Operating lessor Avolon anticipates in a new market report that the transition to the Airbus 320neo and Boeing 737 Max will be stable without an immediate impact on the values of current generation aircraft.
Lucas Mollan, Avolon's chief technical officer and co-author of the report, Transitioning to Neo and Max, says: "The transition of production from a highly successful current generation of aircraft to more efficient successors is the subject of much debate in the aviation industry. The successors to current generation A320ceos and 737NGs are an evolution of the existing models rather than fundamentally new aircraft types.
"They will deliver fuel efficiency advantages deriving from advances in engine technology, with no other material changes to structure or performance. Our analysis confirms that the Neo and Max do not pose a disruptive threat to the long-standing competitive balance between the two aircraft families and that the transition to the new aircraft will be orderly."
Dick Forsberg, Avolon head of strategy and co-author of the report, adds: "The pattern of customer orders confirms that there is still strong demand for current aircraft models, which bodes well for their continued liquidity and investment appeal.
"We believe that it will take eight years from entry into service for the Max and Neo to build a 35% share of their respective family fleets, reflecting the very large installed base of current generation aircraft. Consequently, Neo and Max are not expected to directly impact values of current generation aircraft for a number of years."
The authors of the report believe while Neo and Max values are still finding their equilibrium in the market, a meaningful premium over current generation equivalents is achievable based on stated performance targets and operating economics.
Source: Commercial Aviation Online
