Aircraft Leasing

What Is Aircraft Leasing?

Aircraft Leasing is the business practice by which airlines acquire the use of commercial aircraft through contractual lease agreements with aircraft leasing companies (lessors) rather than purchasing the aircraft outright. Leasing has become the dominant method of fleet acquisition in commercial aviation: as of 2024, approximately 51% of the global commercial fleet of roughly 26,000 aircraft are on lease, a figure that has risen steadily from 25% in 1990.

The aircraft leasing industry is dominated by a small number of large lessors — AerCap (Dublin, with over 1,700 aircraft), Air Lease Corporation (Los Angeles), and SMBC Aviation Capital (Tokyo) collectively manage assets exceeding $120 billion USD. These companies order aircraft directly from manufacturers, often securing better pricing through bulk orders, then lease individual aircraft to airlines worldwide.

How It Works

There are two primary forms of aircraft lease, each with distinct financial and operational characteristics:

• Operating Lease: The most common form. The airline (lessee) pays monthly rental rates to use the aircraft for a fixed term — typically 6–12 years — without taking on ownership risk. At lease end, the aircraft is returned to the lessor. Monthly rates for a new Boeing 737-800 are approximately $300,000–$375,000 USD.
• Finance Lease (Capital Lease): Structured more like a loan; the lessee assumes most risks and rewards of ownership. The aircraft appears on the airline's balance sheet. Often ends with a purchase option at nominal value.
• Wet lease and wet lease arrangements: A lessor provides the aircraft with crew, maintenance, and insurance (ACMI — Aircraft, Crew, Maintenance, Insurance), used for seasonal capacity.
• Sale and leaseback: An airline sells an owned aircraft to a lessor and immediately leases it back, freeing capital while retaining operational use.

Key Examples

Low-cost carriers such as Ryanair and IndiGo have built their business models partly on leasing — IndiGo operates one of the world's largest all-leased fleets at over 350 aircraft, enabling rapid ancillary revenue expansion without massive capital expenditure. Following the COVID-19 pandemic, lease rates for the Airbus A321neo fell to approximately $280,000/month in 2021 before recovering to over $430,000/month by 2024, illustrating how lease rates function as a market indicator.

Aircraft Examples

• Airbus A320neo family: The most widely leased aircraft type globally; AerCap holds approximately 400+ A320neo-family aircraft in its portfolio.
• Boeing 787-9: Finance leases are common for wide-bodies due to high acquisition cost ($291 million list price in 2024).
• ATR 72-600: Regional turboprops are almost exclusively delivered via operating lease; lease terms of 8–10 years are standard.
• Boeing 737 MAX 8: Post-grounding (2019–2020), stored MAX aircraft generated significant restructuring of operating lease agreements between Boeing, lessors, and airlines.