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Aviation lessors under pressure: Geopolitics, supply chains, and insurance considerations

The leasing sector remains resilient, but shifts in fleets, supply chains, and risk exposure mean risk and insurance programmes should be revisited

At the Marsh Aviation Summit 2026 in London, a panel of leasing executives examined the forces reshaping aviation leasing: heightened geopolitical risk following the Middle East conflict and the need for stronger preparedness; evolving economics in aircraft, engines, and spare‑parts markets; a growing shortage of skilled personnel; and an urgent demand for tailored, fit‑for‑purpose insurance solutions. The takeaway: the leasing sector remains resilient, but structural shifts in fleets, supply chains, and risk exposure mean previous risk management and insurance programme design decisions should be revisited.

Geopolitical risk and operational resilience

Speakers agreed that recent regional hostilities in the Middle East have had a concentrated but manageable operational impact — day-to-day business can continue where governments and operators have prepared and communicated effectively.

Timely, transparent updates on airspace disruptions, interceptions, and logistics sustain confidence and help determine whether employees stay, whether operations continue uninterrupted, and whether aircraft and maintenance facilities remain functional. Yet the panel stressed a sobering lesson: geopolitical shocks seldom resolve quickly. Conflicts tend to simmer and require multi-layered political solutions, creating long-term tail risks for assets, people, and supply chains.

Crucially, this differs from COVID‑19: the pandemic was a simultaneous, global shock that affected every market at once. Today’s regional crises are uneven — some markets may see opportunities as demand shifts, while others face significant disruption and hardship. Lessors should plan for prolonged periods of elevated, geographically varied tension and the associated long-tail risks, not just a short, universal disruption.

Human capital as a strategic constraint

Talent shortages of engineers, asset managers, and finance teams limit what firms can do and shape strategic choices. For instance, larger lessors have often concentrated on fewer, higher‑value transactions because that’s usually how human resources scale most efficiently; specialist lessors have pursued niches that larger players do not prioritise. The result is a fragmented market and opportunities in underserved segments. This has increased demand for asset management support from businesses such as Marsh’s Oliver Wyman Vector division, as well as the contractual advisory side.

Supply chain bottlenecks and the engine market

The engine and spare parts market has emerged as an especially dynamic and sensitive area within the aviation sector. Post-pandemic, raw materials shortages and slow production ramp‑ups boosted demand for and the value of leased spares. In turn, that drove rapid growth for engine lessors and attracted new entrants seeking high returns.

That expansion can be cyclical: if aircraft retirements and capacity cuts accelerate, spare engine supply could increase and begin to bring pricing down. New entrants who made purchases at levels reflecting a higher-priced market might be forced out. Meanwhile, technological maturation (new engine families, efficiency advancements) means lessors must assess longer replacement horizons — often decades — when committing to new assets. The industry must balance short-term scarcity with long-term technological obsolescence.

Current insurance limitations and product innovation

Insurance is also an urgent theme for lessors. As discussed in a previous Marsh article, the Russia‑Ukraine war dramatically changed the market; coverage terms tightened, some insurers withdrew, and contingent‑policy pricing spiked. In the immediate aftermath, claims by lessors were initially denied, triggering litigation.

Panellists drew attention to significant limitations on coverage, most notably the lack of war risk protection for high‑value spare engines and other ground‑stored assets, under the Paragraph A exclusion of LSW555D, whereby spares are only covered when in transit by air or sea — that is, not while on the ground. Many policies exclude state‑level conflict unless an item is in transit, with engines and spares sitting in hangars or yards potentially exposed. That mismatch between exposures and the availability of cover under aviation insurance policies has become a greater concern as spare engine values and reliance on spares have grown.

Speakers also expressed concern about the changeability of war risk and contingent coverage: short cancellation windows, premium increases, and contingent premiums that may be seen as disproportionate to the risks being assumed. Lessors noted that pricing and terms do not necessarily reflect the nuanced risk profiles of different asset classes, and that lessors believe they face higher contingency costs than airlines for similar exposures.

The clear ask was for solutions that better meet lessors’ needs: tailored war‑risk products for static high‑value spares, more transparent and durable contingent arrangements, and underwriting that better differentiates by asset type and behaviour. Such changes would be welcome to allow each lessor the option to purchase contingent policies that fit its needs and exposure requirements.

Opportunities amid uncertainty

The aircraft leasing model has proven resilient through repeated shocks. Assets are movable — an aircraft can be relocated to avoid risk or meet demand. Prudent liquidity management and diversified leasing strategies enable lessors to adapt quickly. Airlines that can operate smaller aircraft are already seeing advantages: lower fuel burn, often reduced crew costs, and the flexibility to trim capacity while preserving frequency — all of which help to protect yields on key routes.

Asset-led, intelligence-driven placement approach

Marsh is positioned to help lessors navigate the current landscape, offering tailored solutions that align with each lessor’s individualised risk profile. Our approach centres on:

Assessing risk tolerance to create tailored risk transfer strategies.
Advanced data analytics and risk registers to provide real-time insights into market conditions, asset risk profiles, and claims trends.
Dedicated placement solutions, through our market-leading facilities, designed to meet diverse lessor profiles and evolving risks.
An understanding of lessors’ insurance requirements and risk allocation.
Situational awareness and scenario planning to assess geopolitical risks and help to guide responses — enabling lessors to act more swiftly and cost-effectively amid sudden market shifts.

In short, the industry’s resilience can mask fast‑evolving structural change. Geopolitical uncertainty, constrained supply chains, shifting fleet economics, and current insurance limitations are converging. Winners will be organisations that convert these themes into concrete strategies: tailored risk transfer, flexible funding, targeted fleet positioning, and long‑term investment in talent and technology.