Few people have been more influential in shaping modern commercial aviation than Steven Udvar-Házy, founder and Executive Chairman of Air Lease Corporation (ALC).
By 2024, nearly half of the world’s airliner fleet belongs to leasing companies, which place large aircraft orders and then rent them out to airlines, providing capacity flexibility to operators and lowering the barriers of entry to new market entrants. And Udvar-Házy is widely credited for his role in the creation and rise of this multi-billion-dollar global industry.
Born in Hungary shortly after the Second World War, Udvar-Házy moved to the United States as a child, his family fleeing Communist repression in his home country.
Once in the US, he developed a passion for aviation that led him to get involved in a series of business ventures from a young age. This culminated in the creation of International Lease Finance Corporation (ILFC) in 1973.
This pioneering firm, which eventually became the world’s largest aircraft lessor by market value, helped spur the development of the modern aircraft leasing industry while securing Udvar-Házy a spot on the Forbes billionaires list.
Udvar-Házy sold ILFC to insurance giant American International Group (AIG) in 1990 but continued at the helm of the company for another two decades, leaving in early 2010 to start his new venture, Air Lease Corporation (ALC).
During all this time, Udvar-Házy has remained one of the most respected voices in the aviation industry and his endeavors have also extended to the domain of philanthropy, among others the creation of the Steven F. Udvar-Házy Center, a partner facility to the US National Air and Space Museum, being perhaps the best-known example and the largest aviation and space museum/exhibit complex in the world.
AeroTime had the chance to speak with Udvar-Házy during the CAPA Airline Leader Summit 2024, which gathered C-level executives from across the airline industry in Belgrade, Serbia, on November 21-22, 2024.
In a brief but insightful conversation, Udvar-Házy commented on some of the main developments currently taking place in commercial aviation and shared his views on the possible paths some of its main players may take.
On supply chain constraints and the state of the industry
We started our conversation discussing, rather inevitably, the supply chain crisis that is slowing down production across the industry. As major customers of original equipment manufacturers (OEMs) such as Boeing and Airbus, aircraft lessors have not been immune to this.
“To give you an example, we were supposed to take 92 new planes this year from Boeing and Airbus, and, I think, if we get maybe 71 or 72, I’ll be happy,” Udvar-Házy said. “That gives you an idea.”
Do these supply bottlenecks offer an opportunity for new entrants like COMAC? Udvar-Házy provided a pretty straightforward answer.
“No, because they can’t get FAA certification,” he said. “That is, unless it’s in certain countries that don’t care about EASA [the European Union Aviation Safety Agency] and where they could almost buy their way in through political muscle.”
What about 10 to 15 years into the future? According to ch-aviation data, the increasingly assertive Chinese manufacturer has racked up more than 700 orders for its C919 mid-sized airliner, 99% of them in its home country. The company announced the first order for its future C929 long-haul aircraft in November 2024, but it is still a preliminary design.
While acknowledging that China is willing to play the long game, Udvar-Házy highlighted some of the challenges it will face if it is to become a peer competitor in aircraft manufacturing.
“Absolutely, they’re committed. But the US has a lot of leverage because we have the engines and the avionics and the APU [auxiliary power units – ed. note] and, the US could cut them off in five minutes,” he explained. “They wouldn’t be in a position to replicate that.”
“It’s more than just the aircraft,” he continued. “You [have] got to create a whole global airline product support network. It took Embraer a long time to get that. So, they have some hurdles: certification, product support and manufacturing in quantity.
“You know, if you make four or five [aircraft] a month, it’s not going to move the needle when we are talking about [a market of] more than 1500 jets a year.”
In any case, Udvar-Házy did not sound too upbeat about the prospects of the production constraints being lifted anytime soon.
“I think we’ll get better, but not much better,” he said. “Look, Airbus set some ambitious goals, 75 narrowbodies a month. I don’t think that’s achievable in the next two years. It’s like saying, ‘I can run 100 meters in 10 seconds’. I can’t. But I tell the outside world I want to run in 10 seconds. Well, it’s not realistic.”
Udvar-Házy also had some words for US manufacturer Boeing, which is still reeling from multiple crises.
“I think they missed some golden opportunities to refresh their product lineup,” he said. “And, you know, they invested a lot of money in the 777X which, in retrospect, will turn out to be an expensive judgment error.”
Udvar-Házy was also critical of Boeing’s decision not to pursue a New Midsize Airplane (NMA). A concept that has been extensively discussed in aviation circles for quite a few years, it would involve the development of clean-sheet aircraft for high capacity, medium haul routes, such as the US Transcon market.
He said: “Boeing should have made a move already, but I think the window of opportunity is gone now, because what kind of engine are they going to use? And where do you make it? Do you make it in a union state, in a non-union state? These are questions that Boeing will have to deal with.”
Airbus’ past decisions also got some criticism from Udvar-Házy, particularly the A380.
“A financial flop for Airbus, except for Emirates,” he stated.
In a conversation with AeroTime back in 2023, Emirates’ CEO Tim Clark had expressed his wish for an even larger plane. But Udvar-Házy is not having any of it.
“That’s Emirates,” he said. “But they don’t speak for the whole industry. For them, the A380 is fine, but for most airlines it’s no good.”
Udvar-Házy also expressed skepticism about Boeing’s 777X program, stating: “What 777X, and when?”
On the future of the aircraft making industry
So, is it time for a paradigm shift in the industry? And is the drive towards sustainability an opportunity for new entrants to disrupt the market with radically new technologies and concepts, such as the blended wing body aircraft proposed by JetZero?
“Maybe, but not on a large scale because, again, they don’t have the funding,” he said. “They don’t have the production capability. And those new designs always have hurdles. Yeah, they might look good on paper but once they get into actual operations it’s challenging to replicate a global franchise of commercial aircraft.”
Udvar-Házy also had words for the much talked about advanced air mobility space.
“All of this reminds me of the US automotive industry,” he said “In the 1930s there were hundreds of companies making cars and then by the time the Second World War ended they were down to seven or eight. So, it’s the same thing. A lot of good ideas. But what are the commercial applications?
“I would say 80% of the money that’s invested in that space is going to be lost. So, you see Lilium already. You’re seeing businesses fold one by one. Because you can’t get from concept to economical production. It’s a big step to get certification. It’s not a space for us because the dollars are so small.”
We couldn’t conclude our conversation without also mentioning the third major commercial jet maker, Embraer.
“They have a good engineering capability. The C390 [a multirole military cargo aircraft – ed. note] is a really good airplane, but it’s too bad that their Boeing relationship ended because I think that would have actually been positive,” However, Udvar-Házy underlined that the Brazilian manufacturer is unlikely to challenge the dominant players on its own. “Not on a huge scale, they need a brother to hold their hands,” he said.
So, where is the commercial aircraft market headed? And are we still going to see what is essentially a duopoly 20 years from now?
“No, it won’t be a duopoly,” Udvar-Házy said. “But I don’t know whether it’s going to be three players or four. Something will definitely change.”