KBRA Releases Research – Navigating Trade Winds: Tariff Impacts on Aviation ABS

KBRA releases research on the potential impacts of tariffs on the aviation asset-backed securities (ABS) sector.

The ABS market entered 2025 with strong momentum, with $2.5 billion issued in Q1 and $1.2 billion so far in Q2. Global air travel has fully rebounded, with passenger volumes exceeding pre-COVID levels across most regions. However, recent trade tensions and evolving tariff policies have introduced new uncertainties that could affect the aviation sector and associated capital markets. While certain tariff increases have been temporarily paused for 90 days, the broader landscape remains dynamic, with possible implications for aircraft lessors, airlines, and aviation ABS.

Unlike many sectors where producers or suppliers bear tariff costs, the aviation leasing market’s reliance on triple-net leases generally shifts responsibility for taxes (including import tariffs) to airline lessees. This structure limits direct exposure for lessors, although indirect effects such as shifts in aircraft demand, lessee operating costs, and geographic leasing trends could influence asset values and aviation ABS transaction performance.

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Recent Publications

• Assessing the Ripple Effect: Tariff Uncertainty Clouds Structured Finance Outlook
• Impact of Tariffs on the Aviation Industry

About KBRA

KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.

Doc ID: 1009511

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