ISTAT JetraderI NTERNATIONAL S OCIETY OF T RANSPORT A IRCRAFT T RADING Airbus A380 C OMPARE | CONTRAST Boeing 7E7 FALL 2004 There’s a new name in the sky – yet it’s one you’ve known We have for almost twenty years. Ansett Worldwide is now AWAS. One of the world’s largest aircraft leasing companies, we work with airlines to create strategic solutions a nose for tailored to individual aviation business requirements. The aviation industry has never been more complex and aviation competitive. AWAS has the expertise, global coverage, industry relationships and experience to analyse your needs. We craft strategies for growth, with a diverse range of aircraft, lease options, investor services and technical support. To find out more about AWAS and what we can do for your business effectiveness, visit our website or contact our team. awas.com Seattle Miami Phone 1 425 453 5613 Phone 1 305 423 7030 London Singapore Phone 44 20 7497 5444 Phone 65 6733 3056 ISTAT 22nd Annual Conference President’s Letter Westin Kierland Resort, Scottsdale AZ . March 6-8, 2005 This “Farnborough 2004” 3 :: In Issue President’s Letter Farnborough 2004 Is the Long Hoped for 8 Recovery Really Underway? Chairman’s Column by John Keitz of ISTAT’s International Appraisers Board of Does a Cyclical Recovery Governors Really Mean Anything if the Industry Doesn’t Learn FEATURES :: to Change its Ways? 12 13 + Compare | Contrast Airbus arnborough 2004 is now A380 and Boeing 7E7 Dreamliner :: history and attendees are Boeing and Airbus present their F left to mull their visceral feelings of whether the aviation planes and plans Michael A “Mike” Metcalf and airline industries have President . ISTAT indeed entered into a period of 18 upturn and some form of pend- The A380 :: Inspired by industry - ing recovery. Quite honestly the created by Airbus signs emerging from this year’s aviation extravaganza are 19 mixed - encouraging, but still not clear-cut. Riddle in the Middle :: With the What is clear enough is the fact that the world’s largest aircraft marketplace, the United States, is still in a 7E7, Boeing looks to solve the state of turmoil as most of the big announcements concern- riddle in the middle ing aircraft, improving airline business and rising passenger 9 counts have been issued ironically from the troubled Middle- Education :: Aviation Technology East and the not surprising rapidly awakening “Tiger” at Purdue University: growing economies of the Pacific Rim. While it is now historical fact that the mighty the leaders of tomorrow (American, Delta, United) have fallen from lofty perches, the real story of interest will be their recovery, or the survival techniques they employ to remain short-term viable and REPORT :: hopefully long term changed. Likewise, the four major air- 5 craft manufacturers are all undergoing systemic change Farnborough 2004 :: words + pics required for the future, as well as offering new aircraft pro- duction models, many of which may well be destined to by Bill Cumberlidge, ALLCO Finance Group redefine aircraft categories and usage roles. 0 Perhaps the most startling techniques of change 11th European Conference The will likely emerge from the financial community as manufac- turers, banks, leasing companies, export credit agencies and Road to Recovery | review by end users struggle to define new “techno-finance” tech- niques and models. Colin Molloy, Finnair Oyj This past cyclical downturn has already heralded a 6 pattern of change relative to ticket pricing, reduced service Industry Trends Changing amenities, on-line bookings, and will likely culminate with a + redefinition of the on-going labor-management struggles, Fortunes by Les Weal, Airclaims work rule changes, and particularly elimination and/or sig- nificant redefinition of scope clauses. Accordingly, whether the predicted and desired recovery is real or still a phantom is debatable, but a sense ISTAT FOUNDATION :: of change is definable and rapidly becoming visible in daily 11 George E. Batchelor Scholarship Awarded industry custom and operating practices. This gathering momentum of industry change will affect almost all ISTAT 23 members, and that is probably the real message to be taken PEOPLE going PLACES :: away from Farnborough 2004. NEW FEATURE The ISTAT Cocktail Reception Thomas E Burke Director, AVMARK, Inc. What is a certainty emerging from this year’s Farnborough 2004 is the continuing growth and appreciation of our hall- writes about his Favorite Places mark ISTAT events with the ISTAT Farnborough Cocktail 21 Reception this year’s instant success. Calendar This “non-denominational,” so to speak, event 22 attracted almost a thousand attendees, guests, and those LETTERS just desiring to be a part of what is now recognized as the Metcalf l continued page 4 Metcalf l continued hallmark Monday night event at the annual Airshow venues JetraderJetrader is a bi-monthly publication of ISTAT, the International of Paris and this year Farnborough. Society of Transport Aircraft Trading. ISTAT was founded in 1983 ISTAT would like to recognize