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January 24, 2020

Aircraft Leasing in Eastern Europe and central Asia: Prospects and Challenges

Growing passenger numbers and a fleet increasingly made up of Western-built aircraft are creating new opportunities for the aircraft leasing market in eastern Europe and central Asia.

The vast post-Soviet territory consists of countries as different as Latvia and Uzbekistan and, though existing for almost 30 years, does not have a proper geographical name that describes it as a whole. So let’s use somewhat vague and ambiguous wording ‘eastern Europe and central Asia’.

This area is a promising market for airline business and, consequently, for aircraft leasing companies. Of course, the traffic growth rate is different for 15 countries of the area, but the biggest market of the Russian Federation is predicted to show by the end of 2019 about 10 per cent growth of passenger traffic over 2018. Russian, Kazakh and Ukrainian air transport markets, according to the latest IATA forecast made at the Wings of the Future 2019 landmark event in Moscow, are all expected to grow substantially over the next 20 years. The passenger traffic in Kazakhstan will reach 20 million people by 2038, up by 150 per cent from the eight million total of 2018. Russia will remain the leader in the sector with 182 million passengers served by 2038, up more than 77 per cent from 2018, and Ukraine will serve 26 million people by 2038, about 63 per cent growth from the 16 million in 2018.

The total fleet of the eastern Europe and central Asia area consists of more than 1000 jets with almost 150 aircraft on order to be delivered in 2020-2024. Our analysis shows that the Russian airline industry’s widespread dependence on Western-built aircraft now exceeds 90 per cent. Last year, almost 94 per cent of all passengers travelled aboard western-built aircraft. For other countries the figure is close to 100 per cent. That gives good opportunities for foreign leasing companies to lease Western-built aircraft in eastern Europe and central Asia.

More than 850 aircraft of the current 1000 fleet are leased, and our analysis shows the share of domestic leasing companies together with their foreign affiliates slightly exceeds 25 per cent. That means the foreign leasing companies maintain good market position for further development of their business, though the competition by the domestic companies is expected to grow, especially with increasing numbers of Superjet 100 regional aircraft and entering into service MS-21 medium-haul aircraft, because these types are and will predominantly leased by domestic companies or their foregn subsidiaries.

With all its prospects, the market Eastern Europe and Central Asia, where sometimes it’s easier to explain yourself in Russian than in English, has many special aspects and hidden pitfalls. One of the best ways to deal with them and to understand the market is direct conversation with professionals. And the best place to do it is 13th annual international conference Aircraft Finance and Lease Russia & CIS to be held in Moscow on 28th of April, 2020. The conference is organized by the Infomost Consulting company, which also conducts the aforementioned Wings of the Future forum and several other professional conferences for airline industry.

The Aircraft Finance and Lease Russia & CIS is the largest event in eastern Europe and central Asia dedicated entirely to covering the issues of aviation finance, aircraft and engine lease and fleet modernization for the Russian & CIS airlines.

In 2019 more than 250 representatives from 16 countries of Russian & CIS airlines and airports (24% participants) as well as of leading international and domestic les-sors, banks, OEMs took part in the conference.

Participation in the event is the best way to get a grip on the eastern European and central Asian aircraft leasing markets whilst striking up new relationships with new-found contacts.

Alexey Sinitsky
Infomost Consulting

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