BEIJING: China was buying second-hand planes from the West. But even as old aircraft reverse course with US airlines buying up planes discarded by Chinese carriers, newly minted Chinese aircraft lessors are yet to tap the potential of this evolving market.
That is why Aengus Kelly does not feel threatened by new Chinese players. The chief executive of the world’s largest aircraft lessor, Aercap, says new Chinese players have miles to go before they become adept at moving planes the other way round.
AerCap, which boasts a fleet of 1,300 planes, last month took 25 used Airbus A319s from China Southern Airlines to place them with United Airlines, the first time a leading Western airline took that many aircraft from China.
“That’s the way the world is changing. If you go back 20 years, no one would ever have thought that the US majors would be taking used airplanes out of China,” Kelly told the South China Morning Post.
Being among the biggest traders of aircraft, Aercap “buys, sells and leases an airplane in the world every 24 hours”, Kelly said. While Greater China has been Aercap’s biggest market for new aircraft where it puts in US$1 billion worth of planes each year, the number of planes coming out of China’s growing aviation market as airlines replenish their fleet is also growing, he said.
The mainland’s commercial aircraft fleet currently stands at about 2,200 planes.
Everything will eventually come out,” Kelly said, but Chinese aircraft lessors, being at the centre of all that opportunity since they came into being in 2007, still have a long way to go before they learn how to manage the “second life” of aircraft instead of just financing new aircraft purchases, he said.
Chinese leasing companies are starting the journey of trying to move outside China and be more than just a bank.
Now the challenge for them is to evolve into the next phase, when those leases expire, taking the aircraft back from a Chinese carrier and leasing it in Argentina, leasing in Norway, leasing it in Canada … can they build the global infrastructure they need to move airplanes all over the world? No one has ever built a global leasing platform from scratch in 25 years.”
