Here’s the latest video presentation by John Persinos, editor-in-chief of Aircraft Value News, posted May 29, 2025. This accompanying article is a transcript edited for concision, to provide you with a quick read. For a much deeper dive, watch the video.
The global aircraft leasing landscape is undergoing a strategic shift as Chinese lessors expand their footprint in emerging markets, particularly across Africa and Southeast Asia. This trend is not only altering competitive dynamics in these regions but also exerting significant pressure on aircraft values and lease rate benchmarks for certain models.
Chinese lessors such as BOC Aviation, CDB Aviation, ICBC Leasing, and CALC have long had global ambitions. While their earlier focus remained on placing narrowbodies with Chinese airlines and selected global carriers with solid credit ratings, their strategy is maturing.
Many Chinese lessors are now aggressively targeting carriers in Africa and Southeast Asia that traditionally relied on Western lessors or national fleets. This expansion is driven by a combination of China’s geopolitical objectives, a surplus of young narrowbody aircraft in domestic fleets, and the need to manage aircraft placement risk through diversification.
As a result, Chinese lessors are becoming more than just participants in these markets; they are emerging as dominant forces willing to offer favorable lease terms, more flexible return conditions, and competitive financing arrangements. In a capital-intensive industry where access to aircraft and the cost of capital can make or break an airline, these offerings are difficult to ignore. And with many of the target airlines being smaller or state-affiliated carriers with modest bargaining power, the effect is amplified.
The Effects on Values and Lease Rates
One clear consequence of this expansion is the impact on lease rates and base values for specific aircraft types, especially those with high utility in developing regions. The Airbus A320ceo and Boeing 737-800, for instance, are among the most popular workhorses for short- to medium-haul operations in Africa and Southeast Asia. As Chinese lessors place more of these aircraft in the regions at relatively attractive lease rates, they are resetting market benchmarks downward, particularly for aging models.
For example, the monthly lease rate for a 10- to 12-year-old A320ceo, which might have commanded around $160,000 in recent years from a Western lessor, can now be found closer to $135,000–$145,000 in competitive tenders involving Chinese lessors.
The shift is subtle but persistent. It reflects the willingness of Chinese lessors to prioritize placement over profit margin in some cases, particularly when the aircraft in question has already been depreciated on favorable terms due to Chinese accounting structures or government-backed financing.
These lease rate concessions ripple through the market, especially when appraisers adjust their value models based on actual lease transactions, not just theoretical estimates.
Similarly, the Boeing 737-800, long considered the backbone of many developing market fleets, is seeing downward pressure on lease rates and base values. With Chinese lessors recycling units from domestic operators and seeking placements outside of China due to fleet modernization programs, many of these aircraft are finding second lives in Africa and parts of Southeast Asia.
While this keeps older jets flying, it also adds capacity to markets that are often fragile and yield-sensitive, nudging values down. Current base values for mid-life 737-800s have softened, with lease rates falling below $150,000 per month in many cases. Not all of this is attributable to Chinese lessors, but their activity is a major contributor.
The trend also has an asymmetric effect on newer generation aircraft. For instance, lease rates for the Airbus A320neo and Boeing 737 MAX 8 remain relatively resilient in mature leasing markets, particularly in Europe and North America.
However, as Chinese lessors begin to place new-generation aircraft with Southeast Asian airlines through aggressive leasing offers, some pressure is filtering into the secondary market. The result is a bifurcation: lease rates for Tier 1 airlines with strong credit in mature markets are holding firm, while those for Tier 2 and Tier 3 operators in developing markets are becoming more volatile.
The long-term concern among traditional Western lessors is that the value ecosystem is becoming distorted. Aircraft values are, in part, a reflection of market perception and the predictability of lease cash flows.
When Chinese lessors disrupt those cash flows by offering below-market lease rates, the market recalibrates its assumptions. This can lead to a chain reaction in portfolio valuations, residual value expectations, and risk management practices among lessors and banks.
There is also an underlying geopolitical dynamic at play. China’s Belt and Road Initiative (BRI) has elevated Africa and Southeast Asia as strategic zones for infrastructure investment, aviation included.
Aircraft leases supported by Chinese policy banks or state-influenced entities often come with softer financial covenants or broader diplomatic objectives. In regions where creditworthiness is a concern, such flexibility is more attractive than the stricter underwriting practices of Western lessors. This gives Chinese lessors an edge not only in placement but also in dictating terms that eventually shape regional leasing norms.
This growing presence of Chinese lessors is also changing the complexion of competition. Western lessors, accustomed to dictating lease terms, are increasingly finding themselves undercut or pushed out of certain tenders. In response, some are reconsidering their exposure to emerging markets or demanding higher lease-end compensation to offset lower lease rates. Others are shifting their focus to freighters, newer aircraft types, or stronger credits in an attempt to protect portfolio integrity.
Chinese lessors are not immune to the risks of the markets they are targeting. Aircraft placements in regions with weaker infrastructure, regulatory uncertainty, or political instability can be a double-edged sword.
Repossessions, maintenance tracking, and remarketing can be significantly more complex in countries where legal frameworks are weak or aviation oversight is fragmented. Some observers believe Chinese lessors are underestimating these risks, or at least discounting them for now in favor of broader strategic goals.
In the long run, this evolving dynamic is forcing a reassessment of the entire global aircraft leasing market. If Chinese lessors continue to gain market share in Africa and Southeast Asia, they will also gain leverage in shaping market norms, lease structures, and even asset values. That influence is likely to spill into appraisal methodologies, insurer behavior, and the secondary market for used aircraft.
