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Navigating the skies – Key highlights from the Airline Economics conference

Ireland 28th Jan 2025
Navigating the Skies – Key highlights from the Airline Economics conference.

The aircraft leasing sector continues to grow annually. The atmosphere at this year’s Airline Economics: Growth Frontiers conference in Dublin was notably positive and encouraging. JTC’s Mohammad Zia, Head of Corporate Services – Ireland, and Lloyd Collier, Senior Director, Institutional Client Services – UK and Ireland, attended the three-day event where crucial issues in the commercial aviation industry, particularly the financing and leasing of aviation assets, were thoroughly examined.

Key highlights from the conference include:

Aircraft Leasing Leads the Way:

The number of leased aircrafts continues to rise, with over 50% of commercial aircrafts now leased. The ongoing shortage of aircrafts has driven up lease rates, making it a highly lucrative market for investors. Leasing offers airlines the ability to expand their fleets quickly and efficiently, compared to waiting for new aircrafts.

However, the leasing industry faces challenges such as the cost of capital and inflation, which are often not passed on to airlines in real time, thereby reducing investor margins.

Market Accessibility for Funding:

Access to capital markets remains a challenge for non-investment grade lessors. This has led to an increase in sale and leaseback transactions, where airlines sell aircrafts to lessors and lease them back to gain access to capital. The market is dominated by larger investment-grade lessors, with 80% of aircraft owned by 36 lessors[1] .

Navigating Manufacturing Delays:

Manufacturing delays have resulted in a scarcity of new aircraft amid mounting demand, leading to older aircraft being pushed into service for longer periods.

Aircraft manufacturers face delays in production and delivery due to issues with Original Equipment Manufacturers (OEMs) supplying necessary components, and the high demand for new aircraft.

Challenging Geopolitical Climate:

The geopolitical climate adds pressure on aircraft lessors. Some are trying to “derisk” their exposure in certain jurisdictions due to ongoing political tensions, while others are expanding their fleets in these regions. The regional location of the airline plays an important role the level of risk they are exposed to.

Market Dynamics and Competition:

Passenger numbers are growing post-pandemic, and airlines are evolving to meet passenger demand for new routes. Emerging markets in Asia-Pacific and Africa are expected to further fuel air travel demand. The expansion of low-cost carriers keeps the sector highly competitive.

“Our global experience in servicing complex financing structures and asset-backed securitisation vehicles indicates that this asset class is becoming increasingly important to our service offering” says Lloyd. About 1,000 leasing vehicles are currently registered in Ireland[2]. Ireland’s beneficial tax regime, double taxation treaties (DTAs) with a wide range of countries, and extensive expertise in the sector continue to bolster its position in the aircraft leasing sector.

For more information, please contact Mohammad or Lloyd directly or visit our Ireland webpage

[1] Ascend by Cirium Weekly Team Perspective: New Lessors vs Consolidation – The Evolving Lessor Landscape – Cirium

[2] Atlantic Star Consulting