China's - Orient Aviation

SPECIAL REPORTAircraftLeasingLease rates atan all time highFew aircraft available on the marketTalk to aircraft lessors thesedays and you won’t be able tomiss the merry glint in theireyes. Business is booming …and if only they could get theirhands on more jets it would be even better.Late model, single-aisle B737s and A320sare almost unobtainable. So are popularwidebodies as airlines hang on to theirexisting fleets because of delivery delays ofthe new generation A380 and B787 aircraft.As one North American-based leasingsalesman put it: “Rates we are getting onextensions and new leases, even for usedaircraft, are probably the highest they haveever been.”For instance, he pointed out, an A320leased new for around US$330,000 a monthsix years ago is today, as a used aircraft,being leased for around $370,000. “If youwanted to start a low-cost carrier (LCC) now,it is hard to see how you could do it with theprice of aircraft today,” he said.According to industry insiders rapidglobal traffic growth, a faster than expectedexpansion of LCC operations and anincreased propensity for airlines to leaserather than buy, coupled with delivery delaysin Seattle and Toulouse, are combining to putthe squeeze on aircraft availability.The proportion of the global airline fleetthat is leased has grown from 17% in 1990 to30% last year. It is expected to rise to 40% ormore in the next decade.Much of the predicted demand will bedriven by the growth of the budget airlinesector, particularly in the Asia-Pacific, wheremore and more start-ups are looking forB737s or A320s to launch their operations.Indeed, Randy Tinseth, vice-presidentmarketing for Boeing, told Orient Aviationin October the planemaker has significantlyWORLD WIDE COMMERCIAL TRANSPORT AIRCRAFT AVAILABILITY Source: AirfaxJet Aircraft Available: 507(including A330, BAC1-11, B707, B777, CRJ, ERJ, F28, F70/F100 and 328Jet)increased its forecast of global demandfor single-aisle aircraft in the next twodecades because earlier market forecastshad underestimated the pace of budgetoperations.Not only are lessors moving to addressdemand by placing massive multi-billionorders for new aircraft, the health of thesector is attracting the attention of wealthyinvestors, particularly banks, striving to buyexisting lessors or create new companies. Inthe past 12 months this has included:• Australia’s Macquarie Bank’s purchaseof GATX Corporation for $150 million andthe setting up of Macquarie Aircraft LeasingServices.• Bank of China (BOC) buying SingaporeAircraft Leasing Enterprise (SALE)• A new joint venture, SkyWorks CapitalNote: DC-9 includes MD80 aircraft, DC-10 includes MD 11 aircraftAsia, which involves Cathay Pacific Airwaysowner, Swire Pacific, Air China and U.S.financial consultants, SkyWorks Capital.The joint venture will include leasing in itsportfolio.• Dragon Aviation, another new aircraftoperating lease joint venture made up ofChina Aviation Supplies Import & ExportGroup Corporation (CASGC), Europe’sAerCap and Calyon Airfinance, which willtarget China.• In September, the Asia-focussed StandardChartered Bank agreed to buy Irish-basedlessor, Pembroke.• China plans to change regulations toencourage the development of local leasingcompanies. Several Mainland banks haveapplied to start leasing companies (seeseparate story).56 ORIENT AVIATION NOVEMBER 2007