From misery to luxury? Why flying may actually get better

Yahoo Finance

With the cheapest Boeing (BA) 737 listed at nearly $80 million, it’s no surprise that a growing number of airlines are leasing their planes instead of buying them.

Enter AWAS – the world’s largest airline rental company. CEO Ray Sisson says between 40 and 45 percent of the commercial jets in the sky are being leased by airlines.

“We have a 25 year useful life cycle for an aircraft,” Sisson said. “We simply move the aircraft around the world over the course of 25 years. Reconfigure the aircraft. Repaint the outside. Today it’s United Airlines. Five years from now it will be a Singapore Airlines Aircraft."

Because AWAS manages the overhaul and retrofitting of jets, Sisson is in a unique position to track trends in air travel.

With a handful of blockbuster mergers in the rearview mirror, airlines are looking to definite themselves going forward, and many are doing that by targeting opposite ends of the market: low-cost and luxury.

“What you’re seeing actually is airlines iterating to different price points and different strategies,” Sisson said.

On one end, carriers like Spirit (SAVE), are packing seats onto planes and charging a la cart for nearly every service in order to secure a low base far. On the other, airlines like Etihad are building three-room suits on their A380s. (American luxury lovers, take comfort. Sisson notes that the opulent air travel popular in the Middle East is slowly making it’s way to the U.S. in the form of fully-reclining seats and 500 channel in-flight entertainment)

“You’ll have in effect the best of all worlds dedicated to your price point,” Sisson said.

It may be easy for airlines to create that variety, thanks to a huge number of orders outstanding.

According to Sisson, the major aircraft manufacturers – Boeing, Airbus, Bombardier, Embrear (ERJ) – currently have 12,000 orders outstanding. To put it in perspective, that’s equal to the entire world’s operating fleet in 1994, he said.

And this growth could mean good news for customers.

Sisson says improving technology means planes are getting more fuel-efficient, which will lead to cheaper tickets. More nimble planes also mean more convenient routes – think New York to Manchester direct, without a stopover in London.

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