They are not professional leasing companies, but airlines in the country are looking to boost their cash flows by leasing idle aircraft. The decision to lease aircraft comes in the wake of declining load factors and under utilisation of aircraft during the past few months. Industry observers say though the lease market is under-valued in the current scenario, airlines can earn up to Rs 10-12 crore a month by leasing a wide-bodied Boeing or an Airbus.

Start-up airlines of the Gulf region, Eastern Europe and even from south-east Asia are looking at Indian carriers to get an aircraft on lease, according to industry observers. These carriers need flexibility to increase or reduce capacity quickly and do not have to pay pre-delivery charges. They also save on capital by not buying aircraft.

There are professional leasing companies like AWAS (headquartered in Dublin) and GECAS (GE Commercial Aviation Services). But, Indian carriers can offer better deals to airlines wanting to take aircraft on lease, say analysts.

This is not the first time airlines are leasing their aircraft. Jet has already wet leased five B777s to Gulf Air Company early this year for a period of six months and at the end of the term, the wet lease arrangements will migrate to dry lease ones. In a wet lease, the responsibility for operations control and maintenance remains with the lessor. Also, the aircraft remains registered in India and is operated by the company’s crew. In a dry lease, only the aircraft is leased minus any cabin crew or management responsibility. The carrier has also wet leased two of its A330s to Oman Air with effect from May.

?Jet is again evaluating options for leasing three more B 777s,? said Ragini Chopra, vice-president, corporate communications, at Jet. The airline, considered the largest one by market share, at present, has 86 aircraft in its fleet.

Said Jitendra Bhargava, director, (PR) at Air India, ?We have invited expressions of interest to dry lease three Boeing 777-200 LR, manufactured in 2007.? These airplanes are on a US Exim Bank guaranteed financing and are being offered as sub lease. The lease will be subject to prior written consent of the US Exim Bank.”

Air India has 147 aircraft in its fleet, a mix of Airbus and Boeing. The public sector airline has ordered for 111 aircraft and has received delivery of 64 of them.

Revenue from traditional sources such as passenger and cargo traffic is no longer enough, especially when airlines are expecting a combined loss of Rs 10,000 crore for the FY09-10. Hence, leasing aircraft is the strongest option available to enhance operational efficiencies.

Said Milan Zatakia, chief executive of Millennium AeroDynamics Pvt Ltd, “Leasing aircraft is a smart business preposition at a time when international operations of various airlines are not fetching good returns, with hardly 40% loads on certain long haul sectors. An airline company will get Rs 10 crore a month by leasing a Boeing aircraft.?