China’s aircraft lessors enjoying surge in business

TESTCustomwebLP TESTCustomwebLP
By TESTCustomwebLP TESTCustomwebLP September 22, 2014 14:51

China’s aircraft lessors enjoying surge in business

China’s burgeoning aircraft leasing sector has reported total business worth up to US$400bn, with the Tianjin region emerging as the dominant hub for deals in the rapidly growing sector.

Zhang Zhongdong, deputy director of the Tianjin/Dongjiang free-trade port (DFTP), stated that an average of 15 aircraft were being delivered every month by leasing companies registered in the region.

Zhang also reported that 409 aircraft had been delivered from the zone since the first transaction took place in late-2009, with the figure expected to reach 450 by the end of the year.

“The DFTP accounts for 99.3% of aircraft leasing deals on the mainland,” Zhang said.
Forty aircraft have been leased through Shanghai, two from Shenzhen, and two via Xiamen, which are other pilot zones permitted to conduct aircraft leasing with preferential policies.

The mainland’s aircraft leasing market was dominated by foreign lessors until 2007, when state-owned banks were allowed to own leasing subsidiaries, rapidly increasing their market share. Chinese lessors now account for 300 passenger aircraft flown by domestic airlines, or 14% of the mainland’s total fleet of more than 2,000 aircraft, said Tao Mei, vice-president of ICBC Financial Leasing, which accounts for 107 aircraft, making it the largest player in the domestic market.

Boeing’s recent Chinese market forecast predicted the region will need more than 6,000 passenger aircraft worth US$870bn over the next 20 years. “At least 50 to 60% of that will be financed through leases,” Tao said.

ComSys Leasing, a leasing company backed by Hong Kong capital, last week announced plans to buy 20 of the indigenous COMAC ARJ-21 regional jet. With no direct affiliation with airlines or banks, ComSys started operating in Tianjin’s DFTP in 2011 and had leased more than 30 aircraft to mainland airlines, company president Cheng Gang said. “During the financial crisis and the US credit crunch, many foreign lessors were phasing out of the Chinese market and we saw the opportunity,” Cheng said.

The company’s portfolio consists mainly of narrow-body Boeing and Airbus aircraft bought from airlines. Cheng said the decision to add the smaller ARJ-21, which is still undergoing testing and development, stemmed mainly from a wish to “to support Chinese homegrown aviation and because we see market demand for regional jets”.

Some Chinese lessors have also set up foreign subsidiaries, including ICBC Leasing, which has nearly half of its 200 delivered aircraft leased to customers outside China, China Development Bank Leasing, with a fleet of 185, and Bank of Communications Leasing, with 70 aircraft. Bank of China’s BOC Aviation.

TESTCustomwebLP TESTCustomwebLP
By TESTCustomwebLP TESTCustomwebLP September 22, 2014 14:51