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Background Concepts and Definitions

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Aircraft Valuation

Abstract

To understand aircraft and aviation valuation and leasing, one must understand the dynamics between the ecosystem, namely, the owner, financier, and user. The owner can be the airline or lessor and lessors account for 43% of all Airbus and Boeing and McDonnell Douglas aircraft in the world as of 2017 (Ascend 2017). An airline or operator is the ultimate user of the aircraft and one of the main stakeholders in the aircraft leasing industry. To operate as an airline, it needs to buy or obtain the use of one or multiple aircraft and other large fixed assets in addition to many smaller items. The operator has a variety of options that are assessed to complete this objective. After going through the various analyses and processes in choosing the type of aircraft, the classic question of how to fund the acquisition comes into play, where there are also a multitude of options at one’s disposal.

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Notes

  1. 1.

    The use of PMA parts versus OEM parts is controversial in the industry. The use of PMA parts is frowned upon by OEMs and lessors due to the potential difficulties in transitioning the aircraft, affecting values, among others; however, airlines, tend to view it more favorably given their decreased operating costs.

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Authors and Affiliations

  1. New York University Shanghai, Shanghai, China

    David Yu PhD. CFA (Senior ISTAT Certified Aviation Appraiser)

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  1. David Yu PhD. CFA
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Yu, D. (2020). Background Concepts and Definitions. In: Aircraft Valuation. Palgrave Macmillan, Singapore. https://doi.org/10.1007/978-981-15-6743-8_2

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