An engine lessor’s perspective on the Asia-Pacific market

June 1st 2023

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Engine utilization and demand are quickly recovering in the Asia-Pacific, especially in India, WLFC senior vice president and chief commercial officer Americas and Asia, Craig W. Welsh, told Orient Aviation last month. Read More »

“Because China still drives a significant segment of travel demand in the balance of Asia-Pacific, those regions for the most part only picked up markedly after China’s COVID polices shifted,” he said.

“But significant challenges remain for lessors in the region. “It is no secret that the OEM/MRO challenges are ultimately driven by supply chain constraints caused by material and personnel shortages”.

“There are mixed messages about how long it will take for OEM/MRO networks to resolve these shortages.

“Our repair shops have been impacted by these disruptions as well, causing delays in lease returns and our ability to remarket equipment.

“On the positive side, this situation has buoyed lease engine demand to some extent, but the challenge is trying to forecast how long this situation will last.

“Interest rates to lessors are like the price of jet fuel for airlines,” Welsh said. “As rates increase, margins become strained until and unless rents increase commensurately.

“While a recession may help on the interest rate side of the equation, its potentially a negative effect on air travel demand and equipment utilization may offset the benefits of lower costs.

“Thus far, demand for air travel has been remarkably resilient in most regions, even in the face of higher ticket prices and the predictions of a recession.”