Commercial Lease This Lease Is Made Between: Fill & Download for Free

It's like house renting business, except that your tenants are airliners and they will always pay on time. Various safety and legal agencies will make sure that they maintain your planes well and they lease for long time like 5-15 years. You don't have to advertise as there will always be demand. There is low competition and high entry barriers for new players. You don't have to maintain the planes or care about fuel costs. And if your plane crashes then insurance companies will compensate you with more money.There is almost no legal liabilities and low business risk. Common people don't even need to know that you or your company exists. Although, if you are a plane lover like me, then you can brag that you own thousand jumbo jets. In-fact, Plane manufacturing companies like Boeing and Airbus will consult you first before designing a new airplane. Does that sound like a good business idea? (Except that you would need loads of initial investment just like any other rental business)Why do airlines need to lease planes?Nearly half of the passenger airplanes flying today are leased by the airlines from big plane leasing companies. The main reason is because it's cheap.Economic Uncertainty and flexibilityLet's take an example, of lets say "Quora Airways". They purchased 5 aircraft from Boeing for 500 million dollars, but due to their superior services(compared to yahoo air) and due to the vacation season (especially in India), they now have enough demand to have 9 aircraft in service, but they can't buy new planes as they had put all their money in buying 5 planes.Image: It was made in 2 minutes for fun, so no judgments -_-This is where a leasing company can be the airline’s best friend. They can step in and cheaply (relative to buying an aircraft) provide them with aircraft to cater for the spike in demand.Conversely, let’s say it is off season and the demand fell. Now Quora Airways only needs 3 aircraft for the next two seasons. If they own the 5 aircraft they would find themselves in a major problem, trying to fill the aircraft or lease them out.However if their fleet was composed of a few leased aircraft, they could arrange for the early return of the aircraft, and with some penalty payments, solve their capacity crisis.The total Investment capital that went into AirAsia India was around $100 million, they have a fleet of 5 A320s which would have costed them $100m per plane if they had purchased it instead of leasing.PriceAirplanes are very expensive. New airlines cannot afford to invest such large amount of money in buying planes. Existing airlines may not want to put all their money into buying one aircraft. Instead they can operate 10 aircraft on lease and focus on growth.Take a look at the price chart of Boeing's planes. Big lessors purchase planes in large quantities (about 50 to 250) even before the first plane of that model is manufactured. Such lessors can get as much as 70% off on each plane. These deals happen privately, so I don't have much of a proof.Here is a table indicating the alleged discounts offered on various models.Types of LeasingDry LeaseThe lessor provides an aircraft without insurance, crew, ground staff, supporting equipment, maintenance, etc. It is all the airliners responsibility.Wet LeaseThe lessor provides an aircraft, complete crew, maintenance, and insurance. It is more like a charter plane, but with your logo on it.Damp LeaseA damp lease is similar to a wet lease but leasing company won't provide the cabin crew services.Sale and lease backAn airline which has bought an aircraft, sells the aircraft to a leasing company at current market price and immediately leases the same aircraft back. Airliners typically purchases 100s of planes in bulk and sells them to banks and then leases them back. As aircraft are owned by a lessor, an airline can save on the depreciation provision, which increases profit and saves tax.For example, Air India did this with their new 787s.Air India's flawed sales and lease-back strategy for its 787 Dreamliners - Bangalore AviationIn 2013, when every Indian airliner was making 100s of crores of loss, Indigo airlines made 6 fold profit by cleverly using sale and leaseback model. Although their CEO denies it and says that "focusing on the product and services" is the reason, I believe the reason for such profits is the sale and lease back model.What I think is the reason for Indego's success?They always buy in bulk. In 2005 when they started operation, they had purchased 100 A320s. In 2011, IndiGo had placed another large order for 180 A320neo aircraft, valued at $15 billion. Recently they had placed an order for 250 A320neos, valued at $25.70 billion (Rs.1.50 lakh crore) at catalogue price. It is the largest plane purchase order ever. They must have got 60-70% off for such bulk orders.They always go with 'sale and lease back model' when the planes are delivered and sells them for a profit.They only buy one type of airplane.( brand new A320neos)They save on fuel as they only use most efficient new planes.They only have economy class and provide descent services at low cost.They always retire their planes at the end of 6years to probably avoid maintenance costs.Which are the top plane leasing companies?You may be surprised to find out that Ireland is the hub of aircraft leasing business. Nine out of the top 10 leasing firms in the world operate from here. This is mainly due to tax benefits.GE Capital Aviation Services:- They own 1700+ big planes and is the biggest leasing company. (Just for a reference, Boeing have made 1508 Boeing 747s since 1967)International Lease Finance Corporation :- A company founded by Steven Udvar-Hazy. They own nearly 1000 big passenger planes. If you are interested then you can read his story here - "The Real Owner of All Those Planes"SMBC Aviation Capital :- 350+ planesAWAS :- They own 250+ planesFLY Leasing :- They own 125+ planesThere are 100s of other companies in plane leasing business. It is more profitable and easier to run a leasing company than to run an airliner (provided that you have loads of money for investment :p )What are the risks involved?Asset recovery riskIf the airline goes bankrupt, the lessor faces a huge risk in retriving their aircraft in good condition.For example, ILFC was the main lessor of Kingfisher Airlines, a regional airlines based in India. When Kingfisher went bankrupt, ILFC had to seize most of their planes in bad operating condition due to poor maintenance. Some planes could not even be flown as many of their parts were scavenged to repair other planes.Some aircraft were so badly cannibalized that they can only be sent to scrapyard. Although rare, but this is the biggest risk in this business.Kingfisher Airlines’s 15 leased planes may land in scrapyards - The Times of IndiaShort LeasesLong leases are better for the lessor than shorter ones. The fewer changeovers an aircraft does during its life the better! The lessor may have to reconfigure the seating arrangements and such customization according to the preference of the new operator. This can cause unnecessary costs.Transition TimeThe lessor earns no revenue during the transition time between the previous and new operators.Currency fluctuationsSince leasing rate is fixed for a long time, any fluctuations in the value of currencies involved may cause loss to either lessee or the lessor.Bad lesseesEven though there are many laws to safeguard lessors, some airliners (like Kingfisher airlines) might not maintain your aircraft as agreed, or simply not pay. If this happens then the lessor may have to negotiate with the airline for an early return, or if the relationship becomes hostile, then an international seizing operation might have to be done.Long term investmentJust like any other rental business, it takes 8 to 15 years for the plane to break even and make profit for the lessor. An average jet have a lifespan of about 25 to 35 years after which it may be sold to low budget airlines operating from poor countries or it is sent to scrapyard.SourcesLessor trouble mounts for Kingfisher AirlinesAircraft leaseAbout Boeing Commercial AirplanesThe secret of Indigo’s consistent profitsCompetition between Airbus and Boeing

