Slow Demand = Airliners Ending Up in the Boneyards

[LosAngelesBeauty]

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As travel declines, aircraft 'boneyard' in Victorville fills up
Industry experts say this year is likely to set a record for planes sitting on the ground rather than flying. Storing them is a growing business.
By Peter Pae

March 15, 2009

With the economy in a tailspin, aircraft "boneyards" across the country are filling up with Boeing 747s and other jetliners no longer needed to ferry passengers. Call it airline limbo.

Air carriers are grounding planes at a rate not seen since the Sept. 11 terrorist attacks, and industry experts say this year is likely to set a record for planes sitting on the ground.

That has meant job security for Richard Robertson, an aircraft mechanic at the Southern California Logistics Airport in Victorville, formerly George Air Force Base, now one of the nation's busiest boneyards.

Robertson has perfected the art of "pickling" airplanes, aviation jargon for disassembling parts and draining fluids from aircraft so they can be stored for a long time.

"It's unfortunate, but when the economy is bad we're doing good," Robertson said as he pulled a cockpit instrument off a Boeing 727 last week so it could be stored for use another time or perhaps on another plane.

The jet, with its windows covered in aluminum foil and engines removed, will be towed later to a sprawling lot that resembles a used-car dealership. It is filled with rows of planes that just months earlier had crisscrossed the Pacific or hopped across the Midwest.

High fuel costs last summer drove many airlines to ground older, gas-guzzling planes.

Since then, a recession- induced travel slump has led carriers to take even more planes out of the sky.

Passenger traffic for the nation's largest carriers dropped an average of 11% in February compared with a year earlier . It marked the carriers' 18th consecutive monthly decline.

Several big airlines that already had pared their schedules over the last six months said last week that they would slash even more flights than planned because demand was falling further.

The latest rush of airliners to Victorville began in October. Before long 100 aircraft were on the tarmac, then 150, and by last week the roster had swelled to nearly 200, making the outpost more crowded at times than Los Angeles International Airport.

Victorville, about 80 miles northeast of Los Angeles, is home to one of three major commercial boneyards in the U.S.

The others are in Arizona and New Mexico, where grounded planes are also piling up. (Mothballed military aircraft such as fighters, bombers and cargo planes end up at Davis-Monthan Air Force Base in Arizona.)

"We're seeing consistent growth and anticipate growth for another six months," said Steve Coffaro, vice president of marketing for Evergreen Maintenance Center in Marana, Ariz.

Coffaro counted 198 planes in his lot last week, twice as many as several months ago.

The Victorville airport isn't bursting at the seams yet, but it's getting closer to its maximum capacity of 300 aircraft, said Jeff A. Lynn, general manager for Southern California Aviation, which provides "transitional parking" for grounded planes.

Based on recent airline inquiries about available space, there could be 50 or more planes arriving at the airport by this summer, Lynn said, adding that "we could run out of room" if the facility gets more 747 jumbo jets, which take up two spaces.

The Victorville airport was established after the closure of George Air Force Base in 1992. The airport in Mojave, about 75 miles away, is also used for idled jets; about 100 planes are mothballed there.

Airlines like to park planes in the desert because the dry weather acts as a preservative, preventing corrosion.

"Boneyards are purgatory for airliners," said aviation consultant Michael Boyd, who estimates that 10% to 20% of the planes will fly again.

"They sit there for a while before they're turned into beer cans."

Or until they're sold. Older aircraft no longer wanted by the U.S. carriers sometimes find their way to airlines that serve countries in Africa or Latin America.

Buyers are likely to see some of the lowest prices for used planes in decades.

Last year, nearly 1,200 planes worldwide were grounded, making 2008 the worst year for fleet cutbacks since 2001, according to London-based aviation consulting firm Ascend Worldwide.

An additional 675 aircraft could be parked this year.

If that happens, a record percentage of planes will be sitting on the ground rather than flying.

"Fleet reduction is the most efficient way to reduce capacity," said Jean Medina, spokeswoman for United Airlines, which began phasing out older, gas-guzzling 737 jets last fall.

Many of the planes are for sale, but if the airline doesn't find buyers, the aircraft are sent to the boneyard to wait out the lull or be dismantled for parts, Medina said. "We've been working to sell these where we can."

Aircraft leasing companies are also grounding planes because fewer airlines are renewing their leases. In some cases the companies park the planes rather than slash lease rates, said aviation analyst Richard Aboulafia of Teal Group Corp.

With plane numbers far exceeding demand and travel sliding even more than anticipated, the boneyards are expected to remain busy this year.

