As the coronavirus grounds thousands of planes and silences airports around the world, Israel Aerospace Industries and the AirPark unit of holding group IES Holdings are offering airlines a place to park their idle aircraft.
The two companies said Wednesday they were partnering to create a facility for airlines to park airplanes at Ovda Airport, in the desert near the southern resort town of Eilat.
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The 1.1 million square meter IES facility is designed for storage, maintenance and end-of-life aircraft. But today there are more than 12,600 planes in storage as airlines cut back flights, according to date provider Cirium. That compares with 2,485 recorded at the beginning of the year.
The two sides have agreed to set up and operate a facility that can hold up to 500 narrow- and wide-body panes, making it one of the biggest such facilities in the world. Given the cost of flying planes to and from the facility, its airline customers will want to keep their aircraft at the site for at least several months at a time.
“This is a long-term business. It wasn’t started for the coronavirus era, but the crisis has elevated the need for it. The question is whether we can set up the infrastructure before the world returns to normal. I doubt the airline market will return to normal before the end of the year,” said Yossi Melamed, executive vice president of state-owned IAI’s aviation group.
The joint venture comes side by side with a plan by the Israel Airports Authority, which said earlier in the week that it was in touch with several airlines about parking their aircraft in Ramon Airport, also near Eilat. With aviation volume slashed by the coronavirus crisis, there are now just two daily domestic flights in and out of the newly built airport.
“The site offers a good climate for preserving the planes, as well as security,” authority spokesman Ofer Lefler said.
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Melamed said the pandemic’s impact on the airline industry would be long term, creating more demand for parking facilities than there was before the crisis.
“Until they development a proven vaccine or medicine for the epidemic, people won’t be flying as much as before,” he explained. “Before the [coronavirus] , there were both profitable routes and routes that were kept running just to keep the business alive. But the business strategy of the airline industry is going to change. Many planes will be removed from service and airlines will need to decide which routes are economically worthwhile.”
Melamed said the joint venture will offer airlines a wide range of series, ranging from simple parking to basic preservation services to a full maintenance package. The facility will also be used to convert passenger planes for cargo use and to store out-of-service planes slated for cannibalization for their engines and other parts.
“The whole business of aircraft parking, disassembly of planes for the trade in engines and components is very brisk globally,” he said. “The temperature here is right for aircraft and the facility is very close to IAI, which has an existing aircraft maintenance and upgrade business. We could even leverage the joint venture to enter the engines and components trade in a big way.”
Services will initially be provided by IAI’s Bedek civilian aviation unit, but over time the work will be conducted by the joint venture directly.
Yair Bitton, deputy CEO and vice president for investments at IES, called the joint venture a “national and strategic undertaking” and said it would create new jobs in Israel’s southern Arava Desert.
With reporting from Reuters.