Asia to drive growth in passenger air travel in 2023 driven by recent reopening in China

Leasing rates are expected to rise and the outlook for long-term aircraft values ​​positive

Supply-side restrictions, not passenger demand, are the limiting factor for airlines

DUBLIN, January 16, 2023–(BUSINESS WIRE)–The aviation industry will thrive in 2023 with global traffic reaching pre-pandemic levels in June, according to an article published today by international aircraft leasing company Avolon.

After a 70% recovery in passenger traffic last year led by recovery in Europe and North America, Asia will drive growth in 2023, helped by the recent reopening in China. For every two airline capacity seats added in the world today, one is in Asia.

The traffic recovery brought the sector back to the brink of profitability in 2022, following combined sector losses of $180 billion in 2020 and 2021. A profit of c. $4.7 billion by 2023 as the recovery continues.

of avolon Outlook 2023: Get on Cruise The document, available here, reviews industry trends for airlines, manufacturers and lessors. Key findings include:

  • Airlines: Airlines’ financial recovery is ahead of their capacity recovery: while air traffic is still 25% below 2019 levels, revenue is only 13% lower as airlines flex their pricing power and increase rates. Travel demand is no longer the constraint to recovery, but the ability of airlines to get planes in the air.

  • Manufacturers: Delivery delays have become endemic and an aircraft shortage is emerging given the loss of production of 2,400 aircraft that had been planned but not built due to the pandemic. As traffic flows recover, the absence of new aircraft increases supply tension, supporting long-term residual values.

  • Landlords: Airlines have reduced their own fleets by 3% since 2019, while lessors have increased theirs by 17% and now manage 53% of the global passenger fleet by value. Aviation markets are adjusting to higher interest rates and leasing rates are increasing, creating opportunities for well-capitalized investment grade lessors.

  • Sustainability: Aviation needs to make further progress in addressing concerns about its long-term environmental impact. Sustainable aviation fuel (SAF) production has tripled by 2022, but still represents only 1% of the amount expected to be produced in 2030. Raising SAF production to 10% of jet fuels will require $250 billion in investment and collaboration among all industry stakeholders.

Andy Cronin, CEO of Avolon commented:

“Aviation has demonstrated its resilience and is poised to thrive after overcoming a two-thirds drop in traffic caused by a pandemic. Airlines, manufacturers and lessors share an ecosystem that creates opportunity for all, but requires collaboration to overcome key challenges, including an increased interest rate environment, limited aircraft availability, and the need to continue making progress on decarbonization goals.”

“The rebound in 2022 is projected to continue into 2023, with the reopening of China helping push global traffic levels to pre-pandemic levels by June. Airlines enjoy higher fares and load factors, and manufacturers are under pressure to ramp up production faster. Geopolitical and macroeconomic risks persist, this is a positive environment for lessors as supply constraints drive higher lease rates and increase order book values.”

The paper, co-authored by Avolon Chief Risk Officer Jim Morrison and Chief Counterparty Risk and Sustainability Rosemarie O’Leary, makes seven forecasts:

Bold Forecasts 2023

  1. China pushes global passenger traffic to 2019 levels by June: The reopening of the world’s second largest aviation market will fuel a rapid increase in air travel.

  2. Manufacturers delay delivery rate targets by one year: Airbus and Boeing aim to produce a combined 140 single-aisle and 24 twin-aisle aircraft per month by 2025. These targets will be pushed back a year to focus on on-schedule delivery and quality versus aspiration.

  3. A330ceo market lease rates increase by 35%: Used widebody aircraft will be in demand again as international markets fully reopen, new aircraft become scarce and a pressing need for additional capacity emerges.

  4. Airline consolidation will accelerate as the start-up of new airlines slows: 100 new airlines started operations in the last three years, taking advantage of available aircraft and crews. Consolidation will replace fragmentation in 2023, and startups without competitive niches will be forced out.

  5. Two investment-grade lessors will receive rating upgrades: Aviation has weathered the most severe recession imaginable, and yet lessor credit metrics are all pointing positive. Rating agencies will recognize the strength of the business model with updates.

  6. Two electric aircraft manufacturers are acquired: Aerospace start-ups have created valuable intellectual property, but require additional funding to finish the job. The largest companies will seize the opportunity to buy the most promising concepts.

  7. The volume of sustainable aviation fuel (SAF) under purchase agreements doubles: Purchase agreements reduce project financing risk by securing future revenue. ICAO tracks 40 billion liters of SAF under today’s agreements. This will increase to 80 billion, but more is needed.


About Avolon

Headquartered in Ireland with offices in the United States, Dubai, Singapore, Hong Kong and Shanghai, Avolon provides aircraft management and leasing services. Avolon is 70% owned by an indirect subsidiary of Bohai Leasing Co., Ltd., a public company listed on the Shenzhen Stock Exchange (SLE: 000415) and 30% owned by ORIX Aviation Systems, a a subsidiary of ORIX Corporation listed on the Tokyo and New York Stock Exchanges (TSE: 8591; NYSE: IX). Avolon is a world leader in aircraft leasing with a owned, managed and committed fleet of 835 aircraft as of December 31, 2022.


The opinions and forecasts set forth in this document and in the 2023 Outlook are those of the authors. They do not necessarily represent the views of any other person or of Avolon. This document and any other materials contained in or accompanying this document (collectively, the “Materials”) are provided for general information purposes only. The Materials are provided without any warranties, conditions, representations or warranties (express or implied) as to their suitability, accuracy or completeness. Any opinions, estimates, comments or conclusions contained in the Materials represent the judgment of the authors as of the date of the Materials and are subject to change without notice. The Materials are not intended to constitute advice that should be relied upon, and Avolon disclaims all liability arising from any reliance placed on the Materials.

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doug keatinge
Head of Communications
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M: +353 86 037 4163

jonathan neilan
FTI Consulting
[email protected]
M: +353 86 231 4135