Preighters And Leasing
One response to the surging air cargo demand of recent years has been the temporary conversion of passenger aircraft into so-called ‘preighters’ for temporary cargo operations.
This usually involves modifications to the passenger cabin, such as the removal of seats, to augment an aircraft’s bellyhold freight capacity.
In some markets, preighters have returned to their original passenger configurations as markets have reopened, but plenty still remain, and airlines are likely to pursue similar modifications again in future demand crises.
This all raised questions about the terms of passenger aircraft lease contracts, which may contain restrictions on operating passenger aircraft as preighters, writes Adam Longney, a partner in the transportation industry group of law firm Reed Smith.
Longney notes that while many leasing provisions are universal to passenger and freighter aircraft, certain technical and redelivery conditions may limit how passenger airframes can be modified.
“For example, these provisions may restrict the removal of passenger seats and, in more extreme cases, they may contractually limit the airline’s ability to operate regular cargo-only flights using the aircraft,” he writes.
He adds that airlines with “leases that would contractually restrict their ability to operate aircraft as preighters… may seek adjustments to those provisions to allow them greater flexibility to manage their fleet and operate the aircraft as preighters in times of disruption.”
However, Longney also observes that most leases contain enough leeway to allow for the type of preighter operations envisaged today.
Furthermore, given the huge amount of forbearance shown by lessors to airlines during the crisis—including the writing off of lease debt, rent deferrals and the acceptance of flight-hour-based payment terms—it seems very unlikely that they would object to alternative revenue-generating activities for their aircraft.