Aircraft Leasing Market Size, Share & Industry Analysis, By Aircraft Type (Narrow Body, Wide Body, and Regional Aircraft), By Lease Type (Wet Lease, Dry Lease, and Damp Lease), and Regional Forecast, 2024-2032

The global aircraft leasing market size was valued at USD 172.88 billion in 2023 and is projected to grow from USD 183.23 billion in 2024 to USD 401.67 billion by 2032, exhibiting a CAGR of 11.1% during the forecast period. Europe dominated the aircraft leasing market with a market share of 50.32% in 2023.

An aircraft lease is a legally documented agreement between two parties, usually a lessor and a lessee. The lessor agrees to provide the aircraft to the lessee for a particular period of time in exchange for periodic payments called lease payments. Sometimes airlines lease planes instead of buying them. The leasing company uses its capital to purchase the aircraft and provides it to the operator in exchange for a monthly or annual payment for its use. Ownership is with the tenant. As noted, the airline pays a set amount of rent per month or year to use the jet under its own brand and usually in its own color. But at the final stage, once the lease period is over, the aircraft returns to its owner. This is usually a short-term penalty, not exceeding 10 years.

Leasing an aircraft instead of buying it has five main advantages. These are financial liquidity, capacity flexibility, rapid expansion, fleet consistency, and reduced maintenance costs. Under its initial conditions, leasing allows airlines to reduce their debt. This allows for better cash flow and greater financial agility. Airline and cargo operators lease aircraft from other airlines or leasing companies for two major reasons, to operate the aircraft without the financial burden of purchasing them and to provide a temporary increase in capacity. The growing trend of low-cost airlines is a significant factor driving the aircraft leasing market growth.

The substantial government support given to airlines, along with the strong balance sheets that lessors enjoyed after the crisis, gave the leasing sector a buffer against the COVID-19 pandemic that impacted most airlines. A reasonable and cooperative approach by lessors to the cash flow problems facing airlines resulted in significantly fewer airline failures than would have been expected given the prevailing market conditions. More often, lessors would step in to fill orders that airlines placed with Boeing or Airbus and lease that new aircraft with the same airline. This sale and leaseback market continued to thrive throughout 2021. For instance,

• In 2020, major lessors around the world funded 55% of new Airbus deliveries, and it is anticipated that the percentage of leased aircraft could climb toward the 60% mark in the forthcoming years.

Aircraft Leasing Market Trends

Fleet Modernization with NextGen Aircraft and Other Green Initiatives by Major Stakeholders are Prominent Market Trends

Fleet modernization with NextGen aircraft and numerous green initiatives by major key players involved in the aircraft leasing industry have significantly helped in reducing the industry's carbon emissions. A joint census has emerged from the major players about greater efforts to choose environmentally friendly ways. Some of these solutions include increased use of SAF as supply increases and costs decrease. For instance, the International Air Transport Association (IATA) has stated that the production of Sustainable Aviation Fuel (SAF) has reached at least 300 million liters in 2022, as compared to 100 million liters in 2021. Moreover, in October 2021, at the 77th IATA Annual General Meeting in Boston, U.S., a resolution was passed by IATA member airlines committing them to achieving net-zero carbon emissions from their operations by 2050. Airlines and OEMs are continuously working in conjunction to achieve this goal. For instance, Pratt is working to produce the PurePower Geared Turbofan engine family; this product line is developed to provide more eco-conscious solutions for the airline industry.

Additionally, governments around the world have started initiatives to facilitate aircraft leasing to boost their economic growth and support the aviation industry in the aftermaths of the COVID-19 pandemic. To uplift the economic downturn and boost growth of the aviation industry, these initiatives are working in full flow to facilitate the global economic conditions. For instance, in July 2023, the Indian government amended the Finance Act 2023, under which The Central Board of Direct Taxes (CBDT) exempted the dividend paid by an International Financial Services Centre (IFSC) that leases an aircraft to another such unit there from TDS. The amendment is expected to boost the aircraft leasing business in the nation.

The payee would be required to furnish a statement-cum-declaration with the tax department to claim exemption. The notification in this regard comes into effect on September 1, 2023.

Aircraft Leasing Market Growth Factors

Growing Fleet Expansion of Low Cost Carriers around the Globe to Boost Market Growth

The fleet expansion of low-cost carriers and budget airlines around the world is one of the major driving factors. These airline operators prefer leasing every aircraft in their fleet and lease out or return the aircraft after a few years just to minimize the maintenance and operation cost. With growing passenger air traffic on domestic routes, these airlines have started connecting every rural and urban area in their registered countries. For instance, in the current situation for European aviation, one sector is doing exceptionally well, low-cost carriers. While flag carriers are struggling, withdrawing from routes, and cutting staff, the low-cost sector continues to expand at a tremendous pace through continued fleet expansion. There is evidence that low-cost carriers are now the dominant players on a significant number of short-haul intra-European point-to-point routes. Evidence of a growing Low-Cost Carriers (LCCs) industry can also be seen in parts of Asia, as the escalating supply and increasing capacity of the low-cost airline fleet make India the fastest-growing airline industry globally. For example, according to a Boeing India Country Market Outlook last year, LCCs in India accounted for 60% of air traffic.

