Welcome to my latest video presentation, posted February 11, 2025. This accompanying article is an edited transcript.
You don’t need a PhD in Economics to realize that shortages and rising demand equal higher values and prices. That’s the dynamic at play right now in the global aviation industry.
Production delays, supply chain snarls, and regulatory bottlenecks are creating an aircraft shortage, putting pressure on airlines and lessors alike.
The global aviation industry is still grappling with disruptions stemming from pandemic-era factory shutdowns, ongoing shortages of critical components such as engines and avionics, and labor constraints affecting both manufacturing and maintenance operations. The trade war launched by the Trump administration has only exacerbated the situation.
As a result, airlines struggling to expand or refresh their fleets have turned to leasing as a stopgap solution, driving lease rates to multi-year highs. Narrowbody aircraft, particularly high-demand models like the Airbus A321neo and Boeing 737 MAX, have seen some of the sharpest increases in lease pricing due to their efficiency and operational flexibility.
Meanwhile, widebody aircraft such as the Boeing 787 and Airbus A350 are experiencing a resurgence in demand as international travel rebounds, further tightening supply and driving up base values.
Regulatory challenges, including increased scrutiny on aircraft certification and safety checks, have also contributed to the backlog. Delays in Boeing’s production ramp-up—especially with the 737 MAX and 787 Dreamliner—have left airlines with fewer options, compelling many to hold onto aging aircraft for longer, further constraining availability in the secondary market.
Sources tell Aircraft Values News that aircraft lease rates are on track to continue rising in 2025, primarily driven by strong demand for aircraft coupled with limited new deliveries from manufacturers.
We’re witnessing a tight supply situation across both narrowbody and widebody aircraft, particularly for narrowbody models like the 737 MAX 8 and A320-200neo.
The B737 MAX 8 and A320-200neo are popular, fuel-efficient aircraft used primarily used for short to medium-haul flights, catering to a large majority of commercial airline routes with a high passenger volume. Boeing and Airbus aren’t able to make enough of them, fast enough.
When assessing the direction of values and lease rates, production is the key metric. Production delays at Boeing and Airbus are tightening supply, driving up rates and values and extending aircraft lifespans.
With new aircraft scarce, lessors hold the upper hand, pushing lease rates higher for both narrowbody and widebody aircraft, particularly for narrowbody workhorses like the MAX and neo families.
Supply and demand are out of whack, with deliveries and requirements projected to remain in misalignment well into the future. Exacerbating the shortage are tariffs, trade sanctions, export controls, and ongoing disputes among the U.S., European Union, Russia and China.
President Trump announced on February 10 that he would impose 25% tariffs on steel and aluminum imported into the country, and stated that he was planning on introducing reciprocal tariffs on foreign countries that currently impose tariffs on goods from the U.S. This is potentially very bad news for manufacturers such as Boeing.
According to current market forecasts, aircraft lease rates are expected to steadily increase, with the size of the global commercial aircraft leasing market estimated to grow by USD 20.93 billion from 2024-2028, according to data released in February 2025 by research firm Technavio. The Asia-Pacific market is forecast to contribute 43% of this growth during the forecast period.
For lessors, this supply-demand imbalance presents a lucrative opportunity, allowing them to command premium rates on both new and used aircraft. Even older models, such as the Airbus A320ceo and Boeing 737NG, are seeing a spike in demand as carriers scramble for capacity.
The upward trend in lease rates and base values is expected to persist into 2025, particularly if production challenges remain unresolved and global air travel continues its post-pandemic recovery.
