KBRA Releases Research – Navigating Trade Winds: Tariff Impacts on Aviation ABS
20 May 2025 | New York
KBRA releases research on the potential impacts of tariffs on the aviation asset-backed securities (ABS) sector.
The ABS market entered 2025 with strong momentum, with $2.5 billion issued in Q1 and $1.2 billion so far in Q2. Global air travel has fully rebounded, with passenger volumes exceeding pre-COVID levels across most regions. However, recent trade tensions and evolving tariff policies have introduced new uncertainties that could affect the aviation sector and associated capital markets. While certain tariff increases have been temporarily paused for 90 days, the broader landscape remains dynamic, with possible implications for aircraft lessors, airlines, and aviation ABS.
Unlike many sectors where producers or suppliers bear tariff costs, the aviation leasing market’s reliance on triple-net leases generally shifts responsibility for taxes (including import tariffs) to airline lessees. This structure limits direct exposure for lessors, although indirect effects such as shifts in aircraft demand, lessee operating costs, and geographic leasing trends could influence asset values and aviation ABS transaction performance.
Click here to view the report.