Alice Springs Is Running Out Of Space To Store Aircraft

The travel downturn is bad news for airlines, but for some other operators in the industry, it’s a business bonanza. One business doing well is the Asia-Pacific Aircraft Storage (APAS) at Alice Springs Airport in central Australia who are bursting at the seams. Their storage park is almost at capacity, and the owners have begun turning to other airports to take the overflow.

Exponential growth at Alice Springs

According to a report in Australia Aviation, the long term aircraft storage park is close to its maximum capacity of 100 planes. Until the travel downturn, it was rare to see more than 20 aircraft there at any one time. But with thousands of aircraft sitting idle worldwide, airlines began sending their planes down to Alice Springs earlier this year. By July, the park was looking after nearly 50 aircraft. Now, it’s closer to double that number.

Singapore Airlines Group famously sent some of its massive A380s to Alice Springs mid-year, making headlines worldwide.

Business is so good the Northern Territory Government has kicked in a few million dollars to fund infrastructure expansion at APAS. The storage park is becoming a significant local employer and pumping millions back into the local economy.

Among the airlines now using the park are Cathay Pacific, Cebu Pacific, Cathay Dragon, Fiji Airways, Virgin Australia, Singapore Airlines, Silk Air, and Scoot.

Robyn Ironside in The Australian is reporting that APAS is expected to reach capacity next week.

Alice Springs aircraft storage park expanding and sending planes elsewhere

APAS is madly scrambling to expand. Soon it will have the ability to handle up to 200 planes over a 350,000 square meter site. APAS is also starting to work with other airports to take surplus aircraft. They’ve done a deal with Toowoomba’s Wellcamp Airport to store aircraft there.

Wellcamp is close to Brisbane, a couple of hours flying time east from Alice Springs Airport. The deal is interesting for many reasons. Both APAS and Wellcamp are examples of smaller private businesses operating in an industry dominated by big business and government. Both are agile and responsive – they get things done.

The two airports have different climates, and climate is important when it comes to storing aircraft. Alice Springs has a dry desert climate, hot days with low humidity, and colder nights. But it’s in central Australia, and that part of the world has red bulldust in abundance.

Toowoomba is a 90-minute drive inland from the Queensland coast. It’s more humid, but there’s a lot less dust to get into planes. Toowoomba and Wellcamp sit high on an escarpment. The area typically sees cold crisp winters and warm summers.

Qantas passed on Alice Springs for California

The climatic differences mean APAS can offer its potential customers more choice. While Alice Springs is a popular choice for many airlines, not all choose it. Local airline Qantas famously picked California’s Mojave region over much closer Alice Springs to park its A380s and 787-9s.

Qantas says Alice Springs is too humid, so we guess they won’t like Wellcamp either as a storage option. But they also liked California because they’ve also got a big A380 maintenance and engineering base at Los Angeles International, an easy drive from the Mojave storage park.

That said, Wellcamp will appeal to some airlines. With the travel downturn continuing, APAS says they can see themselves looking after up to 300 aircraft. Meanwhile, they are busy building more hardstands at both airports.


Lessors And Lion Air Working To Modify Leasing Agreements

One of Indonesia’s biggest airline groups is attempting to radically restructure its aircraft lease agreements. The Lion Group, who own the Lion Air brand, is reported to have approached their lessors to request group-wide power-by-the-hour agreements for 24 months.

The Lion Group wants to go to power-by-the-hour leases

Jakarta-based Lion Group is Indonesia’s biggest airline group. They operate several well-known airline brands, including Lion Air, Thai Lion Air, Malindo Air, Wings Air, and Batik Air. Between them, the various airlines lease more than 220 aircraft.

According to a Cirrum report in FlightGlobal late last week, the Lion Group has contacted its many lessors asking them to revise lease agreements. The Lion Group wants to convert its existing leases to power-by-the-hour agreements. With the Lion Group’s revenues substantially down this year, the business is asking lessors to share the pain.

The alternative is to break leases and send planes back to their owners. Airlines know lessors have a tough time farming out returned planes to new airlines in the current environment. Many experts suggest this is making airlines bolder when it comes to asking for new leasing terms on existing aircraft.

“A typical power-by-the-hour agreement usually involves a minimum spend amount, as well as a charge per flight hour,” Cirrum’s Thomas Kaplan tells FlightGlobal.

“A maximum monthly charge may also be set, plus the minimum monthly charge can be less than half the normal full lease rate.”

A poor deal for aircraft lessors

This kind of deal might be music to the ears of the cash-strapped Lion Group, but the many lessors are unenthused. The Lion Group is not the first airline group to ask for a power-by-the-hour agreement this year. But it’s a big ask for a 24 month period.

These types of lease agreements are most common for seasonal operations. An airline would pay the normal lease while the aircraft is busy servicing seasonal demand on a certain route or to a certain destination. Then, during the off-season lull, the lease deal might revert to a power-by-the-hour agreement.

Now more airlines are asking for power-by-the-hour deals to cut costs. The problem for lessors is that these deals cut into their revenue. While some revenue is better than no revenue (as can happen with lease deferrals or plane returns are negotiated), aircraft lessors appear underwhelmed by the trend towards long term power-by-the-hour leases.