Growing Passenger Air Traffic on Long International and Domestic Routes to Propel Market Growth in the Coming Years 

Aviation has truly been the reliable and safest mode of transportation in the world today. The volume of air passenger traffic reached around 6.8 billion in 2022. Airplanes take off all over the world at a rate of approximately 400 departures per hour, and that’s only scheduled commercial traffic. The growing passenger air traffic is one of the concerns and a major driving factor of the market. The growing airline industry and the emergence of new airlines around the globe have led to an increase in aircraft leasing as these new airlines prefer to lease aircraft instead of owning them. Moreover, the major airline operators in regions such as Europe and the Middle East have now also started adopting leased aircraft as they are experiencing high passenger traffic, and leasing the aircraft would help them streamline their cash flow and recover from the impact of the COVID-19 pandemic. For instance, one of the major airlines in the Middle East and the whole world, Emirates, has leased a Boeing 777-300ER from AviaAM Financial Leasing China.

RESTRAINING FACTORS

Lack of Modern Airport Infrastructure for Aircraft Storage and Other Operations to Hinder Market Growth

The lack of modern airport infrastructure is a major problem for aircraft lessors, as newly leased aircraft must be located and stored in the right location. The availability of efficient airports is one major requirement for the investor or lessor looking forward to investing in the aircraft leasing business. Airport infrastructure, the requirement for new aircraft calling for airfield improvements and expansion. Moreover, due growing leased aircraft fleet, these aircraft requires a proper parking and storage space which can be only provided by the airport authorities and respective airport operators but due to lack of proper infrastructures in developing economies, aircraft leasing cannot be expanded in different regions of the world, and the market dominance remains with some major players in Europe and North America.

Aircraft Leasing Market Segmentation Analysis

By Aircraft Type Analysis

Narrow Body Segment to Hold the Market Dominance Owing to High Demand for Narrow Body Aircraft from Budget Airlines

Based on aircraft type, the market is classified into narrow body, wide body, and regional aircraft.

The narrow body segment is estimated to be the largest segment in 2023. The growth is attributed to rising demand for narrow-body aircraft around the world. The high demand is created mainly by budget airlines and LCCs in the airline industry. Moreover, full-service airlines are now planning to expand their narrow-body fleets as the next generation aircraft can now cover long routes. In addition, the budget airline industry has witnessed a surge in demand and procurements of these aircraft, and the airlines are now seen placing bulk orders despite the pandemic impact. Thus, higher growth numbers are anticipated during the forecast period.

• In February 2024, Airbus SE, a Europe-based aircraft OEM, awarded a manufacturing contract to an Indian company for manufacturing doors for its A220 family of aircraft. The initiative for its narrow body aircraft family was initiated as a part of the “Make in India” program and therefore, was announced by Jyotiraditya Scindia, India’s Civil Aviation Minister.

The wide body segment to witness a significant growth owing to the growing passenger air traffic on the international routes. The modern generation wide body aircraft are now capable of flying more than 15 hours continuously and are economical. Moreover, due to the high cost of aircraft, airline operators prefer leasing them instead of buying them, which gives them a regular cash flow with a low operating cost. For instance, the lease rentals for a new Boeing 777-300 ER or Boeing 777-200 LR aircraft are around USD 1.2 million per month in this market; however, if the airline wishes to buy it, it will cost around USD 279 million. These aircraft are leased for a minimum of 10 years, so the airlines will be paying approximately half the price of the aircraft. Considering the above factors, higher growth numbers are anticipated during the forecast period.

By Lease Type Analysis

Dry Lease Segment to Witness Substantial Growth as Dry Lease Aircraft Possess Low Operation and Maintenance Costs

Based on lease type, the market is segmented into wet lease, dry lease, and damp lease.

The dry lease segment is expected to witness substantial growth during the forecast period. The growth of the segment is attributed to the low cost of maintenance and operation of dry-leased aircraft. In a dry lease, the lessor provides the aircraft to the lessee without a crew, so the operational and maintenance costs are borne by the lessee. The lessee or the airline operators have full control over the cost aspect; therefore, they use some cost cutting techniques to make the aircraft operation and maintenance economical. Dry leasing is commonly adopted by budget airlines and low-cost carriers, although it is anticipated that dry leasing will also work great for the biggest airlines. Moreover, the growing adoption of dry-leased aircraft has created job opportunities in the aviation industry.

