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Avolon names India one of aviation growth leaders in its 2026 market outlook
January 27th 2026
India, the UAE, and Saudi Arabia are positioned to lead aviation’s next growth cycle, with the three countries’ combined order backlog at over 3,000 aircraft, Avolon stated in its newly published “2026 Outlook: Up Next” paper. Read More » The continuation of low fuel prices and economic growth is expected to help global airline industry profits reach $US41 billion in 2026. This year is set to mark the fourth consecutive profitable year for the sector, helping airlines to recover over 80% of the $US182 billion lost during the pandemic, the company said. Demand fundamentals remain positive, but airlines risk missing out on growth opportunities due to the persistent structural undersupply of aircraft. Order backlogs at Airbus and Boeing now extend to over 11 years. The ongoing supply shortage will support higher lease rates and strong residual values, while increasing the strategic value of lessor-held slots for under-ordered airlines, it added. The authors of the paper predict that the regional growth will be varied. India, the UAE, and Saudi Arabia are emerging as the next growth regions for the aviation sector. At the same time, the Asia-Pacific is limited by fleet constraints, with China having a near-term requirement for 1,000 new aircraft. From the airlines’ perspective, lower fuel prices were a key driver for airline performance in 2025, with US$8 billion in reduced fuel expenses accounting for a fifth of the airline industry’s net profits. This trend is expected to continue in 2026, helping airlines further repair their balance sheets despite operational challenges and increasing labour and maintenance costs. Looking at the manufacturers sector, Avalon notes the market is shifting toward larger aircraft variants, with the A321neo outselling the A320neo aircraft three-to-one over the past three years. The A330neo is benefiting as the only new passenger widebody available before 2032. Engine manufacturers are increasing shop visits and spare part pricing at rates well above general inflation as they manage higher input costs and deliver rising shareholder returns. The market value of two full-life engines now represents c.80% of a new aircraft’s value. Avalos sees a positive perspective for leasing companies. “A structural re-rating of the aircraft leasing business model has occurred, with eleven lessors now achieving investment grade ratings, positioning them to outperform in a market of scarce aircraft. Around US$120 billion of new aircraft are expected to be delivered in 2026, up 20% on last year. With lessors expected to provide around half of the global fleet’s overall financing requirements, their importance in supporting the transition to lower emissions new-technology aircraft has never been stronger,” the paper says. “Airline financial performance continues to strengthen, with the industry expected to record its fourth consecutive year of profitability. Airlines’ ability to capture sector tailwinds will be impacted by a shortage of new aircraft deliveries and the long order backlogs at Airbus and Boeing. Well-capitalised lessors with orderbooks of new-technology aircraft are strongly positioned to outperform in the current market,” Jim Morrison, Chief Risk Officer of Avolon, the paper’s co-author, commented.
