Sky-high rents hit the aircraft market as Boeing jets top $300,000 a month
Passengers aren’t the only ones paying more to fly this year. A tight supply of aircraft is driving up the price airlines pay to rent planes, just as travel demand returns. The rent on a new Boeing 737 Max rose more than 20% between April 2020 and this July to $316,000 a month, estimates aviation advisory firm IBA Group. The competing Airbus A320neo climbed to $324,000 a month, up more than 14% from April 2020, and the highest price since before the Covid pandemic. The larger version, the A321neo, was going for $375,000 per month in July. The world’s largest aircraft leasing firms, like Air Lease, Avolon and AerCap, which acquired GE’s airplane leasing business last year, are reaping the benefits. More than 51% of the world’s nearly 23,000 single- and double-aisle jetliners are owned or managed by leasing firms, according to aviation consulting firm Cirium. While many airlines do own their aircraft, some carriers choose to rent planes instead, or combine the two. Reasons for leasing vary and include weak credit ratings that drive up borrowing costs, and the desire, or need, to conserve cash, rather than shelling out to buy new planes, which can run more than $100m apiece at list prices. The higher costs come as airlines are already facing high inflation, resulting in expenses that usually get passed along in fares. Aircraft rents are approaching or in some cases surpassing 2019 prices, and they’re set to go even higher. This year’s surge in oil prices make newer, fuel-efficient planes more attractive than older ones, and higher interest rates could also drive up lease rates. “You have the rising interest rates and higher cost of capital,” said Mike Yeomans, director of valuations and consulting at IBA. “That will push lease rates higher through the rest of the year.”<br/>
https://portal.staralliance.com/cms/news/hot-topics/2022-08-26/general/sky-high-rents-hit-the-aircraft-market-as-boeing-jets-top-300-000-a-month
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Sky-high rents hit the aircraft market as Boeing jets top $300,000 a month
Passengers aren’t the only ones paying more to fly this year. A tight supply of aircraft is driving up the price airlines pay to rent planes, just as travel demand returns. The rent on a new Boeing 737 Max rose more than 20% between April 2020 and this July to $316,000 a month, estimates aviation advisory firm IBA Group. The competing Airbus A320neo climbed to $324,000 a month, up more than 14% from April 2020, and the highest price since before the Covid pandemic. The larger version, the A321neo, was going for $375,000 per month in July. The world’s largest aircraft leasing firms, like Air Lease, Avolon and AerCap, which acquired GE’s airplane leasing business last year, are reaping the benefits. More than 51% of the world’s nearly 23,000 single- and double-aisle jetliners are owned or managed by leasing firms, according to aviation consulting firm Cirium. While many airlines do own their aircraft, some carriers choose to rent planes instead, or combine the two. Reasons for leasing vary and include weak credit ratings that drive up borrowing costs, and the desire, or need, to conserve cash, rather than shelling out to buy new planes, which can run more than $100m apiece at list prices. The higher costs come as airlines are already facing high inflation, resulting in expenses that usually get passed along in fares. Aircraft rents are approaching or in some cases surpassing 2019 prices, and they’re set to go even higher. This year’s surge in oil prices make newer, fuel-efficient planes more attractive than older ones, and higher interest rates could also drive up lease rates. “You have the rising interest rates and higher cost of capital,” said Mike Yeomans, director of valuations and consulting at IBA. “That will push lease rates higher through the rest of the year.”<br/>
