Aircraft Secured Bond Transactions and Securitization

Air transport plays a pivotal role in connecting people and economies, particularly in emerging markets or where alternative options are not available. Roughly 4000 airplanes in today’s commercial fleet are at least 20 years old. Demand for commercial aircraft is driven by emerging markets in Asian Pacific, South America, China, Middle East and India, with airlines in developed markets such as Europe and the United States enjoying moderate growth. In China, the number of passengers should more than triple, and airline fleets will double in size by 2030. In fact, the International Air Transport Association (IATA) had predicted that China would surpass the U.S. as the World’s largest aviation market in the mid-2020s. These significant increases in demand mean airlines need to know how to acquire additional aircraft. The current downturn is expected to lead to the replacement of many older airplanes. Continued demand from emerging markets such as Asian Pacific and Latin America will keep demand for commercial aircraft strong, with global passenger traffic projected by Boeing to rise 4.0% annually for 2020–39, despite the prospect of the COVID-19 pandemic. Similarly, Airbus predicted that the world airlines would need 47,680 jets by 2038.