There are many government agencies that will lease different types of aircraft. They do so because they do not have a fleet of their own. It is often easier for one of these governmental agencies to do this so they can avoid the upkeep on aircraft that they may only use once in a while. Of course, the cost of using these planes and helicopters can be quite expensive. However, it is often less, over the course of several years, than investing in the aircraft themselves. The demand for government aircraft leases is keeping small aircraft leasing companies busy and is expected to increase over the next decade.
Overview of Aircraft Leases
The topic of leases for aircraft is quite comprehensive. It is also diverse. Airlines will lease aircraft from other airlines, as well as companies that are in the business of leasing these vehicles. There are two main types of leasing contracts. One is called wet leasing. This involves a short-term lease, whereas a dry lease is for extended periods of time. Statistically, leases for aircraft represent as much as 40% of all operating leases for jetliners today. This has amounted to over $100 billion of aircraft being used in this way. Regarding governmental agencies, they also use leases when they need aircraft for specific purposes.
Why Would the Government Lease Aircraft?
One of the reasons that they will lease aircraft opposed to buying them is that it’s more cost-effective in most cases. For example, the US government might lease aircraft for millions of dollars, and this will include a maintenance agreement. By doing so, they are avoiding the need of spending what could be hundreds of millions of dollars on aircraft that will only be used occasionally. Likewise, they will save money on the continual maintenance that is necessary to keep these aircraft in tip top condition. These aircraft are typically used for special missions. They will choose aircraft that are specifically designed for a specific purpose. Whether this is transporting a government official, or monitoring weather conditions, there are specific planes and helicopters that can be used for virtually any type of mission that may come up.
Who Does the Government Lease Aircraft From?
It is likely that the government will choose to lease aircraft from some of the top aircraft leasing companies in the industry. This would include companies like AerCap, Dubai Aerospace Enterprise, and Textron Financial, most of which get their aircraft from companies like Boeing and Airbus. It is their connection to these well-known manufacturers of aircraft which often motivates government agencies, at any level, to consider these companies. Like any other type of purchase, they will get estimates on the total cost of the lease, what the lease entails, and then make a decision based upon how much money they can save.
Aircraft Financing Options for Government Agencies
It should be noted that the government can also purchase aircraft that they will be using consistently. This could include private aircraft and commercial aircraft. They can do so through what is called operating leasing or finance leasing, each of which will eventually lead to the potential of owning the aircraft they are paying on. In many cases, they will do finance leasing, primarily because capital leasing represents a much longer financial arrangement which means the payments might be lower.
The Main Reason That the Local State And Federal Government Leases Aircraft
If you think about the main reason that people will lease a vehicle, instead of buying one, the same idea applies to aircraft that these government agencies purchase. When you lease a vehicle, you are purchasing something that is new, and in a few short years, you can turn that in to get the latest model. It is this benefit of not having to deal with the problems associated with older vehicles that makes leasing a much better option. It allows them to have full confidence in the performance and safety of these aircraft that they will use which are maintained by the companies that lease them.
This overview of why local, state and the federal government will lease aircraft should now make sense to you. It is a business decision that allows them to only use the latest state-of-the-art aircraft. In most cases, the lease will include a maintenance contract which means they only have to worry about finding a competent pilot. This ensures that important people that they are transporting, and valuable cargo that is being shipped, will be flown in aircraft that will not fail.