WHO PAYS FOR THE NEXT 4,000 PLANES?
Half the world's civil aircraft will have to be replaced within the next 10 years. This means building 4,000 new planes at a cost of something between $175 and 225 billion, and the money has to be found by an industry which is barely making a profit.
Yet the re-equipment has begun. Last year, 654 new aircraft were placed on firm order by civil airlines, for a total of $10.6 billion, the second highest annual total ever.
How is the financing to be organized? Not, in the future, through the tax-based financial lease, the favourite instrument for the financing of aircraft during the past 10 years. Governments are slamming tax windows shut as the airlines most need them.
Most of the leases have been written under US or UK tax rules. In the UK, those opportunities began to wind down two years ago and the tax breaks have now ended. Philip Derby, vice president in the major assets group of Security Pacific, said: "The UK tax market has had its own momentum, but there is no reason now for using it. It should really have stopped a year ago."