WHY are Airlines STEALING each others Airplanes??!

recently there have been reports about how some Airlines have been literally trying to steal least Jets from each other is this a sign that we're actually starting to run out of aircraft and if that's the case why is that happening and can we fix it stay tuned we all know that the aviation industry is incredibly cyclical with violent swings between good and bad times often this is triggered by external economical upsets and the pandemic was of course the probably most recent and extreme example of this at least in peace time but like I said that was far from the first time that the industry insiders carefully prepared Market preparations and Trends then went completely out of the window after something unexpected happened but what I want to talk about today is a relatively new type of Crisis something that has been brewing for a while in the aftermath of the pandemic but in reality had started forming well before 2020 and is now getting more and more serious and I'll start with a couple of interesting examples of effects that this crisis is already bringing us just over a year ago an ultr lowcost carrier in Canada called flare Airlines had to make an embarrassing apology to its customers after they had cancelled several flights in the last minute and the reason well the reason was that a group of lessers had just seized four of their aircraft one boing 737800 and three 737 Max 8s the airline later sued those lessers and a few months after that the lessers sued one of Flair's investors for missing or late aircraft lease payments now from the start Flair admitted that they were indeed late on some of their payments for their lessers to the tune of about $1 million or so now the lessers later disputed at Mount saying that it was many many times more than that but flare ciously also alleged that the repossessions were made not so much because of the late payment but instead because the lers had found new and better deals for the planes with other airlines now this isn't an unprecedented event and I'm not going to comment on the specifics of this case except to say that repossessions are situations that Airlines and lessers normally do their absolute best to try and avoid nobody likes going for the nuclear option if friendlier Solutions are available which they tend to be for example during the pandemic when Airlines obviously couldn't fly anywhere and therefore made basically no money lessers had to be more patience and by all accounts it looks like they actually were a survey showed that 86% of the leasing companies out there agreed to defer aircraft lease payments during those times which obviously makes sense since neither side would benefit from wholesale repossessions at the time would nobody could fly so the key detail to focus on in the flare Airline story is that those rep possessions took took place early in March 2023 So based on that timing you might think that well since the worst of the pandemic was behind us by then and travel was picking up nicely it probably made sense for the lessers to gradually have less and less patience with late payments right well that is probably true but it's far from the whole story here and that brings me to my second and most recent example involving G and latam Airlines in South America now to understand just how crazy this story is you need to know that latam operates a single ale aircraft Fleet of only the Airbus A320 family both Legacy models and NEOS and go in Brazil are an only boing 737 Airline operating NGS and Maxes and a fortunately for goal they had a quite difficult start of 2024 late in January the airline actually filed for chapter 11 bankruptcy protection which allowed them to continue operating whilst restructuring their debts under the supervision of a Court based in New York City now without getting too technical here the chapter 11 process keep debtors from trying to seize a company's assets which is obviously important if the company wants to be able to continue operating but just one day after goal's chapter 11 process was announced something pretty strange happened latam Airlines reportedly contacted several lessers on that very same day telling them that they would happily take over any leases of boing 727 aircraft that that might become available and they did that even though they currently had an all Airbus single a fleet and that's not all that they did latam who operates mainly in Chile and Brazil also started posting ads for pilots in Brazil who were already typ rated on the 737 and according to Gul they also contacted several travel agents who were working together with Gul allegedly trying to persuade them to stop doing that now the New York judge who remember was supposed to be protecting the air during the chapter 11 process wasn't very impressed by this at all and sure enough a lawyer for latam later admitted to the judge that the letter the airline had sent to those lessers a day after Go's chapter 11 bankruptcy was not purely a coincidence but latam's team also explained something very relevant to the topic of this video they just really really needed to find airplanes at the time they were already working with some of the same less as goal and right then they just desperately needed aircraft wherever they could find them so to steal