ISTAT Jetrader - Autumn 2020 - 29

To summarize, what are the
essential moving parts needed to
facilitate a reasonably turbulencefree return to the airways? First, a
coordinated government approach to
market access. Agreement on how
and when borders will reopen must be
forged on a global basis, or at least
a regional basis, rather than reliance
on bilateral decisions. There needs
to be a single international set of
protocols and processes that dictate
how travelers are going to remain
safe using consistent procedures.
It needs to be the same wherever
they go, whichever airport they use,
however they travel. Another helpful
measure would be for governments
to underwrite travel insurance so that
the previous levels of cover can be
restored, including support during the
end of a COVID diagnosis or disruption.
Many passengers who would otherwise
be traveling are looking at their invalid
or unavailable insurance policies and
saying "I can't risk it." And finally,
in order for leisure travel to become
appealing again, governments and
businesses must work together to
figure out how to reopen hotels, bars,
restaurants, cafes, concert venues,

theme parks - all the places that
tourists want and need to function
safely and seamlessly.
On the other hand, what needs to
be knocked on the head quickly and
firmly? Social distancing on board
has to be a nonstarter. Blocking
off middle seats or alternate rows
makes no difference. It's completely
uneconomic. I always loved flying on
the Viscounts with their big seats and
even bigger windows, but we can't
turn the clock back 50 years. Blanket
quarantine requirements amount to
travel bans. They will kill any prospect
of recovery. Safe travel corridors and
air bridges are not substitute for a
clear set of agreed policies, such as
those set out for travel within the EU.
The potential for individual government
intervention is too high, and advice
changes too frequently to be useful.
And governments must be supportive
of all of their air service operators, not
just those they have a vested interest
in protecting. A recent example of
Austria imposing a minimum on airfare
of 40 Euros is nonsense - simply
unfair and a very unhelpful.
Notwithstanding all of the
obstacles of the recovery, in recent

weeks, we've actually started to
see the first signs of a return to the
air. Not big numbers, but significant
enough that it's a good indicator that
the human race still has a desire for
travel in its DNA. We passed the peak
of fleet inactivity in mid-April, and
since then there has been progress
in all regions across all aircraft fleet
segments. For sure, there are some
anomalies; widebody recovery,
for example, is misleadingly high
on these charts, driven up by the
use of passenger aircraft for cargo
operations. The latest data show that
over 40% of the global passenger fleet
still remains idle. But there are big
differences between the extremes:
75% of U.K. airline capacity inactive
versus less than 10% in China. Now,
of course, these flight indicators only
track seats in flights, not passenger
numbers and revenues. But as Winston
Churchill once said, "Now this is not
the end; it is not even the beginning of
the end, but it is, perhaps, the end of
the beginning."
To view the full presentation, go
to istat.org/ISTAT-Online/ISTATLearning-Lab.

Appraising Aircraft in Challenging Markets
By Bryson Monteleone, Senior Advisor, Aviation
Finance Advisory Services, PwC Ireland, and Chair of
the ISTAT Appraisers Program Board of Governors

Description: Take a closer look at aircraft value concepts, market price
discovery, comparables, discounted cash flow analysis, price transparency,
availability of price data, data pool and transparency - all with a focus on
the implications of the current crisis on long-term values.

A

This presentation was recorded on 8 July 2020.

ppraisers are in
a very unique
situation. If our
values lag too
far, we're not on
top of the market
enough. If we're

too far ahead, we're seen as leading the
market. But we have to deal with cases
in which there are limited transactional
data points. A lot of people say, "If
there are no transactional data points,
how are you appraising aircraft?"
Good question. We receive raw data,

which can be anything from lease
rates, transactions, historical and
current information on bankruptcies,
announced retirements, lease returns,
number of aircraft in the market,
number of aircraft being stored, number
of operators operating those aircraft
Jetrader

* AUTUMN 2020 * 2 9
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ISTAT Jetrader - Autumn 2020

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