MIAMI — Pretend for a moment that you are the CEO of a long haul airline with a fleet already stretched to the limits. One of your mechanics just informed you that your brand new Boeing 787 has an issue that will keep it on the ground for the next three days – a total disaster. If you cancel three days worth of flights, thousands of people will be stranded and your airline will be on the hook for a boat load of money in compensation.
What Do you Do?
In situations just like this, charter airlines like EuroAtlantice and Hi Fly come to the rescue.
Neither is exactly your typical airline – instead of running normal scheduled routes, they specialize in leasing out their aircraft out to other airlines on a case by case basis. Most this comes in the form of something called a “wet lease.” When an airline “wet leases” an aircraft, the airplane comes fully loaded with a crew, maintenance support, and insurance – everything an airline needs to resume operations as soon as possible.
EuroAtlantic operates three passenger Boeing 767s, a single Boeing 777-200ER, as well as a Boeing 737-800. Hi Fly focuses on medium to long term leasing, and currently has a fleet of twelve Airbus wide-body aircraft, ranging from the A310 all the way up to the A340-600. Over the last year, these aircraft have become extensively used by one particular airline in need.
In the summer of 2013, when Norwegian Air Shuttle started its highly anticipated long haul service, they were an airline without a fleet. The airline bet the farm on an all Boeing 787 fleet for long haul operations, but a grounding caused by battery fires delayed deliveries. Once deliveries finally started rolling in, Norwegian experienced problem after problem with its 787s, putting the airline in a tough spot.
Rather than push back the start of service and tarnish the airlines reputation, Norwegian looked to the charter airline Hi Fly for help. The airline initiated long haul services with a wet leased Airbus A340-300, the very aircraft which Norwegian CEO Bjorn Kjos scalded at a press conference in early September of 2013. When prolonged and unpredictable issues with the airline’s 787 fleet struck several months later, Norwegian then turned to EuroAtlantic, operating flights with Boeing 767s and 777s.
Wet-leasing an aircraft can work in a pinch, but the costs add up quickly. As Norwegian continues to endure issues with its 787’s, the bills have been piling up. “[O]ur results this quarter are significantly affected by the additional costs associated with replacement aircraft for the Dreamliner,” said Norwegian CEO Bjørn Kjos in the airlines third quarter 2013 financial report. Although it is likely that Boeing will pick up a substantial part of the costs, it has still eroded Norwegians profit in a significant way.
The process for acquiring an aircraft on short notice is surprisingly simple. “When an airline needs an aircraft, they contact EuroAtlantic´s commercial department,” said Francesca Valle, external relations representative for EuroAtlantic. “If an aircraft is available, it can be dispatched [as soon as possible]. We travel all over the world, so [the aircraft] can come from any place worldwide,” added Valle.
While airlines like Norwegian turn to charter airlines during temporary issues, others rely on them on a full time basis. Nigerian airline Arik Air wet leased two Hi Fly Airbus A340-500s in 2009 to start long haul services and still continues the lease today. The airline has since weened itself off the lease agreement after acquiring two Airbus A330’s for use on the Lagos – London route, but the wet leased aircraft are still an integral part of its fleet.
In the United States, charter airlines have been a dying breed over the last decade. Just last week, charter airline World Airways ceased operations. Of the few American charter airlines remaining, Atlas air stands out as the frontrunner. With a passenger fleet of Boeing 747-400s and 767s, Atlas recently provided assistance to Canadian airline Westjet during post-storm recovery. Tulsa based Omni AIr International also provides quite a bit of military charter flights with its fleet of Boeing 767s and 777s.
In a time of rapid expansion in the airline industry, these charter airlines help to fill the gaps a growing airline might find itself with. While leasing an aircraft for extended periods is a pricey proposition, if the benefits outweigh the burden, charter airlines are just a phone call away.