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The ACMI Leasing Market During COVID-19

ACC's wet leasing experts explore the possibility of ACMI leasing during and after COVID-19, and how the current market circumstances have impacted ACMI lease rates, aircraft availability and contract terms.

Dave Williams

Dave Williams

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While the effects of the coronavirus pandemic are still being felt around the world, airlines must effectively manage their assets, operations and cash flow to ensure sustainability and ultimately, long term business success. Preparing for travel in a post-coronavirus world must happen now – and we’re here to help airlines make the most of the current situation.

This month, we explore the possibility of ACMI leasing during and after COVID-19, and how the current market circumstances have impacted ACMI lease rates, aircraft availability and contract terms.



An ACMI lease (or wet lease) is the temporary provision of additional capacity from one operator to another. It differs from an operating lease in that the lessor is an aircraft operator and that the nature of the lease is situational, not a long-term financing activity.

Airlines normally use ACMI to manage short and medium-term capacity requirements. Typically, ACMI leases are used to cover increased seasonal passenger demand: in the European summer season, bringing people together for Chinese New Year or for religious travel.

ACMI can also cover unforeseen technical issues such as the 737 Max groundings and Trent1000 engine issues, as well as planned maintenance events and delays in aircraft deliveries.

A lessor can either be a dedicated ACMI operator or a scheduled airline leasing out their excess capacity. In a conventional ACMI lease, the lessor provides:

  • A – aircraft
  • C – crews, either complete or partial
  • M – maintenance
  • I – insurance.

The lessor’s supplemental capacity is provided in return for payment on the number of block hours operated.

ACMI leasing gives operators flexibility to scale capacity up and down at short notice without capital expenditure, and the ability to move in and out of capacity segments or aircraft types – without operational commitment to that aircraft type.

ACMI lease transactions are less time consuming to execute than their operating lease counterparts and can offer airlines a variety of lease durations – from as short as 1 day to multi-year contracts.



As highlighted in the second part of our Supporting Airlines Through COVID-19 series, passenger demand across the world has fallen to unprecedented levels due to the restrictions on air travel caused by the ongoing pandemic. Global passenger demand is forecasted to decline by -54.7% in 2020 which translates to an expected loss of USD 84.3 billion this year alone to airlines across the globe.

The impact of this decline in demand has been felt across the industry as airlines have been forced to place aircraft in long term storage, defer future aircraft deliveries, defer and restructure operating lease rentals and terminate ACMI leases altogether.

ACMI leasing has been one of the sectors most impacted by the COVID-19 pandemic. Due to the lack of passenger demand and the inability of airlines to fully deploy their own capacity, dedicated ACMI lessors and airlines with excess capacity have found it extremely challenging to deploy their aircraft into ACMI leasing projects.

This is in stark contrast to the summer of 2019, when the global grounding of the 737 Max fuelled a lack of narrow body supply. Airlines faced challenges in sourcing enough ACMI aircraft to fill their capacity requirements.

As restrictions on air travel begin to ease, airlines that had significantly scaled back operations (either by storing their fleets, or by furloughing or releasing crews) will find that they may not be able to scale up operations at the pace of market recovery. In those cases, ACMI leasing may be an attractive proposition for capturing market share and seizing opportunities at the first signs of market recovery.

The viability of ACMI leasing in the immediate term is enhanced by the downward pressure on ACMI lease rates, where in some instances, ACMI leasing may be comparable to or even more advantageous than an airline’s internal ACMI costs.

ACMI lessors are currently offering extremely competitive lease rates, high levels of aircraft availability and a high degree of flexibility on lease duration and payment terms.



Driven by the sharp decline in passenger demand, the vast majority of ACMI-leased aircraft have had their contracts cancelled and have been returned to their respective ACMI lessors. This has resulted in an oversupply of ACMI capacity, placing immense pressure on ACMI lessors who have traditionally looked to the aircraft sublease market for revenue generation.

This development has paved the way for an environment of extremely competitive ACMI rates; rates that have traditionally been available only in low season months and in some cases, have depressed rates to levels below low season rates.

If we look at A320 ACMI capacity and pricing for August 2019 vs. August 2020 (the peak European summer season), the contrast is significant. In August 2019, ACMI pricing was driven by strong passenger demand and a lack of narrow body ACMI availability (compounded by Boeing’s global 737 Max grounding) – placing carriers with ACMI availability in a commanding position to charge premium rates.

