Aircraft leasing has become a dominant financing method in the aviation sector, enabling airlines to acquire aircraft without the significant upfront costs of purchasing. In 2024, more than 50% of the global commercial fleet is leased, reflecting the growing importance of leasing companies. The industry is characterized by a small number of major players that hold significant market share, with fierce competition for new clients and aircraft acquisition.
How Aircraft Leasing Companies Operate
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- Aircraft Acquisition: Leasing companies acquire aircraft from manufacturers (like Airbus or Boeing) or through sale-and-leaseback transactions with airlines. They place large orders to benefit from economies of scale and often have close relationships with aircraft manufacturers to secure favorable terms.
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- Leasing to Airlines: After acquiring aircraft, lessors lease them to airlines. They offer flexible leasing arrangements (operating leases, finance leases, wet leases, etc.) to meet the diverse needs of global airlines. Lease terms can range from a few months to over a decade.
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- Fleet Management: Leasing companies manage large and diverse fleets of aircraft, ensuring they are maintained and, when needed, repositioned to different airlines. Effective fleet management includes monitoring aircraft age, technological developments, and market demand.
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- Risk Management: Leasing companies assess the creditworthiness of airlines to manage lease default risks. They also carefully track the residual value of aircraft, economic conditions, fuel prices, and geopolitical factors that could impact the airline industry.
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- Aircraft Repositioning: When a lease ends, the lessor must re-lease the aircraft to another airline. This often involves upgrading or modifying the aircraft to meet new regulations or customer preferences and finding airlines that match the aircraft’s specifications.
Major Players in the Aircraft Leasing Industry (2024)
AerCap Holdings N.V.
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- Market Share (2024 estimate): ~17%
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- Overview: AerCap, headquartered in Ireland, is the largest aircraft leasing company in the world. It manages a portfolio of approximately 2,000 aircraft and is known for its strong relationships with manufacturers and global airline customers. Following its acquisition of GECAS (GE Capital Aviation Services) in 2021, AerCap further cemented its dominance.
Avolon
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- Market Share (2024 estimate): ~11%
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- Overview: Based in Dublin, Avolon is a key player in the leasing space, with a fleet size exceeding 800 aircraft. The company focuses on modern, fuel-efficient aircraft to meet the rising demand for sustainability in aviation.
SMBC Aviation Capital
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- Market Share (2024 estimate): ~9%
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- Overview: A Japanese-owned company headquartered in Ireland, SMBC Aviation Capital has a portfolio of approximately 700 aircraft. It benefits from strong backing by Sumitomo Mitsui Banking Corporation and focuses on maintaining a young fleet of modern jets.
Air Lease Corporation (ALC)
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- Market Share (2024 estimate): ~8%
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- Overview: Based in Los Angeles, ALC is known for its extensive relationships with airlines and manufacturers, offering flexible leasing options to airlines across the globe. It has a fleet of around 450 aircraft.
BOC Aviation
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- Market Share (2024 estimate): ~7%
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- Overview: Headquartered in Singapore and majority-owned by the Bank of China, BOC Aviation leases over 500 aircraft. The company has a strong presence in the Asia-Pacific region and focuses on fleet growth and diversification.
CDB Aviation
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- Market Share (2024 estimate): ~5%
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- Overview: CDB Aviation, owned by China Development Bank, is an emerging player with a fast-growing fleet of over 300 aircraft. It focuses on modern, efficient aircraft and expanding its global footprint.
Other Key Players:
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- Macquarie AirFinance (Market Share: ~3%)
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- Nordic Aviation Capital (NAC) (Market Share: ~2.5%) – focuses on leasing regional aircraft.
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- Castlelake Aviation (Market Share: ~2%)
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- Combined Market Share of Other Players (Not all Listed): ~37.5%
Market Outlook (2024 and Beyond)
The aircraft leasing industry is expected to grow steadily in the coming years as airlines seek more flexibility and capital efficiency. Key trends include:
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- Sustainability Push: Airlines are under pressure to reduce carbon emissions, prompting a shift toward leasing fuel-efficient and newer aircraft, such as the Boeing 737 MAX and Airbus A320neo families. Some freight models such as the Boeing 767F-300 will be cease production due to changes in environmental regulation.
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- Expansion of Emerging Markets: Growth in air travel demand in Asia-Pacific, Africa, and Latin America will fuel the demand for leased aircraft, as airlines in these regions prefer leasing to mitigate upfront capital costs. Aircraft leasing is ideal in regions that lack robust capital markets that are experiencing an increase air travel demand.
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- Increasing Role of Sale-and-Leaseback: Airlines, still recovering from pandemic-related financial struggles, are increasingly turning to sale-and-leaseback transactions to raise cash, which benefits lessors by adding modern aircraft to their portfolios.
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- Geopolitical and Economic Factors: Rising interest rates, inflation, and geopolitical tensions could pose risks to the leasing industry, especially for airlines with weaker balance sheets. Lessors need to maintain strict risk assessment procedures and diversify their lessee base.
UDS Aviation does not provide financial advice, view our disclaimer policy for further information.
Key Concepts in Aircraft Leasing
Operating Lease: The lessor (leasing company) retains ownership of the aircraft and leases it to an airline for a fixed period, typically 5-10 years. At the end of the lease, the airline returns the aircraft to the lessor, with no ownership transfer.
Finance Lease: A finance lease functions similarly to an operating lease but with longer terms. The airline often assumes most of the benefits and risks of ownership, and there is sometimes an option for the airline to purchase the aircraft at the end of the lease.
Wet Leasing: Involves leasing an aircraft with a crew, maintenance, and insurance provided by the lessor. It is typically used for short-term needs or when an airline lacks the capacity to operate the aircraft itself.
Dry Leasing: The aircraft is leased without crew or operational support. The airline provides its own crew, insurance, and maintenance, and is responsible for operating the aircraft.
Sale-and-Leaseback (SLB): Airlines sell their owned aircraft to a lessor and lease it back. This allows airlines to raise cash while continuing to operate the aircraft.
Residual Value: The estimated value of the aircraft at the end of the lease term. Leasing companies assess residual value to mitigate risk when structuring leases.
Maintenance Reserves: Payments made by lessees into a reserve fund, which is used for heavy maintenance or overhauls. This ensures the aircraft is returned to the lessor in good condition.