Aircraft Leasing Market

• In February 2024, AerCap Holdings announced the successful leasing of 17 aircraft to Thai Airways, including A350s, A321neos, and B787s, in support of the airline's fleet renewal. This partnership aims to enhance Thai Airways' operational fleet as part of its broader plan to reach 90 aircraft by 2025.

• In January 2023, Voyager Aviation Holdings delivered an Airbus A220-300 on a long-term lease to Breeze Airways, marking another key move in the aircraft leasing space. The deal also included an additional agreement for five more aircraft under a sale and leaseback arrangement.

The global aircraft leasing market is poised for substantial growth, with a trajectory forecasted from 2024 to 2030. This growth is driven by several factors, including the rising demand for air travel, particularly in emerging economies, the increasing preference among airlines for leasing rather than owning aircraft to manage costs, and the flexibility offered by leasing arrangements. The market is segmented by leasing type into wet leasing and dry leasing. Wet leasing involves leasing not only the aircraft but also the crew, maintenance, and insurance, providing airlines with a comprehensive solution. Dry leasing, on the other hand, involves leasing only the aircraft itself, leaving the responsibility for crew, maintenance, and insurance to the lessee.

The aircraft leasing market is segmented by aircraft type, including narrow-body, wide-body, and others. Narrow-body aircraft are typically used for short to medium-haul flights and are favored by low-cost carriers for their efficiency and flexibility. Wide-body aircraft, on the other hand, are used for long-haul flights and offer greater capacity and range, making them suitable for international routes. Other aircraft types may include regional jets, turboprops, and freighters, catering to specific market niches and operational requirements.

Geographically, the market is segmented into North America, Europe, Asia Pacific, Middle East and Africa, and Latin America. North America and Europe are expected to remain key regions in the aircraft leasing market, driven by established aviation industries and significant demand for leased aircraft. However, Asia Pacific is projected to witness the highest growth rate during the forecast period, fueled by the rapid expansion of airline fleets in countries such as China and India.

Global Aircraft Leasing Segment Analysis

In this report, the Global Aircraft Leasing Market has been segmented by Leasing Type, Aircraft Type and Geography.

Global Aircraft Leasing Market, Segmentation by Leasing Type

The Global Aircraft Leasing Market has been segmented by Leasing Type into Wet Leasing and Dry Leasing.

The Global Aircraft Leasing Market is experiencing significant segmentation based on leasing type, primarily categorized into Wet Leasing and Dry Leasing. Wet leasing involves the leasing of an aircraft along with crew, maintenance, and insurance, providing a comprehensive package to the lessee. This type of leasing is particularly attractive for airlines seeking temporary capacity solutions or during peak seasons when additional aircraft are required to meet passenger demand. Wet leasing offers flexibility and cost-effectiveness, allowing airlines to scale their operations without the burden of long-term commitments or operational complexities.

On the other hand, Dry Leasing involves the leasing of an aircraft without crew, maintenance, or insurance. This arrangement provides lessees with greater control and autonomy over the operation and maintenance of the aircraft. Dry leasing agreements typically span longer durations, ranging from several years to over a decade, offering stability and predictability to both lessors and lessees. Airlines often opt for dry leasing when they require aircraft for extended periods or when they seek to expand their fleet with specific aircraft types without the financial burden of outright purchase.

The choice between wet and dry leasing depends on various factors such as operational requirements, financial considerations, and strategic objectives. While wet leasing offers immediate capacity solutions and flexibility, dry leasing provides long-term stability and control over operations. Additionally, regulatory requirements and market dynamics also influence the selection of leasing type. Both wet and dry leasing segments contribute significantly to the growth and dynamism of the global aircraft leasing market, catering to the diverse needs of airlines across the globe.

Global Aircraft Leasing Market, Segmentation by Aircraft Type

The Global Aircraft Leasing Market has been segmented by Aircraft Type into Narrow-Body, Wide-Body and Others.

