Leases

Penguinboy · **on:** April 13, 2008, 08:03:40 pm

If I "return the aircraft to owner" on a lease, do I still have to pay monthly fees?

yourefired · **Reply #1 on:** April 13, 2008, 08:06:17 pm

No. When you return the plane, you've officially terminated the lease, there's no penalty.

tropico · **Reply #2 on:** April 13, 2008, 08:28:26 pm

There could be some sort of penalty... People would think twice before leasing

Chavaquiah · **Reply #3 on:** April 13, 2008, 09:11:24 pm

Why would people have to think twice before leasing?

Or do you mean thinking twice before prematurely ending a contract?

tropico · **Reply #4 on:** April 13, 2008, 09:13:11 pm

Both

Thinking twice before signing a long contract and ending it prematurely. I think it would be a great addition

Air Elbonia · **Reply #5 on:** April 13, 2008, 11:28:48 pm

If you lease a plane and cancel it immediately, you still have paid that first month's fee. We are considering expansion of leasing options // penalties entailed, however... it's about Hyah -waves hand-, whereas other stuff is up 'round hyawh -waves hand higher-.

ah... south park. sorry. it's probably in the high single digits of what we "want" to do. depending on if you assign some of the small tweaks numbers, it may wind up in the teens on the "get" to do it list.

Steeler83 · **Reply #6 on:** April 14, 2008, 05:20:00 am

I wonder if I could make an analogy to leasing a plane vs leasing an apartment. You can agree to 12 month leases on apartments for a set monthly payment - same with an airplane. Let's say I break that apartment least after 9 months. There is a penalty, usually equal to one month's rent. Maybe there could be a similar penalty for returning a plane. Suppose you return an aircraft before the lease is up, and the rate was 1 million per month. That's an additional 1 million that would be charged to you for breaking the lease...

IceTrojan · **Reply #7 on:** April 14, 2008, 06:24:39 am

Quote from: "Steeler83"

I wonder if I could make an analogy to leasing a plane vs leasing an apartment. You can agree to 12 month leases on apartments for a set monthly payment - same with an airplane. Let's say I break that apartment least after 9 months. There is a penalty, usually equal to one month's rent. Maybe there could be a similar penalty for returning a plane. Suppose you return an aircraft before the lease is up, and the rate was 1 million per month. That's an additional 1 million that would be charged to you for breaking the lease...

So basically, you want first+last month's as a deposit?

tropico · **Reply #8 on:** April 14, 2008, 04:05:20 pm

I think it should be some percent from the whole deal. Let me illustrate it with an example. Let's say you rent a plane for 1 mil for 12 months. And after 2 months you decide to return it. So you'd have to pay 10(remaining months) x 1000000 x 0.05(let's say you'd have to pay 5 percent) = 500000. And I think leaser should choose the percent...

Steeler83 · **Reply #9 on:** April 14, 2008, 06:16:05 pm

Quote from: "tropico"

I think it should be some percent from the whole deal. Let me illustrate it with an example. Let's say you rent a plane for 1 mil for 12 months. And after 2 months you decide to return it. So you'd have to pay 10(remaining months) x 1000000 x 0.05(let's say you'd have to pay 5 percent) = 500000. And I think leaser should choose the percent...

Ya know, I think this actually is better than my original thought... Altho, there should be a limit on the term of the lease (i.e: no 999 or 9999 month rents! I'd put a limit of maybe 36 months in 5 year rounds, and 60 in 10 year rounds), especially with this suggestion. Let's say I agree to a lease of 999 months, and then return it after 12. I'll be bankrupt and then some...

For this round, I am going to try and go through this round without leasing any aircraft.

yourefired · **Reply #10 on:** April 14, 2008, 06:21:25 pm

A 999 month lease is just, um, abusive. Airplanes can't be in service for more than like, 20 years or so. The lease is more than 3 times as long as the useful life of a plane.

Leases should be capped at 24 months, period, with an option to renew for the same number of months before lease expiration from the lessee's end (some button like, "renew lease" and give the lessor the option to choose not to allow the use of this function).

Something like:

Aircraft Type Lease price lease length Renewable?
Blablah 1,000,000 24 months No/yes

Or you're allowed to terminate a lease anytime you want but your "credit rating" takes a hit. And lessors can require their lessees to have an "excellent" credit rating, a "good" credit rating, or a "poor" credit rating, or not state a preference. But then that requires an individualized analysis of leasing patterns.

Steeler83 · **Reply #11 on:** April 14, 2008, 06:23:13 pm

Quote from: "yourefired"

A 999 month lease is just, um, abusive. Airplanes can't be in service for more than like, 20 years or so. The lease is more than 3 times as long as the useful life of a plane.

Leases should be capped at 24 months, period, with an option to renew for the same number of months before lease expiration from the lessee's end (some button like, "renew lease" and give the lessor the option to choose not to allow the use of this function).

Something like:

Aircraft Type Lease price lease length Renewable?
Blablah 1,000,000 24 months No/yes

even better

justinm · **Reply #12 on:** April 15, 2008, 02:56:44 pm

maybe add an incentive for completing the 24 month lease. say if a 24 month lease is succesful the one who leased the plane can exercise an extension of 12 months.

yourefired · **Reply #13 on:** April 15, 2008, 03:00:02 pm

Quote from: "justinm"

maybe add an incentive for completing the 24 month lease. say if a 24 month lease is succesful the one who leased the plane can exercise an extension of 12 months.

Perhaps. Or exercise an option to buy at the minimum allowable price. Of course, the lessor has the discretion to allow this or not.