Fast forward to August 2020, where we’ve seen ACMI rates decline by over 62% compared to the same period a year earlier. In addition to reduced ACMI rates, airlines have a greater range of choice in terms of aircraft type, vintage, configuration and operator.

Airlines can make use of the current competitive pricing and increased availability to test new markets, aircraft types or test the feasibility of realigning their future business strategies. As an example, we have seen this strategy deployed with Bamboo Airlines, who leased two Embraer E195s to test new markets which are unable to operationally fly on their core narrow-body fleets.

Given the competitive pricing and increased availability in the ACMI leasing market, airlines may wish to consider ACMI leasing in aircraft as an initial step before committing to full-scale restoration of internal operations. The flexibility that ACMI leasing affords can be an attractive option to right-size capacity for interim demand levels, and to provide a level of flexibility that allows airlines to increase or decrease capacity levels while there remains significant uncertainty around the easing and reimposition of travel restrictions.



Over the course of the past several months, we’ve seen increasingly flexible ACMI arrangements; not only in terms of lease terms and minimum guaranteed hours, but also across many other contractual terms.

Keeping in mind the scheduling uncertainty (driven by constantly changing travel restrictions) and stringent cash preservation policies adopted by airlines, ACMI lessors have had to ease traditional expectations on lease terms and guaranteed hours in order to win airline customers.

Lease Term

In a traditional European summer season with strong demand levels, it’s standard practice for an ACMI transaction to have a minimum lease term of six to seven months or longer (where demand levels are sufficiently in the favour of ACMI lessors). With the impact of COVID-19 on passenger demand and the uncertainty around the pace of industry recovery, airlines are unable to commit to long ACMI leasing terms. In the absence of alternatives, ACMI lessors have shown new levels of flexibility – the most common being a two to three-month lease term, with monthly rollover options.

Minimum Guaranteed Hours

ACMI leases are traditionally charged on a per block hour basis. Lessors have a fixed cost to deliver those hours (aircraft ownership costs for example), so it’s standard practice that ACMI leases are subject to a minimum guaranteed number of hours per month or over the lease term. This means that the lessee must pay the minimum guaranteed hours, even if they are not delivered. This protects ACMI lessors and allows them to cover the fixed cost base of their operation.

With ongoing uncertainty around travel restrictions, it’s challenging for any ACMI lessee to commit to minimum hours.

With high levels of ACMI leasing supply, those lessors that wish to place aircraft have typically softened their stance on minimum guaranteed hours. In effect, this transfers the risk from the ACMI lessee to the lessor; airlines are able to shed their own fixed costs and at the same time secure third-party supply on a purely variable cost basis. The ACMI lessor takes on the fixed cost risk of the operation, and the lessee gets the service at ACMI rates comparable to their internal cost to deliver the service.

The changes in lease terms and minimum guaranteed hours represent a significant shift from the traditional norms of the ACMI leasing market. Combining these changes with competitive pricing creates a new environment for the utilisation of ACMI leasing which did not previously exist.



At ACC Aviation, we take immense pride in being the world’s largest ACMI specialist. From immediate short-term capacity to longer multi-year leases, our dedicated ACMI team is able to support airlines in making informed ACMI leasing decisions and sourcing the most economic capacity available.

Our goal is to play an active role in the recovery of our industry. We’re perfectly positioned to assess and provide unbiased solutions to operators. ACC continues to work with airlines looking to offload excess capacity or are deliberating the usage of ACMI capacity to help restart operations.

We also support airlines in the usage of ACMI capacity for smaller aircraft types – such as regional jets and turboprops – to meet the reduced short term passenger demand in their domestic and regional markets. This gives operators access to aircraft types outside of their core fleet, to fulfil the current passenger demand with optimal operational and economic efficiency.

ACC Aviation works with operators around the world, contracting tens of thousands of block hours annually. We are able to source and deploy aircraft anywhere, through our global network of suppliers. This scale gives ACC Aviation significant buying power, which allows us to negotiate the most competitive ACMI rates for our airline customers.

For more information about our complete range of services or to enquire about your airline’s specific requirements, get in touch or speak with a member of our team on +44 (0) 1737 232 239 or

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