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The Commercial Aircraft Leasing Market size is estimated to grow at a CAGR of 9.48% between 2022 and 2027 and the size of the market is forecast to increase by USD 19,459.38 million. The growth of the market depends on several factors, such as the strong market position of Irish and Chinese lessors, the aggressive market expansion strategies of LCCs, and aircraft leasing as an affordable option as opposed to buying.
This report extensively covers market segmentation by product (narrow-body aircraft, wide-body aircraft, and regional aircraft), type (wet lease and dry lease), and geography (APAC, Europe, North America, South America, and Middle East, and Africa). It also includes an in-depth analysis of drivers, trends, and challenges. Furthermore, the report includes historic market data from 2017 to 2021.
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Our researchers studied the data for years, with 2022 as the base year and 2023 as the estimated year, and presented the key drivers, trends, and challenges for the market. Although there has been a disruption in the growth of the market during the COVID-19 pandemic, a holistic analysis of drivers, trends, and challenges will help companies refine marketing strategies to gain a competitive advantage.
Aircraft leasing as an affordable option as opposed to buying is driving growth in the commercial aircraft leasing market. It is well recognized that, with a large number of operators working to take advantage of increased demand, the aviation sector is in high competition. Intense competition means that airlines must position themselves strongly to attract customers through their offerings. Discounts provided by airlines tend to bring down their profits. Thus, airlines mostly operate with low margins (merged profits). The development of the leasing business for commercial aircraft is therefore facilitated by the very nature of the aviation sector.
Moreover, buying a new aircraft is always a big decision for any airline because it requires extensive research, demand, and, most importantly, finances. Consequently, a number of airlines choose to rent aircraft from lessors instead of purchasing them in view of the lack of funds. As aircraft acquisition is very expensive, nearly all airlines in the world are taking airplanes on lease. The significance of leasing as an affordable operating strategy for airlines will significantly propel the global commercial aircraft leasing market during the forecast period.
The dominance of major aircraft suppliers is a primary trend in the commercial aircraft leasing market. The fact remains that Airbus and Boeing are dominant manufacturers of aircraft in the market. The leasing companies are extensively dependent on the suppliers for procuring aircraft. As stated by a major aircraft lessor, it may be very difficult for lessors to comply with their obligations regarding lessees if deliveries from the supplier end are delayed. This, in turn, will result in many consequences for the lessors.
Moreover, overproduction by suppliers can also have a negative impact on the commercial aircraft leasing business. The demand on the market could, therefore, be substantially outweighed by production. In turn, the aircraft is going to lose its value. Moreover, the lease rates will get reduced owing to the supply-demand mismatch. Thus, the overdependence of aircraft lessors on two major suppliers is expected to continue, which will drive the growth of the market in focus during the forecast period.
The asset recovery risks associated with airline bankruptcy are a major challenge in the commercial aircraft leasing market. Airlines are considered to be extremely capital-intensive enterprises, and they have very low margins. The ever-dynamic, highly competitive nature of the airline business poses significant challenges to the players in the industry. Airlines are facing difficulties in obtaining optimum financial health if there is a severe internal management crisis or an unforeseen change of externalities. In such a case, the investors that initially backed an airline may choose to withdraw financial support. This will lead to the airline filing for bankruptcy.
Moreover, if an airline goes insolvent, it becomes difficult for the lessor/lessors that supported the airline to retrieve their leased aircraft in decent operating condition. Filing for bankruptcy by Kingfisher Airlines in India is a big example. There are a few circumstances that could endanger relationships between lessors and lessees, thereby expected to hinder the growth of the global commercial aircraft leasing market during the forecast period.
The narrow-body aircrafts segment will account for a major share of the market's growth during the forecast period. Narrowbody aircraft have a single aisle inside the cabin, and the passengers are seated in two axial groups. They've got a two-engine configuration that is attached to the wings, providing thrust.
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The narrow-body aircrafts segment was valued at USD 10,485.32 million in 2017 and continued to grow until 2021. In developing and advanced economies, where the historical load factor and seasonal significance are crucial for defining their profit margins, demand for these aircraft is determined by efficient operations carried out by air carriers. Increasing tourism with high demand for personal jet leasing will drive the growth of the narrowbody aircraft segment in the global commercial aircraft leasing market during the forecast period.
Moreover, widebody aircraft are designed to incorporate two or more passenger aisles within the fuselage, resulting in a seven-seater configuration. The aircraft offer high efficiency, better passenger comfort, and more space for cargo. A widebody plane offers passengers a premium class of service. Though the demand for widebody aircraft is lower than for narrowbody aircraft, dominant market players offer a considerable number of variants in large widebody aircraft. The introduction of a fuel-efficient design, more spacious windows, a quieter cabin, and the most recent in-flight entertainment and connectivity systems will drive the growth of the segment in the global commercial aircraft leasing market during the forecast period.
