Spring Airlines Leases A320 Jets From BOC Aviation

Jun 28, 2010 - SHANGHAI - Chinese airlines have started to look for domestic Chinese aircraft leasing firms, a break with the past when they would only lease from foreign companies.

Spring Airlines, a Shanghai-based private budget airline, recently inked an agreement to lease two A320-200 airplanes from BOC Aviation, an aircraft-leasing unit of the Bank of China (BOC).

One jet was delivered to the airline last week, and the other is expected to be delivered next month, BOC said in a statement Thursday.

The country's aircraft leasing market has offered more alternatives to airlines according to Zhang Wuan, a spokesman for Spring Airlines.

Airlines generally buy some airplanes and lease others. Owning airplanes can result in higher profit margins but require a high investment. Leasing is more flexible, particularly during an economic crisis, Zhang said.

Spring Airlines generally leases airplanes from international firms that have many jets like GE Capital Aviation Services. But the firm has gradually been moving away from foreign suppliers, leasing from ICBC Leasing, a unit of Industrial and Commercial Bank of China (ICBC), according to Zhang.

BOC Aviation bought out Singapore Aircraft Leasing Enterprise (SALE), once the largest aircraft-leasing firm in Asia, for $965 million in December 2006.

Corporate jets have also become an attractive investment for the leasing companies.

Minsheng Financial Leasing, a unit of China Minsheng Banking Corp, bought 17 corporate jets worth 4 billion yuan ($588.18 million) after the company forayed into the market last year, Zhou Wei, president of the company, said at a forum in Beijing Thursday.

The number of corporate airplanes in China rose to 74 currently from 25 in 2007, according to Zhou. Demand for corporate airplanes is estimated to reach around 1,000 by 2020, Zhou said.

Hou Peng, general manager of the department of aviation finance at ICBC Leasing, is also bullish on the corporate jet leasing market. But he said his company like some other State-owned banks, are mainly targeting big airplanes.

Hou did not disclose ICBC Leasing's plans to launch corporate jet leasing services.

Source: Global Times

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