SGI Aviation: Airline Guidance for Aircraft Operating Leases Aircraft operating leases represented less than 5% of overall aircraft ownership in the 1980s. But this percentage has continued to grow significantly over the past few years. It is expected that half of all aircraft worldwide will be under either an operating or financing lease in the next decade. A lease allows airlines to add aircraft to its fleet without any ownership risks, introducing much needed flexibility. However, it also presents a series of unique challenges for the airline. It is widely recognized that an aircraft lease, with the associated delivery and redelivery process, can be a cumbersome and time-consuming activity. However, many issues can be resolved by proper preparation and attention to detail. One of the biggest pitfalls for a delivery or redelivery program for any airline is insufficient preparation time or lack of manpower. Delays are extremely costly, as lease contracts impose significant penalties, such as 50% additional or even double rent in the event of a delay in redelivery. Leveraging the correct expertise is of equal importance, as an initial low lease rate may rapidly evaporate against the high cost of a redelivery as a result of delays, regulatory issues, or technical difficulties. Integrating the cost of the entire leasing life cycle into the negotiation process will create clarity and aid in determining which issues have a significant impact during lease negotiations. SGI Aviation, an IATA Strategic Partner, has created guidance material and best practices, so airlines can effectively manage and optimize the lease process. This material was developed under guidance and input from IATA and its members. The document analyzes and makes recommendations for the entire aircraft-leasing life cycle, from the negotiation phase right through to the operations phase, and, ultimately, redelivery. Joost Groenenboom Executive Director, Airlines SGI Aviation
Posted on: Fri, 21 Jun 2013 20:41:36 +0000
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