Aircraft Leasing Market Synopsis

Aircraft Leasing Market Size Was Valued at USD 51.262 Billion in 2023, and is Projected to Reach USD 77.303 Billion by 2032, Growing at a CAGR of 4.67% From 2024-2032.

The aircraft leasing market involves the rental of aircraft from leasing companies to airlines and other operators. This arrangement allows airlines to utilize aircraft without the significant capital expenditure required to purchase them outright. Leasing can be either dry (without crew, maintenance, or insurance) or wet (including crew, maintenance, and insurance). This market plays a crucial role in the aviation industry, providing flexibility in fleet management, aiding in capacity adjustment, and facilitating access to modern aircraft, which can enhance operational efficiency and competitiveness. The market is influenced by factors such as global air travel demand, interest rates, fuel prices, and technological advancements in aircraft design.

• With time, aircraft leasing business has expanded due to the growing need for aviation services and realization of the benefits of leasing business compared to owning of aircrafts by airlines. Leasing allows for carriers to diversify and upgrade the existing fleet, at the same time avoiding significant investments on new planes’ acquisition. This financial strategy is quite effective in conditions of changing passengers’ demand and economic risks, where the airlines can manage the capacity with more flexibility and take actions quickly.
• The display below outlines some of the major trends that characterise the aircraft leasing industry. It has also been observed that there is a shift towards acquiring more efficient aircraft to save on fuel, time and costs that are associated with pollution control. Hence, lessors are shifting their attention toward obtaining and providing the updated model aircraft, which are regarded to have better expense-efficiency and environmental performance. And there is also an observed trend for consolidation; major leasing companies are actively seeking to increase their leasing portfolios through mergers and acquisitions for the sake of improving their competitive advantage and gain greater economic efficiencies.
• Lack of capital strains, the absence of an efficient secondary market coupled with regional dynamics bear influence on the aircraft leasing market. Out of all regions in the world, Asia-Pacific has turned into a highly promising one, which stems from the constantly growing middle class and, as a result, people’s desire to travel by air. Similarly, deep reaches low-cost carriers LCCs are considered one of the most crucial drivers of the market since they constantly lease new equipment to ensure flexibility and reduce costs. However, the market is not without risks and troubles such as geopolitical risks, alteration in the interest rate, and residual value risk connected to the leased airplanes.
• The following factors are also influencing the growth of this sector: There is also advancement in technological infrastructure such as digitalization and data analytics that enhance asset management and maintenance. Lessor are also using PdM and condition-based monitoring to improve reliability of the aircraft, and to meet lease requirements. Also, sustainability is emerging as a critical concern among lessor and airline organisations that are continually seeking ways of adopting environmentally responsible policies in addition to funding sustainable innovations in the aviation industry.

Aircraft Leasing Market Trend Analysis

Increasing Preference for Aircraft Leasing over Purchasing

• There are various factors that which are notable trends in aircraft leasing market, but one most important among them is that airlines are preferring more leasing aircraft rather than buying them. This is mainly due to the economic advantage that comes with leasing than owning an asset. Leasing enables the airlines to benefit through the management of its fleet without having to correspond the vast expenses that come with direct purchase of new planes. Instead of investing significantly into proprietary stakes, the airlines can invest their capital back into functional or Other requirements, or growth strategies. This feature can be very helpful in an industry where demands are very much vulnerable to economical shifts, the effects of which can be seen in reductions or sudden increases in demand due to one reason or another such as recession, geopolitics, or pandemics. Here, leasing offers the advantage of flexibility in the number of aircrafts that the airlines use, depending on the prevailing market circumstance hence providing a flexible operation while at the same time enabling the firms to be financially sustainable.
• Leasing also means that an airlines’ fleets are current with all the latest updates, and the newest models of airplanes. The current models are more efficient and eco-friendly than the older models, and this is why most of the airports and airline companies strive to buy the newer models because, in the long run, they will save a lot of money that they could have used to fuel older models. They are becoming more significant as the internals of business and industry continue to be squeezed by the demands of regulatory authorities and a growing population awash with information about the effects of environmental degradation. Not only does the new generation of emission-friendly vehicles outperform their predecessors in terms of fuel efficiency and pollution reduction but also contribute to improved passenger comfort and service quality in addition to providing increased dependability in operations. As a result, desirably of leasing the latest models being availed to airlines with no immediate ownership responsibilities is seen as a plus. Hiring of these newer and efficient planes adequately aligns with economic and environmental mileage; this is a characteristic feature of the progression of the aircraft leasing market.

