Chairman of Avia Solutions Group Gediminas Ziemelis: 3 key trends in ACMI leasing as we enter 2024

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DUBLIN, March 8, 2024 /PRNewswire/ -- As we step into 2024, Gediminas Ziemelis, Chairman of Avia Solutions Group and a leading figure in ACMI leasing, outlines three pivotal trends shaping the aviation industry, particularly in the realm of ACMI leasing. Amidst a backdrop of a resurging demand for air travel, with projections nearing pre-pandemic levels, the aviation sector is poised for growth. However, this optimism is tempered by enduring structural challenges including labor shortages, financial constraints, and supply chain disruptions, all of which ACMI leasing can strategically address.

Trend 1: Wet Leasing as a Strategic Response to Demand Surge

The end of historically low borrowing costs signifies a challenging era for airlines, especially those still grappling with the financial aftermath of the COVID-19 pandemic. With interest rates stabilizing but still high, traditional fleet expansion through borrowing becomes a risky endeavor amidst uncertain long-term demand. ACMI leasing emerges as a vital solution, offering flexibility and financial viability. It allows airlines to scale operations to meet current demand without the burden of long-term debt, ensuring adaptability regardless of future market fluctuations.

Trend 2: Addressing Labor Shortages Through ACMI

The aviation industry is facing a dire human resources crisis, exacerbated by the pandemic's impact on pilot training programs and high attrition rates. With an estimated requirement to train an additional 264,000 pilots by 2029 to replenish the retiring workforce, airlines are under immense pressure. ACMI leasing offers a reprieve by tapping into an international pool of aviation professionals, thereby mitigating staffing challenges and enabling airlines to maintain operational efficiency and growth.

Trend 3: Overcoming Seasonality and Supply-Side Issues

ACMI's historical forte in managing seasonality is now more relevant than ever, with airlines leveraging wet leasing to adjust capacity in response to fluctuating demand. Moreover, as the industry navigates supply-side shocks, such as production delays and parts shortages, ACMI provides a crucial stopgap, ensuring continuity of service. This flexibility is also being recognized by governments and tourism-dependent regions seeking to rejuvenate travel and tourism post-pandemic through rapid route expansion and capacity adjustment.

Conclusion: ACMI's Strategic Imperative for Airline Resilience

Ziemelis advocates for a balanced approach to fleet management, recommending that 6-15% of an airline's fleet comprise ACMI-leased aircraft. This strategy offers the necessary operational flexibility while mitigating financial risk, positioning airlines to capitalize on current opportunities and navigate future uncertainties. With a fleet prepared for both short-term and long-term leasing, Avia Solutions Group stands ready to support airlines in overcoming current challenges, maximizing the resurgent demand, and securing a prosperous future in the evolving aviation landscape.

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