With Falko coming into its 13th year, “this is the best market we have seen to be a lessor,” confirmed Mark Hughes, chief commercial officer at Falko. “We’re seeing everything we have expiring in 2024 already extended or committed,” he added, pointing out that airlines with 2025 maturities are already looking to secure that capacity: driving not just longer leases but better terms and conditions within those leases. “When we’ve been meeting airlines [in Dublin] over the last few days, pretty much the first question you get asked is have you got an aircraft,” he joked.
With de Havilland Canada supporting around 3000 legacy aircraft types in service, the company is not necessarily as exposed to large macro-economic factory as others in the segment, highlighted Philippe Poutissou, vice president of product strategy and marketing for de Havilland. “It’s really more of a collection of many local domestic economies as well as many different business models” he added, noting that production of the updated Twin Otter variants is being driven “on the back of a lot of demand coming from Asia”. Additionally, “quite a bit of energy” is being spent in owners putting the Dash 8 back into service amid demand from both existing operators and new market entrants, with the aircraft’s performance – particularly Dash 8-400s - particularly crucial for its “traditional strongholds”.
Basil Gygax, head of customer finance EMEA, Embraer Commercial Aviation, also explained the E-Jets family was seeing a lot of replacement demand across the American and European markets. This is being driven in part by the 200 ERJs and 15-year-old E1s due to be replaced in the US, with upcoming EU emission trading mandates also set to increasingly drive operators to more fuel-efficient fleets. Asia is also very much a growth market for Embraer, with market penetration achieved by Scoot “a real game changer” for the OEM.
Anne-Bart Tieleman, CEO of TrueNoord, had a slightly different perspective regarding the anticipated upgrade of second-general E-Jets. “There is a lot of uncertainty we think that we can see in the market,” he explained, adding that bigger airlines – especially in the Western world – may well continue to stick with what they have and know. “Why take the risk of a sight more expensive capital,” he noted, adding that postponing a decision may be sensible amid a “difficult” market. “Which of course has a positive effect on interest rates,” he concluded, adding that not too much supply or shortage will have a positive demand on pricing.
Mark Dunnachie, SVP Commercial at ACIA Aero Leasing, further confirmed the significance of Asia for growth. “I’d say from our perspective in Asia… everything is out there for us,” he commented. “We’re struggling in Africa, but we also have presence in Australia,” with “good potential” in North America. However, from Dunnachie’s perspective, the number one challenge remains the ongoing supply chain issues; something projected to last until at least 2025. “I could have traded the ATR landing gear or the spare engines… several times this week,” he laughed.
Looking to the future of the regional leasing segment, Hughes says Falko has been “most active in terms of consolidation in the last few years,” having done two of the biggest deals in the industry in terms of portfolio acquisition and corporate mergers. He believes that while more consolidation and diversification will follow, “more people supportive of smaller aircraft will be very, very helpful”. Tieleman concurs that while there is “room for more” players in the market, it’s ultimately about the ability offer a well-priced product. “We can price it well because we’re big enough to actually tap the capital markets that might be for some airlines out of scope,” he adds.
Between 55-60% of ATR’s deliveries are financed by lessors, explains Alister Read, head of marketing for lessors at Airbus. The liquidity in the sale and leaseback space is very competitive, with lessors bringing financing products to the A220. This type has also begun to be traded between lessors and included as collateral in ABS loans, with that kind of “lifecycle activity in the leasing market” ramping up.
Finally, how might the regional leasing sector be impacted by evolving sustainability technology? Mark Dunnachie, SVP commercial at ACIA Aero Leasing, believes a “reality check” is required; citing the long gap likely before an alternatively-powered aircraft and its ultimate certification. Poutissou concluded that with aircraft in the regional segment – whether an ATR, Dash 8 or a Twin Otter – designed to last a “very, very long time”, while manufacturers obviously have to stay “as efficient as possible and help reduce the emissions from the aircraft,” “keeping an aircraft in service for decades is actually probably the most sustainable thing for the industry and for operators”.
Asia a growing market for regional aircraft lessors as demand remains strong worldwide