Possession date is the date you are legally allowed to occupy the premises, basically the day you pick up the keys.Rent commencement date is the day you begin paying rent on the space.Date of occupancy is the day you move into the space.With a residential lease, this will typically all be the same date, but people typically move into a ready, “as is” house or apartment. Due to the nature of commercial leases, tenants or land lords frequently have months of work completing tenant improvements to customize the space for the tenant to be able to occupy. For this reason, commercial leases are definitely something you want to be negotiated by your broker, and reviewed by your lawyer. Commercial tenants are considered more business savvy by courts, and as such face far fewer protections than residential tenants. Typically on commercial leases, there will be multiple drafts with revisions from each party’s lawyer before a final agreement is made. Commercial leases are usually rather long term (5–10 years), and you do not want to sign something you later regret.

Why should we have to buy a port for 99yrs which doesn't give any profit in the near future. Sri Lankan government itself said that ,they are leasing this port to Chinese company inorder to stop paying the debt of hambantota port from Colombo port. Moreover Sri Lanka is now in a debt crisis and doesn't have the money to develop this port from its own pocket.The $1.4bn, Chinese-built deep-sea Hambantota port, which began operating in 2011, is situated in a remote corner of Sri Lanka with little demand for large-scale freight traffic, making it financially unviable.Before giving it to China , Sri Lanka made a similar request to India,which indian government denied. Indian government knows that by taking the Hambantota port for $1.4 billion and to get back profit from the same is an uphill task. India has already 2 major and 2 intermediate seaport in the bay of Bengal. Also the same number of seaports in the Arabian sea. All these ports are well developed and handles more traffic than the Hambantota port.With this $1.4 billion why should we have to go for a fledgling port rather than developing our small and intermediate ports.India's concern is that China may use this port as a military base. India expressed this similar concern to Sri Lanka. In return Sri Lanka assured India that the port will not be allowed to be used a Chinese military base. This assurance delayed the port signing between Sri Lanka and China. Finally after many negotiations China agreed to use this port only for commercial purposes.