Redelivery Whitepaper: Minimising the risk of nasty surprises, November 2015

Contrary to the efficiency advancements achieved elsewhere in aviation, very little has changed in the redelivery process over the last two decades. It is still very manpower intensive, requires a broad technical and operational skillset and frequently involves robust negotiations between parties. With this background, what can be done to smooth the aircraft transition?

Critically what is frequently missing is the necessary level of communication between the Lessee’s departments that is required to maintain optimum control of costs. As IBA highlighted recently in ADVANCE (the UK magazine for Aviation, Defence, Security and Space Industries) an inefficient redelivery results in an average overpayment of $1.65m* per single aisle aircraft.

Given the number of returns per year – IBA’s JetData database recorded 895 lease returns in the last 12 months, 522 of them single aisle aircraft of the type analysed in this paper – and with most airlines still operating on single digit margins – the benefits from improvements are clear. It is IBA’s contention that the process of aircraft redelivery is frequently and significantly underestimated in terms of the cash, time and expertise that is required to be invested by the Lessee.

Increasingly, many of the stipulations required by Lessors through the negotiation of the redelivery conditions go beyond the standard requirements and airworthiness tasks that the manufacturer’s Maintenance Planning Document (MPD) typically requires and we contend that many industry estimates of Maintenance, Repair and Overhaul (MRO) costs are underestimating the quantity of actual work that is driven by operating leases.

With operating leases on the increase, IBA forecasts that the demand for MRO services related to end-oflease reviews are currently underestimated by at least 10-15%.

The requirements detailed below are typical of a single aisle aircraft operating lease redelivery condition. IBA has combined and anonymised a selection of leases, then provided analysis and opinion of the likely additional costs associated with work involved to get an aircraft into contractual redelivery condition.

To read the full report click on the link below.

Download PDF