Global Aircraft Leasing market set to soar to $315B by 2033
The global commercial aircraft leasing market is projected to skyrocket to $315.9 billion by 2033, marking a substantial increase driven by a cumulative annual growth rate (CAGR) of 7.3 percent from 2022. This rapid expansion is set to reshape the aviation industry, with Nigeria emerging as a significant player in this evolving landscape.
Nigerian Market Dynamics
Nigeria’s burgeoning aviation sector is expected to witness increased participation in the global aircraft leasing value chain. This growth is fueled by a mix of outright aircraft purchases funded by financial institutions and flexible lease options. Major Nigerian carriers, including AZMAN Air, Max Air, DANA Air, Arik, Aero Contractors, Ibom Air, Overland Airways, Green Africa Airways, United Nigeria Airlines, Air Peace, NG Eagle Airlines, Rano Air, and Cally Air, are actively engaged in various negotiations with original equipment manufacturers (OEMs) and third-party lessors to acquire new aircraft for their operations.
While some airlines prefer direct purchases, others are exploring diverse leasing arrangements that align with their business models and financial flexibility. The demand for new aircraft is high, with several operators processing applications and approvals from the Federal Ministry of Aviation & Aerospace Development and the Nigerian Civil Aviation Authority (NCAA) to become scheduled carriers. Besides scheduled commercial operations, the charter sector is also experiencing a surge in demand for different types of aircraft.
Fleet Expansion and Leasing Strategies
The projected increase in aircraft acquisitions comes at a time when Nigerian carriers are solidifying their contractual relationships with global aircraft lessors. Ongoing business negotiations aim to ensure the fidelity of lease rental payments and avoid defaults.
For instance, a leading indigenous carrier has emphasized that since its operations commenced in 2014, it has focused more on aircraft acquisitions than on dry leasing. An official from the airline, who requested anonymity, confirmed that their fleet expansion has involved direct acquisitions from manufacturers such as Boeing and Embraer, rather than leasing.
Aniekan Essienette, Group Manager of Marketing and Communication at Ibom Air, highlighted the state-run carrier’s preference for aircraft acquisition through partnerships rather than leasing. “Ibom Air does not have any aircraft on lease from any lessors, foreign or domestic. We own all seven aircraft that we operate, and they are all financed by Nigerian banks,” Essienette stated.
Commitment to Contractual Obligations
Prof. Obiora Okonkwo, spokesperson for the Airline Operators of Nigeria (AON), affirmed that operators adopting the leasing model are meeting their obligations to lessors despite challenging business conditions. “Nigerian airlines have consistently worked very hard to meet their contractual obligations with lessors despite operating within a challenging business environment,” Okonkwo said.
Max Air, another indigenous carrier, reiterated its commitment to the acquisition model for securing its fleet. A source close to the carrier confirmed that Max Air fully owns its Boeing 737 and 747 aircraft and does not engage in leasing for its domestic and international operations. The airline emphasized that it is not indebted to any organization for unpaid lease fees.
Arik Air, despite being under receivership managed by the Asset Management Corporation of Nigeria (AMCON), has also maintained its commitment to meeting lease agreements before its financial troubles.
Government Initiatives and Industry Growth
In February 2024, the Minister of Aviation and Aerospace Development, Festus Keyamo, met with the Aircraft Leasing Group (ALG), including major manufacturers Airbus and Boeing. The meeting aimed to leverage opportunities for indigenous carriers and address challenges in securing dry leases for Nigerian operators. Part of the discussion focused on removing Nigeria from the list of countries facing hurdles in aircraft leasing.
Global Market Trends and Major Players
The aircraft leasing market has experienced significant growth, expanding from $178.31 billion in 2023 to $195.09 billion in 2024, with a CAGR of 9.4 percent. Several factors contribute to this expansion, including globalization of aviation, pursuit of cost-efficiency, market deregulation, financial advantages for airlines, and the rise of low-cost carriers.
Key players in the aircraft leasing market include AerCap Holdings N.V., Air Lease Corporation, BOC Aviation Limited, Aviation Capital Group LLC, BBAM LLC, GE Capital Aviation Services LLC, CIT Group, International Lease Finance Corporation, Dubai Aerospace Enterprise Ltd., Nordic Aviation Capital A/S, Avolon Holdings Limited, and many more.
Future Projections and Strategic Practices
Looking forward, trends expected to drive the industry’s growth include fleet modernization, proliferation of low-cost carriers, innovation in leasing platforms, and a shift towards operating leases. The anticipated surge in air travel demand is pushing airlines and investors to opt for aircraft leasing as a strategic practice. Leasing offers flexibility to adapt to changing demand, expand or contract fleets, and avoid the significant upfront capital costs associated with buying aircraft.
The global aircraft leasing market is on a robust growth trajectory, with Nigeria poised to play a pivotal role. As Nigerian airlines navigate between direct purchases and leasing options, they contribute significantly to the industry’s expansion. Government initiatives and strategic partnerships with global lessors further bolster this growth, positioning Nigeria as a key frontier market in the aviation sector. The collective efforts of Nigerian carriers and regulatory bodies underscore the country’s commitment to meeting global aviation standards and driving industry innovation.
