Sunday, May 05, 2019

Are lease rentals for aircraft headed north after the 737 MAX, Jet crises?

Are Indian airlines paying more for leasing aircraft due to the global grounding of the Boeing 737 MAX aircraft and Jet Airways’ entire fleet of aircraft not being operational?

While leasing companies are categorical that there has been no impact of these two events on the cost of leasing, analysts give a different perspective.

Timothy Ross, Head, Investors Relations, of leasing company BOC, said: “There is very little spot business done in the aircraft leasing market. I am not sure if it would be correct to say that there has been a massive increase in premium for aircraft due to the grounding of the MAX or due to Jet Airways temporarily ceasing operations. The reality is that leasing rates have not hardened.”

Ross said most good leasing companies identify the airlines to lease out their aircraft at least nine or ten months before taking delivery of the asset from the manufacturers and start looking for renewing lease agreements at least 12 months before they are to expire.

BOC is well represented in the Indian market with SpiceJet, IndiGo and Vistara operating its aircraft.

Priyanka Chimakurthi, Senior Research Analyst, Aerospace & Defense Practice, Frost & Sullivan, said the grounding of the B737 Max, overall pilot shortages and the de-registration of Jet Airways has put pressure on domestic capacity.
05/05/19 Ashwini Phadnis/Business Line

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