IBA, the aviation intelligence and advisory company, reported that demand for regional travel remains robust, with revenue passenger kilometres (RPKs) for turboprop and regional jet aircraft increasing by 14.4%, from 22.06 billion in January 2024 to 25.45 billion in January 2025.
Available seat kilometres (ASKs) for the same aircraft have also risen by 10.1% over the same period, from 27,850 billion to 30,660 billion, reflecting the sector’s steady recovery and strengthening passenger confidence.
Regional travel has led the recovery of medium and long-haul travel in the wake of the pandemic, driven by its role in feeding broader networks and its typically counter-cyclical nature. During the pandemic, domestic and regional travel faced fewer restrictions compared to long-haul routes, and passengers initially showed greater reluctance to fly long distances.
IBA anticipates that this strong demand will persist and grow at healthy rates, particularly in APAC, where rising populations and improving regional connectivity are driving expansion.
While the overall outlook for regional travel remains positive, IBA noted that some risks persist, particularly related to tariffs and trade restrictions. Inbound US regional travel, especially from Canada, could face challenges. For instance, Porter Airlines, having expanded into the US market with the E195-E2 aircraft, may experience subdued demand.
Engine challenges impacting fleet availability
Despite a positive market outlook, IBA highlighted that issues with the latest technology engines are impacting many airline operations and fleet availability, with 23% of PW1500G and PW1900G-powered Airbus A220 and Embraer E2 series aircraft currently inactive.
Among PW1500G operators, airBaltic and Air France are the hardest hit, with 21% and 27% of their Airbus A220 fleets currently grounded, respectively. Breeze Airways is also affected, with 13% of its total fleet inactive. As sole Airbus A220 operators, both airBaltic and Breeze Airways face heightened risks from these PW1500G setbacks.
The PW1900G-powered fleet, though smaller in size, has also seen notable groundings, affecting Embraer E190-E2 and E195-E2 operators. Porter Airlines and Azul Linhas Aéreas are heavily impacted, with 12% and 16% of their fleets grounded, respectively.
Stored aircraft rates declining, maintenance backlogs persist
While the number of inactive aircraft remains high, data from IBA Insight indicates a gradual decline in overall storage rates, particularly for regional and turboprop aircraft. Currently, 20-25% of the total regional fleet remain inactive, with a large proportion consisting of CRJs and older turboprops, many of which are stuck in long maintenance queues to get back into service.
From January 2024 to January 2025, the number of stored aircraft fell from 977 to 868, representing an 11.2% decrease. However, stored aircraft do not necessarily translate to market availability. Data from IBA Insight estimates that the actual number of stored regional aircraft available in the market is closer to just 3% of the total fleet, due to lengthy maintenance backlogs. Industry stakeholders are pushing for shorter turnaround times, but long lead times for maintenance have become the norm, further constraining the market’s ability to meet demand.
Robust market values and lease rates remain
Meanwhile, IBA Insight data revealed that supply constraints and high demand have pushed market values and lease rates upwards, with new-generation regional jets and turboprops maintaining strong pricing.
As of January 2025, the A220-300 holds a market value just above US$40 million for new models, rising 12.6% since January 2021. The E195-E2 is currently valued at around US$38 million, approximately US$4 million higher than the E190 variant. The ATR72 remains in the low US$20 million range, while the ATR42 holds in the high teens. Lease Rates for the E195-E2 and A220-300 are on par, averaging around US$300K per month for new deliveries, giving the E195-E2 a higher LRF.
Older regional aircraft have also benefitted from limited supply and extended lease terms, driving up market values and lease rates, particularly in late 2023 and early 2024. The market value of a ten-year-old E190 rose 17% from January 2021 and is currently in the region of US$13 million, with values now stabilising. Lease rates for a 10-year-old E175 have increased, currently sitting around US$120K per month. The CRJ family has seen more modest increases, with the CRJ-900 nearing US$10 million, and the market values of the CRJ-700 remaining stable throughout recent years.
Regional engine market trends upward
IBA data showed that Market Values for regional engines have seen slight increases, but cost of ownership pressures remain. The PW1500G has experienced value growth, but its performance is still impacted by ongoing GTF issues, albeit less severely than the PW1100G fleet. Notably, the PW1524G has risen by 2% year-on-year to January 2025 and shows a significant 24% increase from 2019, climbing from around US$8 million to over US$10 million.
Lease rates across the market have also generally risen in response to growing demand and market adjustments. The PW1524G and PW1922G, have stabilised at approximately US$100,000 and US$83,000 per month, respectively.
Intelligence from IBA highlighted that the market for Bombardier CRJ’s engines, particularly the 8C variant, remains strong.The Bombardier CRJ’s compatibility with the North American airline pilot scope clauses ensures its continued demand. This alignment has bolstered long-term commitments from CRJ operators, keeping its engines in-service. With lease rates over US$40,000, the demand for the 8C remains robust.
The CF34-8E continues to be a preferred choice for short-haul regional routes. However, despite a backlog of engine orders, the secondary market activity remains subdued. IBA warns that potential scope clause changes could put downward pressure on CF34-8E values, albeit unlikely. While the E175 currently complies with these restrictions, any relaxation could prompt airlines to shift towards larger aircraft, impacting demand. IBA has updated its opinion on the 8E’s, noting an 8% year-on-year increase in Lease Rates, which currently stand close to US$50,000.
Additionally, the 8C and 8E engines share interchangeable parts, allowing operators to utilise used serviceable materials (USM) to streamline maintenance. Conversely, the CF343-10E lease rates are showing signs of decline, falling 7.4% in the year to January 2025, and a 23% reduction from 2019 levels, decreasing from around US$65,000 to US$50,000.
