The global commercial aircraft finance market size was valued at USD 80 billion in 2023 and is projected to grow at a compound annual growth rate (CAGR) of 12.59% from 2024 to 2033, reaching approximately USD 262 billion by 2033.
This market growth is primarily driven by the increasing demand for air travel, particularly in emerging markets, and the need for fleet expansion and modernization among airline operators. As the global economy recovers post-pandemic, more airlines are seeking to finance the purchase of new, fuel-efficient aircraft. Aircraft finance is pivotal in supporting the aviation industry’s infrastructure, with various financial models such as leasing, loans, and asset-backed securities (ABS) playing a key role.
Why Commercial Aircraft Finance is Important?
Commercial aircraft finance is crucial because it enables airlines and lessors to acquire the high-cost assets required to meet the growing demand for air travel. The aviation industry relies heavily on expensive, long-term investments in aircraft, which often exceed the financial capacity of individual airlines or operators. Aircraft finance provides the necessary capital to purchase, lease, or maintain aircraft, allowing airlines to expand and modernize their fleets without the upfront burden of full ownership costs.
It also helps optimize cash flow, mitigate financial risks, and support the adoption of new technologies such as fuel-efficient aircraft. Additionally, it allows airlines to remain competitive by enabling fleet renewal, which is key to reducing operating costs, improving fuel efficiency, and meeting regulatory requirements. The availability of flexible financing options—such as leasing, loans, and asset-backed securities—fosters growth in the global aviation sector and ensures that airlines can continue to expand their services to meet the increasing demand for air travel worldwide.
Market Trends in Commercial Aircraft Finance
- Environmental Sustainability: With increasing global focus on environmental sustainability, aircraft financing is aligning with greener goals. Green bonds and environmentally-focused financing structures are being introduced, reflecting the shift toward cleaner technologies and the development of sustainable aviation fuel (SAF).
- Digitization in Aircraft Finance: Financial transactions and lease agreements in the aviation sector are becoming increasingly digital, driven by advancements in fintech. The digitization of the aircraft finance process improves transparency, reduces transaction costs, and enhances operational efficiency.
- Shift Toward Emerging Markets: Regions such as Asia-Pacific, the Middle East, and Latin America are seeing significant investments in their aviation sectors. Countries like China and India, with burgeoning middle classes and strong demand for air travel, are attracting both financing and leasing companies to meet their growing aviation needs.
Regional Analysis of the Commercial Aircraft Finance Market
North America: A Hub for Aircraft Leasing and Financing
North America remains the leader in the global aircraft finance market, with the U.S. being home to many of the world’s largest aircraft leasing companies. The region benefits from a well-established financial infrastructure, strong airline industry presence, and robust financing models. Major companies in aircraft leasing, such as GE Capital Aviation Services (GECAS) and AerCap, are driving market growth in this region.
Europe’s Role in Aircraft Financing‘
Europe, with a strong presence of aircraft manufacturers like Airbus and a highly developed financial market, is a significant player in the aircraft finance industry. European airlines are focusing on fleet modernization, and leasing companies in the region play a major role in facilitating aircraft financing. The European market is also witnessing an increased demand for sustainable finance solutions, reflecting the growing trend of eco-friendly aviation.
Asia-Pacific: Rapid Growth in Aircraft Finance
Asia-Pacific is the fastest-growing region in the aircraft finance market, with countries like China, India, and Japan leading the charge. Rising incomes, urbanization, and increasing demand for air travel in these countries are driving the need for new aircraft. Leasing companies are increasingly focusing on this region due to its growth potential and the rising number of low-cost carriers and full-service airlines.
Middle East and Africa: A Focus on Luxury and Long-Haul Flights
The Middle East and Africa are seeing rapid growth in high-end aircraft financing. Airlines in the UAE, Qatar, and Saudi Arabia are investing heavily in modern aircraft fleets to cater to luxury and long-haul travel demand. The Middle East is also emerging as a global hub for aircraft leasing, with several international lessors setting up operations in the region.
Latin America: A Developing Market for Aircraft Financing
In Latin America, countries like Brazil and Mexico are showing steady demand for commercial aircraft financing, driven by increasing air travel and expanding middle-class populations. However, the region still faces economic and regulatory challenges that impact aircraft financing. The growth prospects in this region remain strong, particularly as infrastructure improvements and liberalization of aviation markets continue.
Aircraft Type Analysis
- Narrow-Body Aircrafts: These aircraft are typically used for short to medium-haul flights and have a single aisle. They are smaller in size, more fuel-efficient, and less expensive to operate, making them popular in commercial aviation.
- Wide-Body Aircrafts: Designed for long-haul flights, wide-body aircraft have two aisles and can carry more passengers and cargo. They are more expensive to purchase and maintain, but are essential for international travel and large airlines.
- Others: This category includes regional aircraft, cargo planes, and other specialized aircraft types that are used for specific purposes such as freight transport, regional travel, or smaller airline operations.
Leasing Type Analysis
- Dry Leasing: In dry leasing, the lessor provides only the aircraft, and the lessee is responsible for operating and maintaining it, including crew and insurance. It’s often used by airlines looking for more control over operations.
- Wet Leasing: Wet leasing involves the lessor providing the aircraft along with the crew, maintenance, and insurance. It is typically used for short-term needs or when airlines require immediate capacity.
Security Type Analysis
- Asset-Backed Security (ABS): ABS in aircraft financing refers to securities backed by aircraft assets. Investors receive payments from the lease or sale of the aircraft, offering a relatively stable investment opportunity.
- Non-Asset Backed Security (Non-ABS): Non-ABS financing does not rely on physical assets as collateral. Instead, these securities are backed by the general financial health of the airline or lessor, offering higher risk and potentially higher returns.
Application Analysis
- Long Haul Aircraft: These aircraft are used for flights covering long distances, often intercontinental. Financing for long-haul aircraft tends to be more expensive due to their size, cost, and specialized features.
- Medium Distance Aircraft: These aircraft are designed for flights of intermediate range, typically domestic or regional routes. They offer a balance between cost-efficiency and passenger capacity, making them popular in many airline fleets.
Top Companies of Commercial Aircraft Finance Market
- AerCap Holdings N.V.
- GECAS (GE Capital Aviation Services)
- Avolon
- Air Lease Corporation (ALC)
- SMBC Aviation Capital
- BBAM
- Boeing Capital Corporation
- Deutsche Bank
- CIT Aerospace
- Nassau Capital
- Nordic Aviation Capital (NAC)
- Jackson Square Aviation
- Macquarie AirFinance
- Investec Aviation Finance
- Aegon Asset Management