Technological Advancements Transforming Aircraft Leasing Management

• Technological advancements are playing a pivotal role in transforming the aircraft leasing market, introducing a suite of digital tools and analytics that significantly enhance the management of leased aircraft. These technologies are revolutionizing maintenance scheduling by using predictive analytics to forecast and preemptively address potential mechanical issues before they lead to costly downtime. Through sophisticated software, lessors and lessees can now track real-time performance data, streamline maintenance operations, and ensure that aircraft remain in optimal condition. This proactive approach not only improves operational efficiency but also extends the lifespan of aircraft, allowing lessors to maximize the return on their investments. Additionally, digital platforms enable seamless communication and coordination between airlines and maintenance crews, ensuring that compliance with stringent regulatory standards is consistently met.
• The integration of advanced data analytics into the aircraft leasing sector is further enhancing its attractiveness as a business model. These analytics provide a more accurate valuation of aircraft assets by considering a wide array of factors, including market trends, aircraft usage patterns, and historical performance data. This precision in asset valuation allows lessors to set competitive leasing rates and make informed decisions about fleet composition and renewal strategies. Furthermore, risk management is significantly improved through the use of predictive models that can anticipate market shifts and operational risks. By leveraging these technologies, both lessors and lessees can achieve better financial planning and risk mitigation, making the leasing process more efficient and economically viable. This technological evolution is thus driving the growth and sophistication of the aircraft leasing market, offering enhanced value to all stakeholders involved.

Aircraft Leasing Market Segment Analysis:

Aircraft Leasing Market is Segmented based on Aircraft Type and Lease Type.

By Aircraft Type, Narrow body segment is expected to dominate the market during the forecast period

• Currently, the options for aircraft leasing and financing remain overwhelmingly dominated by narrow body aircrafts, which act as the backbone of many airline companies, due to factors such as flexibility and cost. These single-aisle aircrafts are greatly preferred by airlines across the globe and are utilized to their maximum potential on short to medium-length flights, which is vital to sustain the growing traffic on existing routes. It is worth pointing out that the Airbus twenty family and their closest Boeing seven thirty-seven counterparts are the cornerstone aircraft of the narrow body segment, continuing to offer exceptional reliability alongside impressive performance, particularly in the context of the leasing market. In addition, lower operating costs due to acquisition, maintenance and engine costs are another area in which the narrow body planes benefit the airline which are cost effective in comparison to wide body aircraft yet able to deliver quality services. This alone explains why narrow body aircraft offer an economic advantage over wide body ones and can suggest versatility to accommodate different route networks making it ideal for various airlines in the various market segments.
• The trend of increased use of LCCs especially in the expanding regions such as the Asia-Pacific and the Latin America Region has significantly increased the market for narrow body aircrafts thereby increasing demand for the leasing of these aircrafts. These dynamic regions experience higher growth in terms of consumption and usage being underpinned by increased disposable incomes and the growing middle income earners. Consequently, LCCs leverage on the operational advantages of the BNM aircrafts to establish extensive route networks, and therefore encroach into the market share of FSCs. Thereby, the leasing market observes a marked increase in the activity level and specific focus on single aisle aircraft, with the narrow body models. It further cements the continued dominance of the narrow-body aircraft sector while underlining the sect0ors central role in defining the growth path of the aviation industry on the global level.

