Aircraft leasing in China to take off

Photo: Ningbo Daily

(ECNS) – Major overseas investments indicate that China's aircraft leasing business is set for takeoff.

According to a report released by Chinese consultation firm Morning Whistle Group on Oct 30, China's aviation industry saw total overseas investment of $5.084 billion in the third quarter, the third biggest amount of all industries.

In August, it was reported that Hong Kong tycoon Li Ka-shing's Cheung Kong (Holdings) Ltd. bid for a $5 billion fleet of 100 planes that Ireland-based AWAS Aviation Capital put up for sale.

Fu Shang, an analyst at Morning Whistle, said the move is partly fueled by a booming demand in China for aircraft leasing.

China's lift of a ban on setting up new private airline companies in 2013 and recent regulations to encourage aircraft leasing have boosted growth potential in the demand for aviation supplies. Carriers, bargain airlines in particular, are opting to lease new planes instead of buying them, avoiding huge upfront payments.

China has become the world's second largest aviation market only after the US, and will become a large plane leasing market, Fu said. Boeing estimates that China will need more than 6,000 new aircraft over the next 20 years. The leasing market for civil aviation is expected to expand to $130 billion by 2025, according to Qianzhan Industry Research Institute.

China's plane leasing market is dominated by foreign companies such as International Lease Finance Co. (ILFC) and GE Capital Aviation Services (GECAS).