the fine efforts of to act as a forum and to promote improved communications this year’s sponsor the R B S Aviation Capital and their rep- among those involved in aviation and supporting industries, resentatives Mr. Dick Forsberg and Ms. Nodlaigh Goss, con- who operate, manufacture, maintain, sell, purchase, finance, cerning their continuing support of ISTAT and in helping to lease, appraise, insure or otherwise engage in activities related make this event so successful. Ultimately, we were only lim- to transport category aircraft. ited in attendance numbers by the fire marshal’s limitations placed on the meeting gallery. Officers Further, even as ISTAT grows into a much larger Michael A Metcalf John W Vitale organization we have not forgotten our roots and in many President Vice President | Secretary ways we are still a very cohesive like-minded aviation family. Thomas W Heimsoth Proof of this fact is offered by the many ISTAT members and Bill Cumberlidge Vice President | Treasurer associates who pitched in to help Executive Director Dawn Immediate Past President Michael Platt O’Day Foster pull off another almost flawless event. Vice President These people were a tremendous asset to ISTAT in Alan C Coe Board of Directors helping accomplish these tasks. In the office, Jennifer Colin M Davis Earyes, Valerie Wheeler and Taylor Coffman helped with the Dr Dinesh A Keskar RSVPS, badges, shipping and other preparations as needed. Fred Klein A380 / 7E7 / C Series / E-Jets 170/190 Connie Laudenschlager The thematic content of this JETRADER is to recognize the Israel Padron Gregory A May fascinating array of new aircraft types on the horizon and Nick Popovich how they might possibly affect the ISTAT Membership as the Gary J Spulak manufacturer’s order books become reality and the machines themselves issue into the hands of their initial ISTAT International Appraisers Board of Governors operators. John F Keitz Clearly, the Airbus A380 will likely be among the Chairman largest metal aircraft to ever be constructed and is almost William Bath certain to be the final aircraft of that passenger carrying Administrative Director capacity (or larger higher seating capability) to resemble the traditional outline of an airplane as we recognize it today. Governors Eric G Allred This mammoth will require new engine technology, passen- Jack F Arehart ger compartment attributes and accouterments, and even Richard M Baudouin will dictate and necessitate specialized loading equipment Fred E Bearden and airport gate modifications. Stephen C Bieneman The airplane promises to be a high-density cost Skip Clemens effective commercial platform to serve the world’s tradition- Alison Mason al gateway hubs. New trans-border production and assem- Clive Medland bly facilities and systems have illustrated Airbus’ commit- ISTAT Foundation ment to this revolutionary aircraft. Yet in building one of the largest aircraft ever built the aircraft will also be one of the Thomas Hiniker Chairman “greenest” environmentally friendly to ever take to the skies. Roland H Moore The Boeing 7E7 might best be summarized by a Immediate Past Chairman quote from James Allen, “Dream Lofty Dreams and as You Thomas W Heimsoth Dream so Shall You Become,” appropriately the aircraft is Secretary | Treasurer named the “Dreamliner.” The airplane promises to be a sea Michael A Metcalf change airplane whose airframe will be largely composite ISTAT President (less than 18% metal composition). The airplane will be a Bill Cumberlidge “greater electric airplane” whose new generation power- ISTAT Immediate Past President plants will do away with traditional bleed air systems. Trustees The airplane will be built around an open core Robert M Brown architecture allowing for non-proprietary appliances and Laurie Hatcher accessories (non-boutique suppliers), as technology provides Wayne Lippman newer advances (for instance the APU might ultimately be Chris Partridge replaced by improved fuel cell technology) retrofits can be David P Sutton made as economically feasible. The airplane promises to be David Treitel very long lived in the hands of the original operators and may ISTAT International Society of Transport Aircraft Trading come with manufacturer provided maintenance and a hand- Dawn O’Day Foster Executive Director ful of approved maintenance centers. 5517 Talon Court . Fairfax Virginia 22032-1737 USA Original parts vendors will be required to stock JIT T +703 978-8156 F +703 503-5964 E [email protected] inventory freeing the airlines from massive spares inventories. W www.istat.org Perhaps of utmost importance this aircraft reaffirms Boeing’s A ADVERTISING Ajax Newservice Inc 219 939 9581 commitment to the commercial aircraft industry making a [email protected] cover :: image sources Boeing + Airbus Metcalf l continued page 22 Fall 04 5 Farnborough 2004 ISTAT Reception here was an air of apprehension about what the mood at the Farnborough Airshow would be T and what implications that mood would have on the industry as we enter the second half of Fiscal 2004.