subsidised rates, multiple aircraft deals and a choice of maintenance and technical services provided by based third parties. The largest cost of parking an aircraft comes in the long-term care and preservation of the units on required services from MRO and CAMO providers.
However, IATA has been in discussions with governments to reduce aircraft parking fees, to assist airlines in an already financially testing time – where parking fees would only accumulate to 2% of generated revenue.
ACC Aviation can assist new and existing aviation partners with dynamic parking solutions, with a varied offering of technical services at locations across Europe, Middle East, Asia, and the Americas.
Storage space in favourable locations is becoming limited and costs are increasing. Discussing your requirements with ACC will enable us to facilitate a cost-conscious and dynamic approach while leaning on our relationships with technical services to extract the most out of the parking and storage requirement.
DO YOU REQUIRE EXPERT GUIDANCE ON AIRCRAFT PARKING & STORAGE SOLUTIONS?
At ACC Aviation, we recognise the difficulties that airlines and lessors have faced since the onset of the pandemic.
We are here to support our industry partners with comprehensive parking and storage solutions that prioritise the safety of temporarily decommissioned assets, at a manageable cost. We ensure that our clients have access to aircraft parking and storage solutions in favourable environments that will help maintain the condition and the value of assets.
For more information about our complete range of services or to enquire about your airline’s specific requirements, get in touch or speak with a member of our team at +971 4 250 0373.
ACC Aviation welcomes David Macdonald as Head of Global Business Development to maximise commercial opportunities across ACC’s complementary service proposition.
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