Owing to benefits such as a reduction in the financial burden that has to be incurred by the purchase of the aircraft, the aircraft leasing market is experiencing rapid adoption as opposed to its traditional alternatives. The need for an aircraft at a low cost due to the increasing amount of traffic by the passengers has accentuated the need for Aircraft Leasings thus, improving the dependence on this market.
Covid-19 Impact and Market Status
During the covid-19 pandemic, some industries like the pharmaceutical industry flourished while many others were negatively impacted. Different nations' economies suffered negative effects. Globally, the pandemic affected the customer. It adversely affected the Aircraft Leasing market too while hitting the refining and petrochemical industries with a significant decline. The global disturbance in the overall supply chains affected these industries which are responsible for a major share of consumption of Aircraft Leasing. Trade restrictions being imposed worldwide and a paucity of resources acted as a hindrance in the path of manufacturing operations and affected the market for nearly two years. Airlines that had invested in leasing a significant portion of their fleet incurred severe losses caused due to the outflow of capital as these aircraft had been grounded. The post-pandemic era witnessed a tremendous rise in the demand for aircraft leasing. Nonetheless, the marketplace is only slowly making a comeback. It won't be back to its regular growth scale for some time.
Narrow Body Aircraft Type to Remain the Most Appealing Segment
By aircraft type, the market is segmented into narrow-body aircraft and wide-body aircraft. Amongst the two, the narrow body segment is expected to hold a higher share in comparison to the wide body type during the study period. This is due to its ability to consume a considerably lower amount of fuel thereby, making it cost-effective. It provides flexibility in the process of management of the fleet while decreasing the costs of operations. All these factors contribute to the enhanced sustainability of the airlines. With the advancement of technologies in contemporary times, narrow-bodied aircraft can cover a larger distance with improved fuel efficiency.
The Wet Lease Form to Remain Atop
Based on the type of lease, the global aircraft leasing market is segmented into dry lease and wet lease. The wet-lease segment is anticipated to hold a larger share of the market during the forecast period. The owner provides the aeroplanes with a minimum of one member of the crew in this type of arrangement. They (the owner) take up the operational tasks that are inclusive of the provision of maintenance services, procuring of insurance, and other such legalities and the obligations involved with them. However, in the arrangement which is that of a dry lease, no crew is provided to the aircraft.
Europe is expected Render Ample Investment Avenues
Europe has been seen to assert its dominance over the aircraft leasing market during the forecast period. This is because of the increase in demand for aeroplanes that are fuel efficient and the growing aerial traffic in this region. To ensure compliance with the European Union’s Emission Trading System, the airlines in this region are driven to opt for the purchase of more aeroplanes that are fuel-efficient and not just cost-saving. The key players that operate in this region are AerCap Holdings N.V., and Nordic Aviation Capital A/S, among others. After Europe, the U.S aviation industry is expected to drive the growth of this market in North America as there is an incidence of a rising focus on regulatory reforms along with the development of the infrastructural facilities of private airports.
Rapid end-use applications across the aviation industry are fostering remarkable progress in the global Aircraft Leasing market. Enhancement of the infrastructure of the airport as well as that of the airlines and the upward thrust in UAM (Urban Air Mobility) solutions has fueled the growth of the global aircraft leasing market.
Aircraft leasing means the involvement of a lease by airlines and other aircraft operators to yield an aircraft from either a leasing company or another airline. Aircraft leasing might also provide a temporary increase in the capacity of an airline company. It allows the entrepreneur to carry forward the operation of their aircraft by eliminating the financial burden of buying a whole new aircraft.
Advantages such as a reduction in the rate at which commercial aircraft are leased and the decreased vulnerability of fuel prices which could hamper the growth of this market if increased, encourage further adoption of Aircraft Leasing.
The global aircraft leasing market is growing at the compound annual growth rate (CAGR) of 8.2% and is expected to take over the market size of 295 billion by the end of the forecast period, that is, 2019-29.
A significant rise in the demand for the global aircraft leasing market is because of the considerable growth in the global passenger traffic that has taken place recently due to the growing desire to travel via air. It helps them reduce travel time while adding to their comfort. Aircraft leasing can be used by airlines to mobilize their financial agility.
However, certain disadvantages are associated with aircraft leasing. It leads to loss of ownership of the aircraft and one might have to bear the costs at the end of the lease which includes the wear and tear of the vehicle in addition to the mileage charge. There is also a potential risk of early termination of the liability. The owner, that is, the lesser keeps a watchful eye on the activities of the lessee to make sure that the aircraft is being operated as per the terms and conditions made in the contract thus, restricting the freedom of the user. Despite these limitations, the aircraft leasing market is expected to grow steadily due to the surge in freight traffic, the cost-effectiveness, and the longing of people to travel via airlines to conform to their solace.
The key players in the border security market are AerCap, CIT Commercial Air, ALAFCO Aviation Lease and Finance Company, Aviation Capital Group, BBAM, GE Capital Aviation Service, Ansett Worldwide Aviation Services, SAAB Aircraft Leasing, and Boeing Capital Corporation among others. These players operate in the Aircraft Leasing market and adopt various strategies including mergers and acquisitions to maintain their positions in the market.
Latest Innovations in the Aircraft Leasing Market: a Snapshot
•In November 2022, AerCap announced the raise of its earnings outlook for the year by mentioning the spike in air traffic and the increasing demand for aircraft that hold the capacity to travel for long distances.
•The Gujarat government and the Government of India provided various incentives that included interest payments, no withholding of tax on lease payments, and provision of tax holidays, for the aircraft leasing companies to set up shop in GIFT City.
Aircraft Leasing Market Scope
|Forecast Unit||Value (USD)|
|Revenue forecast in 2029||USD 295 billion|
|Growth Rate||CAGR of 8.2 % during 2019-2029|
|Segment Covered||Aircraft Type, Leasing Type, Regions|
|Regions Covered||North America, Europe, Asia Pacific, Middle East and Africa, South America|
|Key Players Profiled||AerCap, CIT Commercial Air, ALAFCO Aviation Lease and Finance Company, Aviation Capital Group, BBAM, GE Capital Aviation Service, Ansett Worldwide Aviation Services, SAAB Aircraft Leasing|
Key Segments of the Aircraft Leasing Market
Aircraft Type Overview (USD Billion)
- Narrow Body
- Wide Body
Leasing Type Overview (USD Billion)
- Dry Leasing
- Wet Leasing
Regional Overview (USD Billion)
- Rest of Europe
- Rest of Asia Pacific
- Rest of South America
Middle East and South Africa