Investments and dealing initiations in the aircraft market is considerably a high profile business head. A latest report by Anderson (2015) for Gulf Business, notes the rapid increase in the activities of leasing aircrafts in the aviation market. The report refers to the an amount of more than $200 billion at Dubai Airshow, in the year 2013, whereby very few aircraft organisations paid any attention to the deals, rest moved into the sector of financing these deals through alternative means, like leasing of aircrafts. An interview with Safwan Kuzbari, an industry veteran, who is in this business since 1973 with his Novus Aviation Capital, states –

“Operating leases some 10 years ago were only 20 per cent of the portfolio of the aircraft being operated…. “Today, we are over 35 per cent”.

Further confirmation collected from Deloitte & Touche LLP (2010) and Capital Aviation (2014) specifically noted that leasing of aircraft has been identified as one of the most convenient, efficient and popular form of long-term financial investment. The core reasons of its popularity are backed by its trend to remain extremely flexible with reduced status of value risk.

In consideration with the aforementioned increasing demands of aircraft leasing in the global market, the investors are still amidst the state of indecisiveness, in terms of choosing between the options of purchasing aircraft or leasing aircraft. This report is investigating the basic aspects that can assist in gaining the right decision in this matter.

Global Aircraft Market

The increasing demands and developments in the aircraft market remain a very significant matter of concern in the global aviation market. The research based report of BCC (2014) mentions that with an extensive amount exceeding $120 billion is demanded by the global aircraft market for all the deliveries to be made in the year 2015, which is the current year (see Appendix 1 for details). Scopes for tremendous financial benefits and opportunities are marked in the domain of participating the market of aircraft finance by the investors.

Past Aircraft Market

A very clear and steady growth of the trends involved in the aircraft leasing and purchase has been noted by BCC (2014) as following –

Figure 1 Environment of Aircraft Financing since 2007

Source: BCC (2014)

It can be clearly noted from Fig. 1 that since 2007, aircraft organisations are much involved in various concerns of maintaining their business, and the leasing appears to be one f the most satisfactory domain in past couple of years. The report confirms that amidst tighter regulatory norms in the global market, there last decade remained as the ground for increasing competition in aviation industry for new commercial modes of bank loans (1^st-tier airlines), and boosting aircraft leasing (2^nd-tier airlines). The growth of the leasing companies faced some fluctuation during global recession of 2008; otherwise, their hold over the aircraft market was strong in 2007. The developmental trends in leasing aircraft gets further noted since 2011 and the same is currently very strong in terms of initiating the business lead of aircraft industry on global frontier.

The reports of Deloitte & Touche LLP (2010) offered the insight into the aircraft market by stating that in past decade, i.e. 2004 – 2013, the orders received by Airbus is 8,933 with a delivery of 4,824 aircraft. In case of Boeing, it has a count of 8,428 with delivered record of 4,458 aircrafts. With intense increase in competition of the aviation industry, the organisations are more inclined in considering leasing of aircraft than buying the same.

Current Aircraft Market

The current demands of aircrafts, as noted by the report of Airbus (2015) are 32,500. The limitations are noted in terms of manufacturing units and thus the trend of purchasing new products is highly compensated through the aircraft leasing by various organisations all over the world. Further details are depicted in Fig. 2, below –

Figure 2 Current demands for new Aircraft

Source: Airbus (2015)

Declarations as made in Fig. 2, holds the fact that the trend of leasing aircraft undergoes the process of remarketing of the passenger fleet that eventually gets converted into freight fleet. The retirement of the new deliverables after remarketing, gets prolonged and the same is very much appreciated in offering finance based support to the respective aircraft leasing company and the airlines leasing the same. It is the act of conversion that renews the financial side of the airlines and offers huge profit margins that are counted from the negation to buy new Aircraft or Boeing.

Resources collected from Investec (2013) specifically note the increasing demands of aircraft leasing in last few years. The report of Investec confirms the activity of aircraft leasing as an asset as it assist in the creation of value with minimal exposure to risks. In the current aircraft market, the considerations and preferences of narrow body aircraft leasing is at high pick, as it supports in releasing the investment burdens and operational perspective remain comparatively cheap for the Airline organisation.

Projected Future Trend

The futuristic trends as forecasted by Airbus (2015), for the demands and deliverable rates of aircraft until 2034 gets serious backlog status. As per this report, the demands are large all over the world, but the deliveries are slow and unable to meet the demands of the growing airline business. a comparative declaration has been made by Airbus (2015) in order to gain the status that will appear by 2034

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