THE history of aircraft leasing began in the 1970s. It was the Americans who first ventured into this business, followed closely by Europe. Ireland’s GPA was then one of the biggest players, but it does not exist today.
Aircraft leasing is a billion dollar business globally. There are very big to very small players. Typically, aircraft lessors are owned by banks and insurance companies.
Today, half of the global aircraft leasing market is controlled by two giants, GECAS (GE Capital Aviation Services) and ILFC (International Lease Finance Corp).
Penerbangan Malaysia Bhd (PMB) is relatively the new kid on the block. But in its short history, it has emerged as one of Asia’s three major mid-tier players, given its fleet size of 83 airplanes.
For now it solely caters to the needs of Malaysia Airlines, but things are going to change with the opening of its doors to other airlines. The company is also increasing the size of its fleet to meet future demands from other airlines.
But by no means is PMB aspiring to compete head to head with giants like GECAS or even ILFC.
“We do not have the advantage and cannot compete with them. We will remain a mid-tier company. To us, the issue is not size but what returns we can get for the risk we take,” PMB managing director Tengku Azmil Zahruddin Raja Abdul Aziz said.
The global leader in aircraft manufacturing, Airbus chief commercial officer John J. Leahy said the company was not involved in aircraft leasing but about 30-35% of aircraft (sales) go through leasing companies.
GECAS is a unit of GE Commercial Finance, which is headquartered in Connecticut, USA. The aviation solutions provider is a member of the General Electric group. It has relationships with more than 200 airlines in 60 countries.
It owns a fleet of 1,200 aircraft and manages nearly 300 from others, according to its website. Its operating leases range from three to 12 years.
ILFC claims it is the international market leader in the leasing and remarketing of advanced technology commercial jet aircraft to airlines around the world. ILFC, on its website, said it owned a portfolio valued at more than US$35bil, consisting of more than 650 jet aircraft. American International Group (AIG) wholly owns ILFC.
Apart from PMB, other major mid-tier lessors are Singapore Aircraft Leasing Enterprise (SALE), CIT Capital Aerospace, GATX Air, Debis Air Finance, Boullioun Aviation, Awas, Babcock & Brown, RBS Aviation Capita, Pegasus Aviation and Orix Aviation Services Ltd.
SALE said in its website that it had the world’s youngest and most modern aircraft portfolios with an average age of five years.
It said its fleet comprised new generation aircraft type purchased directly from manufacturers.
It has a current fleet of 60 aircraft flying with 30 airlines globally. Its offices are in Singapore, London, Washington, DC and San Diego.
SALE is jointly owned by Singapore Airlines (35.5%), German Bank WestLB AG (35.5%), Temasek Holdings (14.5%) and the Government of Singapore Investment Corp (14.5%).
Orix Aviation, based in Dublin, was established in May 1986. It said last year that it provided aircraft operating leases. As at end March last year, it owned 19 aircraft, with a carrying value of about 40 billion yen.
AWAS is based in Seattle and has 165 aircrafts that it leases to airlines in 40 countries. Debis Air Finance –in which DaimlerChrysler Services has a 35% stake – has a larger fleet of 250 jets and turboprops, leased to 85 airlines in 45 countries worldwide.
CIT Group Inc of New York own CIT Aerospace, which has been in existence for over 40 years. It has a portfolio of over 200 commercial aircraft leased to over 90 airlines.
After the Sept 11 incident, there were just too many financially troubled carriers either parking aircraft in the deserts or breaking lease agreements, thus affecting the financing machinery for new aircraft.
But since the aviation markets have picked up, lessors are getting better returns for their leases.