Passengers aren’t the only ones paying more fly this year.

AND tight supply of aircraft increases the prices airlines pay to lease aircraft, just as demand for travel returns.

Rent for new Boeing The 737 Max rose more than 20% to $316,000 a month from April 2020 to July this year, according to aviation consultancy IBA Group. The competing Airbus A320neo climbed to $324,000 per month, up more than 14% from April 2020 and the highest price since the Covid pandemic. The larger version, the A321neo, cost $375,000 per month in July.

The world’s largest aircraft leasing companies, e.g Air LeaseAvolon and AirCapwho acquired GE‘s aircraft leasing last year, they are reaping the benefits.

According to aviation consultancy Cirium, more than 51% of the world’s nearly 23,000 single- and twin-aisle jets are owned or managed by leasing companies. While many airlines own their aircraft, some carriers choose to lease aircraft instead, or combine them.

Reasons for leasing vary and include poor credit ratings, which increase borrowing costs, and the desire or need to conserve cash rather than shell out new aircraft, which can have list prices of more than $100 million apiece.

The higher costs come as airlines already face high inflation, resulting in expenses that are usually reflected in fares. Aircraft leases are approaching or in some cases exceeding 2019 prices and are set to go even higher. This year’s surge in oil prices makes newer, more fuel-efficient planes more attractive than older ones, and higher interest rates could also push up lease rates.

“You have rising interest rates and a higher cost of capital,” said Mike Yeomans, director of valuation and advisory at IBA. “This will lead to an increase in rental rates for the rest of the year.”

Leasing executives told CNBC that many of their customers are extending their leases and new aircraft are hard to come by.

Steven Udvar-Hazy, executive chairman of Los Angeles-based Air Lease, said the company’s lease renewal rate is approaching an unprecedented 90% and that it typically hovers around 65% to 75%.

“We’re seeing a lot of lease extensions on aircraft that a year ago we assumed we would have to resell,” Udvar-Hazy said. This means that the company does not have to worry about switching costs and provides the landlord with a steady stream of income.

The trend is the result of a resurgence in airline bookings, while Boeing and Airbus – still recovering from a slump in demand and production in the early days of the pandemic along with supply chain issues – are unable to ramp up production as much as they would like. .

Global passenger traffic rose 76% in June from a year earlier, but is still about 29% lower than before the pandemic, according to the latest available data from the International Air Transport Association.

Hazy said interest rates would have to climb higher and stay elevated to significantly weaken travel demand.

For now, airlines are “now looking at the world where they can actually deploy more aircraft,” said Andy Cronin, CEO-designate of Dublin-based Avolon. “We’re certainly seeing a shortage of aircraft and an acceleration in demand beyond what we would expect at this stage.”

Cronin said lease rates for Boeing Maxes and Airbus A320neos have increased by 10-15% this year.

Supply chain issues and labor constraints are forcing manufacturers to increase production. Part of the problem stems from sanctions imposed on Russia, which have limited titanium supplies since the country invasion of Ukraine February.

RaytheonThe company’s chief executive Greg Hayes acknowledged last month that some customers would feel the impact of the supply shortage. “Now we’re not talking about dozens and dozens of planes, but you’re talking about five to ten planes … that will be without engines because we don’t have the titanium forgings that we expected to get this year. Hayes said on an earnings call last month, referring to the conglomerate’s Pratt & Whitney engine unit.

“We’ll sort it out, but it won’t be without a little pain for our customers.”