Recent Trends
JOLs are a desirable source of financing for airlines because of the structure’s combination of 100% financing and attractive economics. The structure is also popular with Japanese investors due to a scarcity of alternative investments. Some recent tax changes in Japan have reduced the economics but only slightly. Lessees have historically been European and Asian flag carriers, but LCCs such as Ryanair and easyJet have been successful in Japan over the past several years. We believe that second tier airlines will also gain favor as will widebody aircraft despite the JOL market’s historical bias toward narrowbody aircraft.
In other cases, we see traditional operating lessors selling aircraft subject to lease into Japan under JOLs, while the same lessors tap the JOLCOs market to fund their own aircraft acquisitions.
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