The global aircraft leasing market has experienced significant segmentation based on aircraft type, catering to various needs and preferences within the aviation industry. Among these segments, narrow-body aircraft constitute a substantial portion of the market. These aircraft are popular for short to medium-haul flights, making them highly sought after by airlines looking to efficiently serve regional routes with moderate passenger capacities. Narrow-body aircraft leasing offers airlines flexibility in fleet management, allowing them to adapt to fluctuating demand and market conditions without committing to long-term ownership.

In contrast, wide-body aircraft represent another vital segment within the aircraft leasing market. These planes are designed for long-haul flights, capable of carrying larger passenger loads over extended distances. Wide-body aircraft are favored by airlines operating international routes, providing travelers with spacious cabins and enhanced comfort during intercontinental journeys. Leasing options for wide-body aircraft enable airlines to expand their global reach without the hefty upfront costs associated with purchasing such large and expensive planes outright.

The aircraft leasing market encompasses other types beyond narrow and wide-body classifications. This category typically includes specialized aircraft such as regional jets, turboprops, and freighters. Regional jets, for instance, are favored for short-haul flights to smaller airports, catering to niche markets and complementing the operations of larger carriers. Turboprops are valued for their versatility in accessing remote destinations with short runways, serving both passenger and cargo needs in regional and commuter services. Furthermore, freighter aircraft play a crucial role in global logistics, transporting goods and cargo across continents efficiently. By offering leasing options for these diverse aircraft types, lessors cater to a wide range of aviation needs, supporting both passenger and cargo operations worldwide.

Global Aircraft Leasing Market, Segmentation by Geography

In this report, the Global Aircraft Leasing Market has been segmented by Geography into five regions; North America, Europe, Asia Pacific, Middle East and Africa and Latin America.

Global Aircraft Leasing Market Share (%), by Geographical Region, 2024

In 2023, the global aircraft leasing market showcased a diverse distribution across various geographical regions. North America continued to dominate the market share, accounting for a substantial portion of the total. With a well-established aviation industry and a robust economy supporting air travel demand, North America secured a leading position in aircraft leasing. The region's strong presence of key players and favorable regulatory environment further fueled its market dominance. Additionally, technological advancements and increasing investments in aircraft leasing operations contributed to North America's prominent market share.

Europe followed closely behind North America in terms of market share in the global aircraft leasing industry in 2023. The region benefited from a dense network of airlines, leasing companies, and airports, fostering a conducive environment for aircraft leasing activities. Moreover, Europe's strategic geographical location facilitated efficient connectivity between major global aviation hubs, enhancing its attractiveness for aircraft lessors. As a result, Europe maintained a significant share of the global aircraft leasing market, supported by stable demand and ongoing fleet expansion initiatives by airlines across the region.

Asia-Pacific emerged as another key player in the global aircraft leasing market in 2023, demonstrating notable growth and a rising market share. The region's expanding middle-class population, increasing urbanization, and rapid economic development propelled air travel demand, driving the need for leased aircraft. Furthermore, Asia-Pacific witnessed a surge in low-cost carriers and new airline ventures, creating additional opportunities for aircraft lessors. With rising investments in aviation infrastructure and a burgeoning fleet size, Asia-Pacific solidified its position as a significant contributor to the global aircraft leasing market.

This report provides an in depth analysis of various factors that impact the dynamics of Global Aircraft Leasing Market. These factors include; Market Drivers, Restraints and Opportunities Analysis.

