The aviation asset-backed securities (ABS) market entered 2025 with strong momentum, with $2.5 billion issued in Q1 and $1.2 billion so far in Q2. Looking toward potential full-year volume, issuance may reach the $10 billion record set in 2019. 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…