Leasing Aircraft vs. Buying Aircraft

When you're looking to either purchase or lease an aircraft fleet, you have to consider several factors. Neither option is inherently better than the other, but one can be a better deal depending on how you intend to use the fleet. Image, obsolescence, and number fluctuation should all factor into the choice that you make. Each factor should be considered before you decide one way or the other.

Image: For institutions such as colleges and flight schools, a main issue might be the conflict between appearances and functionality. Image can be a big concern, since you want your fleet to look nice, new and up-to-date. A nice, clean fleet can help convince interested students to enter your program. Using an operating lease would be a good choice if that is of extreme importance, because operating leases only last between two and seven years. That means that you'll never have to worry about the planes looking too old or beat-up. However, a flight school is provided for a sole purpose: training. We all know that students can make sloppy, bumpy landings that can add more wear and tear than you want. Generally speaking, if you own your fleet, it will look more worn out over time. Most operating leases come with a security deposit and a written agreement about the state of the fleet upon its return. If you don't care about appearances, it might be cheaper to buy old training planes that can continue to get a little beat-up.

Obsolescence: When you acquire a fleet through an outright purchase, you are thereafter in charge of all maintenance, updates and eventual removal. The problem with purchasing is that aircraft tend to become obsolete over time. If you're training new pilots you want them to be using the latest technology so they are familiar with its functions and operation. If you lease, then you only have the aircraft for a short period of time. After the agreement is up you can get the newer model the next time you shop.  The lease solution eliminates the hassle and process of selling old aircraft when it is time to upgrade and it also creates a mandatory date for when college administration must review the fleet. 
Numbers: If you're running a flight school, you should know that it's only natural that the number of students you teach is going to change on a yearly basis. There's nothing worse than buying a huge fleet of planes and then not needing most of them. This is especially galling when you have to continue service and maintenance. Leasing is the only way that makes sense in this scenario, so that you can accommodate the fluctuations in your numbers. Buying a fleet would be a good option only if you had a set number of available spots and always enough students to fill them.

While leasing tends to be a better option for large institutions and flight schools, make sure that you go over all the factors before you decide either way.