Honeywell: air transport market bottom in sight

 - June 16, 2009, 6:45 AM

The bottom of the air transport crash is in sight, according to Honeywell Aerospace. John Bolton, president of the group’s Air Transport & Regional division, told AIN that the dip in airline flight hours seems to be slowing.

“We had projected a three- to five-percent decline this year, but in the U.S., where there has been the greatest decline, we now see it stabilizing at roughly three percent from the latest April figures,” he explained. “Much of this is from narrowbody activity, and premium traffic is still an issue [that is, in decline].”

Honeywell’s forecasters look carefully at data from its spare parts and maintenance business to gauge fleet utilization, as well as factoring in statistics from the air carriers. “A rapid destocking [of spares] has occurred and this is now at the lowest operating level that [airline] fleets can support,” explained Bolton. He indicated that delays in restocking by airlines could mean that former levels of spares inventory will not be restored for at least another 12 to 18 months.

The U.S. group sees the drop in revenue passenger kilometers “flattening out” in response to pricing pressure related to carriers’ cuts in seat capacity, but this indicator seems to be lagging behind the signs that flight-hour numbers have stopped getting worse. The company is predicting that the recovery should gather momentum over the summer months.

According to Bolton, Honeywell has been stepping up efforts to help airlines reduce operating costs. For instance, instead of carriers having to pay for upfront and maintain inventories of spares, it is increasingly combining rotable assets with spares so that the cash outlay is effectively carried by maintenance providers.

Similarly, Honeywell’s Aerospace Trading division is increasingly sourcing pre- owned line-replaceable units for carriers rather than selling them new parts. This segment of its business has grown rapidly from annual revenues in recent years of just $10- to $15-million to an anticipated total of $100 million this year.

The company also continues to develop new and more cost-effective repairs to keep airliners flying for less cost. For instance, new metallurgic technologies have allowed it to introduce less costly repairs for engine blade coatings, as well as for impellers and combustors. The repairs also extend the service life of parts.

Bolton also claimed that further economies are and can be achieved by using the right equipment and systems. For instance, he claimed that Airbus A320s and Boeing 737s equipped with Honeywell’s 131-9 auxiliary power unit are achieving 5-percent better fuel efficiency than those with alternative equipment. The company has made mechanical improvements to the APU which improved reliability to the extent that it is now achieving times between nonscheduled repairs in excess of 10,000 flight hours.

Honeywell is also working to introduce software changes to avionics that could accelerate moves to allow faster descents and ascents to reduce the amount of fuel burned at those stages of flight. Bolton said these initiatives could bring significant savings even ahead of longer term projects envisioned by new-generation air traffic management structures being introduced in Europe and the U.S. Combined with factors such as improved weather radars that reduce the distances crews have to fly to avoid storms, he estimated that this could lead to another 5-percent savings in operating costs.

Bolton envisions two possible scenarios for the air transport sector’s short-term prospects. The first would follow historical patterns set in previous downturns when production rates for new-build narrowbody airliners get cut and more existing aircraft are “parked” in order to reduce airline fleet capacity and to protect carriers’ bottom lines. In describing the second scenario, he said, “Four months ago the prevailing opinion was that history would repeat itself, but now the alternative scenario seems to be that there could be a strong upswing [in demand for aircraft] in 2011 and 2012, so operators will have to decide whether they want to get at the back of the line for new aircraft [by deferring or canceling existing orders].” He believes the next 90 to 120 days will be critical in determining which of these scenarios materializes because of the extended lead times needed to produce the aircraft concerned.