8 replies to this topic

[pabloc]

hi!

 

is there an actual difference in price between leasing an aircraft for a different length of time?

 

For instance, if you negotiate a leasing contract for 5 years the price is lower than if you negotiate just 1 year, but also... the aircraft would be 1 year older and if you were to lease an aircraft 1 year older the price would be lower.

My actual question is if the discount they give you for a longer leasing does just offset the depreciation of the lease itself, or does it actually have an additional discount?

 

Also I have read in the forum that depending on the offer/demand of certain models the used price can fluctuate, does it apply to the leasing price too?

 

I was wondering as I was leasing used aircraft for now, as I'm starting, but I was wondering if it would be better to lease for shorter terms (1-2yrs) or longer terms 

 

Thx for your help.

 

[Mobeer]

Lease as long as possible (10 years). Although the aircraft depreciates this does not involve you paying out any money.

[Ioh]

you can also extend the leases too, the longer the lease, the less you pay per month as its spread more out.

[channy_thegreat]

If you are the lessee, then depreciation is something you should not concern yourself with. The plane is not technically on your books as an asset, rather it appears as a lease liability to yourself while the lessor has the plane on it's books as an asset. Therefore, the lessor depreciates the asset. 

 

However, you as the lessee are responsible for maintenance, which will increase over time as the aircraft ages. Therefore, depending on the aircraft it may be more beneficial to short lease and replace. Also that strategy allows you to keep a fresh young diversified fleet, but can be tough and time consuming to manage. 

 

With all of that being said, most people opt for the instant gratification in cost savings by long term leasing. I will often just lease and continue with those planes renewing them until the end of the world. When you get a VLA it is just easier to maintain. 

 

Hope this helped!

-Channy

[pabloc]

thx for your help guys

[the DOC]

Lease as long as possible (10 years). Although the aircraft depreciates this does not involve you paying out any money.

Leasing for 11 years gives you the best discount. Once the aircraft is delivered (with a 10 year lease), extending the lease by one more year gives you the maximum discount. Once you hit an 11 year lease contract no more discounts will be given

[Yuxi]

FYI, the market variable price does affect the lease rate, which is directly derived from the purchase price.

[mxax-ai]

Actually, why is the maximum leasing time 10 years (without extending) and the maximum time a lease can be extended only 5 years each?

[pabloc]

Leasing for 11 years gives you the best discount. Once the aircraft is delivered (with a 10 year lease), extending the lease by one more year gives you the maximum discount. Once you hit an 11 year lease contract no more discounts will be given

thx for the tip, it really works

I wanted to extend some of the first aircraft I bought and I noticed that it saves some money, but I didn't know you could also do it with just-delivered aircraft

 

but... don't do it blindly because if the aircraft is increasing its value due to demand... the lease can become more expensive:

-------------------------------------------

Extend Lease
You will receive a discount of 3% off the monthly rate per year for the total length of the lease (max 30% discount).

With an extension of 1 year, your new monthly leasing cost for this aircraft will be $342,222. Do you want to proceed?

--------------------------------------------

 

but my current deal is

 

Lessor: System
Monthly Cost: $325,926
Lease Term: May 18, 1981 - May 18, 1991 (10 years),