Commercial Aircraft
Aircraft are expensive. A Boeing 737-700, the type Southwest or Ryanair uses, is priced in 2008 USD in the range of $58.5 - $69.5 million (although very few airlines actually pay this much). Airlines also typically have low margins so very few airlines can afford to pay cash for all their fleet.
Commercial aircraft, such as those operated by airlines, use more sophisticated leases and debt financing schemes. The three most common schemes for financing commercial aircraft are secured lending, operating leasing and finance leasing. However, there are other ways to pay for the aircraft:
- Cash
- Operating leasing and sale/leasebacks
- Bank loans/finance leases
- Export credit guaranteed loans
- Tax leases
- Manufacturer support
- EETCs
These schemes are primarily distinguished by tax and accounting considerations, particularly tax-deductible depreciation, interest and operating costs which can reduce tax liability for the operator, lessor and financier.
Read more about this topic: Aircraft Finance
Famous quotes containing the word commercial:
“So by all means let’s have a television show quick and long, even if the commercial has to be delivered by a man in a white coat with a stethoscope hanging around his neck, selling ergot pills. After all the public is entitled to what it wants, isn’t it? The Romans knew that and even they lasted four hundred years after they started to putrefy.”
—Raymond Chandler (1888–1959)