Robert Martin, Rich Wiley and Peter Barrett all took to the stage at ISTAT Asia this week and reiterated that airlines will become operating lessors. The conversation that has been on going now for many years, with airlines such as Jet leading the way and doing well, was given fuel once again by comments recently that Lion Air will build a leasing venture. Of course Lion Air would have to say that as at the moment everyone is questioning what it plans to do with 469-odd aircraft on order.
Although it is true to say that airlines have all the various pieces in play to become operating lessors on an ad hoc basis at any time with relative ease subject to third party support in most cases, it is also true to say that Lion Air, in stating that part of its giant order book is for an operating lessor venture, is confirming that it has gone down the road of speculative aircraft order. Now that is one dangerous business plan in this market.
The real worry for lessors is the fact that large ad hoc orders of aircraft for leasing purposes means lease rate pressure down the line. So there is a niggling worry for many lessors today across the globe about orders such as that for Lion Air as there is a question mark over the future of lease rates on the types it has on order, especially the A320 and A320neos & A321neos. Those worries will remain until we all know for sure what Lion Air is going to do with the orders – if indeed it takes them at all. Will there be a flood of certain aircraft types on the leasing market in the near future – The answer is yes if Lion Air is indeed being sincere in its recent statements.
In related news: Air India CMD Rohit Nandan today announced that the airline is set to replace its eight 777-200LRs as the 787 is introduced saying that it will either sell or lease the 777s with the help of Boeing Capital.
Lessors still have that old burning worry at the back of their minds
