With airlines increasingly looking to wet-leasing as a revenue source, Leasing Manager, Andy Peirce, from ACC’s market-leading wet leasing division, ACMI, reveals what his role and that of his team entails and identifies the reasons for the growth of wet leasing and, looking ahead, the opportunities and obstacles for the industry.
What are the key responsibilities for you and your team?
“The essence of what we do is to have an accurate overview of which airlines and markets will be looking for aircraft availability at any given time and also knowledge of those which have the availability to offer, globally.
“Wet leasing is used by airlines for a variety of reasons, including crew shortages and training issues, scheduled maintenance checks, AOGs, new route development, seasonal capacity and service frequency increase plans, to name but a few; so, our immediate responsibilities and priorities are to establish the exact commercial and operational requirements of the Lessee in order to ensure we source and offer the correct aircraft for the lease project.
“Additionally, there are a considerable number of variables which affect the make-up and terms of the overall lease agreement, and it is important to clearly understand these elements to ensure the operation is successful.
“Once I have identified suitable candidate aircraft and the client has selected the aircraft/operator combination that best suits their needs, I work with both parties to negotiate the detail of lease, not only in financial terms, but also in terms of the most deliverable, robust and efficient overall operation.
“After the start of the lease, I continue to monitor the performance of the operation, ensuring that contracted metrics are met and, in case of any issues, helping to resolve them as quickly and smoothly as possible.”
What are the best parts about your role?
“Each lease has its own bespoke aspects that make every project I work on different in some way to every other.
“And, while many airlines only look to see what their direct competitors and local markets are doing, because we have a global view of the options and possibilities that are available, we can advise airlines looking to explore new markets and suggest new strategies.
“So, with each new introduction and eventual inquiry comes a new challenge which, for me, is what makes this job so interesting.
“Establishing and developing client and supplier relationships are also important parts of the role, best achieved through face-to-face meetings, which gives me an opportunity to travel fairly extensively to new and exotic places and meet lots of interesting people.”
And the worst parts?
“I wouldn’t say there’s a worst part as such, but certainly one of the most frustrating aspects of the job is having a number of requests that we cannot find the correct aircraft for due to lack of availability.
“And whilst we always try and offer some solutions, this is becoming a more commonplace factor.
“Additionally, when there are geo-political barriers to business growth, prohibiting access to markets that offer huge potential but are still, to at least some degree, closed by political influences.”
Where are the major opportunities?
“Aircraft wet leasing provides a significant, low risk revenue opportunity that more and more airlines are turning to as a way of maximizing their fleet and crew resource productivity.
“We’re seeing significant growth in demand from the Asian region and while some states still place regulatory limits on wet leasing, which is stifling growth to some degree, there is pressure from the airlines in those jurisdictions to remove these restrictions.
“From 2017-2022, there’s also a great deal of opportunity in Africa, and we are already working with some national entities who are seeking to re-energize their local and regional aviation markets with more modern, efficient equipment to offer a broader choice and greater point-to-point connectivity.”
And what about the challenges ahead?
“While we have seen a steadily growing demand for wet lease aircraft, as I touched on earlier, the issue is that capacity is not keeping pace with demand, and this is particularly evident in the European Summer Season, where the gap between the two increases year on year.
“Added to this, the annual Hajj pilgrimage has moved into the summer peak season placing further pressure on available wet lease resources.
“That being said, the introduction of the new B737MAX and A320NEO, as well as widebody aircraft such as the A350 and B787, should encourage a reduction in the market rates for slightly older vintage aircraft families, prompting a drive in airlines to offer wet leasing as an additional revenue stream to their product portfolio.”
Alternatively, ACMI 24 will be happy to help with any leasing requirements you may have – make an inquiry or call +44 (0)1737 232239 for more information.