Making the decision of whether you should own an aircraft or just lease one is not simply a matter of being able to afford to buy an aircraft or not. In fact, there are many times when a person or company has more than enough capital to buy an aircraft outright, but it is actually a more lucrative solution to lease one. If you still have any doubts, consider this: more than one-third of all aircraft operated by airlines are leased by the airlines themselves.
But wait! why would an airline with huge amounts of funds available choose to lease an aircraft rather than buy one? There are in fact a multitude of reasons, for both cases.

The Advantages of Leasing an aircraft

One of the main advantages of leasing an aircraft comes from one of the most obvious and essential places – affordability. If a person or company can’t afford to raise enough money to purchase an aircraft outright, leasing one means they can begin to enjoy the benefits of aircraft ownership regardless.
Even if a company can afford to buy an aircraft, it may well be preferable to lease it instead. There are a lot of different reasons for this. For instance, retaining the money that would have been spent on the upfront cost of an aircraft frees up funds for other avenues of the business. This could mean expanding the business more quickly and ergo driving more success.
The most business savvy minds out there will also be aware of the benefits that leasing an aircraft can have on a company’s balance sheet. Leasing an aircraft does not qualify as either an asset or a liability. Shrewd businesses can use this to make the best of their key ratios.
Finally, one huge advantage is that getting the most up-to-date aircraft doesn’t have to be such a burden when leasing. When buying an aircraft, the company will begin to take on the burden of its age over time. To upgrade to a newer model, a buyer would have to be found. When leasing, this is no longer an issue.
Despite its upsides, leasing will typically cost more in the long term than buying outright. Just like renting a house can be more affordable than taking out a mortgage, but ultimately leave you with no assets to show for your money, so too does leasing have a rather unsatisfying conclusion.

What if I wanted to buy an aircraft?

When it comes to buying an aircraft, the aircraft will be yours to keep. This means you have a tangible and valuable asset to show for your investment, and if the market becomes favorable to sellers there is the opportunity to turn a profit – or at least a favorable return.
Because you own the aircraft, there is nothing to stop you modifying it to your liking. Whether that means upgraded engines, a unique outer design or brand new interiors, you can custom design your aircraft just the way you like it. With a lease, this is much more difficult and would require the owner’s permission at the very least.
An airline that owns its own aircraft will also go a long way to reassuring its stockholders and customers because these assets naturally double up as substantial collateral. This opens the door to raise funds when needed.
However, buying a brand new aircraft may be an appealing prospect at first. But over time, the aircraft will likely depreciate in value. For airlines, in particular, this can be a problem when an upgrade becomes essential. For personal owners, this may not be as much of a problem.
Ultimately, there is no definitive answer as to whether it’s better to lease an aircraft or buy an aircraft. The decision depends on the situation of the individual or company. Even major airlines lease a significant percentage of aircraft, which shows that it isn’t a case of simply having the money available – but spending it smartly. Aviation Horizons can help you make the right decision as whether to buy or lease an aircraft based on your capital as well as future plans. Get in touch with us today and let us discuss what works best for your advantage.