Golden oldies


Aging aircraft


Economists worry about ageing populations. Perhaps they should look at the business jet fleet.

In May, Dassault celebrated 50 years since the first flight of the Mystère 20. Since then 2,250 Falcons have been built. And 85% of these are still flying.

It is not just Dassault that builds aircraft that last. Bombardier estimates that only 7% of the total business jet fleet has retired since the first jets in the late 1950s. Light jets have the oldest average age (20.6 years) followed by mid-size jets (17.6 years) and small-mid-size jets (16.6 years).

The concerns surrounding maturing populations is largely to do with having enough workers to support a large number of retired people. This obviously does not apply to aircraft (new aircraft do not pay the medical costs of aircraft) and a 40-year-old Falcon does not compete with a brand new one.

But it does make you wonder what will happen to the ageing fleet.

Historically, aircraft owners could be confident of selling older jets to developing markets. It is more complicated now. Although markets like China will start buying more pre-owned aircraft as they mature, there is a clear preference for younger aircraft and lots of newer jets are available. Emerging market governments also like limiting the maximum age of aircraft that can be imported. The other regulatory issue is noise.

There is also limited finance for older jets. Very few banks or leasing companies are willing to finance aircraft older than 15 years. This means that some 9,800 aircraft (or 48% of the fleet) will only trade for cash. Banks are unlikely to change their policy on this, as they have quantitative reasons for not wanting to finance older aircraft (downturns give you lots of data). And it does leave them 10,155 younger aircraft to finance.

You would expect downturns to act like viruses and kill off older aircraft. But it doesn’t appear to have happened yet. Unless the aircraft we think are still part of the fleet have quietly been parked never to fly again.