Today more than 35% of the world's airline fleet is leased, but not all lessors are convinced that figure will grow to 50% by the start of the next decade as anticipated by various market observers, including Boeing.
"I think we are about at the saturation point for operating lease penetration. I am neither an advocate nor a believer that we can greatly exceed the current levels we have already achieved," said John Willingham, chief executive officer of Macquarie Air Finance, speaking at the Ascend Finance Forum in San Francisco
today. "There are some constraints on the sustainable market share of lessors because if it becomes too easy for an airline to take an aircraft...and give it back, we will end up flooding the used aircraft market."
According to Willingham, if lessors do not produce the returns that they were targeting when they originally invested "over time this will affect the overall economics of the market."
Steve Rimmer, chief executive officer of Guggenheim Aviation Partners, questions whether manufacturers and aircraft pricing will allow lessors to grow to 50% of the global fleet.
"Manufacturers have been very plain and straightforward about how they want to control who their customers are," he said. "I don't see manufacturers, quite bluntly, allowing lessors to own that much of the market. And this will be a barrier."
Also, putting pressure on the growth of lessors will be the airlines, he says.
"If one associates the returns of leasing as being opportunistic returns of 15-20% IRs [initial returns], the airlines can't afford to pay that sort of return on all 50% of the leases."
However, Frank Pray, chief executive of Intrepid Aviation, is optimistic about the growth of lessors.
"Absolutely, lessors will continue to grow," he said. "We are at 40% on average today from 10-15% years ago, so I expect about 50% of the global fleet in the next eight years."