Drivers, Restraints and Opportunity Analysis

Drivers

• Increasing demand for air travel
• Cost-effectiveness for airlines

• Fleet expansion strategies by airlines : The global aircraft leasing market has been witnessing significant growth over the years, primarily due to the expansion strategies adopted by airlines worldwide. Airlines often resort to leasing aircraft as a cost-effective means to expand their fleet without committing large sums of capital upfront. This approach allows airlines to adapt to fluctuating market demands and maintain operational flexibility. Additionally, leasing enables airlines to access newer and more fuel-efficient aircraft models, enhancing their competitiveness and environmental sustainability. One prevalent strategy among airlines is to leverage operating leases, wherein they rent aircraft for a predetermined period, typically ranging from several months to several years.
  This approach minimizes the financial risks associated with aircraft ownership while providing airlines with the flexibility to adjust their fleet size according to changing market conditions. Furthermore, operating leases often include maintenance and service agreements, relieving airlines of the burden of managing maintenance tasks and ensuring aircraft airworthiness.
  Another key expansion strategy involves sale-and-leaseback transactions, wherein airlines sell their owned aircraft to leasing companies and then immediately lease them back. This allows airlines to monetize their existing assets while retaining access to the aircraft for operational purposes. Sale-and-leaseback arrangements provide airlines with immediate liquidity, which can be used to fund fleet expansion, reduce debt, or invest in other areas of their business. Moreover, these transactions can help airlines optimize their balance sheets and improve their financial performance.

Restraints

• Regulatory challenges
• Economic uncertainties affecting airline profitability

• Technological advancements reducing lease durations : The global aircraft leasing market has witnessed significant evolution, largely propelled by technological advancements that have revolutionized aircraft design, performance, and operational efficiency. One notable consequence of these advancements is the reduction in lease durations, a trend that has reshaped the dynamics of the leasing industry. Modern aircraft are equipped with state-of-the-art technology, including advanced materials, more fuel-efficient engines, and enhanced avionics, allowing airlines to operate newer models with greater cost-effectiveness and reliability. Consequently, leasing companies are facing growing pressure to offer shorter lease terms to accommodate the demand for the latest generation of aircraft.
  Technological innovations have played a pivotal role in enabling airlines to achieve higher utilization rates and lower operating costs, thereby altering their preferences in leasing arrangements. With newer aircraft boasting improved fuel efficiency and maintenance requirements, airlines are inclined to opt for shorter lease durations to capitalize on these benefits. Moreover, the rapid pace of innovation in the aviation industry means that aircraft are becoming obsolete more quickly, prompting airlines to seek flexibility in their fleet management strategies. As a result, leasing companies are adapting their business models to accommodate shorter lease terms, offering more agile solutions to meet the evolving needs of airlines. The shift towards shorter lease durations is also influenced by changing market dynamics and competitive pressures within the aviation industry.
  Airlines are increasingly focused on optimizing their fleet compositions to remain competitive in a volatile market environment, where factors such as fluctuating fuel prices and changing consumer preferences can impact profitability. By leasing newer aircraft for shorter durations, airlines can better align their fleet strategies with market demand and mitigate risks associated with long-term commitments. This trend is driving leasing companies to innovate their lease structures and contractual terms, offering greater flexibility and customization to meet the diverse needs of their airline customers.

Opportunities

• Emerging markets with growing aviation sectors
• Shift towards leasing for fleet modernization

• Innovation in leasing structures and financing options : The global aircraft leasing market has been witnessing a remarkable surge in innovation, particularly in leasing structures and financing options. This surge can be attributed to several factors, including the increasing demand for air travel, the continuous advancement of aircraft technology, and the need for more flexible and cost-effective fleet management solutions by airlines worldwide. One significant trend in aircraft leasing is the emergence of innovative leasing structures tailored to meet the diverse needs of airlines.
  Traditional operating leases remain prevalent, offering airlines the flexibility to manage their fleets without the burden of ownership. However, new structures such as power-by-the-hour agreements and sale-and-leaseback transactions are gaining popularity. These arrangements allow airlines to align their leasing agreements more closely with their operational requirements and financial objectives, thereby enhancing efficiency and reducing risk. Financing options in the aircraft leasing market have become increasingly diverse and sophisticated.
  While traditional sources of financing, such as bank loans and capital markets, continue to play a significant role, alternative financing methods such as asset-backed securities and structured finance arrangements are gaining traction. These innovative financing options provide aircraft lessors with greater flexibility in raising capital and managing their balance sheets, while also offering investors access to attractive investment opportunities in the aviation sector.