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Power of lease

The engine leasing market has reached full maturity, and for cost-conscious airlines, carefully managing their powerplant requirements means reducing outlay while still delivering a reliable service. Paul E Eden looks at some of the options available
A buoyant market generally means a competitive market, and both qualities are true of engine leasing, in which a number of competitors are working to supply demand. MTU Maintenance is a major player among them, and Arne Straatmann, Director Engine Lease Services, MTU Maintenance, explains: “Aviation leasing is a fast-moving and growing market.”
Straatmann quotes a recent study that shows the share of narrow and widebody aircraft on operating lease is now slightly over 45%, and could reach 50% in coming years. It’s a trend stemming from the 1990s, leasing having gained popularity among operators because it releases capital. Most new engines are covered under comprehensive OEM contracts in their early years of service, providing spare engine coverage if required.
But beyond that initial period, engine maintenance comprises a huge part of a carrier’s costs and with every airline – low cost, regional or long haul – looking to keep costs in check, Straatmann says MTU tries to help, “With ad hoc lease engines and excellent turnaround times. This reduces downtime and investment in spare engines. Usually, we align with our customer to understand their specific requirements and come up with a solution to meet or even exceed their needs.
“Thus, MTU Maintenance Lease Services offers short-term leasing, stand-by arrangements, engine pooling and asset management. We plan to grow and develop with the market and continue investing in spare engines, as well as innovating in our product portfolio.”
Tom Slattery, EVP GECAS Engines says some sectors of the market offer more lucrative leasing potential than others. “The demand for spare engines is driven by the size of the installed fleet, followed by its maintenance requirements and MRO supply chain capacity. Low cost and regional airlines tend to operate high frequency and utilisation, contributing significantly to the demand for spare engines.”
Straatmann adds: “At MTU we’re also noticing growing demand for technical support from smaller lessors and airlines with mature aircraft. We can support them with our newly launched Technical Asset Management Services [TAMS], which offers customised solutions for engine management. These services can include housekeeping, end-of-lease services and records management, through to complete fleet management.
“We believe it is essential to offer our customers the best solutions, which is why we offer leasing and asset management services for the engines that we also specialise in from an MRO perspective. We may add new engine types, including the LEAP, to our lease pool in the near future, while we have a partnership approach with the OEM regarding the GTF.” GECAS Engines holds more than 600 spare engines in its portfolio, deploying them to support the OEMs, airlines and MROs.
“Our customers’ business models are evolving, with a focus on cost and risk allocation,” Slattery says. “As such, there has been a shift to power-by-the-hour maintenance contracts that include spare engine support. The OEMs still need to sell spare engines to ensure the fleet is supported and the MROs need spare engines to win overhaul business, while GECAS Engines remains active in all areas of opportunity with airline financing solutions, rental support and pool solutions for our related OEMs.”
Just as parts harvested from retired airframes are finding a ready market to support older aircraft, so MTU’s Straatmann says older engine types are seeing something of a resurgence, suiting the company’s offering well. “In the current climate, with strong traffic growth and low fuel prices, there has been a revival in demand for older, more mature engines. The extended operation of such assets has to be viewed with an intelligent MRO eye, of course, but mature engine concepts can absolutely help improve the cost of operating such MRO-intensive assets. >>

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