Why Do Airlines Lease Aircraft?

History

Aircraft leasing began in the 1970s as commercial air travel grew in popularity. General Electric Capital Aviation Services and International Lease Finance Corporation are the two largest aircraft leasing companies in the world, with a combined fleet of over 2,000 aircraft, as of 2010.

Benefits

Aircraft leasing allows airlines to fly new aircraft at a reduced cost. The reduced cost is easier to finance and allows the carrier to conserve cash rather than invest it in a depreciating asset.

Types

The two types of aircraft leases are wet leasing and dry leasing. A wet lease is a short-term lease where the lessor also supplies the crew, maintenance and insurance on the aircraft. Airlines use this model for seasonal or restricted routes. A dry lease is a long-term lease where only the aircraft is supplied. It must be registered and maintained by the lessee. Behind the brightly-colored liveries that differentiate each airline, there is a financial surprise: As of 2010, nearly half of all commercial aircraft in service are not owned by the airlines. Instead, they are leased in a process that gives carriers options and flexibility in fleet management.