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2023 Aviation leasing forecast: Progress ahead, but challenges remain

Leading industry experts headlined the Airline Economics conference in Dublin, which kicked off Sunday evening. The good news is that experts predict a move towards market stabilization in 2023.  Looking back, an unexpected downturn in 2022 resulted from factors including the start of the war in Ukraine and a COVID spike.  Experts indicate that all actors in the world of aviation financing have a role to play in market recovery, especially in light of the challenges ahead. Two of these challenges are previewed below. 

First, in 2023, aircraft production and deliveries will continue to feel the strain of meeting order demands. In the years prior, manufacturers overestimated the swiftness with which they could construct aircraft.  Often, this was a result of factors outside of their control, such as supply chain demands. After all, how can a manufacturer produce an aircraft when aircraft engines and raw materials are also hotly in demand? 

Second, aviation financiers may be faced with a lack of capital for their business. Global inflation has led to an anxious economy, compounded by a market that is still significantly recovering from the financial effects of COVID.  This is where experts on both sides of aviation financing will be charged with developing creative solutions to keep the industry heading in the right direction.

As we have already seen, central banks and other financiers are increasing interest rates. This will ensue until manufacturers can make progress towards meeting demands, and the economy begins to recover.

Nevertheless, airline orders for new aircraft are increasing and new geographic markets are opening.  2023 could prove to be a "silver lining" on a challenging several years for aviation.     

Authors: Richard Hakes, Catriona Henderson, Christopher Jackson, Adam Longney, Julia Norsetter, Simon Spells and Hui Ling Teo

All actors in the world of aviation financing have a role to play in market recovery.

Tags

aviation, financing, transportation

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