Younger Fleets Boost Non-U.S. Airlines

The aging planes of Northwest, American, United, and Delta guzzle more gas, making the U.S. carriers more vulnerable to soaring oil prices—and to global competitors

by Carol Matlack

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For a look at one of the biggest headaches facing U.S. airlines, head out to Paris' Charles de Gaulle airport any day and watch the big jets taking off for the U.S. There goes United Airlines to Chicago, American Airlines to Boston, Delta Air Lines to Atlanta, and Air France to New York's John F. Kennedy airport.

What's the big deal? Many of the U.S. carriers' planes are Boeing 767s, a model that dates from the mid-1980s. Most Air France-KLM (AIRF.PA) planes are at least a decade younger—and a lot more fuel-efficient. According to U.S. Transportation Dept. data, the Airbus A330 model that Air France flies between Paris and JFK burns an average 12% less fuel per passenger than the 767 does on a similar flight.

With oil prices above $130 a barrel, that adds up fast. Indeed, if prices remain at current levels, U.S. airlines are forecast to lose a record $7.2 billion this year, triggering what could be a brutal industry shakeout (BusinessWeek.com, 5/28/08). "We're at the precipice of a disaster," says Scott Hamilton, an aviation consultant with Leeham in Issaquah, Wash.

Older Planes, Higher Costs

While the oil spike is clobbering airlines worldwide, the U.S. carriers' aging fleets make them more vulnerable than most. American Airlines (AMR) underscored that fact last month when it announced plans to retire as many as 50 planes, mainly gas-guzzling MD-80s dating from the early 1980s.

In fact, U.S. airlines' fleets are some of the oldest in the world—an average of 18.5 years old at Northwest Airlines (NWA), about 15 years at American, almost 14 years at United (UAUA) and Delta (DAL), and about 10 at Continental (CAL). By contrast, Air France's planes are only 8.8 years old on average—and some others, such as Singapore Airlines (SIAL.SI), whose fleet averages 7 years, and Emirates, whose fleet averages 6.2 years, are younger still. Even carriers such as Russia's Aeroflot (AFLT.RTS) and THY Turkish Airlines (THYAO.IS) have fleets that are about half the average age of U.S. carriers'.

And the gap is only going to get worse. Financially strapped U.S. carriers have curtailed their orders for new planes in recent years, even as foreign carriers have placed hundreds of orders for new, more fuel-efficient models. Out of 840 orders for the new fuel-sipping Boeing (BA) 787 Dreamliner, only 43 are from U.S. carriers: Northwest and Continental.

Manufacturers Wary of Financing U.S. Carriers

Of the 386 booked orders for Airbus' new A350, which like the 787 promises to be more fuel-efficient thanks to use of lightweight composites and other innovations, only 18 are from the U.S. And not a single U.S. carrier has ordered the Airbus A380 double-decker jumbo, which the European maker says is more efficient per passenger mile than its closest rivals, the Boeing 747 and 777.