Financiers and lessors from the global air travel industry gathered in Dublin, supported by strong lease rates and stable oil prices, but concerned about jet shortages and trade tensions.
Ireland is the center of the global aircraft leasing industry, which controls about half of the world’s airline fleet. The Airline Economics event offers an important opportunity to evaluate economic and trade risks.
Leasing companies have seen higher rental and resale values for jetliners as airlines work to meet new demand while planemakers struggle to recover from the COVID-19 pandemic. This has led to strong profits for lessors and airlines, as shortages push up demand and fares.
However, concerns are rising about getting new efficient aircraft because of problems with supply chains, including shortages of parts and labor. Older second-hand planes have been in high demand to fill the gap.
Bertrand Grabowski, an independent aviation advisor, said the main question for the industry is how quickly manufacturers can increase deliveries, as this will affect many areas of the market. He also noted that lease rates have started to level off, as airlines are now less willing to add capacity at high costs.
Some delegates believe the shortage of jets will last for about three more years, while others think the industry will remain short of jets longer due to the removal of about 4,000 unbuilt jets during the pandemic.
Airbus plans to produce 75 A320-family jets a month by 2027, but this target has been delayed several times due to supply chain issues. Boeing is also slowly increasing production of the 737 MAX to 38 jets a month, after regulators set this limit following a problem with a 737 MAX door plug last year.
The meeting also touched on the potential impact of U.S. President-elect Donald Trump’s promise to impose new tariffs, which some analysts believe could disrupt aerospace supply chains and reduce air cargo demand.
Avolon CEO Andy Cronin said any problems with supply chains would hurt the recovery process, as airplane factories are struggling to meet demand. Avolon, a major customer of Boeing and Airbus, expects the world’s top aircraft makers to face capacity constraints for at least 10 more years.
The airline industry has had mixed results, affected by delivery delays, engine repairs, security issues in the Middle East, and labor disputes. The International Air Transport Association (IATA) predicted record passenger numbers in 2025, with revenues expected to exceed a trillion dollars.
However, the recovery of travel from China and business travelers has been slower than expected. Grabowski also pointed out that the rising U.S. dollar is impacting airlines, which pay for fuel and planes in dollars while earning money in weaker local currencies.
