Growth in the CFM56 engine leasing market is set to continue for at least another five years before reaching its peak, says Julie Dickerson, managing director of Shannon Engine Support (SES).
“At a macro level, the engine leasing market is directly linked to the number of shop visits required annually, the supply of spares, the shop visit turnaround times and the overall health of the aviation sector,” Dickerson says. “In recent years, all these factors have contributed to a strong leasing market and assuming there is no change to the health of the aviation market, we expect that engine leasing will continue to grow for the coming years.”
The Shannon, Ireland-based engine lessor, a wholly-owned subsidiary of CFM International, traditionally hasn’t chased engine sale and leaseback deals unlike some of its contemporaries. Instead it has focused on a mix of short-term, long-term, operational leases along with customized agreements for around 200 CFM56 and LEAP engines in its portfolio.
SES took its first LEAP, the successor to the CFM56, in 2016 in the form of a -1A engine powering an Airbus A320neo entering into service of August that year. It has since added the -1B variant to its portfolio, complementing the -1A along with more mature CFM56-5 and -7 engine types.
With SES slowly growing its LEAP spare engine portfolio, Dickerson predicts the CFM56 market peak in the next five years pushed by factors such as aircraft part-outs and fluctuating fuel prices, which as of September 2018, stood at just more than $80 a barrel.
Data from Aviation Week’s Fleet & MRO Forecast supports Dickerson’s prediction. By 2021, 11,742 CFM56 engines will be in-service in the global fleet, before beginning to drop off from 2022 onwards.
The increasing competitiveness of the modern leasing market has also influenced the way lessors seek new agreements, with flexibility an increasingly key demand according to Dickerson.
“Operator procurement departments are not only looking for value for money from reputable suppliers who have proven track records, they also expect bespoke solutions to support all their spare engine requirements,” she says.