in Business & Finance / Features

A new life of lease?

Posted 29 May 2020 · Add Comment

One of the challenges for African airlines is gaining access to suitable aircraft. Now, as Victoria Moores reports, leasing-support company, Six West, has an idea that could help.

The problem is quite simple. African airlines want aircraft. Lessors want to place aircraft. But lessors are risk-averse and repossessing aircraft in Africa can be challenging, so neither side gets what they truly want.
This is where Six West comes in…
A normal mainstream lessor and an African airline sign a regular lease deal, but a condition is added to the contract stipulating that the aircraft must be placed on Six West’s Maltese air operator’s certificate (AOC) and operated by its crews on a wet-lease basis.
The lessor’s risk is minimised, because the aircraft is not placed on the local register, making it easier to repatriate if things go wrong. This gives the lessor greater control of the asset – without having to take on day-to-day control – and removes the need for legal counsel in every country. Six West also manages the maintenance records, which are a major pain point in aircraft repossessions and lease transitions.
Meanwhile, the African airline gets access to a broader range of lessors, making it more likely to secure the aircraft it wants.
The aircraft is operated by Six West, so the airline does not need to find crews and has the flexibility to change types further down the line, if needed. It also avoids the time delays and complexity of adding new aircraft types to the local register.
Six West director of operations, Matt Gee, said this concept is geared towards up-and-coming markets, like Africa. It could also be a good fit for African start-up airlines, looking to lease an initial fleet for five years, before receiving ordered aircraft.
“It’s a region that needs connectivity, because there are some quite sparsely populated areas that are underserved, or even unserved,” he said. “There’s huge opportunities within – I wouldn’t say the whole of Africa – but certainly targeted regions. There’s a lot of interest into the region, for sure. It’s not unexplored or untapped, but it’s probably less explored and tapped into by lessors.”
However, most lessors have a limited number of African airlines that they would do business with, such as EgyptAir, Ethiopian Airlines, Royal Air Maroc and a few regional airlines.
“Lessors aren’t that favourable to simply put an aeroplane on lease on a local register in Africa, because, if things go wrong for the airline, it just gets harder and harder to deregister and you can be caught for quite a period of time trying to get your aeroplane out,” he said.
While lessors may still be reluctant to enter completely unexplored markets, Gee said the Six West model could open up “less explored” regional markets as an option for aircraft placements.
“They’ve got requests from airlines that they sometimes can’t fulfil, or don’t want to fulfil. They are very interested in this type of market, because it opens up opportunities that they perhaps haven’t been able to look at,” he explained.
Six West is in “very serious” talks with three lessors, which are looking to use the company’s model in Africa, spanning a mix of aircraft types.
Dublin-headquartered Six West’s fee is typically paid by the airline, but it might also be covered by the lessor, depending on how keen it is to place the aircraft. The airline pays the direct operating costs.
Gee acknowledged that airlines could simply take a direct wet-lease, without involving Six West, but wet-lease aircraft are in short supply. The choice of types is limited and it might be hard to secure modern aircraft on a mid- to long-term wet-lease.
Six West is currently operating from a Maltese European Aviation Safety Agency (EASA) AOC. In the longer term, Gee said, the company is looking to also secure a Cayman Islands AOC to give greater scope across regulatory jurisdictions.
 

Other Stories
Advertisement
Latest News

African airlines’ traffic dropped 68.0% in February

The International Air Transport Association (IATA) announced that passenger traffic fell in February 2021, both compared to pre-COVID levels (February 2019) and compared to the immediate month prior (January 2021).

South Africa needs to start planning for the safe restart of aviation

IATA has urged South Africa to start planning for the safe resumption of international air travel to help repair its decimated business and leisure tourism industry.

Ethiopian Marks 75th Anniversary

Ethiopian Airline Group celebrates its 75th anniversary today, April 8, 2021.

Travelport+ launches next-generation platform for a new era of travel

Global travel retail platform, Travelport, has launched its next-generation platform, Travelport+.

Baby born on EgyptAir flight coming from N'Djamena

An EgyptAir flight from N'Djamena to Cairo had to make made an emergency landing at Aswan Airport to check on the safety of a Chadian passenger and her new born baby boy, after giving birth safely on board, with the help of a medical student.

Willie Walsh to deliver interview at World Aviation Festival Virtual

Willie Walsh will be doing one of his very first interviews as the new IATA Director General at the World Aviation Festival Virtual on Tuesday, 20 April, 9:30 AM to 10:00 AM GMT.

WDS SK2601090322
See us at
Aviation Africa 2021 BTNNDAS21_BTWDS BT1202090322Aviation MENA 2021