them away from a competitor in trouble didn't look like such a bad idea and by the way latam themselves had gone through that same chapter 11 bankruptcy and restructuring at the height of the pandemic in 2020 completing the process about 2 and a half years later but the fact that latam needed aircraft so badly that they were willing to commit to an entirely new aircraft type and also risk annoying an American judge by let's say testing the limits of some International rules says something about how desperate things have started to become so why is this happening what's going on with the supply of aircraft that makes both Airlines and lessers do these kind of things in the first place well to understand that we need to start by looking at a combination of different events in recent years who have all worked together to cause this perfect storm and I will do all of that after this while the airlines to navigate shortages and legal issues we all face potentially similar issues but with our online security and that's for today's sponsor nordvpn steps in Nord supplies tools that my team and I use all the time to both ensure our online security and also get access to crucial research information you see by routing your connection through different countries you can unlock access to your favorite content when you're out traveling but also score exclusive discounts on things like flights rental cars and hotels but lately nor has grown Beyond just their VPN Services they're now a complete all-in-one defense against online threats like malware intrusive ads and even fishing attempts so if you want access to these fantastic tools then use the link here below which is nordvpn.com Mentor now to get four free month when you sign up for the 2-year deal and remember you can test it completely risk-free for up to 30 days since Nord always gives you a full refound within that time if they fall short of your expectations thank you Nord now back to the video it wasn't that long ago that the airline industry was literally overflowing with aircraft or at least certain types of them those included the 737 mg the Legacy A320 family plus Embraer 190s and 195s along with wide bodies like the Airbus A330 and the Boeing 767 back then all signs were pointing to the fact that these Jets just weren't In Demand anymore now this happened in the pandemic but it definitely wasn't the pandemic itself that had actually caused it the pandemic accelerated it as it did with many many other things but in many ways it was inevitable anyway because of what had happened during the previous decade so what was that then well the 2010s had been an incredibly hectic period for both aircraft manufacturers and Airlines since everyone had started either replacing or updating nearly every aircraft type that they had and to explain what I mean by that let's look at a couple of timelines the entry into service date of the Airbus A320 Neo family was near the middle of the 2010s January 2016 for the Airbus A320 Neo and may the following year for the bigger and more popular Airbus a321 Neo the 737 Max family followed close at the heels of the Airbus with the max 8 starting to fly passengers in May 2017 and with a larger Max 9 following just under a year after that and together those two aircraft families makes up the vast majority of airliners out there but this ref fleeting goes beyond just the narrow bodies we also had new types like the Airbus 8330 Neo who entered service in December of 2018 and before that boing's 787-8 the smallest member of the 787 family who entered service late back in 2011 now that aircraft had quite a few problems at first which is wide larger 787-9 didn't come online until August of 2014 finally the Airbus a350 came into play in 2015 and of course all of the dates that I just mentioned only represent the first delivery and service entry for each type in reality it takes months or even years for deliveries of a new type to pick up pace even if everything go smoothly in the beginning and in the case of the 787 for example that did did not happen with smoking lithium batteries and engine issues from the very start keeping boing and its Airline customers very busy and frustrated for years meanwhile older aircraft like the boing 7 300 ER went out of production in 2020 and was replaced Slowly by types like the Airbus A3 51,000 the tri 7 x was supposed to enter service around the same time but as I've explained in many of my other videos that now won't happen until early earli as 2025 but back to our story in 2019 then came the grounding of the boing 737 Max family after two devastating accidents in 2018 and 2019 now I will eventually cover those accidents over on the mentor pilot Channel but for today's topic a key detail here is that before the grounding Boeing was producing 52 Maxes every month immediately after the grounding boing believed that the plane would be returned to service relatively quickly so they actually kept making around 42 of them per month for quite a while but it soon became clear that a quick return was out of the question and once that was realized production was completely stopped for a while and then resumed at a much slower pace of course Airbus was completely unaffected by the max crisis but they were not unaffected by the pandemic which kicked in about one year