Jetrader - March/April 2011 - 17

Mind the Generation Gap
Useful life debate remains key to aviation future
By Les Weal, Director of Valuations & Appraisals, Ascend Contributing Editors: Andy Golub, Head of Risk Advisory, the Americas George Dimitroff, Senior Analyst There is a raucous debate currently in play across the aviation market concerning the useful life of commercial jets. The long-held benchmark of 25 years is under threat. Some of the more aggressive traders in the community are advocating a view that the useful life is a short and brutal 15 years. Some others, perhaps more sober members of the leasing community, vigorously hold that 25 years may indeed be too conservative. There are compelling arguments for both extremes. How do you make sense of this debate? And more importantly, how do you keep score? These are critical questions for anyone participating in the aviation sector. With massive order backlogs and increasing production rates, the answers are needed now if we are to understand how the market may unfold in the years to come. Ascend has taken a serious look at the facts, diving deep into our historical records, reaching back to before the dawn of the Jet Age, to come up with data-driven analysis that brings some much-needed perspective to the debate. To begin, we examined the historical age proﬁle of the global ﬂeet of western-built commercial passenger jets. An illustration of this analysis follows in Chart 1: Passenger Fleet Share % by Age Buckets. The most striking observation which emerges is that older aircraft are a relatively recent phenomenon. In the early 1970s, only 10 percent of the ﬂeet was more than 10 years old. This heavy weighting of new equipment makes sense in the context of the phenomenal 24 percent compounded annual growth rate of the ﬂeet during the 1960s. It was, in truth, the dawn of the Jet Age. Jetrader 17

Chart 1

Jetrader - March/April 2011

Table of Contents for the Digital Edition of Jetrader - March/April 2011

Jetrader - March/April 2011
A Message from the President
Table of Contents
Calendar/News
Q&A: David Neeleman
Aircraft Financing 2011: Expanding Liquidity Meets More Deliveries
Mind the Generation Gap
Breaking Up is Hard(er) to Do
State of the Regions: North America
‘You’re Late on the Payments!’
Relationships Versus Brand Marketing in Aviation
Aircraft Appraisals
Aviation History
Advertiser.com/ Advertiser Index
Jetrader - March/April 2011 - Jetrader - March/April 2011
Jetrader - March/April 2011 - Cover2
Jetrader - March/April 2011 - A Message from the President
Jetrader - March/April 2011 - 4
Jetrader - March/April 2011 - Table of Contents
Jetrader - March/April 2011 - 6
Jetrader - March/April 2011 - Calendar/News
Jetrader - March/April 2011 - Q&A: David Neeleman
Jetrader - March/April 2011 - 9
Jetrader - March/April 2011 - 10
Jetrader - March/April 2011 - 11
Jetrader - March/April 2011 - Aircraft Financing 2011: Expanding Liquidity Meets More Deliveries
Jetrader - March/April 2011 - 13
Jetrader - March/April 2011 - 14
Jetrader - March/April 2011 - 15
Jetrader - March/April 2011 - 16
Jetrader - March/April 2011 - Mind the Generation Gap
Jetrader - March/April 2011 - 18
Jetrader - March/April 2011 - 19
Jetrader - March/April 2011 - 20
Jetrader - March/April 2011 - Breaking Up is Hard(er) to Do
Jetrader - March/April 2011 - 22
Jetrader - March/April 2011 - 23
Jetrader - March/April 2011 - State of the Regions: North America
Jetrader - March/April 2011 - 25
Jetrader - March/April 2011 - 26
Jetrader - March/April 2011 - 27
Jetrader - March/April 2011 - 28
Jetrader - March/April 2011 - ‘You’re Late on the Payments!’
Jetrader - March/April 2011 - 30
Jetrader - March/April 2011 - 31
Jetrader - March/April 2011 - Relationships Versus Brand Marketing in Aviation
Jetrader - March/April 2011 - 33
Jetrader - March/April 2011 - 34
Jetrader - March/April 2011 - Aircraft Appraisals
Jetrader - March/April 2011 - 36
Jetrader - March/April 2011 - 37
Jetrader - March/April 2011 - 38
Jetrader - March/April 2011 - 39
Jetrader - March/April 2011 - 40
Jetrader - March/April 2011 - Aviation History
Jetrader - March/April 2011 - 42
Jetrader - March/April 2011 - 43
Jetrader - March/April 2011 - 44
Jetrader - March/April 2011 - Advertiser.com/ Advertiser Index
Jetrader - March/April 2011 - 46
Jetrader - March/April 2011 - Cover3
Jetrader - March/April 2011 - Cover4
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