T + T – Normal size
Dubai plays a pivotal role in the commercial aircraft leasing market in the Middle East and Africa, which is currently witnessing significant growth, and the market size is expected to increase from $19.5 billion in 2022 to $29.2 billion by 2030, at a compound annual growth rate of 5.6%, according to a report published by Research and Mark.
Dubai offers specialized leasing services that meet the growing demand for aircraft in the region, through a group of companies that it hosts, such as Dubai Aerospace Enterprise (DAE), which has established itself as an important player in the aviation industry, and is one of the most prominent aircraft leasing companies in the region, and is ranked eighth globally in terms of value at approximately $18 billion, and ninth globally in terms of fleet size, which reaches 489 aircraft, according to recently issued data. The list of major companies operating in the aircraft leasing market in the Middle East and Africa also includes Novus Aviation Capital and Alafco Aviation Lease and Finance Co. The list of major companies operating in the aircraft leasing market in the Middle East and Africa also includes Avilis, APL, Sahara African Aviation, Fair Aviation, Global Aviation Operations, and Asia Aero Leasing.
A KPMG report indicated that there are a number of factors that contribute to enhancing Dubai’s position in the commercial aircraft leasing sector at the regional and global levels, including that Dubai provides an advanced infrastructure, including Dubai International Airport and Al Maktoum International Airport, which enhances its attractiveness to global companies in this sector. Dubai is also a center for technological innovation in the aviation industry, where many pioneering projects are being implemented that focus on improving operational efficiency and reducing operating costs for airlines through the use of advanced technology.
Dubai’s strategic location between Europe, Asia and Africa makes it an ideal hub for airlines and leasing companies seeking to access emerging markets. Dubai-based leasing companies can easily serve airlines in these regions, enhancing opportunities for future growth and expansion. Dubai also hosts several annual aviation events, such as the Dubai Airshow, one of the largest aviation events in the world. These events bring together major players in the market, providing great opportunities for business networking, knowledge exchange and innovation.
E-commerce
The Middle East and Africa region is witnessing a significant increase in demand for air cargo, especially with the growth of e-commerce activities. To meet this growing demand, airlines such as Emirates, Qatar Airways, and Etihad Airways are resorting to leasing aircraft to manage their fleets efficiently. For example, in 2023, Emirates SkyCargo leased two Boeing 747-400F aircraft, providing it with additional cargo capacity and the ability to respond immediately to high customer demand.
According to statistics from the International Air Transport Association, airlines in the Middle East witnessed a 43.1% increase in air traffic in March 2023, while Africa witnessed a 71.7% increase during the same period. With this growth in air traffic, airlines are facing an increasing need for larger fleets to handle the increased traffic, especially with the great difficulty in receiving new aircraft from manufacturers, so companies resort to leasing aircraft from leasing companies to reduce operating costs.
The aviation sector is currently experiencing significant growth compared to 2019 levels, and data shows that demand for aircraft leasing has never been higher. According to Mark Danachi, Senior Vice President, Asia, Aero Leasing: “Previously, about a third of airline capacity was leased, now that figure is up to 50%. Even companies that used to prefer to buy aircraft are using leasing as an important financing channel to modify their fleets.”
Lease rates have seen a significant increase from their lows in 2020 to their highs in 2023. “The inventory of aircraft available for lease is not as large as some people think, which is driving prices up,” says Eddie Beniak, head of analytics and consulting at Ishka. “More airlines competing for available aircraft gives landlords more control over lease terms.”
Rental Sections
The aircraft leasing market in the Middle East and Africa is witnessing continuous growth, influenced by the expansion of airlines and the increasing demand for flexible leasing solutions in the region. The aircraft leasing market in the Middle East and Africa is divided into three main types: dry leasing, which means that the company that owns the aircraft provides the aircraft without a crew or services, giving the lessee greater freedom to manage operations; wet leasing, which includes providing the aircraft with its full crew, in addition to maintenance and insurance services; and semi-wet leasing, which is a combination of dry and wet leasing, where the aircraft is provided with some services but not all of them.
Major companies operating in the Middle East and Africa aircraft leasing market include Avilez, APL, Novus Aviation Capital, Dubai Aerospace Enterprise, ALAFCO Aircraft Lease and Finance, Sahara African Aviation, Fair Aviation, Global Aviation Operations and Asia Aero Leasing.
Factors
The commercial aircraft leasing market is witnessing rapid growth due to several factors that stimulate this trend, most notably the increasing demand for air travel, especially in emerging markets, as these regions are witnessing economic growth and an increase in the number of passengers, which requires airlines to expand their fleets quickly to meet the increasing demand, which makes aircraft leasing an ideal option. Leasing also provides airlines with high operational flexibility, as they can meet seasonal needs or operate new routes without committing to purchasing aircraft at high costs, which reduces financial risks and allows companies to maintain financial liquidity to direct it towards other investments.
The increasing focus on improving operational efficiency and reducing costs is leading to an increased reliance on leasing modern, fuel-efficient aircraft. These aircraft help companies reduce operating costs and comply with increasingly stringent environmental standards.
