Standardizing Lease Contracts?

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Is there a need to create industry standards for lease contracts and agree on guidelines for maintenance reserve calculations? This was the subject of discussion in a session today at MRO Europe.

Yes, says Ran Ackerman, Head of Aircraft Acquisitions & Sales at El Al Israel Airlines, who argues that maintenance reserves are the main concern for an airline when it comes to lease contracts. Ackerman, whose airline leases 16 aircraft, says “there is no leasing company that doesn’t see maintenance as a source of revenue.”

AirCap’s Chief Technical Officer, Joe Venuto, points out that lease contracts (often 200 pages long) need to provide the protection that an owner of a 40 million dollar asset would expect. 

He also says that maintenance reserves are unique to the individual lease contract depending on the aircraft and conditions in which it is being operated and maintained. Lessors and operators have different databases which form the basis for expected maintenance reserve rates, says Venuto. While the airline’s database is unique to its operations, the lessor takes data and makes calculations from it worldwide fleet.

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