Market Overview

The Global Aircraft Leasing market is projected to reach the valuation of USD 473.6 million by the year 2026 with a CAGR of 7.5 %

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An aircraft lease is a contract between three parties: A lender (providing funds to the leasing company), the leasing company (owner of the aircraft) and the lessor (the operator). For the leasing company, its cost of capital must at least be covered by the rent it receives from the lessor.

Global Aircraft Leasing market is projected to reach the valuation of USD 473.6 million by the year 2026 by growing at a CAGR of 7.5% during the forecast period 2020-2026. The simplest way is to lease an aircraft from a leasing company. A contract is established between the lessee and the lessor over a tenor and at an agreed monthly rental fee. The aircraft remains on the lessor’s balance sheet, can be depreciated, and is generally paid by debt. The asset does not appear on the airline’s balance sheet. Lessors typically make monthly or quarterly lease payments. At the end of the contract – which is typically four to eight years – the airline returns the aircraft to the leasing company. This method offers the most flexibility to fleet adjustment for the airline.

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The possibility of adding a call option exists. Increased airline revenues, liquidity flexibility in global capital markets and relatively low oil prices help create a favorable climate for the aviation leasing industry. The fact that recent bankruptcies by airlines have not had a significant detrimental impact on the sector further indicates resiliency. Some of the aircraft impacted is noticed instantly, and issued to other airlines. Although air transport is a cyclical business, the cycle’s dominant growth phase seems more protracted than in the past and shows no signs of slowing down, and the industry remains attractive to investors.

In recent years the market has been overwhelmed with fresh funding, which has reduced lease prices and the subsequent profits. Compressed margins can serve as a leading indicator of the expansion phase’s approaching end, but most market players expect the expansion to continue.

Commercial aircraft lease is a legal arrangement availed to airlines and other aircraft operators offered by leasing companies. Its main advantage is it provides flexibility to lessen the financial burden on the airline’s balance sheet while procuring new aircraft or adjust capacity over shorter terms. Because of the relatively low default rate and stable returns in an otherwise low-yield environment, attractive opportunities emerge in aviation financing. 

Although the economic reasons for leases are common to all businesses in all industries, there are specific business purposes for why an airline may choose wet leasing. The main reason to lease is capacity. By making use of wet-leasing, airlines are capable of increasing capacity temporarily. This is a big advantage, particularly for commercial airlines, but charter jet operators may also find themselves in need of extra capacity. Usually, the leased aircraft can be used for the very short notice, sometimes as little as three hours, to cover short or medium transportation needs.

 

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The Asia-Pacific region has been and will continue to be the most dynamic region in the world. The economic development in India and China leads to the rapid development of a middle class that is the primary driver of air traffic growth. And with an increasing population in the region, the market is expected to grow significantly during the forecast period.

The leading companies of Aircraft Leasing are AerCap, Air Lease Corporation, BOC Aviation, GECAS, BBAM LLC, CIT Commercial Air, Aviation Capital Group, Boeing Capital Corporation, Saab aircraft leasing, International lease finance corporation, Dubai aerospace enterprise, Chapman freeborn, Textron financial, General electric capital aviation services (Gecas), Nordic aviation capital, Avolon, Smbc aviation capital, Fly Leasing Limited and other prominent players.

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