Air Lease Corp.’s founder and executive chairman, Steven Udvar-Hazy, at a Deutsche Bank event earlier in September, outlined a rosy environment for airlines, with demand strong and load factors in some cases at all-time highs. Global traffic, measured by RPKs, is still nearly 30 percent below what it was in 2019, mostly because of longhaul routes from Asia. But Asia is the exception, not the rule. Many routes elsewhere are even busier now than before the pandemic. And more than 80 percent of the global fleet is back in service. Udvar-Hazy acknowledged the industry’s operational constraints, including labor and maintenance bottlenecks. The result is more flight delays and cancellations, flight crews timing out, and schedule consolidation. “It’s not exactly a happy experience for the average traveler,” he said.
Udvar-Hazy separately criticized Airbus and Boeing for their “overaggressive, overambitious production rate projections … particularly on single-aisle aircraft.” He added: “It’s virtually impossible for them to get anywhere close to what they projected, say, 12 months ago … there’s just a lot of missing elements to be able to achieve those production rates, particularly in power plants, avionics, forgings, titanium, I mean I can give you a list of 30 different things that have impeded the ability of the primary OEMs [original equipment manufacturers] to achieve their targets.”
Demand for newer-technology aircraft is expected to exceed what Airbus and Boeing can produce over the next three or four years, Udvar-Hazy said. This gap between demand and supply, though, should help restrain capacity and boost airline profitability, not to mention the fortunes of aircraft lessors that have available aircraft. Udvar-Hazy mentioned Lufthansa’s recent decision to grab Boeing 787s built for but never delivered to China’s Hainan Airlines. The German airline also increased its Airbus A350 orders and reinstated its Boeing 777X orders. ALC will also provide additional A350-1000s to Virgin Atlantic.
Looking ahead, Udvar-Hazy sees “secular tailwinds” driving air traffic growth of 4-5 percent a year, even with annual worldwide economic growth of around 1.5 percent. These tailwinds include a growing middle class, expanding mobility, and the tendency for travel to become part of a person’s lifestyle. “It becomes something that’s normal rather than unusual … It’s become a form of mass transportation.”
Regarding future aircraft products from airframers, Udvar-Hazy expressed skepticism about a prospective Airbus A220-500, an aircraft Air France-KLM covets. The problem in his eyes is that the Airbus production facilities in Mobile and Montreal cannot handle an increase in A220 rates. In addition, a larger A220 could cannibalize orders for Airbus’ A320neo.
Air Canada, United Commit to Heart’s Hybrid-Electric 30-Seater
Air Canada and United Airlines are among the first customers for a new hybrid-electric airplane from Heart Aerospace. The aircraft, named the ES-30 for its 30-passenger capacity, replaces the Gothenburg, Sweden-based planemaker’s all-electric ES-19 airplane that United first committed to last year.
“The ES-30 is an electric airplane that the industry can use,” Heart founder and CEO Anders Forslund said. “We have designed a cost-efficient airplane that allows airlines to deliver good service on a wide range of routes. With the ES-30 we can start cutting emissions from air travel well before the end of this decade and the response from the market has been fantastic.”
Air Canada has signed for up to 30 ES-30s, while United reconfirmed its commitment for up to 100 aircraft. Heart aims to deliver its first plane in 2028, or two years later than its target for the ES-19.
Heart’s shift to hybrid-electric technology — think a Toyota Prius but for airplanes — appears a reflection of the limits of existing battery capabilities. The size of the battery needed to power an an all-electric aircraft increases significantly as the plane gets larger, and quickly becomes too heavy for an economically feasibly airliner. However, hybrid-electric technology allows for a smaller battery that can be supplemented by a traditional internal combustion engine.
The airframer’s hybrid-electric technology will be able to be used in-flight to allow for additional range on the ES-30, as well as to meet fuel reserve requirements. The proposed aircraft will be able to fly 200 kilometers (125 miles) under solely electric power, or 400 kilometers using the hybrid-electric technology.
The size and range of the ES-30 mean the aircraft could be used on existing airline route networks. For example, the additional range would make nonstop flights between New York and either Boston or Washington, D.C., possible for the aircraft. This differs from the rapidly expanding electric vertical takeoff and landing, or eVTOL, air taxi market that aims to replace ground-based trips to the airport with flights.
The ES-30s “are well, well positioned to replace existing planes to fly to small markets by the end of the decade,” Air Canada CEO Michael Rousseau said at an industry event on September 15. He added that the larger size followed discussions with Heart over “what’s commercially attractive” to airlines.
Heart is not alone building an electric, or hybrid-electric, airliner. Eviation is developing the all-electric Alice that would seat nine passengers for regional airlines. Cape Air already has commitments for the Alice that Eviation aims to certify by the middle of the decade. And Surf Air Mobility and Southern Airways Express want to be first to market with retrofitted hybrid-electric Cessna Caravans in 2024 or 2025.
Heart, in keeping with the ES-30’s sustainable bonafides, said the internal combustion components on the plane will run entirely on sustainable aviation fuel. However, the planemaker said nothing about the availability of the sustainable fuels, which today are available in very limited supplies and in only select locations.
In addition to Air Canada and United, Heart has letters of intent for the 96 ES-30s from Braathens Regional Airlines, Icelandair, SAS, and New Zealand’s Sounds Air, as well as Swedish lessor Rockton.
Air Canada and Saab have also both invested $5 million in Heart. Last year, United’s private equity arm United Airlines Ventures, along with Mesa Airlines and a clutch of other investors, participated in a $35 million Series A fundraising round by the airframer.
Fleet Briefs
- Wizz Air has confirmed options for 75 Airbus A321neos with deliveries in 2028 and 2029. The deal raises Wizz’s firm commitments for the plane to 369 aircraft, or 382 aircraft including its A320neo orders. The options were part of the order Wizz placed with Airbus at the Dubai Air Show in 2021.