later now I don't think that I need to explain to you guys why the demand for new aircraft basically went down to zero during the pandemic but never mind new aircraft what what about the old Airbus and Boeing aircraft that were getting replaced normally they would find other users and roles but when the pandemic hit what do you think happened to them well predictably the value of a lot of those older aircraft just evaporated basically overnight now even if there had been no pandemic a lot of airlines and lesses would have struggled to find new uses for them anyway but the pandemic obviously made this trend even stronger and that was a big problem you see under normal circumstances Airlines have to look after their aircraft because their resale value when they're replaced forms a big part of how Airlines remain profitable and the same obviously also goes for lessers who right now own over half of the world's commercial aircraft so with the resale value now dropping like a rock this affected the airlines balance sheets very very badly and immediately so getting rid of them and their maintenance costs became a big priority but even with that in mind the low utilization of Passenger aircraft during the pandemic meant that there were suddenly a huge aircraft Surplus and while most affected aircraft were older models many of them were still relatively new which caused some quite unusual things to happen in September of 2021 Scott Hamilton in leham news reported that an Airbus a33 300 had been converted into a freighter now that in itself wasn't very strange but what made this specific conversion very special was the fact that the jet was less than 8 years old that's less than half the age of most aircraft were being converted into cargo and that just showed how much these aircraft had depreciated this was of course especially true in 2021 when L haul travel was still a long way from recovering but Freight prices were still Skyhigh the pandemic famously became an opportunity for cargo airlines to refresh their fleets with newer and more efficient ient models but it wasn't just cargo that benefited from this odd circumstance this aircraft Surplus in the industry also meant that the leasing prices of these aircraft suddenly dropped and the availability of cheat to rent Jets was an opportunity for new Airline startups to suddenly emerge which included examples like Avo air and Breeze in the United States some regular Airlines also saw an opportunity in using these cheap leasing aircraft to expand their fleets which which is exactly what flare in Canada had done in 2021 a couple of years before its issues started with their lessers in Europe Norwegian air shuttle was also able to restructure their dep and recover from Hard Times in part thanks to the sudden availability of sheep aircraft now not all startups and expansions went well during the pandemic we saw flares issues with their least Jets eventually and others like fle in Norway only lasted about a year and a half then we had fly poop a lowcost Lon haul startup who didn't even really get off the ground Beyond just a few cargo flights but all this cheap aircraft bonansa happened between 2021 and the beginning of 2023 gradually after that the air travel recovery really started accelerating and the aircraft demand issue was then obviously reversed that happened first to short and medium Hall operations but then eventually also for Long Haul especially during the second half of 2023 now this this obviously meant that those older aircraft were suddenly becoming more desirable again which up until then had been far from certain but as the industry now started to pick up and Theon started picking up with that had the production of new aircraft recovered in the same time no it had not new aircraft production had not come even close to recovering even before the FAA capped Boeing 737 monthly output to 38 aircraft earlier this year Boeing could bar hit that production rate which was still a far cry from the 52 737s that they had made monthly until the 2019 grounding and Airbus well in 2023 they had a record year in new aircraft orders and also delivered 735 Jets to their customers which was a pandemic ERA record but in contrast back in 2019 Airbus had actually delivered 863 aircraft meaning that they were now nowhere near the pre-pandemic production the years of the pandemic plus the extra year of slow 77 Max production during the grounding plus the problems that Pratt and Whitney had with some of their Airbus A320 Neo engines plus other teething problems in the production of the CFM leap engines was now causing a significant shortfall of single ale aircraft and things were just getting worse on top of all of this widebody production wasn't doing great either deliveries of the 787 had actually stopped for an even longer period than the Max and it production rate Still Remains low to this day and since in the early stages of the pandemic several Airlines decided to retire entire aircraft types early to try and keep their costs low this now made the current aircraft shortage even worse the end result of all of this is that we are right now dealing with an airline industry that is around 3,000 aircraft short of what the Airlines and lessers were planning with for the pandemic for this year Gul the airline in Brazil that is going