Lynn's company has been growing steadily since airlines began grounding planes. Its payroll increased by 30% since last fall.

The company has 150 employees and is looking for more aircraft mechanics.

But Lynn says the company has been cautious about hiring too many workers too quickly to avoid the boom-and-bust cycle that has characterized the business for decades.

"We're trying to be careful about ramping up too fast," he said.

Each airline has its own preferred way of storing aircraft, which could include draining a plane of fluids, covering up the windows and then having a tow truck move it slightly every two weeks to even out the tires.

Planes that are not expected to return to service are stripped of parts or "chomped" into pieces to be used as scrap.

The Mojave airport boneyard, once one of the nation's largest, may be more familiar to Southland travelers than the boneyard in Victorville because the planes are visible from California Highway 14, the main route to Highway 395 and the Eastern Sierra Nevada.

In recent years, however, the Mojave airport has focused on boosting commercial spaceflight and research operations. The airport, about 100 miles north of Los Angeles, is now officially called the Mojave Air and Space Port.

But in the last few weeks, the company that stores planes in Mojave has had an uptick in calls from airlines looking for spaces to park their aircraft, said Lin Roberts, manager of Flight Test Associates Inc.

"March and April are going to be big," she said. "We're getting calls from all over."

Roberts had expected the next upswing in business to come in 2011 and 2012, when most carriers had planned to begin updating their planes. But the falloff in travel has pushed it up a few years, she said.

"The economy is taking us all for a wild ride," Roberts said.

peter.pae@latimes.com

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http://www.latimes.com/business/la-fi-boneyard15-2009mar15,0,6631747.story?page=2
From the Los Angeles Times

[bnk]

I have never found seeing airline jets laying in fodder in the desert comforting.

Can not some 2nd or 3rd world country buy these on the cheep vs the loss of just letting them rot there?

[202_Cyclist]

The US carriers often try to sell these aircraft to carriers in developing countries but many of these carriers in the Mid East, Asia, and Latin America also suffer from over-capacity and a drop in passenger demand as well.

As the article notes, the first planes to get taken out of the fleets of carriers are the most ineffiecient planes (the Lockheed 1011 and the B727). These planes would have been retired and replaced by aircraft with lower operating costs irrespective of the current downturn in the airline industry. Mothballing these planes and reducing capacity is one of the most effective ways to match the number of seats available with passenger demand.

[202_Cyclist]

According to this NYT article, the average aircraft age for US carriers was 12.2 yrs in 2006. The Bureau of Transportation Statistics (BTS) maintains data on the age of the US aircraft fleet: http://www.bts.gov/publications/transportation_statistics_annual_report/2007/html/chapter_02/table_a_18.html


U.S. Airlines Put Off Buying New Planes

By JEFF BAILEY
NY Times
10/27/2007

http://www.nytimes.com/2007/10/27/business/27planes.html

"It’s not just flights that are being delayed. United States airlines are also putting off purchases of new planes, meaning the nation’s fleet of aircraft, on average, is aging right along with the passengers.

Northwest Airlines, for example, flies 109 of the oldest jetliners in the country, DC-9s, with an average age of 35 years. Northwest has yet to decide how to replace the DC-9s, which could remain in service another five years or more.

American Airlines operates a fleet of 300 older MD-80s, a model that guzzles fuel and lacks the latest in passenger comforts. And American has only a handful of replacement planes coming in the next couple of years.

The fleet of big jets operated by nine major domestic airlines has aged steadily since 2002, according to Airline Monitor, an aviation research firm. The average age was 10.6 years at the end of 2002, and it has risen each year, hitting 12.2 years at the end of 2006. Domestic airlines largely stopped ordering new planes after Sept. 11, 2001, shrinking their fleets to adjust to a drop in demand. Travel has rebounded strongly, but airlines are, for the most part, years away from taking delivery on large numbers of new planes. A big reason is that Boeing and Airbus have committed most of their airliner production capacity in coming years to carriers outside the United States.

Indeed, only 43 of the 710 Boeing 787s on order have been identified as going to domestic airlines; 25 to Continental Airlines and 18 to Northwest. And none of the 165 giant Airbus A380s on order are destined for United States carriers. In essence a new generation of jetliners — bigger, more comfortable, more fuel efficient — is largely bypassing domestic airlines and their customers.

“The fleet is aging almost one-for-one with the calendar,” said Roger E. King, an analyst at CreditSights, who predicts that the trend will continue for about five years.

