Yes, More Than 14,000 Aircraft Over The Next 20 Years
Retirements: To put things in context, only about 7,000 aircraft have been retired since the dawn of the jet age. More than twice that amount or about 14,000 commercial aircraft will be retired over the next 20 years. This is why this cycle has been referred to as “The Retirement Tsunami.” The chart to the right shows some of the most impacted aircraft over the next eight years or by 2022. Aircraft retirement data were provided by Ascend and we correlated these data to depict the number of engines coming out of service for the same period. This is indeed an unprecedented cycle in aviation history, both for new aircraft deliveries but also retirements.
Market Implications: Residual values will continue to decline on these products as buyers calibrate to higher levels of availability. Used material prices and lease rates will also decline as competition increases. Based on historical patterns, there will often be periods during this cycle where availability will tighten, values may stabilize and even increase temporarily. Risk levels for buyers are higher on these products as price point becomes more critical. Channels and access to the market are key factors. Those material providers with captured customers and likely locked in pricing will experience more stability during this period while those having a pure transactional business model will be impacted more unfavorably. As is always the case in the surplus business (regardless of market conditions), the overall outcome is largely dependent on the purchase price.