through chapter 11 bankruptcy has actually cited the lack of 737 Max deliveries as one of the reasons for their issues since they were planning with access to those aircraft in order to run their business and latam's probes to see if gold 737s would be available and their ads for 737 Pilots are also not unique this is actually very similar to what happened in India last September between a startup called Acasa air and Air India several aasa air Pilots reportedly resigned and Mos to go and work for Air India instead upsetting aasa's flight schedules and what this all seems to point at is that we're now lacking both pilots and aircraft everywhere and speaking of Pilots all this actually helps answer a question that some of you have been asking lately what about that pilot shortage that you made such a big deal about a few videos back where is it well lately we have actually received news of several airlines in the United States stopping their pilot h firing so does that mean that the pilot shortage is over well no the airlines still need thousands of new pilots only to replace the retiring ones and on top of that they also need to fill the cockpits of the aircraft that they have on order but since those ordered aircraft are not arriving it means that there are currently no aircraft for these new pilots to fly so since the airlines now need both pilots and aircraft it makes very little sense to get one without the other which is why they're now holding recruitment so what does this all mean then what's next can we expect this situation to improve or is there more trouble ahead well obviously the most recent 737 Max problems and the scrutiny that boing now finds itself in seems to indicate that we can't really expect a production ramp up from their side anytime soon and on top of that the delayed certification of the 727 max7 and the max 10 is already forcing Airlines like United to make alternative plans for their expansions as for Airbus checks on early Airbus A320 NEOS with geared turbofan engines looks set to continue for many more months potentially meaning even further delays there and their Airbus a321 XLR is also behind schedule although it hasn't faced the kind of multi-year delays that we've seen with Boeing's remaining Max variants but even if Airbus keeps up their production they won't really be able to satisfy the entire world's demand fast enough and we can see that by looking at their order books where new aircraft orders are now being scheduled for delivery well into the 2030s so what can the airlines actually do about all of this then well in the short term the airlines can lease small numbers of aircraft and pilots from ACMI Airline operators meaning wet leasing both Crews and aircraft from Airlines specialized in fulfilling exactly that role but this isn't really a cost effective nor a viable long-term solution since the number of available ACMI operators and aircraft are quite low but if you tend to have one of those Airlines congrats another alternative is to go out to the desert where some older aircraft are sitting in storage and try to return those to service but this can be very timec consuming and extremely costly especially if the planes need lengthy and expensive overhaul which they almost certainly will no un fortunately for all of us the one thing that the airlines can do that can help them both deal with a lack of aircraft and the lack of Pilots is to increase ticket prices the rules of supply and demand are simple when there isn't enough Supply the prices goes up and a lack of aircraft makes existing aircraft pricier and the same happens when there's a lack of available routs because of a lack of aircraft and in a lot of markets reducing routs and capacity is something that the airlines have already started doing again reducing Supply now the ticket prices have been steadily decreasing over the last couple of decades but this changed after the pandemic and all indications point to them just continuing to become more and more expensive during the coming years this becomes even more true if you consider that beyond all of the issues that I've laid out in this video there is also a need to fund future technology like sustainable Aviation fuels and new infrastructure for things like hydrogen this will undoubtedly push the ticket prices up even higher but what do you think as always I would love to hear from you and see if you agree or not go down leave a comment and leave a like if you think that I've earned it also check out these videos next and if you want to help me improve the channels and join our awesome Hangouts consider joining my fantastic patreon crew have an absolutely fantastic day wherever you are and I'll see you next time bye-bye

Channel: Mentour Now!

Views: 273,727

Keywords: airbus, boeing, aviation news, news explainers, aviation trends, aviation industry, airbus vs boeing, US aviation, mentour pilot, mentour now, air travel, spirit airlines, low fare carriers, united airlines, airports, Aviation revolution, New Tech, Fascinating Tech, Things you didnt know, Aviation history, mentour pilot now, door plug, alaska airlines, 737 MAX 9, spirit aerosystems, boeing 737, Boeing, Spirit Aerosystems, boeing news, things you didnt know you needed

Id: Y0sAr2QToEo

Length: 21min 56sec (1316 seconds)

Published: Sat Apr 06 2024