The Airbus A330 has seen its share of ups and downs since its launch in the early 1990s. With the market shifting once again, this is where the aircraft—and its siblings—stand.
Figure 1: Deliveries and in-service or stored fleet for A330-200 and A330-300
Source: CAPA Fleets database, August 2019
Airbus has improved the aircraft with a relatively modest investment, and these increases in capability have led to increased demand for the aircraft.
Through the latter part of the 2000s and early 2010s, the aircraft experienced a rise in sales as customers sought interim lift while 787 program delays increased. The A330-300 eclipsed its natural competitor, the Boeing 777-200, and meets most mission profiles of the longer-range 777-200ER.
Current generation competition comes from the 300-seat 787-10 and from fraternal competition by the Airbus A350-900, which entered service in 2015. The most direct competitor to the A330-200 and 300 is the A330-900, which began service in 2018. The current in-service fleet comprises 23 aircraft with an additional 221 on firm order backlog.
The A330ceo fleet is reasonably well-dispersed geographically but dominated by operators in the Asia Pacific (APAC) region, where 47% of the aircraft operate. Nearly 30% of the fleet is in service in Europe, making it the second-highest geographic regional concentration, while 12% of the fleet resides in the Africa and Middle East regions.
Within the family variants, the A330-300 is concentrated in the APAC region, where nearly 60% of the fleet is in service. Of the 15 largest operators of the A330-300, ten are in APAC, compared to only three in Europe and one in North America.
Figure 2: Geographic dispersion of the A330-300 Fleet
Source: CAPA Fleets database, August 2019
Given the long sector lengths and the large passenger volumes in the APAC region, these statistics are not surprising. However, this concentration does expose the A330-300 to potential challenges should the region suffer an economic downturn similar to the 1998 Asian Flu crisis.
The A330-200 is not as concentrated in the APAC region as the -300 variant, though two-thirds of the fleet operates in APAC and Europe, with each region flying 33% of the in-service fleet.
Overall, the A330ceo market mass—the ratio of aircraft in service and on order to the number of operators and customers—is very good. It includes over 120 operators and customers and nearly 1,340 aircraft in-service or on order.
Aircraft with substantial market mass tend to be very liquid, as the opportunities to transition aircraft from one operator to another are numerous. For the A330-300, the operator base is fairly broad, with 68 airlines as of August 2019. It has become a workhorse for major airlines and low-cost carriers alike, such as AirAsiaX, Cebu Pacific, and Lion Air.
Figure 3: Top 20 carriers of combined A330 fleet (active and orders only)
|AirAsia X (inclu. Thai and Indonesia)||36||36||72|
|Cathay Pacific (incl. Cathay Dragon)||57||57|
|China Eastern Airlines||30||24||54|
|China Southern Airlines||14||34||48|
|Delta Air Lines||11||31||42|
|Hong Kong Airlines||9||19||28|
|All Other Operators||338||282||620|
Note: Grey shaded airlines are based in the APAC region
The number of A330ceo series aircraft in storage—a proxy for asset demand—stands at about 5.9% of the current fleet (in-service and stored combined) but includes aircraft that may be transitioning to new operators. At a variant level, the A330-200 has a significant number of aircraft in storage, over 9%, while the share of A330-300s in storage was just over 3%—indicative of relatively stronger demand for the latter type.
The average age of those A330-300s in storage is 12 years. Four of the 23 stored A330-300 aircraft are earlier-vintage variants (pre-2000), likely with lower MTOWs that are operationally less-flexible and thus less-attractive to new passenger operators. But, they may represent an opportunity for the freighter program.
With respect to engines, there are some market liquidity issues, given that the A330-300 is available with three engine options from Rolls-Royce (Trent 700), General Electric (CF6-80E1), and Pratt & Whitney (PW4000-100).
The Trent 700 is the market leader with about 68% market share, and A330-300s with Trent engines should afford the owners increased remarketing opportunities. Investors are concerned, however, about the residual values associated with Trent 700 engines at the end of their useful lives. The issue stems from the OEM’s considerable control over the aftermarket, though they have tried to alleviate these concerns with an array of aftermarket and support service offerings.
Figure 4: Engine manufacturer share of A330-200 and A330-300
For some time, the secondary widebody aircraft market (e.g., the A330 and 777 market) has faced high reconfiguration costs and decreasing demand, causing significantly reduced values and lease rates on redelivery. The following chart displays the trend in availability monthly since the beginning of 2018.
Figure 5: Available A330 series aircraft by month
While the number of aircraft listed on Airfax has declined recently for both the A330-200 and A330-300, actual availability is a bit higher—with several of both types offered through brokers' websites. However, among current-generation twin-engined widebodies, the A330 family—and in particular the A330-300—appears to have greater market liquidity than the Boeing 777 family. It enjoys a broader operator base and saw relatively more aircraft returning to service over the past year.
Passenger to freighter conversion market analysis
The Airbus A330-200 and -300 variant, and the Boeing 767-300ER passenger aircraft are expected to dominate in the passenger-to-freighter (PTF) 30—80-tonne medium widebody markets in general, express, and e-commerce air freight markets in the coming years.
In its Current Market Outlook 2018-2038, Boeing sees a medium widebody fleet increase from 640 aircraft in 2018 to 1,200 aircraft in 2038, with share growing from 32% to 35%. According to the Centre for Aviation (CAPA), A330ceos and 767s account for about 300 of these units in service with another 72 units on firm order backlog.
Much of the current medium widebody demand centers on the Boeing 767-300ER, with both ATSG and Atlas—in concert with Amazon—actively acquiring passenger aircraft for PTF conversion. This places significant pressure on conversion slot availability. The need for the A330 PTF program is expected to grow when suitable aircraft become available at economically-feasible levels for acquisition and conversion, allowing appropriate redelivery market prices.
ICF research suggests current Airbus A330 PTF conversion costs at around $17 million excluding engine and airframe maintenance costs. For an aircraft to be suitable for conversion, its age, maintenance condition, and accumulated flight hours and cycles must allow for an acceptably low price yet enough useful life left to justify the effort. Given the growth of express freight and e-commerce—and relatively light, high volumetric payloads—buyers favor A330-300 aircraft with higher volumetric capacity. But, they still require higher MTOWs than the older base MTOW aircraft for operating flexibility.
Suitable post-1998 feedstock aircraft still maintain values well over $20 million, which ICF forecasts will preclude their acquisition for another three years. We do not believe significant conversion activity will occur until on-ramp redelivery costs near $30-32 million.
A330 family leased aircraft analysis
Based on CAPA data, nearly 55% of the total A330 fleet is either on operating or financial leases. The combined A330 active fleet skews on the younger side, with an average of under 10 years—despite its 25-year production run. As a result, much of the fleet is approaching the end of its first lease, which, for this size aircraft, typically occurs in the 10-12 year time frame.
Lease return information is often highly proprietary, so ICF has based its lease expiry estimates on information found in CAPA, public news sources, and generalized estimates.
Figure 6: Estimated lease termination dates of A330 series aircraft
Source: CAPA Fleets database, ICF analysis
The A330 aircraft family retains a relatively healthy position in the overall aircraft market. Though much of its activity is concentrated in specific markets, like Asia, its efficiency and flexibility in both passenger and freight services continue to support in-service fleet retention.
At a variant level, the Airbus A330-300 has become the preferred model for many airlines thanks to gradual improvements over the product life cycle. As the family of aircraft continues to evolve, the A330 remains popular with first and second-tier operators globally. It should keep serving as a medium widebody workhorse for many years, albeit at lower values and lease rates compared to new-technology replacement aircraft.