The Aviation Sector Is Slammed By Sky-High Rents: CNBC

The Aviation Sector Is Slammed By Sky-High Rents: CNBC

CNBC reported that just when travel demand is rebounding, a lack of available aircraft is pushing up the cost airlines pay to rent planes.

According to aviation advice business IBA Group, the rent on a new Boeing 737 Max increased by more than 20% between April 2020 and this July to reach $316,000 per month.

The price of the rival Airbus A320neo increased to $324,000 a month, a rise of more than 14% from April 2020 and the highest level since before the Covid epidemic. 

In July, the A321neo, a larger version, was rented for $375,000.

The increased costs coincide with airlines already experiencing high inflation, resulting in costs that are typically reflected in fares.

Newer, more fuel-efficient planes are more appealing than older ones due to this year's spike in oil prices, and rising interest rates may further increase leasing fees.

Steven Udvar-Hazy, executive chairman of Los Angeles-based Air Lease Corp AL, stated that the company's lease extension rate is nearing a never-before-seen 90% and that it usually runs about 65% to 75%.

"We're seeing a lot of lease extensions on planes that a year ago we projected that we would have to remarket," said Udvar-Hazy. As a result, the business won't have to worry about transfer expenses, and the lessor will receive a consistent income.

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