Chinese capital is changing the competitive dynamic of the commercial aircraft operating leasing market, according to research released today by FlightGlobal.
"The flood of capital from China has reset the marketplace, changing the dynamic not only of aircraft leasing but the airline industry as a whole," says Rob Morris, global head of Flight Ascend Consultancy, which is part of FlightGlobal.
Chinese capital's effect on the market has been marked since 2008, when it represented just 5% of the market, the research shows. Since then, the volume of Chinese capital in aviation has grown by 860%, and now accounts for 28% of the market.
Total capital deployed by aircraft lessors has grown 51% to $261 billion, with $71 billion coming from Chinese sources, over the last decade.
When Chinese capital is taken out, however, the growth rate is a much more modest 15%.
"From a modest share of the leasing marketplace 10 years ago, Chinese capital now accounts for over a quarter of it, and we forecast it will fund over a third of it in just five years' time," adds Morris. "This is the new reality of the marketplace as aircraft lessors and their airline customers take advantage of this new capital, much of it known to be at lower rates, to increase the size of their fleets."
An infusion of Chinese capital, which tends to be cheaper than established debt sources, has provided aircraft lessors with greater means to drive the growth of their fleets. The cheapness of Chinese capital has also softened lease rates.
Over the last decade, the world's aircraft leasing community has acquired more than 8,300 aircraft.
FlightGlobal forecasts that this will grow by around 50% to 12,300 aircraft over the next 10 years, equivalent to around 55% of all new aircraft manufacturer deliveries over that period.