Major aircraft lessor SMBC warns airlines of growing costs

Airlines face a slew of growing costs in the coming year including higher insurance, fuel, labour and lease rates, the chief executive of major aircraft lessor SMBC Aviation Capital said on Thursday. Managing those will be the industry’s biggest challenge in the next 12-24 months despite a rebound in demand, Peter Barrett told the Airfinance Journal conference in Dublin. “If I had to pick one topic that’s going to be a challenge for the industry over the next 24 months, it will be the cost base and how elastic will demand be relative to that,” Barrett said. After years in which airlines enjoyed growth helped by low interest rates, Barrett said it was inevitable the rising cost of money would eventually be passed on through to the rates charged to airlines for leasing jets. The US Federal Reserve raised interest rates by 50 basis points on Wednesday - the biggest hike in a single day since 2000 - in a bid to control surging prices.<br/>