By Lease Type, Wet Lease segment held the largest share in 2023

• The wet leasing takes the largest market share of the aircraft leasing market because of its all-inclusive and more or less ‘Plug and play’ in their functional approaches as they give airlines an effective solution to handle short-term capacity requirements more efficiently. It is common to have an increase in passenger traffic, or a sudden surge in passenger numbers, seasonal factors and could be by having faults with and or grounding of airplanes. In such circumstances, wet leasing acts as a savior since it offers aircraftcharter services that can immediately expand the fleet without involving various time-consuming formalities such as the recruitment of new employees, staggering working hours, or renewing insurance policies. This advantageous factor makes wet leasing appealing to any airline organization that needs immediate operational support, and thus, wet leasing has the largest market size for leasing.
• Furthermore, integration of wet leasing goes beyond regular aircraft operators in that new operators and/or small operators who seek to enter the market quickly can easily do so through wet leasing. Thus, some of the players investing in the dedicated fleet or setting up an internal operant system, may face operational and financial difficulties. Wet leasing presents a more economic solution to achieving this objective as it allows for the acquisition of aircraft, crews, maintenance and insurance needed in the short-run thus incurring less capital outlay and operational costs. This accessibility and flexibility make wet leasing as an excellent opportunity suitable for the majority of operators, which makes it the largest share of the leasing market. The future outlook for wet leasing is therefore promising, with many experts suggesting that it will remain relevant and will be used by airlines to adapt to various changes in the industry, and guarantee that operations will continue uninterrupted.

Aircraft Leasing Market Regional Insights:

North America is Expected to Dominate the Market Over the Forecast period

• Currently North America has a strategic position in aircraft leasing market mostly due to the activity of the key leasing companies having their offices in the United States. This has been due, primarily to the maturity of the aviation industry in these planes, moderate complemented by a strong regulatory structure and backed up by large numbers of experienced mainstream carriers. I once again define leasing environment peculiarities in North America and note that a broad range of aircraft types which are effectively meet the demands of various and versatile carriers – from legacy carriers to the LCCs and FSCs. Furthermore, there is a significant increase in the need for leasing schemes in the region due to continuous fleet renewal programs organize by the airline companies intending to enhance operating productivity and minimize their adverse effects on the environment. In the same respect, the market in North America has boosted its trend in liberalization of more unique business models including aircraft trading and sale-and-leaseback activities thereby expanding its dominance in aircraft leasing globally.
• Even as North America’s aircraft leasing market is widely esteemed, it is noteworthy that the market remains varied and is continually changing and growing hand in hand with variations in the market’s environment. Far from the fundamentals of a mature and well-established leasing infrastructure that relies heavily on a regional regulatory environment, the region is also characterized by its energetic and active approach to technological developments and leasing market innovations. This environment assists to develop a suitable fleet composition for meeting the specific requirement of various categories of airlines across the globe: the full service networks, the low-cost point-to-point long haulers, and the express freight operators. In addition, the market for aircraft leasing in North America remains buoyant following the sustained efforts of the airlines to replace antiquated fleets with modern technology, new generation of aircrafts, fuel efficiency, passengers comfort and compliance to new standards. As such, a new opportunities for growth appear, which can be illustrated by the development of such previously less significant, but now increasingly important practices as aircraft trading and sale and lease back; all these complement the former specified already in the text significant focus on Aircraft Leasing which dominates in the region globally.

Active Key Players in the Aircraft Leasing Market

• AerCap (GECAS) (Ireland)
• Avolon (Ireland)
• BBAM (U.S.)
• Nordic Aviation Capital (Ireland)
• SMBC Aviation Capital (Ireland)
• ICBC Leasing (China)
• BOC Aviation (Singapore)
• Air Lease Corporation (U.S.)
• DAE Capital (UAE)
• Boeing Capital Corporation (U.S.)
• Other Key Players

Key Industry Developments in the Aircraft Leasing Market:

• In April 2022, Air Lease Corp. (ALC) announced that it is expanding its airplane portfolio with a confirmed order for 32 additional 737-8 and 737-9 jets. As the travel market recovers after the pandemic, ALC is increasing its 737 MAX family in order to meet airline demand for modern, fuel-efficient and sustainable operations.
• In July 2022, AerCap Holdings announced that it placed an order for five additional Boeing 787-9 Dreamliners, bringing AerCap’s orders for the 787 aircraft to 125, owned and on order. The 787 Dreamliner family is playing a major role in sustaining and reopening new long haul routes with high fuel efficiency in the airline and aircraft leasing industry.