Airlines face rising costs in aircraft engine leasing amid high demand

"Many lessors perform maintenance, repair, and overhaul services for customers," which makes leasing appealing due to their expertise with various engine types. This is particularly beneficial for older aircraft still in operation. For example, Delta Air Lines and United Airlines continue using Boeing 757s on domestic and international routes.

Engine leasing rates have risen recently. Narrowbody aircraft engines like the CFM 56 and LEAP series have seen fluctuating costs based on supply constraints and market demand. The Airbus A320neo's popularity has driven up leasing rates for its LEAP-1A engines due to limited availability.

According to IBA data, "the LEAP-1A has seen a rise in leasing rates partially due to its limited supply." Meanwhile, the LEAP-1B model powering Boeing's 737 Max family hasn't experienced similar rate increases due to lower service time compared to its competitors.

Older narrowbody engine models exhibit varied performance in leasing markets. The IAE V2500-A2 remains in high demand while other models like the CFM56-5B experience declining rates.

Widebody engine markets show higher costs reflecting their size and capabilities. The GE90 model for Boeing's 777 family saw lease rates jump from $120,000 per month early in 2024 to $160,000 more recently.

Darren Wormwald from Engine Lease Financial Corporation highlights that "we’ve got a very strong demand for our product... but we’ve also got a difficult geopolitical environment."

Longer lease durations are now common as airlines face ongoing challenges such as Pratt & Whitney's engine issues impacting the A320neo fleet globally. As Jeff Lewis of Hanwha Aviation explains: "You have brand new airplanes or newer generation airplanes with engine issues... you’re going to be desperate to go source engines on lease."

The industry continues navigating these difficulties with engine leasing playing a crucial role amid evolving conditions affecting future lease rates.