“Lion Air and other operators are intending to negotiate power-by-the-hour agreements with some lessors. Obviously, it will cause huge losses for lessors with this unfair situation,” one lessor is quoted saying in FlightGlobal.

Goshawk Aviation sues Lion Group over unpaid aircraft leases

One lessor has already commenced legal action against the Lion Group. Goshawk Aviation Ltd sued the Lion Group in a London Court in late July. They claimed the Lion Group had not met payments on seven Boeing 737 leases. The lease deal was worth US$12.82 million, and Goshawk says between US$2 million and $3.2 million was unpaid. Goshawk wants the full $12 million-plus paid in full.

The Lion Group says it wants to find a “fair solution” with Goshawk and all its aircraft lessors. While the multiple lessors with planes out across Lion’s various airlines are adopting different positions on Lion’s power-by-the-hour requests, one lessor summed the situation up from the lessor’s perspective.

“We’re unhappy with power-by-the-hour.”


Delta To Retire All Its Boeing 717s And 767-300ERs

Delta Air Lines has set out plans to retire all of its Boeing 717s and 767-300ERs. The two types will exit the airlines’ fleet by December 2025. Alongside these aircraft, from its regional brand, Delta will be retiring all of its 50-seater Bombardier CRJ200s.

Retiring the aircraft

Delta Air Lines announced on September 25th that it would retire all Boeing 717-200s and all 767-300ERs by December 2025. Meanwhile, the CRJ200s will be retired by December 2023. Delta stated in an investor update that these plans are part of the airlines’ fleet simplification strategy.

The airline evaluated all of these aircraft, and, on September 23rd, the airlines’ team concluded the carrying value of these aircraft was no longer recoverable compared to their future cash flows from the jets. Essentially, Delta does not think they can turn a profit with these aircraft in the future.

The Boeing 717-200s

Delta Air Lines has 91 Boeing 717-200s in its fleet. At the end of the second quarter of 2020, the airline only earned 13 of these aircraft, meaning the rest were on lease. These planes have an average age of just under 19 years of age, making them a little old for short-haul workhorses.

The Boeing 717s have 110 seats onboard with 12 in recliner-style first class, 20 in extra-legroom economy, and 78 in economy. These are, notably, the only jets in Delta’s mainline fleet that do not have seatback screens onboard.

Of 91 aircraft, 88 of Delta’s 717-200s came from Southwest Airlines starting in 2013. Southwest had just merged with AirTran Airways but did not want to add complexity to its fleet, so it sought a new place for the 717s. Those planes found a home in Delta’s fleet.

The Boeing 767-300ERs

Delta retired seven Boeing 767-300ERs in the second quarter, bringing its overall number of 767s in its fleet to 49 of the 767-300ERs and 21 of the 767-400ERs. Delta owns outright all of these aircraft with an average age of just under 25 years.

The 767-300ERs come in two different configurations. One has 26 forward-facing lie-flat Delta One seats with 35 in extra-legroom economy, and 165 in standard economy. The other has 36 forward-facing lie-flat Delta One seats with 32 in extra-legroom economy, and 143 in standard economy. All of these aircraft have seatback entertainment.

These aircraft are one of Delta’s long-haul workhorses, flying transatlantic, transpacific, and some routes to South America, including between Atlanta and Bogota, where Simple Flying got to check out the aircraft.

Bombardier CRJ200s

Delta does not fly the CRJ200s itself. Rather, those planes fly with regional carriers like Endeavor and SkyWest, which, combined, have 97 of the type in its fleet.

These jets seat 50 passengers in a 2-2 configuration. These aircraft operate a mix of short-haul and medium-haul operations, though they are not much of a passenger favorite.

What will replace these aircraft?

Delta does not have perfect one-to-one replacements for all of these jets. The CRJ200s will likely be replaced by other regional jets– a massive boon for passengers since those aircraft offer a true three-product experience. Whether any routes are cut because of this, however, is unclear. In some cases, Delta may choose to operate fewer frequencies with a larger aircraft, or else consolidate flights on a particular route.

As for the 717s, Delta does have 64 Airbus A220 aircraft on order, which would not make them a perfect one-to-one replacement. Counting the existing 31 in the fleet, Delta does have a good one-to-one plus a little extra for replacement. However, if Delta does decide it needs more, amending this order for a few extra planes would not be hard, though it would come at a cost at a time when Delta does not necessarily want to incur such an expense.

Moving on to the 767-300ERs, this is a different story. There are 32 A330-900s left to come to Delta, but, even on a perfect one-to-one replacement, that leaves Delta 17 aircraft short. Without any other new aircraft orders, this means Delta will most probably need to cut some long-haul routes. Ones to Europe, especially, would be at risk since Delta has partners on which it can transfer passengers.

A less ideal option would be for Delta to convert some of its A321neo orders to A321XLR orders. These aircraft, which rivals United and American have on order, could cover some seasonal routes such as to Berlin, Prague, Lisbon, and others. Though a bit of a downgrade compared to the 767, it would still allow Delta to provide at least some international service.

