Source: LinkedIn Post, by Lionel G. Roques
Since the beginning of aviation history, aircraft have improved in terms reliability and safety. Over the years, design and engineering have allowed us to manufacture unprecedented flying machines that set standards higher each time. As the last century was ending, we could see numerous flying planes aged 30 years and over including, but not only, the iconic Concorde or Super Jumbos. When the time came to retire after a heavy career spanning decades, those old birds were abandoned in deserts or destroyed with no second thoughts. In the best-case scenario, they were preserved in a museum and now serve as a testimonial of human ingenuity.
As knowledge progresses planes should operate longer…
Plane design and material knowledge were so good at the end of the 90s that we expected to see planes flying for a good 30 years if not more. Is there a way to measure this? A good indication can be derived from checking the average age of scrapped aircraft. We expect this average age to increase over time yet data about the age that planes were scrapped during the last 20 years gives us quite a surprise.
In the year 2000, the average age of scrapped aircraft was over 45 years old. The range between the oldest and the youngest retired aircraft was 30-50 years old. This confirms the idea of mature flying machines serving for long periods of time. In 2010, the average age dropped to 35 years old and the age range widened from just over 20-50 years old.
In the next decade (2010 to 2020) such tendency of early retirement was confirmed. The average age of scrapped aircraft continued to drop to reach close to 25 years old. Even more astonishing, was the fact that during this period the youngest scrapped aircraft are only turning 10 years!?
… but they are retired earlier and earlier.
The tendency of early retirement cannot be ignored as the number of aircraft retired is increasing in volume. Between 2000 and 2010, scrapped aircraft almost tripled from 100 to 300 per year, reaching almost 500 aircraft in recent years (2018).
Age of scrapped aircraft has been reduced by half within 20 years whilst the volume of scrapped aircraft has quintupled.
We could easily be worried about this early retirement. Is plane reliability the reason for decreasing the age of scrapping? Actually, it is quite the opposite. Mastered maintenance programs and accurate life cycle management systems now make it easier to track and predict aircraft condition. These programs and systems also help to appraise total aircraft value and the value of its main components. We expect total aircraft value to decline over time, and to limit this depreciation, heavy maintenance charges and costly investment would be needed. This is the reason for early retirement.
At approximately 15 years, there is a pivot point where the sum of the individual value of major components such as the engine, avionics and landing gear is higher if sold separately than the unique total aircraft value. The value of engine, avionics or landing gear are more resistant to depreciation thanks to enhanced maintenance and the capacity to be used on other aircraft. Thus, rather than investing in prohibitive aircraft revamp, owners retire and dismantle their assets to optimize their revenue. Parted-out components will be sold as Used Serviceable Material (USM) and feed the surplus spare-parts market.
Surplus spare-parts market is “drying-out” the population of old planes.
Pre-pandemic, the airline traffic was booming, and the need of maintenance was strong. Consequently, demand for spare-parts was equally expanding and USM were an affordable alternative to OEM parts. The higher the demand for spare-parts is, the earlier aircraft owners might dismantle their asset.
Interestingly, the COVID-19 pandemic proved the above point. As many aircraft were grounded, the public opinion was that many would be dismantled straightaway. In reality, the quantity of aircraft scrapped dropped in 2020 and 2021. Traffic was nearly at a halt during this period. Without planes flying, the need of maintenance dropped and demand for USM vanished. As dismantling comes at a cost, very limited aircraft owners were willing to invest at this moment, explaining this drop in the last years.
Now that traffic is gradually coming back, maintenance will be needed and so will USM. Accumulated unused stock of spare parts will soon be depleting and we are likely to see more aircraft dismantled in the near future. There remains a question: What will happen to some wide bodies retired for good like the A380? Yet that story has not be written…
