Last updated: 03:51 PM ET, Fri May 13 2016

Why Are US Airlines Buying So Many Second-Hand Planes?

Airlines & Airports | Josh Lew | May 13, 2016

Why Are US Airlines Buying So Many Second-Hand Planes?

Photo illustration by Barry Kaufman

Some of the world’s biggest airlines have made news in recent months with their large airplane orders. Dreamliners, A350s and state-of-the-art versions of the A320 and 737 are grabbing the headlines in the commercial air travel industry. 

But there is a less glamorous side to airplane acquisitions. U.S.-based airlines are also opting to buy or lease used planes from foreign carriers to fill out their fleets. 

Why used planes? 

Just like used cars have lower price tags than newer vehicles, second-hand planes cost less to acquire than newer models. These already-flown jets are still in working order, though their life spans won’t be as long as brand-new planes. Their biggest disadvantage, however, is not their age, but their lack of fuel efficiency compared to more-modern gas sippers. 

Because fuel prices are currently so low and most major carriers have been able to hedge so that their costs will remain relatively low for the next couple of years, this disadvantage is not a deal-breaker. In fact, the money saved by buying or leasing used craft instead of new ones more than offsets the higher fuel costs.  

Southwest's shopping spree

Southwest has been the biggest proponent of this strategy. The Dallas-based airline is acquiring 83 used 737-700s from other airlines around the world. Though these aircraft are not new, they are much newer than some of the older planes that they will be replacing. Improvements in maintenance practices will make it possible for Southwest, which works exclusively with 737s, to keep these planes in the air for a longer than was previously possible.  

The used planes, which can be delivered right away, will make it possible to accelerate the retirement of older aircraft and, by doing so, keep costs down. Southwest, for example, is using its newly acquired 700s to replace older 737 Classics, which have started to have problems with metal fatigue.  

Delta, which is buying 737s from Brazilian alliance partner Gol, and United, which is purchasing A319s from Chinese carriers, are following Southwest’s lead and opting for used jets. 

Opposite of past trends

The current buying-used trend is the polar opposite of what has happened in the past. U.S. carriers have traditionally sold their older planes to airlines in overseas markets and replaced them with brand new models. Now, airlines in Brazil, Russia and China are sending their older planes to U.S. carriers. 

Some carriers in these countries are downsizing because of economic problems or competition. Thus they are looking to unload part of their fleet and, ideally, make a profit in the process. 

Keeping costs down

This second-hand trend is, perhaps, a side effect of past struggles in the U.S. airline industry. Even though things have gone very well for most major airlines recently, bankruptcies and debt are still fresh in everyone’s memory. Airlines want to stretch their newfound profits as far as they can. 

Buying and leasing used aircraft show that U.S. carriers are willing to go against tradition as long as it helps them improve their bottom line. 


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