Aviation leasing market hits new heights

"Domestic aircraft leasing companies have advantages in providing reasonable prices, and this has helped them grow their business fast in recent years. But they still need to improve their professional abilities in fleet management."

China's air travel market has steadily recovered since the pandemic emerged. In the third quarter of this year, the sector transported 86.4 million people, 49.3 percent the volume recorded in the same period of 2019 and a rise of 23.2 percentage points from the second quarter. In particular, with the gradual return of international passenger flights, the volume of such traffic reached 537,000 people, up by 73.3 percent from the second quarter, according to CAAC.

The accelerated recovery of the air travel market has boosted demand for aircraft leasing. Bohai Leasing, which is based in Tianjin, said in its earnings report that in the third quarter it saw a significant improvement in rental fees for leased aircraft. During the quarter, it sold 13 aircraft, and sales revenue was up by 3.9 billion yuan ($559 million) compared with the same period last year.

After breaking the monopoly of foreign leasing companies at home, Chinese leasing companies, while serving domestic airlines, have been actively going global and helping develop the aviation financial market worldwide.

By the end of last year, Chinese companies occupied eight spots among the top 20 aircraft leasing companies globally, according to travel data provider Cirium.

Aircraft leasing has maintained a high market share in the global aviation market. Last year, nearly 60 percent of new aircraft deliveries were funded by lessors, according to the Aviation Industry Leaders Report 2022 issued by global consulting company KPMG.

Despite the pandemic posing challenges for aircraft lessors, it has also highlighted the resilience of the leasing business. Large-scale and well-run lessors have managed their liquidity problems and have been vital partners in supporting their airline customers through the pandemic, the report said.

Such support during the past two years has deepened and strengthened relationships between lessors and airlines. As most carriers face severe capital restraints for the foreseeable future, lessors have taken on greater importance in funding new deliveries, according to the report.