Regional travel increase drives demand for aircraft

IBA, a prominent aviation intelligence and advisory firm, has reported a substantial increase in demand for regional travel, showcasing a surge in revenue passenger kilometres (RPK) for turboprop and regional jet aircraft. The RPKs have surged by 14.4% from 22.06 billion in January 2024 to an impressive 25.45 billion in January 2025.

This strong uptake in regional travel is also evident in the available seat kilometres (ASKs) for these aircraft, which have witnessed a notable rise of 10.1% during the same period, escalating from 27,850 billion to 30,660 billion. This growth signifies the sector’s recovery post-pandemic and the increasing confidence among passengers to resume travelling.

Regional travel has played a pivotal role in driving the revival of medium and long-haul travel following the impact of the pandemic. Its contribution is attributed to its importance in supporting broader networks and the inherent counter-cyclical nature of regional travel. During the pandemic, domestic and regional travel faced fewer restrictions compared to long-haul routes, which eventually bolstered passenger confidence and encouraged more regional travel.

IBA projects that this high demand for regional travel will continue to expand, particularly in the Asia-Pacific region. Factors such as a growing population and improved regional connectivity are fueling this growth trajectory.

Despite the positive outlook for regional travel, IBA cautions that certain risks persist, particularly concerning tariffs and trade restrictions. Inbound US regional travel, especially from Canada, may face challenges. For instance, the recent expansion of Porter Airlines into the US market using the E195-E2 aircraft might face subdued demand in light of the prevailing conditions.

Engine-related challenges have also emerged as a concern affecting airline operations and fleet availability. Notably, issues with the latest technology engines have led to 23% of PW1500G and PW1900G-powered Airbus A220 and Embraer E2 series aircraft remaining inactive. Operators like airBaltic, Air France, Breeze Airways, Porter Airlines, and Azul Linhas Aéreas are grappling with grounded fleets due to engine setbacks.

Storage rates for aircraft are gradually decreasing, but maintenance backlogs persist, hindering the return of many regional and turboprop aircraft into service. The industry is striving for shorter maintenance lead times to address this issue and meet the burgeoning demand more efficiently.

Moreover, the market values and lease rates for new-generation regional jets and turboprops continue to showcase robust performance due to supply constraints and escalating demand. The market value of aircraft like the A220-300 and the E195-E2 has surged significantly since January 2021, underscoring the positive trajectory of the regional aircraft market. Lease rates for these aircraft also remain strong, indicating a healthy market for regional aircraft leasing.