The Strategy of Leasing Aircraft Term Paper by scribbler

The Strategy of Leasing Aircraft
A review of the benefits and drawbacks to aircraft leasing.
# 153437 | 1,893 words | 4 sources | APA | 2013 | US
Published on Jun 02, 2013 in Business (Industries) , Aviation, Aeronautics (General)


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Description:

The paper relates that aircraft leasing has become part of the low cost carrier business model and examines the financial considerations involved. The paper provides an overview of the aviation industry and identifies the four main benefits to leasing aircraft that are financial liquidity, capacity flexibility, rapid expansion, fleet consistency and reduced maintenance costs. The paper also identifies the drawbacks of leasing that include the lack of airplanes and rising interest rates but concludes that for low cost carriers, leasing aircraft is recommended.

Outline:
Introduction
Overview of the Industry
Benefits of Leasing
Disadvantages of Leasing
Internal Considerations
Conclusions

From the Paper:

"The aviation industry is one of the world's largest businesses, worth an estimated 7.5% of global GDP (Investec, 2010). Traditionally, airlines purchased aircraft, often with financing from the manufacturer. In 1994, only 18% of commercial aircraft were leased. Since that time, fueled by the rise of low cost carriers, leased aircraft now account for 40% of the global commercial aircraft fleet and this figure is expected to continue rising (Ibid). Lessors tend to be financial institutions, or subsidiaries thereof, and they enter the business because they can finance the aircraft at very low rates and then lease them out at rates that are profitable but still competitive for the airlines. Low cost carriers in particular became attracted to aircraft leases because they were unable to secure sufficient credit to purchase planes and expand rapidly enough to meet their business objectives. Low cost carriers soon identified other benefits of leasing as well.
"The air travel industry is considered to be cyclical and has suffered two major demand-side shocks in the past ten years. The first came in the wake of the September 11th terrorist attacks in the United States; the second came in the wake of the global economic downturn. The industry is now growing again, lead by air travel in the Asia Pacific market, and the success of the Middle Eastern carriers. There is double the number of aircraft in the skies compared with 1990 (Investec, 2010)."

Sample of Sources Used:

  • A.T. Kearney. (2010). Fast growing aircraft leasing industry. A. T. Kearney. Retrieved May 1, 2011 from http://www.atkearney.com/index.php/Our-expertise/aerospace-a-defense-fast-growing-aircraft-leasing-industry.html
  • Hadhi, A. (2005). Aircraft shortage adds to low cost carrier woes in Asia. Dow Jones Newswires. Retrieved May 1, 2011 from http://www.pprune.org/dg-p-reporting-points/189041-aircraft-shortage-adds-low-cost-carrier-woes-asia.html
  • Investec. (2010). An introduction to aircraft leasing. Investec. Retrieved May 1, 2011 from http://www.investec.com.au/media/spool._2f_en_5f_au_2f_documents_2f_pdf_5f_s_23_0907_23_File-MediaFile.pdf
  • Jeremiah, D. (2011). Asia Pacific to lead the upward ride for aircraft leasing opportunities, says Frost & Sullivan. The Lessors Network. Retrieved May 1, 2011 from http://www.lessors.com/news11-Q2/allnews-110426b.html

Cite this Term Paper:

APA Format

The Strategy of Leasing Aircraft (2013, June 02) Retrieved January 22, 2021, from https://www.academon.com/term-paper/the-strategy-of-leasing-aircraft-153437/

MLA Format

"The Strategy of Leasing Aircraft" 02 June 2013. Web. 22 January. 2021. <https://www.academon.com/term-paper/the-strategy-of-leasing-aircraft-153437/>

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