The wet lease segment to witness moderate growth owing to the less adoption of this type of aircraft leasing. The main reason for the low adoption rate is that the airline does not have full control over aircraft operations. Moreover, the leasing company also takes care of insurance and maintenance activities. However, there are times in the year when airlines experience high passenger traffic, but they don’t have enough money to suddenly ramp up operations and buy new planes, hire new crew, and hire new maintainers. So they contact the leasing company and order wet leases. Thus, taking the above factors into consideration, moderate segment growth is anticipated during the forecast period.

REGIONAL INSIGHTS

Based on region, the market is segmented into North America, Europe, Asia Pacific, and the Rest of the World.

Europe dominated the aircraft leasing market share in 2023. Its market size stood at USD 87.0 billion in 2023. The growth of the region is attributed to the presence of a key player named Aercap. The company holds more than 50% of leased aircraft operating in the airline industry. A majority of lessors are based in Ireland due to its attractive tax policy and ease of doing business. Moreover, the region has witnessed a surge in demand for aircraft leasing due to the emergence of low-cost carriers in the region. Thus, higher growth numbers in terms of revenue are anticipated during the forecast period.

The market in North America is expected to witness moderate growth during the forecast period owing to ongoing headwinds of recession in the country, such as the U.S. economy. However, the airline industry in the region is now adopting leasing instead of buying. In addition, OEMs such as the Boeing Company have a wholly-owned subsidiary named Boeing Capital Corporation. Boeing Capital offers asset-backed lending and leasing, concentrating on assets that are critical to the core operations of Boeing customers.

The market in Asia Pacific is expected to experience new heights in terms of growth during the projection period. The growth of the region is attributed to the growing aviation and airline industries in countries such as India and China. Moreover, these countries have presence of some upcoming players, such as AviaAM, and some prominent players, including the Emirates Airline.

The market in the rest of the world is expected to grow significantly during the forecast period. Increasing number of next-generation aircraft fleets in the United Arab Emirates, Saudi Arabia, and Qatar is the major reason for investments in the Middle East aircraft leasing market. Thus, higher growth numbers are anticipated during the forecast period.

List of Key Companies in Aircraft Leasing Market

Complete Acquisition of General Electric Capital Aviation Services (GECAS) by Aercap Made Aercap the Dominant Player in the Market

AerCap completed the acquisition of GE Capital Aviation Services (GECAS) from General Electric in 2021. The combined company has a portfolio of more than 2,000 aircraft, more than 900 engines, and an order of approximately 450 of the most fuel-efficient and technologically advanced aircraft in the world. AerCap is a leader in all areas of aircraft leasing, with a strong portfolio and a diversified customer base. In addition, 90% of the aircraft fleet owned by AerCap consists of the A320ceo and Neo Family, the A330, A350, 737NG, 737 MAX, and 787 aircraft; these aircraft are the most in-demand aircraft in the world.

LIST OF KEY COMPANIES PROFILED:

• AerCap (GECAS) (Ireland)


• Avolon (Ireland)


• BBAM (U.S.)


• Nordic Aviation Capital (Ireland)


• SMBC Aviation Capital (Ireland)


• ICBC Leasing (China)


• BOC Aviation (Singapore)


• Air Lease Corporation (U.S.)


• DAE Capital (UAE)


• Boeing Capital Corporation (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• In April 2022, Air Lease Corp. (ALC) announced that it is expanding its airplane portfolio with a confirmed order for 32 additional 737-8 and 737-9 jets. As the travel market recovers after the pandemic, ALC is increasing its 737 MAX family in order to meet airline demand for modern, fuel-efficient and sustainable operations.


• In July 2022, AerCap Holdings announced that it placed an order for five additional Boeing 787-9 Dreamliners, bringing AerCap’s orders for the 787 aircraft to 125, owned and on order. The 787 Dreamliner family is playing a major role in sustaining and reopening new long haul routes with high fuel efficiency in the airline and aircraft leasing industry.


• In December 2022, SMBC Aviation Capital, announced that it completed the acquisition of Goshawk Management Ltd and associated corporate assets, the Dublin-based global aircraft lessor. The acquisition made it the second largest global player by number of aircraft and the largest Japanese-owned aircraft lessor.


• In April 2022, BOC Aviation Limited announced that it entered into an agreement with Airbus S.A.S to purchase 80 new Airbus A320NEO family aircraft. All aircraft are scheduled for delivery between 2027 and 2029.


• In July 2021, Dubai Aerospace Enterprise (DAE) Ltd announced that its leasing division DAE Capital signed agreements to sell nine narrow and wide body aircraft with a total market value of approximately USD 500 million.