With many commercial airline operators already struggling financially amid the impact of the global COVID-19 pandemic, thoughts of 2021 may seem a long way off. For smaller LCCs and regional airlines, most are just hoping to still be in business next year but is there another hidden crisis looming?
With many LCC and regional carriers operating leased aircraft, next year could well see the leasing market inundated with over 1,000 aircraft that are simply no longer required by operators. A recent study by IBA, a leading platform for aviation intelligence, described how approximately 1,300 aircraft of all types are due to be returned to lessors next year, although many of these would have had their contract extended in normal circumstances, this is highly unlikely given the current threat of a second global lockdown.
As many LCCs and regional operators terminate longer leases early, in a bid to restructure their business plans, the number of aircraft returning to lessors, which do not have any onward customer in place, is only set to rise. We could well find ourselves in the situation where operators slowly recover but lessors struggle to maintain their business.
The uncertainly that ripples across the industry will likely require a new approach which will have to be permanent or in place for at least four to five years.
But looking beyond this, the drop in leasing activity will also impact engine shop and MRO facilities. Prior to COVID-19, the IBA forecasted an expected rise in visits from 3,200 in 2019 to 4,500 in 2023 but now believes there will only be around 1,000 visits and it may take until 2026 to get to the forecasted 2019 levels, although it expects MRO facilities will be in a better position to cope.
While much of the media’s focus has been on the collapse or survival of airlines and the assistance that has been provided by various governments, the impact of current events has had a far deeper effect, and only those that work and report on the industry seem to be aware.