Home' Asian Aviation : AAV October 2011 Contents General News
High taxes and complex approval procedures
are slowing the growth of China’s aircraft-
leasing sector. A 21.42 percent tax is levied by
the Chinese authorities on the value of aircraft
leased from foreign companies. By comparison,
the tax on aircraft purchased from a foreign
country is only 5 percent.
An official of a Chinese leasing company
who asks to remain anonymous tells Asian
Aviation that the approval process for bringing
leased aircraft into China is complex and time-
consuming. “This will only stifle the growth of
the leasing business in China,” the official said.
Most airlines find the 21.42 per cent tax too
steep. Aircraft leasing is one of the key ways
for airlines around the world to modernise and
expand their fleets, or to plug capacity gaps
while awaiting new aircraft deliveries.
“With low costs, high flexibility and many
financing channels, aircraft leasing has become
the practical choice for airlines,” the official says,
calling on the government to reduce the tax on
For a long time, China had no leasing
expertise of its own, which led to the market
being dominated by foreign lessor since the
1980s. “The situation has changed significantly,
with Chinese leasing companies having learnt
the ropes of the business and competing in the
international leasing market,” the official says.
He adds that China’s civil aviation sector has
tremendous potential for the country’s lessors,
aviation investors and industry employees.
“Chinese leasing companies are expanding
their fleets and positioning themselves
competitively in the international market,”
the official says.
In June, ICBC Leasing signed an order for
42 Airbus A320-family aircraft, with delivery
expected to be completed by 2014. The
company, which currently operates 68 aircraft,
plans to have 200 by then.
In 2006, Bank of China (BOC) paid US$965
million to acquire Singapore Aircraft Leasing
Enterprise, renaming it BOC Aviation and
becoming the first Chinese bank to enter the
As of March 2010, there were 12 Chinese
financial leasing companies in operation.
Now there are 18, with the largest by market
capitalisation being CDB Leasing, ICBC Leasing
and CCB Leasing.
Boeing predicts that Chinese airlines will fork
out US$480 billion to buy 4,330 aircraft over the
next two decades, and will remain the largest
market outside the US, generating about US$5
billion in annual turnover.
According to Civil Aviation Administration of
China (CAAC) Director Li Jiaxiang, the country’s
civil airliner fleet will expand to between 4,800
and 5,000 aircraft by the end of the country’s
twelfth Five-Year Plan, which ends in 2015.
Chinese airlines now operate close to 2,000
aircraft, with about 830 leased from Chinese and
foreign leasing companies. – William Dennis
High taxes stifling China’s leasing sector
Bank of China became the first Chinese bank
to enter the aircraft leasing sector in 2006.
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