Scott Carr, a technology executive in Tulsa, Okla., said that when he flies on one of Northwest’s DC-9s, “I feel like I’m in a tuna can.”

“I’ve grown to know enough about the various kinds of airplanes,” Mr. Carr said. “I try to avoid Northwest now whenever possible. If I’m flying Southwest, they’re flying newer planes and I can tell the difference.”

Warren D. Miller, co-founder of Beckmill Research, a Lexington, Va., firm that appraises private businesses, said he braces himself for an old plane except when flying JetBlue Airways, which operates newer Airbus A320s. On other airlines, “the planes are just dirty; the upholstery is just not very comfy,” Mr. Miller said.

He wishes regulators would allow foreign airlines into the United States to fly domestic routes, which would increase competition and bring some new planes into the market.

Airplane cleaning became something of a lost art during the industry’s deep post-Sept. 11 swoon. Airlines are increasing the frequency of cleaning again, but still have some catching up to do. And the oldest planes often have the most grime.

Carl Zwisler, a Bethesda, Md., lawyer, said he did not think about the age of the US Airways 757 he was flying this month until visiting the lavatory.

“The bathroom looked old: dingy, dusty, not inviting,” Mr. Zwisler said.

Airlines could afford to buy more planes. United States carriers collectively socked away about $28 billion in cash, as of June 30. But they are using it to pay down debt or as a financial cushion after lean years when much of the industry took a tour through bankruptcy court.

Older planes are safe, experts said, largely because of nearly 20 years of government and industry research after a 1988 incident in which the fuselage of an Aloha Airlines 737 was torn open 24,000 feet over Hawaii, killing one flight attendant. It prompted the Federal Aviation Administration to form the National Aging Aircraft Research Program, studying metal fatigue and other problems in older planes and subjecting them to increased inspection and maintenance procedures.

Even so, the industry’s aging jets contribute to the general unpleasantness of air travel these days. They are often noisier and less comfortable than newer models.

They are delayed by mechanical problems more frequently than new planes and often have built-up grime in passenger spaces.

Moreover, airlines are using these planes on longer routes than in previous years, and onboard delays have grown more frequent, meaning a lengthier stay in less-than-ideal quarters. Planes will also grow even more crowded, as rising demand for travel bumps up against a shortage of planes.

Newer planes are generally roomier and some offer conveniences like seat-back television screens and outlets to recharge a laptop computer. But airlines configure them differently (SeatGuru.com provides comparison information on seat width, legroom and other features in its “comparison charts” section).

Airlines routinely announce refurbishment programs to install new seats, seat-back televisions, laptop outlets and other features. But those efforts can take two to three years to complete throughout the fleet, because they are typically done when planes are brought in for periodic heavy maintenance.

“Gadgets are very important,” said Linda Hirneise, who heads the travel practice at J. D. Power & Associates, the market research firm. “In coach, where most people fly, the airlines have taken away more and more.”

Mr. King, the analyst, estimates the industry needs to spend about $280 billion over the next 20 years to replace aging fleets. Even if they had the financial wherewithal, planes are getting hard to come by.

Asian airlines have big orders. Lion Air of Indonesia has 95 Boeing 737s on order. Qantas Airways of Australia has signed up for 65 Boeing 787s.

Discount airlines in Europe are also buying lots of new planes. Wizz Air, a Hungarian carrier, ordered 50 Airbus A320s this month. And Air Berlin has about 85 of the 737s on order.

With the exception of Southwest Airlines, the major domestic carriers have all either been through bankruptcy or narrowly avoided it in recent years. They were back in the black in 2006 and this year, but profit margins are still anemic — “amongst the worst industries in the country,” said Scott Kirby, president of US Airways. “The whole industry is hardly the poster child for strong credit.”

Thus, airline executives are cautious. Even with $3 billion now on hand, “anything we’d do with cash would be related to strengthening the balance sheet — paying down debt,” Mr. Kirby said. The airline recently placed a huge order for jets, but most of the deliveries are years off.

Philip A. Baggaley, a credit analyst at Standard & Poor’s, said that keeping a large cash reserve is, for some airlines, the best safeguard against another bankruptcy in the event of a recession or labor dispute.

But there are other demands on those cash hoards. Airline workers, who made wage and pension concessions during the last six years, want raises and better benefits. The airlines carry big debt loads, and investors would like to see some money go to stock buybacks. Frank Boroch, an analyst at Bear Stearns, prodded United Airlines management as early as last spring about “returning some of that excess cash flow to shareholders.”