Global Aircraft Leasing Market to Hit $315b by 2033
The global commercial aircraft leasing market size is projected to increase to $315.9 billion in the next nine years, data from industry regulators have revealed.
The market, according to industry projection, is anticipated to spike at a cumulative annual growth rate (CAGR) of 7.3 per cent from last year through 2033.
Nigeria , a frontier market in the global projection, will witness greater participation in the value chain as airlines straddle between outright purchase of airplanes with capital injection from financial institutions, and flexible lease options.
Over a dozen carriers : AZMAN Air, Max Air, DANA Air, Arik , Aero Contractors, Ibom Air, Overland Airways, Green Africa Airways, United Nigeria Airlines, Air Peace, NG Eagle Airlines, Rano Air and Cally Air are involved in different model of negotiations with original equipment manufacturers and third party lessors for acquisition of airplanes for their flight operations.
While some operators have opted for direct purchase of aircraft, some are exploring different types of lease arrangements, which align with their business model and capital flexibility.
Investigations reveal that the demand for airplanes has become high as some operators are processing applications and approvals from the Federal Ministry of Aviation & Aerospace Development and the Nigerian Civil Aviation Authority (NCAA), to become scheduled carriers.
Besides scheduled commercial operations, the charter section of the industry is also burgeoning with demand for different types of airplanes.
The projected increase in aircraft acquisition is coming at a time Nigerian carriers are solidifying their contractual relationships with aircraft lessors across the globe.
The on-going business negotiations , according to sources, is to firm up fidelity concerning payment of lease rentals to stave off any form of default.
Investigations reveal that one of the leading indigenous carriers said it has leveraged aircraft acquisition since it commenced operations in 2014 than dry- leasing of airplanes.
An official of the carrier, who pleaded not to be named in print confirmed that its fleet expansion programme has hovered around acquisition with different airplane manufacturers including Boeing, Embraer than leasing of aircraft.
Speaking in an interview, Group Manager, Marketing and Communication , Ibom Air , Aniekan Essienette, said the state – run carrier has adopted the acquisition by partnership model to get airplanes rather than exploring the leasing path.
She said: “ Ibom Air does not have any aircraft on lease from any lessors, foreign or domestic. We own all seven aircraft that we operate, and they are all financed by Nigerian banks.”
Speaking in an interview, spokesman of the umbrella body of indigenous carriers, Airline Operators of Nigeria (AON), Prof. Obiora Okonkwo said some operators who have adopted the lease option for equipment sourcing are meeting their obligations to aircraft lessors.
Okonkwo said : “ We want to state that Nigerian airlines have consistently worked very hard to meet their contractual obligations with lessors despite operating within a challenging business environment.”
On its part, another indigenous carrier – Max Air said it has embraced the acquisition model to secure equipment for its operations.
A source close to the carrier said it fully owns the fleet of Boeing 737 and 747 aircraft it operates with.
The airline insisted that it was not in the business of leasing aircraft for its domestic and international operations.
It reiterated that it did not have any aircraft lease agreement with any organisation, maintaining that it was not indebted to any organization for refusing to pay lessor fee.
Even Arik Air Shareholders , have affirmed that the carrier has not reneged on meeting obligations of its lease agreement, before the carrier slipped into receivership under the guidance of the Asset Management Corporation of Nigeria (AMCON).
In February 2024, Minister of Aviation and Aerospace Development, Mr Festus Keyamo met Aircraft Leasing Group (ALG) comprising the two largest aircraft makers, Airbus and Boeing among others on how to leverage opportunities for indigenous carriers.
Part of the minister’s meeting with the international lobby group was how to expunge Nigeria from the black book of countries experiencing hurdles in securing aircraft dry lease for its operators.
Major companies operating in the aircraft leasing market include : AerCap Holdings N.V., Air Lease Corporation, BOC Aviation Limited, Aviation Capital Group LLC, BBAM LLC, GE Capital Aviation Services LLC, CIT Group, International Lease Finance Corporation, Dubai Aerospace Enterprise Ltd., Nordic Aviation Capital A/S, Avolon Holdings Limited, Industrial and Commercial Bank of China Limited, Sumitomo Mitsui Finance and Leasing Company Limited, Air France KLM, Lease Corporation International.
Vista Global Holding Limited, Chapman Freeborn Holdings Ltd., SMBC Aviation Capital, CDB Aviation, Aircastle Ltd., Macquarie AirFinance Ltd., Aergo Capital Ltd., Apollo Aviation Group, Castlelake LP, Carlyle Aviation Partners Ltd., Falko Regional Aircraft Limited, Goshawk Aviation Limited, Jackson Square Aviation Limited, Mitsubishi UFJ Lease & Finance Company Limited, ORIX Aviation, Seraph Aviation Management Limited, SkyWorks Capital LLC and Altavair LP.
Investigations reveal that the aircraft leasing market has grown strongly in recent years. It grew from $178.31 billion in 2023 to $195.09 billion in 2024 at a compound annual growth rate (CAGR) of 9.4 per cent .
Experts say the expansion witnessed in the historical period could be attributed to several factors including the globalization of aviation, the pursuit of cost-efficiency and flexibility.
Experts listed other factors to include : market deregulation facilitating increased competition, financial advantages for airlines, and the rise of low-cost carriers within the aviation industry.
As experts look forward to growth in the industry, they have , however, observed trends expected to drive it to include : fleet modernization, the proliferation of low-cost carriers, innovation in platforms, and a shift towards operating leases.
The anticipated surge in air travel demand is increasingly forcing players/investors to opt for aircraft leasing as a strategic practice.
Airlines , investigations reveal, are opting to lease aircraft from leasing companies instead of outright purchases, offering them flexibility to adapt to changing demand, expand or contract their fleet, and avoid significant upfront capital costs associated with buying aircraft.
Notably, in February 2023, the International Air Transport Association (IATA) reported a global total traffic increase of 39.7 per cent in December 2022 compared to the same period in 2021.
SOURCE: The Nation