What do you make of Delta’s aircraft retirements? Will you miss any of these aircraft? Let us know in the comments!


United Airlines Delays Pilot Furloughs Until November

Chicago based United Airlines has reached an agreement with the Air Line Pilots Association (ALPA) to avert an imminent involuntary furlough threat affecting nearly 3,000 pilots. United Airlines management has agreed to delay any pilot furloughs until October 31, giving the pilots and their union some breathing space.

“This agreement underscores our commitment to all 13,000 United pilots and represents the importance of creative solutions needed to mitigate massive layoffs for our pilots,” said United pilot union Chairman Captain Todd Insler in a statement provided by ALPA.

The proposed deal provides some breathing space for United’s pilots

There is a catch. There will be no pay for the pilots facing involuntary furlough for the remainder of September and throughout October. But there’s a deal on the table, and if both United Airlines and the pilots union can agree on terms, involuntary furloughs will be avoided for a further nine months.

ALPA represents around 13,000 United pilots. Two thousand eight hundred fifty of those pilots were facing an imminent involuntary furlough threat. United sent them a WARN notice in late August. ALPA has proposed a deal that includes the following;

  • Preventing pilot furloughs until June 2021;
  • Offering a second round of early separation options for all pilots age 50+ with ten years experience;
  • Adding restrictions on express carrier flying; and
  • Securing triggers for a pay raise and additional permanent contract modifications that improve
    work conditions for all United pilots.

“Through past bankruptcies, mergers, strikes, 9/11 and other adverse events affecting this airline, United pilots have always taken care of each other,” said Captain Insler.

“This is our union and our responsibility to take care of each other to ensure there is a temporary lifeline to keep all of our pilots at United flying.”

If deal accepted, pilot jobs safe for nine months

United’s pilots need to vote on the deal. However, both airline management and the union are optimistic it will get ratified. ALPA has recommended its members accept the deal.

“Our pilots are voting right now on a tentative agreement that, if approved, would avoid all pilot furloughs for at least nine months,” a United Airlines spokesperson told Reuters yesterday.

United Airlines is flying just 34% of its usual network-wide capacity this month. Next month, that figure should increase slightly to 40%. To date, payroll funding via the CARES Act has safeguarded jobs, but funding is due to expire shortly.

The airline industry has actively campaigned for an extension to CARES Act funding. So far, this has fallen on deaf ears. Without an extension of funding, mass lay-offs are anticipated across the airline industry. United Airlines has suggested it may need to lay off 36,000 employees.

“The pandemic has drawn us in deeper and lasted longer than almost any expert predicted, and in an environment where travel demand is so depressed, United cannot continue with staffing levels that significantly exceed the schedule we fly,” United Airlines said in a memo sent to employees.

That’s had unions scrambling to secure deals, and today’s example suggests compromises are getting made by all parties. A similar agreement was reached just days ago between Delta Air Lines and their pilots’ union. The interim deal with Delta expires on November 1, just a day after the proposed deal with United Airlines.


Trans-Tasman Routes Off The Books For Air New Zealand Until March

Air New Zealand’s CEO, Greg Foran, has moved to hose down speculation of an imminent trans-Tasman travel bubble. The on-again-off-again travel corridor was on again over the weekend amid sharply declining COVID numbers in the Australian state of Victoria. But travelers with itchy feet on both sides of the Tasman Sea had hopes dashed on Monday morning. Mr Foran said in an interview that he doesn’t see a travel corridor between the two countries happening until March 2021 at the earliest.

“I certainly do not believe we will see anything across the Tasman this calendar year. It’s hard to believe it would be before March next year and could well be longer,” Mr Foran told Patrick Hatch of The Sydney Morning Herald.

Traffic on busy international corridor slashed

Flights across the Tasman are usually the busiest international sectors in and out of Australia and New Zealand. Nearly eight million people make the short flight each year. COVID-19 put the brakes on those flights, with only Air New Zealand operating a pared-back service. But with both countries seeming to be getting on top of COVID-19 by mid-2020, there was much talk of a travel corridor.

However, a second wave of COVID in Victoria centered on Melbourne, and a smaller outbreak around Auckland saw prospects of a travel corridor between Australia and New Zealand fade.

Melbourne has been enduring a harsh, city-wide lockdown that’s now having dramatic effects. There were just 11 new cases reported in Melbourne on Sunday, down from 700 plus highs in early August. Elsewhere in Australia and around New Zealand, low to no COVID cases are getting reported. That’s been enough to get people talking again about a travel corridor between Australia and New Zealand.

Trans Tasman travel bubble talk boosted last week

That included Australian Prime Minister Scott Morrison, who resurrected prospects of travel between certain regions late last week.

For example, the whole of the (New Zealand) South Island, that’s an area where there is no COVID,” Mr Morrison said at a press conference after a National Cabinet Meeting on Friday.

Mr Morrison confirmed that a travel corridor between Australia and New Zealand remained under active discussion. Comments like that raised expectations of a possible relaxation in border controls between the two countries sooner rather than later.

But the bosses of both Air New Zealand and Qantas, the two key carriers on the trans-Tasman routes, aren’t getting onboard the bandwagon.