Leasing: The Secret to Sustainability

The golden clients of the aviation industry are greener than they give themselves credit for. Many airlines offset their carbon footprint with environmental actions and are also in on the sharing-economy trend led by Uber, Cabify and BlaBlaCar. The most important tool in the industry, the aircraft, should not be parked for long periods, unused or undermaintained, says Carlos Olvera, Quality Director of Quality Aeronautical Engineering Consultants (QAEC).
The biggest airlines switch planes when one has higher demand than another, leasing them between themselves and ensuring that this resource is not collecting dust in storage. “We are phasing aircraft into airlines’ operations and work with financers, investors and lessors,” says Olvera. The Mexican consultancy has reached out to clients around the world. Its international operations happen in synergy with AMROS Global and in association with companies including Elix Aviation, Grupo LATAM, Air Berlin and Viva Aerobus. The company can offer quality insurance, audits and certification support. MROs most frequently are looking to be certified by FAA and EASA or South American authorities.
Just like every part of the aviation industry, leasing is subject to strict controls. Nearly new aircraft must enter and leave airlines’ fleets in adequate condition, with the correct technical records and onsite physical reviews. QAEC has mastered the communication needed to help its clients incorporate and return airplanes safely. The customers that most request these services are large airlines that want to phase aircraft in and out of operations and lessors that want to redeliver or deliver aircraft.
“We compete with freelancers but recognize that companies usually prefer the reliability that a company can offer,” says Olvera. If one consultant is sick or a job requires more than one expert, a consultancy can cater to a greater variety of needs, especially when that firm has teams that specialize in inspections, legal matters and technical records. Monitoring airworthiness also demands the highest quality inspections and maintenance, and specialization within divisions of a company can strengthen the offering. Lone consultants would struggle to offer such a broad service, he says.
QAEC is mobile and goes to clients when needed. For long-term projects, it works in temporary facilities at the client’s site, especially phase-ins and outs at MRO workshops. “Our next trip will be to Abu Dhabi in synergy with AMROS-Global, where Etihad Airways Engineering will receive us at their offices for the final check needed to lease two aircraft from Grupo LATAM to a new airline in Germany,” says Olvera. This type of leasing is a natural balancing act of resources ahead of expected demand fluctuations. Economic complications in Brazil have caused demand to drop but LATAM has secured many new contracts and wants to keep growing. The airline can lean on other aircraft owners to use their aircraft and profit from this.
While new planes are being manufactured to fill long order lists from the likes of Mexican airline Volaris, which is taking on several new Airbus units in 2017, and Aeroméxico, which unveiled its Quetzalcóatl Boeing Dreamliner, airlines often phase in slightly older aircraft to stay competitive. Southwest swapped out some of its oldest models in 2016 to avoid “spending lavishly” since fuel costs were low enough to make the less-efficient, older Boeing 737 jetliners viable, as Bloomberg reported. Delta also raised its hand for Gol Linhas Aereas Inteligentes’ unneeded 737s, and United Continental imported two dozen used Airbus A319s from China. The reason for replacing very old planes with younger, but not new planes is primarily that maintenance practices have improved in recent years. The 5-year-old units that QAEC is helping its star client Viva Aerobus with are cheaper than new airplanes, and Viva Aerobus may look for more support from the consultancy when it phases out the oldest units, “especially if they want to save money during phase-outs,” says Olvera. The managers and directors at Viva Aerobus have given shining evaluations of the QAEC's team for having provided solutions and simplifying processes, he adds.
Technology represents another area with which QAEC is adept. Certified Aviation Managers (CAM) evaluate aircraft for incorporation into fleets. Their job can be time-consuming if they need to check more than 20 boxes of records for a 5-year-old aircraft, so technology as usual simplifies laborious tasks. “New companies tend to ask us to scan records and the Boeing 737s are 30 years old so may need 150 boxes of data digitalized.” Olvera’s team not only stores this digital information but organizes it into a user-friendly library for each aircraft to prove when a unit is airworthy. Protecting these records maintains the price of the aircraft, Olvera explains. “If part of an aircraft’s records is lost, that unit’s value can be lowered by 70 percent.”
QAEC saves lessors money in other ways, on top of protecting their true value. The team ensures aircraft are returned in the same condition in which they were first rented, even after five or six years, and that lessors are protected by an aircraft retirement plan. Airlines can be sure they are taking on quality aircraft following the consultancy’s record review and physical inspections.
Olvera’s staff count sways between five and 15 consultants, depending on demand. Being a smaller team means quality is easy to control and maintain but in the case of emergencies, QAEC is as flexible as airlines are when it comes to “sharing” resources. “When Viva Aerobus was phasing out all their Boeing 737 airplanes at once, we posted 10 records specialists at its facilities between October 2015 and March 2016 to help the airline with the six planes.” This requires complete trust and transparency between QAEC and the airline, as a successful phase-in or out demands total access to databases and filing cabinets. This trust permits the consultants to work independently of the airline’s team. “If I have total access, then I have no need to bother our client’s personnel, such as engineers, technicians and managers, and can provide them all the information necessary in advance and documents ready to sign,” says Olvera.
In any other industry, working internationally would herald complicated dealings with authorities. While the International Civil Aviation Organization (ICAO) is pushing to homogenize standards, there are universal standards in place that many airlines and MROs already observe. “Most contracts that lessors create are programmed for FAA and EASA regulations, the latter of which is slightly stricter. But in this instance, we are dealing with Brazilian registered planes, so we have to be aware of the Brazilian government’s regulations for aircraft,” says Olvera, an expert in South American, Mexican, US and European regulations after 20 years in the industry.
The company is looking for greater exposure going forward and to increase their partnerships with airlines and international companies like AMROS Global. Being flexible to travel and also bilingual helps Olvera and his associates stand out, on top of their decades of experience and contacts in the industry. Going forward, “LATAM Airlines is one of my main targets, the biggest airline in Latin America that competes with Avianca, Delta Airlines and other US companies,” he says. Olvera sees more potential with this airline than with North American companies as the latter tend to choose local suppliers and advisers.
To stay competitive, airlines must keep offering competitive prices and differentiating themselves as high service or low-cost airlines. QAEC will continue to help them to this end, keeping operative and administrative costs down. Their services will continue to adapt to changes in the industry, “solving almost all questions.”