BAe146/Avro RJ Values Remain on Even Keel as Demand Shifts East

Values of the BAe146/Avro RJ, seemingly under pressure from the expansion of the new generation of regional jets, continue to find favor in new markets. The high price fuel should be a major negative for the four-engined configuration but fuel represents a relatively small part of direct operating costs when...

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Values of the BAe146/Avro RJ, seemingly under pressure from the expansion of the new generation of regional jets, continue to find favor in new markets.

The high price fuel should be a major negative for the four-engined configuration but fuel represents a relatively small part of direct operating costs when flying shorter sector lengths. The lower capital and leasing cost of the BAe146/Avro RJ compared to new generation regional jets also helps to outweigh higher fuel costs. The U.S. used to represent an important market for the BAe146/Avro RJ but the withdrawal of the Mesaba fleet by Northwest has been indicative of a shift away from the region. In Europe, the type remains a key part of carriers fleets but BAE Asset Management has to work hard to find new markets, as existing customers move to alternative types.

Within 12 months a total of 15 BAe146/RJs are expected to move to the Middle East adding to the four currently operated. Seven BAe146-300s previously operated by China Northwest are due to be operated by Palm Aviation while Dubai Air Wing has acquired three Mesaba RJ85s. Other units will be operated in the VVIP role.

The pricing of the BAe146/Avro RJ fell during the period 2002-2005 mostly because of the decline in lease rentals. However, in the last two years the market for the type has recovered and lease rentals have significantly improved allowing values to also rise. The BAe146 is now approaching 25 years of age, a point at which most types are being withdrawn from service. While the involvement of BAE has been pivotal in ensuring the continued employment of the type by offering manufacturers support, so, too, has been the ability to seek new roles and markets. The re-introduction of the freighter conversion modification as well as sustained move towards the VIP role have helped to keep availability down to manageable levels though there continue to be problems for certain variants.