In this article, Damon J. D’Agostino, Chief Business Officer of Azorra, gives a lessor’s perspective on the biggest challenges facing commercial aviation in 2026.
Air passenger demand increased by 5.3% in 2025 according to the International Air Transport Association (IATA), with a further 4.9% growth in traffic forecast for 2026.
Despite this, ongoing supply constraints and an increasingly complex geopolitical environment continue to place pressure on operations. Global disruptions are delaying access to parts, engines and new aircraft, leaving many carriers operating older, more maintenance-intensive fleets for longer than planned. In some cases, delivery backlogs are extending well into the next decade, influencing fleet strategy and planning.
Other external factors, from fuel price volatility and interest rate fluctuations, are adding another layer of uncertainty. For many operators, the focus is now on securing reliable and available capacity, maintaining schedule integrity and generating revenue, while mitigating risk in a volatile cost environment.
Network planning is evolving as a result. For low-cost and regional airlines, where margins may be tighter and utilisation more critical, access to the right sized aircraft at the right time is essential. Leasing plays an important role in this environment. It gives carriers the ability to respond to near-term headwinds while continuing to pursue longer-term growth, providing a level of flexibility that is necessary in today’s market.
Pressure across aircraft, engines and capital
The industry is facing an aircraft shortage. Travel demand continues to outweigh available capacity. While this means airlines can benefit from increased load factors and higher yields, aging fleets and longer maintenance shop visits are placing additional financial and operational pressure on carriers.
Many operators are turning to lessors to access both current and new generation aircraft, and bridge gaps in delivery schedules. According to McKinsey, more than half of the globally available aircraft in the market are owned by lessors, highlighting the critical role leasing companies now play in maintaining fleet flexibility and continuity. This shift is reshaping the industry’s financial dynamics, with carriers increasingly favouring asset-light models to preserve liquidity and manage risk.
Engines are emerging as a key factor in fleet planning. New generation platforms deliver meaningful gains in fuel burn and operating costs, but availability and a reduction in maintenance durability are becoming an important consideration. Shop visit timelines have extended – from around 60-90 days to closer to 180 days in some cases – reflecting strong demand for MRO capacity and constrained parts availability. This is tightening effective supply, as aircraft spend longer on the ground and fewer spare engines are available to support active fleets.
Against this backdrop, competition for available aircraft and spare engines has intensified. Lease rates remain elevated, particularly for in-demand narrowbody and next-generation assets, as airlines compete to secure limited capacity.
Fleet strategy is becoming more practical
In a supply-constrained environment, fleet planning becomes more about trade-offs than optimisation. Airlines are having to balance long-term strategy with near-term availability, making decisions based on what can be sourced, financed and supported in the current environment.
This influences how networks are developed. Rather than waiting for the suitable aircraft, operators are assessing where demand exists today and deploying capacity accordingly, particularly across regional and lower-density routes where flexibility is key.
Leasing allows airlines to respond to demand changes without incurring unnecessary balance-sheet pressure. It gives operators a way to manage risk. In a tighter market, relying too heavily on a single manufacturer or engine type can create avoidable exposure.
Leasing growth is strongest where flexibility matters most
Global market conditions have seen the growth of leasing across new regions. In Asia-Pacific, for example, carriers are expanding into new and underserved markets, creating demand for aircraft with the right range and operating economics. Aircraft in the 100–150 seat segment are particularly well suited to this environment, allowing operators to build frequency and develop networks, at lower risk compared to larger narrowbody aircraft.
Scoot, the low-cost subsidiary of Singapore Airlines (SIA), is a great example here. The airline leased nine new Embraer E190-E2s to Scoot from Azorra, making it the first airline in Singapore to operate an aircraft of this kind. These new generation assets have been instrumental to maintaining frequency on thinner routes typically served by larger narrowbodies such as the Airbus A320 or Boeing 737.
A similar dynamic is emerging across Africa, where connectivity gaps remain significant. Airlines such as Airlink are demonstrating how small narrowbody aircraft can efficiently link secondary cities and support broader economic development. In these markets, leasing plays a central role by offering access to modern, fuel-efficient aircraft without the burden of significant upfront capital, allowing growth to track demand more closely.
Supply constraints push leasing to the forefront
The supply-demand imbalance is reshaping airline behaviour in practical ways: extending fleet life, increasing use of mid-life assets and placing greater emphasis on engine availability. It is also bringing leasing further into focus as a core part of fleet strategy.
As these conditions persist, the ability to secure reliable, available capacity will remain a key differentiator. Lessors are well positioned to support this shift, providing airlines with the flexibility needed to navigate uncertainty while continuing to grow.
