The value of new-technology aircraft has been questioned given the recent decline in oil prices, but according to The Value of New-Technology Single-Aisles, a report from CIT Group, this is not warranted. New technology aircraft create revenue opportunities and reduce operating costs, enabling airlines to build competitive moats that support sustainable business models.

“The advantages of adopting new-technology aircraft early will dissipate as the world’s fleet shifts to the new types,” said Steve Mason, director and head of Aircraft Evaluation and Asset Strategy, CIT Aerospace. “It will be the early-adopters who fully utilize the benefits of new-technology aircraft that build a lasting competitive advantage. While the price paid for the new-technology aircraft will be crucial to continued competitiveness, the timing of the adoption may be more so.”

Some of the other topics discussed in the report include:

Fuel Costs Management: Pricing is an airline’s strongest tool. By dynamically pricing seat inventory to reflect changes in costs, airlines mitigate their exposure to fuel price volatility.

Building Competitive Advantage: Long delivery lead-times will create technology advantages for early adopters to exploit.

High-Utilization Airlines Favor New Technology: Not all airlines are positioned to take advantage of the benefits new-technology aircraft deliver. Airlines that operate from airports without noise restrictions will not assign an economic value to smaller noise footprints. Low utilization airlines may not save enough fuel to pay for increased ownership costs.

New-Technology Aircraft Value Differs by Airline: Manufacturers desire payback after their costly period of product development, but new-technology aircraft bring a different value proposition to each airline. During this decade’s technology transition, a variety of options will permit airlines to acquire the right tool to meet their needs.