Kroll Bond Rating Agency (KBRA) releases its assessment of the pandemic’s impact on the regional aircraft market, examining challenges the sector faces as well as demand and supply-side dynamics that will shape the future of this essential market.

KBRA believes that the global regional market is poised to be a leader in the overall aviation market recovery as international travel remains restricted and passengers may be more comfortable with shorter-duration regional flights before long-haul flights, especially in light of vaccine rollouts which should support domestic and regional safety concerns more immediately. This dynamic would support demand for regional aircraft in the near term, while a potential supply glut is expected to be mitigated as operators rightsize their fleets through both retirement of older and larger gauge aircraft and lower levels of new aircraft orders. Longer term, the demand for new and used regional aircraft is expected to be supported by a growing global middle-class, a wave of aircraft retirements requiring replacements, and operators’ increased focus on efficiency and sustainability.

The report also highlights:

  • The relative resilience of new order demand for regional aircraft compared to larger commercial aircraft
  • The decline in regional aircraft market values, despite stable base values, and limited secondary market trading activity
  • Longer-term demand supportive trends including fleet rightsizing, aging fleet replacements and demand in emerging economies that require regional flights to connect new and growing cities
  • The impact on regional aircraft OEM order backlogs and the OEM competitive landscape
  • Demand for regional aircraft freighter conversions driven by the e-commerce boom
  • Potential impacts of ongoing U.S. scope clause uncertainties
  • The pandemic-driven stress on regional aircraft lessors and their airline customers

Click here to view the report.