Based on type, the market has been segmented into wet lease and dry lease. The wet-lease segment will account for the largest share of this segment. A wet lease is a legal agreement where the lessor provides aircraft, crew, maintenance, and insurance services (ACMI) to the lessee. The agreement is therefore called ACMI leasing. The expenses arising during the flight operations, including fuel prices, airport charges, duties, and taxes, have to be paid by the lessee as part of this type of leasing. The major incentives for airlines to enter agreements with lessors are the maintenance and insurance features. In addition, wet leasing offers the scope to extend airline operations into regions where airlines do not have legal permission to operate under their own name. The developments will aid the growth of the wet leasing segment in the global commercial aircraft leasing market during the forecast period.
Dry leasing is a contract where lessors offer aircraft on lease to lessees without the provision of added services, such as insurance, maintenance, ground staff, or crew. On average, a dry lease agreement lasts more than two years. In the case of depreciation, maintenance, and insurance, it may also be subject to certain conditions. A dry lease agreement between a large air carrier and a small airline can also be concluded. In such a case, the major airline provides the aircraft to the regional operator. The latter operates the aircraft with its crew on behalf of the former. In the case of a major airline, this leads to considerable cost savings. A significant amount of interest has been shown in dry leasing worldwide. Governments and regulatory agencies are revising their existing policies to favor their respective domestic aviation industries. However, some strict legislation associated with dry leasing might affect its popularity to some extent.
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APAC is estimated to contribute 43% to the growth by 2027. Technavio’s analysts have elaborately explained the regional trends, drivers, and challenges that are expected to shape the market during the forecast period. With the success of the LCC business model, APAC is recording steady growth in air travel. APAC is anticipated to account for approximately half of the global air passenger traffic in the next two decades. Furthermore, fleet operators in this region are increasing their demand for energy-efficient aircraft. Fleet operators are looking for ways to do this by retrofitting older aircraft with new, more advanced ones. Such trends have opened immense opportunities for commercial aircraft leasing companies to offer their services in the region with a competitive pricing strategy. Furthermore, APAC has been witnessing high growth in the global aviation industry and is anticipated to drive the industry during the forecast period. This is increasing the flow of investments in the aviation industry in this region.
The outbreak of COVID-19 in 2020 severely disrupted the economy of the region. However, the adoption of effective vaccination drives in all industrial sectors had shown signs of recovery since 2021. As a result, safety and travel restrictions have been lifted in order to restore demand for commercial aircraft rental in 2021 at the latest. Moreover, the growth in capital spending by airline carriers is expected to increase the demand for commercial aircraft leasing, which will positively impact the growth of the market in the region during the forecast period.
Vendors are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
AerCap Holdings N.V. - The company offers commercial aircraft leasing through its subsidiary Milestone Aviation.
Air Lease Corp. - The company offers commercial aircraft leasing such as Airbus A220.
We also have detailed analyses of the market’s competitive landscape and offer information on 15 market vendors, including:
Technavio report provides an in-depth analysis of the market and its players through combined qualitative and quantitative data. The analysis classifies vendors into categories based on their business approaches, including pure-play, category-focused, industry-focused, and diversified. Vendors are specially categorized into dominant, leading, strong, tentative, and weak, based on their quantitative data analysis.
The commercial aircraft leasing market report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 to 2027.
Commercial Aircraft Leasing Market Scope |
|
Report Coverage |
Details |
Page number |
163 |
Base year |
2022 |
Historic period |
2017-2021 |
Forecast period |
2023-2027 |
Growth momentum & CAGR |
Accelerate at a CAGR of 9.48% |
Market growth 2023-2027 |
USD 19,459.38 million |
Market structure |
Fragmented |
YoY growth 2022-2023(%) |
7.95 |
Regional analysis |
APAC, Europe, North America, South America, and Middle East and Africa |
Performing market contribution |
APAC at 43% |
Key countries |
US, China, Japan, Germany, and France |
Competitive landscape |
Leading Vendors, Market Positioning of Vendors, Competitive Strategies, and Industry Risks |
Key companies profiled |
AerCap Holdings N.V., Air Lease Corp., Aircastle Ltd., ALAFCO Aviation Lease and Finance Co., Avolon Aerospace Leasing Ltd., Bank of Communications Co. Ltd., BBAM US LP, BOC Aviation Ltd., China Aircraft Leasing Group Holdings Ltd., Deucalion Aviation Ltd., Dubai Aerospace Enterprise (DAE) Ltd., Macquarie Group Ltd., Orix Corp., Saab AB, and Tokyo Century Corp. |
Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, and Market condition analysis for the forecast period. |
Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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