Freighter aircraft leasing – Part III
Today we conclude our three-part series on freighter aircraft leasing. In Part I and Part II we looked at the subject from the point of view of the leasing companies, today we turn from lessors to carriers, and ask a basic question:
Why lease?
Why would an airline choose to lease a freighter, rather than buying one?
Of course, there is more than one answer, and each answer depends on the type of lease arrangement. In the classic dry lease, the decision often hinges on whether the carrier wants the aircraft on its books after flying it for ten years. Leasing, while perhaps more expensive in the short term, neatly removes the problem of aging aircraft from the airline. As can be seen in the chart at right, almost 100 carriers have gone the dry lease route for almost 500 freighter aircraft.
ACMI leases solve a different set of problems. Not only does ACMI-leasing a freighter remove the headache of providing crew and maintenance for a type that might not be compatible with the rest of the airline’s fleet, but it also allows a carrier to “test” a route or a potential market. It’s easy enough to calculate the costs involved in a new route, but revenue is something else. An ACMI lease might be expensive in the very short term, but it’s vastly cheaper than being stuck with a freighter for the long term if your revenue estimates were wrong.
CMI leasing, which was almost unheard of just a decade ago, has become an increasingly hot trend in the air freight industry. It gives the lessee complete control of the aircraft (yes, backwards from the traditional dry lease), while at the same time avoiding all of the headaches on the operational side. No pilots. No training. No maintenance. It is what allows DHL to operate in the US. It is what allows Amazon to set up a “virtual airline.”
Of course, the freighter that Amazon is having Air Transport Services Group or Atlas Air Worldwide Holdings operate on a CMI basis has to come from somewhere, and often that “somewhere” is from the very company that is operating it. ATSG acquires a freighter, and its Cargo Aircraft Management leasing arm leases it to Amazon on standard dry lease terms. Amazon then hands the freighter back to ATSG, which has one of its airline subsidiaries (ABX Air and Air Transport International) operate it for Amazon in the new Prime Air network.
Simple, right?
Well, no, it’s not simple, but if you are interested in learning more about how a company like Air Transport Services Group integrates the various types of leasing into its operation alongside its own subsidiary carriers, then join us at the Cargo Facts Symposium in Miami, 10 – 12 October, where ATSG’s Chief Commercial Officer Rich Corrado will participate in a session devoted to all-cargo carriers. To register, or for more information, go to CargoFactsSymposium.com.
