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Airbus A330neo best fit for Asian travel demand, Avolon says

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Avolon, the aircraft-leasing company acquired by the parent of China's Hainan Airlines Co, is in talks with carriers keen to add Airbus Group SE'sA330neo to their fleets and may increase orders for the new wide-body jet as Asian travel demand spikes.

[HONG KONG] Avolon, the aircraft-leasing company acquired by the parent of China's Hainan Airlines Co, is in talks with carriers keen to add Airbus Group SE'sA330neo to their fleets and may increase orders for the new wide-body jet as Asian travel demand spikes.

"We've been in discussions with Airbus, as we place more, we may order more," chief executive officer Domhnal Slattery said in an interview in Hong Kong last week, without identifying the carriers he's engaging with.

China will become the "single-most important market" for plane-leasing companies over the next five years, with the A330neo suited for Asia as intra-continental and longer haul flights proliferate, Mr Slattery said. Avolon, bought by China's Bohai Financial Investment Holding Co for US$7.6 billion in January, has 15 of the new Airbus wide-body planes on order.

Bohai Financial, Hainan Airlines and Avolon are all part of Haikou, Hainan-based HNA Group, with businesses including hotels, logistics and financial services.

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A330 Transition Avolon has also purchased 45 of the 75 current-model A330 that China ordered last year, a deal that helped Airbus bridge the gap as it moves from the existing model to a variant with more fuel-efficient engines that will enter service in 2017. 

As part of that deal, the Toulouse-based aircraft manufacturer last month broke ground on a plant in Tianjin, southeast of Beijing, that will put the finishing touches on wide-bodies flown in from Europe starting with the A330. Airbus has been assembling narrow-body jets at the same site since 2008.

"The A330 market is going through, not unlike the Chinese economy, a transition phase," said Mr Slattery.

"I suspect this year and going into early next year, we're going to see Airbus convert a number of the airlines to the A330neo."

China Market

China has always been the biggest market for Airbus's popular twin-aisle jet. The A330 family seats between 250 and 440 passengers and is Airbus's most successful twin-aisle plane, with more than 1,000 units delivered so far.

"We see demand for at least 1,000 A330neo aircraft over the next 15 years globally," Mr Slattery said on March 30. "It will be a very successful aircraft globally, but here in Asia, it's going to be particularly the case."

Chinese airlines and leasing firms have announced orders for some 780 planes valued at about US$102 billion, according to data compiled from company statements. Over the next two decades, Chinese carriers will require about 6,330 new planes worth US$950 billion, about 17 per cent of the global total, according to Boeing Co.

"China will be the single-most important market for lessors for the next five years," Mr Slattery said. "From 2020 on, we will be moving into the golden age of aviation in China."

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