Introduction
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

Aircraft Leasing Trends

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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

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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

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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.

Aircraft Leasing Trends

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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, in the following manner (see Fig. 3) –
Figure 3 Projected Futuristic Global Trends of Aircraft by 2034

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Source: Airbus (2015)

Figure 3 makes it clear that the demands of the aircraft on a global basis is increasing and at
the same time suffering for lack of available units. Demands from Asia/Pacific holds a grip of
39% as against the global demand of 32, 585 by 2034.europe and the North American nations
follow the trend of increased state of demands for aircraft by 20% and 17% respectively. This
gets confirmed by the statistical investigations initiated by Ivestec (2013). About the future
status of demands for aircrafts, Ivestec (2013) noted that airline organisations and companies
are left with no other option than to lease aircraft in future, in a large quantity. Since this
activity is going to minimise the risks of aircraft business along with the potentiality to offer
expected return to the airline organisation in the following manner (see Fig. 4), the trend of
aircraft-leasing is going to gain enormous significance (see Appendix 2).

Figure 4 Expected Return from Aircraft Leasing

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Source: Ivestec (2013)

It is important to note from Fig. 4 that as against the expectation of 12% to 15% of returns in
the production of aircraft under first/second lease the level of gearing gets counted for 70%
to 80%. In the same way, under 3 rd /4 th lease cycle the expected return of higher rates offers
50% to 60% level of gearing. The emphasis over opportunistic growth thus is the basic
structural status of aircraft leasing in the global market.
Airbus vs Boeing
Buying of Airbus and Boeing appears an expensive activity. The price and the international
ratings are some of the factors that add to its extensive and expensive price ranges. The
difference between the act of buying new aircraft from Airbus or Boeing has been noted
hereafter.
Price Lists
A comparative analytical approach between Airbus and Boeing gets noted basically due to
the relevance of financial support as counted by the act of leasing the aircraft. The price list
of the Airbus and Boeing confirms it all. See Fig. 5 & 6, for details –
Figure 5 Price list of Airbus in 2015

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Source: Airbus (2015 a)

Figure 6 Price list of Boeing in 2015

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Source: Boeing (2015)
It is important to note here that the actual prices vary as per the deals. In case of leasing
aircraft, these prices get lessen further, and thus adding an extra financial edge to the price
list. The activities of manufacturing Airbus and Boeing remain relevantly engaged in creating
the competition of price in order to defend respective value of market share. Airbus (2015 a)
notes that the activities of leasing of the aircraft for Airbus and Boeing are subject to respond
positively to the rates of currency and exchanges as marked by the international aircraft
market.
International Rates
The matter of currency rates, followed by exchange rates of Airbus and Boeing also differs as
per their demographic manufacturing locations. The production of the Boeings are basically
based on the US dollars. On the other hand, the production of the Airbus gets determined as
per the Euro rates. These exchange rates depend a lot in terms of understanding the
appreciation and depreciation of Airbus and Boeing. As marked by Boeing (2015) with the
appreciation of US dollar in contrast to Euro comes into being, the production cost of Boeing
aircraft increases in a competitive manner, and as per the production cost of Airbus aircraft.
On a converse manner as the US dollar falls against the status and value of Euro, Boeing
gains necessary advantage and so is the market of leasing the Boeing and Airbus.
Popularity of Aircraft Leasing
The demands of more aircraft leasing organisation in the global basis is increasing in count.
Most of these organisations prefer to lease aircraft, from either airbus or Boeing rather than
purchasing, due to the scope of gaining less financial burden and returns to be gained on a
long-term basis. In this context, Capital Aviation (2014) declares the aircraft market as the
place that allows huge amount of efficient deployment of large capitals. Such initiations are
stated to be very appropriate as the same offers stable flow of cash, which gets supported by
contracts determined on long term grounds. The other aspects are about the predictability
made over returns on long-term and as per value-forecast for future; global and absolutely
mobile as an asset.

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