India, UAE, and Saudi Arabia Set to Lead Global Aviation Growth – Avolon 2026 Outlook Paper

The continuation of low fuel prices and economic growth are expected to help global airline industry profits to reach US$41 billion in 2026, according to a paper published today by Avolon. This year is set to mark the fourth consecutive profitable year for the sector, helping airlines to recover over 80% of the US$182 billion lost during the pandemic.

Industry Growth & Profitability
- Global airline profits are projected to reach US$41 billion in 2026, marking the fourth consecutive profitable year.
- This recovery helps airlines recoup over 80% of the US$182 billion lost during the pandemic.
- Lower fuel prices and resilient economic growth are major drivers of profitability.

Regional Leaders
- India, UAE, and Saudi Arabia are positioned as the next engines of aviation growth, with a combined order backlog of 3,000+ aircraft.
- Over 900 aircraft deliveries are expected in the next three years, more than doubling their current in-service fleets.
- Europe’s growth is driven by low-cost carriers, while U.S. network carriers are evolving into lifestyle brands with strong loyalty businesses.
- China alone has a near-term requirement for 1,000 new aircraft.

Manufacturers & Fleet Trends
- Airbus and Boeing order backlogs now stretch beyond 11 years, creating a structural undersupply of aircraft.
- The A321neo continues to dominate narrowbody sales, outselling the A320neo three-to-one.
- The A330neo is the only new passenger widebody available before 2032, with lease rates expected to rise by 15%+.
- Engine costs are surging, with two full-life engines now representing ~80% of a new aircraft’s value.

Role of Lessors
- Aircraft lessors are increasingly critical, expected to finance around half of the US$120 billion in new aircraft deliveries in 2026 (a 20% increase from 2025).
- Eleven lessors now hold investment-grade ratings, strengthening their position in a supply-constrained market.
- Lessors’ orderbooks of new-technology aircraft are vital to supporting the transition to lower-emission fleets.

Risks & Challenges
- AI growth is intensifying competition for capital and talent.
- Geopolitical risks remain, though tariff fears have eased since 2025.
- Labour and maintenance costs are rising, even as fuel prices remain benign.

Fearless Forecasts for 2026
- International markets will drive most air travel growth, requiring more widebody aircraft.
- U.S. low-cost carriers are expected to rebound by realigning fleets and products.
- Over 150 GTF-powered aircraft will return to service as engine issues are resolved.
- Airbus and Boeing’s >150-seat jets are effectively sold out until 2035.
- Preparations are underway for a new commercial aircraft program launch in 2027.

India, UAE, and Saudi Arabia’s aggressive fleet expansion signals a shift in aviation’s global center of gravity toward emerging markets, with lessors playing a pivotal role in enabling this growth .