Kroll Bond Rating Agency (KBRA) has released new research analyzing the potential effects of evolving tariff policies on the aviation asset-backed securities (ABS) sector.
The report, titled Navigating Trade Winds: Tariff Impacts on Aviation ABS, comes as the ABS market continues strong momentum in 2025, with $2.5 billion issued in the first quarter and an additional $1.2 billion so far in the second quarter. Global air travel has rebounded, with passenger volumes surpassing pre-pandemic levels in most regions.
However, KBRA notes that recent trade tensions and tariff changes could introduce new uncertainties for the aviation sector and related capital markets. While some tariff increases have been temporarily paused for 90 days, the outlook remains fluid.
In aviation leasing, most contracts are structured as triple-net leases, meaning airline lessees—not lessors—typically assume responsibility for taxes and tariffs. This limits the direct impact on lessors, but KBRA highlights potential indirect effects, including changes in aircraft demand, operating costs, and geographic leasing patterns. These factors could influence asset values and the performance of aviation ABS transactions.
KBRA’s full report is available on its website.
