Podcast: Why Lessors Are Moving Deeper Into The Aftermarket

ORIX Aviation announced its purchase of AerFin on Aug. 3, which follows a trend of lessors diversifying beyond traditional leasing. Aviation Week editors describe why and how this sector will likely evolve. 

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AI-Generated Transcript Summary

The episode focuses on how aircraft lessors are expanding deeper into the aftermarket rather than relying only on traditional leasing and asset sales. A recent acquisition is used as the starting point for the discussion, showing how one lessor is buying a company with capabilities across leasing, inventory management, component sales, repair management, engine maintenance, and part-outs. The conversation explains that this kind of move gives lessors more exposure across the full life cycle of an aircraft asset and allows them to capture more value from repair, teardown, and material recovery activity. 

A major reason behind the shift is that the aftermarket has become more attractive because of supply chain shortages, high material costs, long OEM lead times and strong demand for used service material, alternative repairs, and PMA parts. The discussion also connected this trend to other examples in the market, including acquisitions and partnerships by other lessors and aviation companies that have moved into parts, technical management, recycling or engine-related businesses. Engines are described as especially important because they represent a large share of MRO spend and continue to be affected by spare engine shortages, long shop visits and durability issues in newer platforms.

The conversation also noted that lessors increasingly want more control and visibility over repairs, parts and asset disposition. Looking ahead, most investment is expected to continue flowing into used service material and mature engine markets, especially the CFM56 and V2500 space, while independent engine shops may face a more limited role on newer engine types. Demand remains strong for now, but there was also some caution that too much investment could eventually chase a market that may normalize as reliability improves and production rates rise.

Key Topics

• Lessors moving beyond traditional leasing
• ORIX's acquisition of AerFin
• Capturing value across the asset life cycle
• Growth in the aftermarket and used service material
• Supply chain shortages and OEM lead times
• Engine repairs, spare engine shortages, and durability issues
• Other lessor investments and partnerships
• Future investment trends in mature engine markets