By Karl Cowman, Client Relationship Director
The aircraft leasing market has entered one of its most dynamic phases in decades. Supply‑chain pressure, delivery delays, shifting airline behaviours and rising maintenance costs have all contributed to a level of volatility that many market participants have not experienced since before the pandemic.
Against this backdrop, I recently moderated a panel at the Airline Economics Growth Frontiers Global conference in Dublin, where leading valuation, advisory and leasing specialists came together to unpack what today’s market signals really mean for investors, lessors and airlines.
Their insights, summarised below, revealed a market that remains fundamentally imbalanced, but also full of opportunity for those who understand the forces driving lease rates and asset values.
Aircraft leasing market still far from “balanced”, impacting decision-making
Over the past 18–24 months, lease rates and valuations have risen sharply, often to levels well above long‑term base value assumptions. Our panel unanimously agreed that the market remains far from equilibrium, with elevated demand colliding head‑on with structural supply shortages.
This imbalance is shaping decision‑making across every stakeholder group:
- Airlines unable to secure new‑delivery aircraft are turning to mid‑life assets
- Lessors with the right metal at the right time are enjoying increased pricing power
- Investors are reconsidering how to model downside risk in an overheated environment
The result is a valuation landscape where fundamentals matter – but so does timing.
Narrowbody pressures: Selective high demand, widening disparities
One of the clearest themes was the divergence emerging within the narrowbody sector. For high‑demand variants such as the A320neo and 737 MAX 8, lease rates remain exceptionally strong, driven by:
- Continued delays in original equipment manufacturer (OEM) deliveries
- Airlines expanding capacity faster than supply allows
- A competitive secondary market for in‑production aircraft
Yet not all narrowbodies are beneficiaries. Some older or less efficient models are beginning to show early signs of downward pressure as operators prioritise lower maintenance costs and better reliability profiles.
This widening gap highlights the growing importance of asset selection and technical performance in holding long‑term value.
Widebodies: A supply‑demand mismatch that isn’t going away soon
If the narrowbody story is one of divergence, the widebody story is one of scarcity. Passenger widebodies remain in exceptionally high demand, fuelled by strong long‑haul recovery and limited new‑delivery availability.
Our panellists highlighted three forces shaping this segment:
- OEM bottlenecks continue to restrict new aircraft flow
- Airlines are modernising fleets faster than suppliers can deliver
- Residual values are strengthening, particularly for efficient twin‑engine types
The consensus: the supply‑demand imbalance in widebodies will continue for several years, keeping lease rates elevated well into the medium term.
The defining theme of 2026? Delivery delays and supply chain disruption
Delivery delays from both major OEMs remain a central pressure point. These delays do more than just frustrate airlines; they distort the entire market by limiting replacement capacity and intensifying competition for available assets.
As a result:
- Lease rates are rising across age categories
- Secondary‑market values are strengthening
- Investors are revisiting fleet strategies grounded in assumptions of OEM reliability
The implication is clear: supply chain consistency is no longer taken for granted.
Maintenance cost inflation: The hidden disruptor
Maintenance economics remain one of the most challenging headwinds for operators. As highlighted by MBA Aviation on our panel, engine overhaul and LLP costs have been increasing at double‑digit rates annually, raising important questions about the real-world economics of new‑generation platforms.
Key concerns include:
- Whether rising maintenance costs are offsetting fuel efficiency gains
- The growing influence of engine OEMs in shaping cost curves
- How airlines and lessors allocate these increased costs across lease structures
For investors, this underscores the need to incorporate maintenance inflation more explicitly into long-term value modelling.
Escalation in new aircraft prices: Can the market keep up?
The panel also explored the accelerating price trajectory of new aircraft across both narrowbody and widebody categories. Questions remain:
- Can market values can keep pace with rising OEM pricing?
- Can lease rates adjust sufficiently to protect lessor returns?
- Can airlines sustainably absorb higher capital costs – or pass them to passengers?
As these pressures compound, pricing discipline and capital allocation strategy will become increasingly central to portfolio management.
Forecasting future values in an abnormal market
One of the most complex topics discussed was valuation forecasting. Many aircraft types currently trade well above base value, challenging traditional valuation frameworks.
With the market operating outside “normal” parameters, valuation teams are adapting methodologies while still anchoring forecasts in long‑term fundamentals. For investors, this means treating current pricing as a point in a cycle, not a new baseline.
“It’s a matter of when, not if, the current supply-demand imbalance will shift. Supply chains will eventually adapt and catch up with delivery targets; but demand could also cool in response to continued economic volatility. Either way, the current market conditions will not last forever, and it’s up to investors to tailor their risk appetite to the time horizon of their investment. Expertise is the key.” – Gary Crichlow, ISTAT Certified Senior Appraiser
Looking ahead: What the next 2–3 years may bring
Despite market tightness, the panel’s outlook was cautiously optimistic. Over the next 24–36 months:
- Lease rates are expected to remain high, supported by sustained supply shortages
- Next‑generation widebodies and efficient narrowbodies should continue to outperform
- Older widebodies and less efficient variants are likely to face growing competitive pressure
This creates an opportunity-rich environment for investors and lessors able to balance short‑term pricing strength with long‑term value discipline.
A market of constraints and opportunities
The insights shared at Growth Frontiers Global highlight a market shaped by structural constraints, shifting operator behaviours, and evolving asset economics. For lessors, investors and airlines alike, the challenge is not merely to react to today’s pricing environment, but to prepare for how these forces will reshape the market in the years ahead.
As ever, the winners will be those who pair informed analysis with strategic agility – making data‑driven decisions while remaining flexible enough to respond to a rapidly changing aviation landscape.
Discover IQ-EQ’s aviation leasing and finance services
At IQ-EQ, our experienced team is well versed in the operational and regulatory challenges involved in managing aircraft leasing or aviation finance structures. From entity formation and compliance to lease administration and trustee roles, there are multiple layers of complexity – and we’re here to help you navigate it.
Our end-to-end corporate and administration services are backed by a proven track record across key jurisdictions, integrated technology platforms and a team of seasoned professionals. Learn more and get in touch today.
