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BROUGHT TO YOU BY FLYING FINANCE
The private aviation market is experiencing unprecedented lease rate surges, creating waves that are keenly felt across the industry. In fact, there has even been a 2020s trend of private jet owners leasing out their jets and turning a profit, which is highly unusual considering the depreciation rate of those jets.
Several factors contribute to this spike in lease rates. The post-pandemic surge in aviation demand coincides with global supply chain disruptions, which in turn complicates maintenance schedules and reduces aircraft availability.
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The limited growth of global aircraft fleets is compounding these issues. Business aviation flight activity is up by about 15 percent compared to 2019, but the backlog of OEM aerospace manufacturing means that deliveries are not meeting demand for new aircraft against a backdrop of labor shortages and parts scarcities. This mismatch intensifies competition for available jets and drives lease rates even higher.
High utilization rates have become a double-edged sword. While they indicate robust market activity, they also lead to increased wear and tear, which escalates maintenance requirements and associated costs.
Owners are increasingly turning to engine leasing as a strategy to mitigate downtime due to repairs, maintaining operational continuity while generating profits from assets that were previously viewed as liabilities. Engine lease rates have risen sharply; reports indicate a 20-25 percent increase since 2019.
Case for Financing
Because of these mounting challenges, financing a private aircraft might now be the most appealing alternative for you or your business. When lease rates reach all-time highs, the economics of owning, at least partially, become comparably advantageous.
Tailored financing solutions can provide the flexibility you need to navigate these turbulent times.
Financing a private aircraft can make your costs significantly more stable when you consider the skyrocketing lease rates and market volatility. Since lease rates can surge during periods of high demand or constrained supply, a longer-term solution is the only way to adequately map out your financial planning.
A fixed payment schedule over a designated period might limit your flexibility in some ways, but it lets you budget more effectively without the fear of unforeseen cost increases.
Not to mention, financing arrangements typically come with more reliable access to your aircraft. Unlike the leasing arrangements where access can be uncertain due to aircraft availability issues, ownership provides a guarantee of access and allows you or your business to maintain control over travel plans without being at the mercy of lessor schedules or market-imposed constraints.
Transitioning from lessee to owner can transform private aviation from a reactive to a proactive scenario. If you fly for your business, you understand that reliability and consistency are paramount.
While leasing might have previously been the default path for your industry, exploring ownership and financing options just might provide the stability and long-term benefits that are increasingly valuable in today’s aviation landscape.
If you want to learn more about your financing options, talk to us at FLYING Finance today and our team of experts will be happy to answer any questions.
