The head of Air Lease Corp. says the company sees no reason to adjust its long-held assumptions on aircraft useful life when planning its fleet strategy.
“We’re quite happy with our depreciable life of 25 years across all of our product line,” says Steven Udvar-Hazy, Air Lease’s founder and CEO. “We just don’t see any evidence that [useful life assumptions] should be shortening, either from the aircraft maintenance structural point of view [or] from the economic life point of view.”
Udvar-Hazy’s comments, made to analysts during a Nov. 7 earnings call and reiterating similar statements made over the last 18 months, echo the thoughts of Boeing and lessor Avolon, among others. While certain factors are leading to the parking of some current-generation aircraft—like 737-600s and a few -700s—well before the 25-year mark, they do not point to a sea change, argue those who see the 25-year useful life as holding steady.
In the 737NG’s case, demand for spare CFM56-7 engines for newer and larger versions of the model played a role in retiring some young aircraft, a fact noted by Avolon in a September 2012 study on aircraft retirement trends.
Other models—like the 50-seat Bombardier CRJ—are an exception to the rule, due to significant shifts in industry economics.
Udvar-Hazy noted that while Air Lease isn’t tweaking its aircraft useful life model, the company’s strategy insulates it from shifts in useful lives. The average age of Air Lease’s 182-plane fleet on Sept. 30 was 3.6 years, and it is kept low by adding new aircraft and selling existing ones “when they are still fairly young,” Udvar-Hazy says. He pegs that age at 7-9 years.