Survey says operating leases are ready for take-off

Louisa Whyte
By Louisa Whyte October 12, 2017 12:04

Survey says operating leases are ready for take-off

Clients’ “growing appreciation and understanding” of the benefits of operating leases, combined with their desire to offset the risk of paying with cash, will see demand for operating leases increase over the next year.

That’s the conclusion of Global Jet Capital, which conducted a survey last month of 144 business aviation professionals.

Almost half of the survey respondents (48%) said they expect demand for operating leases in corporate jet transactions to grow over the next 12 months, with 8% expecting the increase to be “dramatic”. Only 13% of the respondents expected the demand to decrease.

According to Global Jet Capital, which provides financing for corporate jets, operating leases are currently an attractive option for potential buyers as their rates are low and prices are falling on pre-owned aircraft. This makes buyers keen to offset this risk and not buy with cash. Forty three percent of those surveyed by Global Jet Capital expected this issue to lead to an increase in operating leases over the coming year.

Seventeen percent of corporate aircraft transactions over the past 12 months have involved an operating lease, says Global Jet Capital. Thirteen percent of survey participants said that more than 30% of their transactions during that time involved n operating lease, while 29% said that, while all the transactions they were involved in were entirely cash-funded, they expected that to change in the future.

Dave Labrozzi, Global Jet Capital’s chief operating officer, said the research supports the company’s own observations of market activity. “There is a growing appreciation of and understanding by clients of the benefits of an operating lease, especially as it relates to the potential risks associated with aircraft residual values. In markets where aircraft valuations are continuing to move, an operating lease is a way to guarantee certainty, while still accruing most of the advantages of full ownership.”

Louisa Whyte
By Louisa Whyte October 12, 2017 12:04

One Minute Week Newsletter