After the Boeing 737 MAX aircraft fleet was grounded by regulators across the world earlier this month, some noticeable trends are occurring in the market concerning Boeing 737 classic and NG aircraft, according to Firoz Tarapore, CEO of Dubai-based lessor DAE Capital.
“Both demand and pricing are firming up,” Tarapore told Aviation Week. However, with changes due, including a new software fix and an overhaul of pilot training put forward by Boeing earlier this week, he doesn’t see this being the new norm. “This phenomenon is likely to abate after a permanent and satisfactory fix has been put in place for the MAX,” Tarapore says.
DAE Capital currently has 103 737s in total under ownership, in its portfolio of 110 clients in 60 countries worth around $14 billion. It took delivery of its first 737 MAX in July of last year, on lease to Brazilian carrier Gol Linhas Aéreas. However, despite the documented issues of the 737 MAX, Tarapore doesn’t see the lessor changing its investment strategy for the aircraft long-term.
The business is also building its fleet of managed assets. In January 2019, DAE Capital announced that its managed portfolio of aircraft grew to 54. Following this, Tarapore says it has a target of $5 billion for the portfolio’s value over the next few years. However, he doesn’t see DAE Capital expanding its leasing reach beyond aircraft to engines.
Taking a wider industry view, he believes Dubai has the attributes to become a major player in the aircraft leasing market. He credits this to the area’s connectivity, geographical location, strong talent pool and an attractive tax and regulatory environment.
“With over half the projected 42,000 new aircraft to be delivered over the next 20 years coming to Middle East, Africa and Asia Pacific, the center of gravity is unmistakably moving eastward,” he says. “The center of gravity will also be moving eastward and Dubai is likely to further establish itself its unique position as a growing hub in the industry.”