The global aircraft leasing market is anticipated to witness significant growth in the coming years owing to rising demand for aircrafts among airline companies across the globe. Aircraft leasing is a legal agreement availed by airline companies to procure airliners on lease from leasing companies. It reduces financial burden of airline companies for purchasing new carriers to handle increasing number of passengers. Companies can easily opt for lease agreement with lessors and use their carriers to accommodate passengers.
Growth of the aviation sector owing to increasing construction activities of airports and airdromes is anticipated to propel market growth. Shifting consumer preference for air travel to reduce their travelling time can augment demand for more commercial planes among airline companies. Rising demand for more planes is expected to prompt airline companies to procure commercial planes on lease, which can support market expansion in the coming years. In addition, constant developments in aircraft and airport infrastructure in developing countries can drive the market significantly in the coming years.
Asset recovery risk associated with bankruptcy of airline companies can hamper market growth. Emergence of unclear and complicated tax policies and leasing regulations can also restrain market growth. However, increasing investments by aircraft leasing companies to expand their business globally and get finically strong can create lucrative opportunities for the market. Most companies are likely to adopt business strategies like mergers and acquisitions to gain competitive advantage over other market players.
The market can be segmented on the basis of aircraft type and leasing type. Based on aircraft type, the market can be classified into narrow body and wide body. On the basis of lease type, the market can be divided into wet leasing and dry leasing. According to the wet lease model, the leasing company deliver airlines, along with trained crew, insurance, and maintenance. It can be charged on an hourly basis. The dry lease model allows the lessor to provide the lessee with the aircraft without any additional facilities or trained crew.
Asia Pacific is estimated to hold the largest market share in the coming years owing to advent of various startup companies in India, China, and Malaysia. China is expected to be a potential center for commercial planes leasing with focus on local and regional players. In addition, rising air travel rate in emerging economies owing to increasing number of airline companies in the region can boost market growth. Presence of busiest airports in cities, such as Dubai, Beijing, New Delhi, and Singapore, is likely to gain traction among leasing companies for future investments. According to International Air Travel Association (IATA), rapidly increasing air travel rate in developing countries is likely to increase demand for commercial planes on lease in the coming years. Increasing investments by lessors to sign new contracts with airline companies and expand their business can stimulate market growth. For instance, BOC Aviation is likely to purchase eight new A330neo jets from Airbus SE. The company will lease these airliners to Lion Air Group. The lessee can purchase four of these planes on delivery. The company is also expected to purchase three Boeing 787-9 aircraft from The Boeing Company.
North America is likely to witness significant market growth owing to growth of the commercial aviation sector in the United States. Presence of world busiest airports, including Memphis International Airport and Hartsfield-Jackson Atlanta International Airport, is likely to increase demand for commercial planes among airline companies. This, in turn, can contribute significantly to market expansion. For instance, Air Lease Corporation (ALC) signed an agreement with Samoa Airways to lease Boeing 737 Max 9. The lessor is expected to deliver the aircraft to lessee by March 2019. Similarly, the company is also expected to deliver three Airbus A321LRs to Scandinavian Airlines (SAS). This Airbus can fly to a range of up to 4000 nm with 206 passengers. SAS is likely to use this aircraft owing to its low environmental footprint.
Some of the leading companies operating in the aircraft leasing market are GE Capital Aviation Services, Air Lease Corporation, BOC Aviation, Aviation Capital Group, and BBAM Aircraft Leasing & Management.
Research Support Specialist, USA