How airlines manage their fleet

The average age of a passenger car in the United States is about the same as the average age of a commercial aircraft employed by the US airlines – about 11 years. On UK roads, the average age of a car is almost eight years old, while for a British Airways aircraft it is over 13 years. It is very common for aircraft to fly in commercial passenger service for 20–25, and sometimes even up to 30 years. And the end of commercial passenger service does not necessarily mean the end of the life for an airplane – many are converted into freighters and/or continue flying in less developed countries.

Aircraft are the most important and valuable assets an airline has (some argue that take-off and landing slots at some congested airports could sometimes be even more valuable, but this would represent an exception rather than the rule). As aircraft are a durable asset, they can be purchased at either primary (directly from the manufacturer) or secondary markets. Alongside the airlines, many of the commercial aircraft are owned by leasing companies, who then, as the name suggests, lease planes to airlines in return for a monthly payment. The largest such company, called AerCap, owns nearly 1,000 aircraft and works with over 200 customers. By comparison, Delta Air Lines, one of the world's largest airlines, currently has 953 aircraft in its fleet (380 of which, according to CAPA, are inactive as of March 2021 due to lower demand).

Clearly, airlines put a lot of effort into fleet planning. The first decision an airline has to make is on fleet composition – how many aircraft types to have, and how many planes of each type should be in the fleet. This decision is driven by the types of markets the airline serves or plans to serve versus the characteristics of different aircraft available. The airline then needs to decide how to finance the aircraft. Options range from using available cash on hand to loans and leases. The general trade-off here is that while leasing tends to be a more expensive option than debt or equity financing, it also provides for more flexibility.