Key Players:
The leading market players in the global aircraft leasing market are AerCap Holdings N.V., Air Lease Corporation, BOC Aviation, GE Capital Aviation Services, BBAM Aircraft Leasing & Management, Aviation Capital Group, Boeing Capital Corporation, SMBC Aviation Capital, Avolon, and ICBC Leasing.
Aircraft Leasing Market – Market Overview
The global aircraft leasing market is a very dynamic and is expected to witness significant growth over the forecast period. The major factors supporting the growth of the global aircraft leasing market are dominance of Irish and Chinese companies, air passenger traffic growth, rising demand for wet leasing and others. However, the major trend in the global market is shifting of global lessors into the emerging regions such as Asia Pacific. On the other hand, the complicated and unclear leasing regulations and taxation policies and asset recovery risk associated with airline bankruptcy are major hindrances to the global market growth.
The aircraft leasing industry is one of the most recognized industries in Ireland over the past four decades. In the recent years, the leasing activities on aircraft have increased from 2% in 1980 to more than 50% in 2016. This has shown that there is complete dominance of Irish leasing company over the global market. Ireland has established itself as a global hub for aircraft leasing with more than 50% of the total market and 14 out of 15 global lessors operate from Ireland. After 9/11 attacks, the aircraft leasing activities have substantially increased from 25% in 2001 to 40% in 2014. This is majorly due to the various leasing companies gaining momentum to establish themselves in the aircraft market, rather than depending on the commercial banks as a main source of aircraft financing.
The other major reason for this growth is the number of aviation related courses conducted in Ireland, including MSc in Aviation Finance in UCD Smurfit School. These give people a good exposure to aviation finance. Additionally, the aviation sector has contributed more than USD 4.80 billion, which is also a major growing factor of Ireland aircraft leasing industry. China also has primary role in the growth of global aircraft leasing market. After Ireland, China is considered a major market for aircraft leasing. Over the last few years, the global lessor have shown more interest in China market and have commenced their operations in here.
In addition, the global air passenger traffic has been growing at a rapid pace, propelled by the increasing demand for air travel from emerging nations in Asia Pacific, Middle East and South America. Over the next 20 years, global air passenger traffic has been forecast to grow by 4.9%. According to global airline trade body IATA (International Air Transport Association), higher traffic from Asia Pacific regions is expected to double air travel demand over the next 15 years. However, this has shown a promising picture for the leasing companies, as it has been projected that the aircraft leasing companies will increase their penetration of commercial aircraft market by 20%, of the flying fleet.
Asia Pacific is always been a very prominent market for aviation industry as APAC region contributes to the world’s largest region by population and consume the largest percentage of air traffic. The presence of the busiest airports such as Beijing, Dubai, Singapore, New Delhi and others have attracted the prominent leasing companies to APAC region for future investments. As per IATA, ACI, air traffic in Asia is expected to grow at 6%; expected to increase in future. There will be need for aircraft financing, leasing and investments so as to meet the growing demand. Among these types, aircraft leasing has gained prominent place and is growing at a substantial rate.
Additionally, around 35% of the total aircraft are financed on lease. This kind of upsurge in aircraft demand and dependence on lease financing has presented an attractive opportunity for many aircraft lessors to consider using the aerospace and leasing hubs in Asia Pacific. Moreover, the growing economic condition and collapse in crude oil prices have also become a major trend that has persuaded the lessors.
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