A lease is a lease, right? Not necessarily so, says ITC-AeroLeasing’s Executive Vice President, Steven Nixon, who takes a look at the peculiarities of the special missions sector.
Leased helicopters are predicted to rise to 15 per cent of the global fleet by the end of the decade, according to the International Bureau of Aviation. The level of leased aircraft, relative to other forms of financing and outright ownership of fleet varies significantly between mission types and activities. Most leased helicopters are offshore configured, followed by Emergency Medical Services (EMS), then firefighting and Search and rescue (SAR). As the leasing market has continuously matured over the past five years or so, trends indicate that the market may be shifting toward multi-configuration/purpose helicopters, which present a number of advantages to operators and leasing companies alike. It allows operators the ability to deploy the aircraft on varied mission types and therefore maximise utilisation and revenue, whilst for the lessor it gives the peace of mind that when the time to remarket comes, the aircraft should appeal to a wider audience.
For special missions, such as EMS, firefighting, SAR and even humanitarian, leasing an aircraft from a specialised lessor may be a wise strategy compared to, for example, an operator independently procuring, modifying/equipping and financing an aircraft for a one-off or specific contract. When we refer to leasing, we typically mean pure operating leasing, but there are also finance or capital leases and hybrid structures, such as operating lease-to-purchase. All of these lease structures have a part to play, and some will be suited more than other depending on the application/scenario.
Operating lease: the obvious choice?
Operating leasing is often the right fit for some special missions operators, in regard to fleet management and flexibility – especially when an operator is under contract with a government agency or similar entity for a certain period of time, or specific contract fixed term. Operating leasing allows operators to match the duration of the lease with the term of the operating contract, returning the aircraft to the leasing company at the end of the operating contract. An operator can then start the contract/ mission cycle again with a new aircraft, assuming the new contract stipulates the need for another brand-new aircraft with specific performance capabilities and equipment specification.
In general, operating leases offer several advantages to operators: they can lower the financial burden and upfront investment for large cash payments such as deposits, downpayments, pre-delivery payments to OEMs and mission configuration costs, with the operator not holding the risk of declining residual value and depreciation – yet it offers quick access to aircraft which can be “off the shelf” and ready for immediate use. On the flipside, this “plug and play, quick access” option will come at a cost (sometimes a premium) for the operator, as the above-mentioned risks are essentially passed on to the lessor to bear. So there has to be a balance for all parties to achieve a fair deal.
Adapting to all missions, at all times
Another advantage for operators who choose to lease helicopters can be the level of service provided by specialist leasing companies, such as the quick and efficient response time and depth of knowledge of the equipment being financed. It is often the case that operators have very limited time to source/procure, modify/equip and prepare an aircraft for deployment on a contract. This means that an operator needs an immediate response and viable solution, which could entail repurposing or use of older models, heavy modification work, and so on – and with these kinds of scenarii, banks will often not possess the skills, knowledge or willingness to accommodate the operator’s requirements and to move quickly. A leasing company, on the other hand, would usually have the know-how and staff members familiar with the industry, often partnering with the operator in such a way as to brainstorm, add/offer the leasing company’s resources, to derive solutions essential for timely aircraft deployment. This is where and experienced and established leasing company can really add value to a transaction.
Compared to air taxi operations, and possibly charter, VIP or corporate transport, special missions operators would typically have more varied “on demand” utilisation, and often this can translate to unstable revenue/income. This means that the purchase of a high-value brand-new aircraft is often not viable. For example, in certain countries in mature markets in Europe, where the EMS sector is often driven by state funding, subsidies or charity, buying new is not always a realistic solution. There are also certain types of mission where it is not only the irregular aircraft utilisation and revenue that traditional financiers may be concerned about. For example, firefighting. Often considered a dangerous/high risk mission, operating in close proximity to extreme heat, treetops, smoke/ash/debris etc., hovering over lakes, oceans, etc., to refill water tanks or buckets, these factors can often cause banks to offer unfavourable terms to operators. Furthermore, fore seasons can vary greatly in intensity, and this irregular demand/revenue may also present challenges for operators when negotiating with banks for financing. Banks will typically require strict loan payments and terms, expecting a stable business model and revenue.
With this in mind, and especially in the firefighting sector, there are therefore specialist short-term leasing companies who can often alleviate some of these challenges by offering a mission-configured aircraft for one fire season at a time.
Leasing companies: an all-round partner for operators
Established leasing companies typically have a broader and deeper perspective. A good lessor will be able to prepare a better suited financial offer than a non-specialised bank: a longer or more flexible term, suitable interest rates based on the rental period, perhaps variable rent based on aircraft usage, etc. Leasing companies are also more aware of the types of aircraft special missions require and may help operators identify and procure the best aircraft for their needs – whether an older model/generation or new. Banks often have policies that include age limitations of aircraft to be financed. Some banks may rely heavily on theoretical appraisals reports, and may fully amortise a loan on an aircraft, making monthly payments high.
Using the example of firefighting again, these machines are often modified with belly tanks which are expensive to purchase yet may not realistically add much to the appraised value. Whereas, using the example of SAR aircraft, the retrofit of a rescue hoist, FLIR, special scanners, cameras, radios, etc., to an older used aircraft represents the same kind of scenario. In the case of EMS, an EMS interior STC kit can be installed on a used aircraft, such as an Airbus H135 or H145, at a cost of over USD 1 million.
While a leasing company understands this concept and may make allowances/concessions in their financing proposal and lease terms, for banks on the other hand, this may not be feasible. Another consideration when selecting leasing versus traditional bank financing could be OEM-provided power-by-the-hour (PBH) programmes, which are typically considered to be expensive per flight hour, cycle, etc., and may not be justifiable for older aircraft, or for operators with smaller fleets. Some banks may require an operator to enroll in such programmes based on bank policy or from advice by external advisors. However, as an alternative, some leasing companies will structure/offer maintenance or overhaul reserves for major maintenance events such as engine and gearbox overhauls. Overhaul reserves may allow operators to improve their financial planning and cashflow management for big ticket maintenance costs.
In some cases, leasing companies may also offer a “rent holiday” period whereby rent will not need to be paid to the lessor for the period of time required for installation of modifications or equipment for a new mission, which could take several months. This concession, if available, during the modification and mobilisation period, can provide massive financial relief for operators who cannot earn revenue from the helicopter during the time it is grounded in a hangar or undergoing transportation to the other side of the world.
Buying used versus buying new
Buying used aircraft for special missions represents several advantages. Firstly, financial – the purchase price of a five-to-10-year-old helicopter could be 50 per cent of that of a brand-new machine. In addition, retrofitting the correct configuration allows the operator to customise using the precise specification and equipment they need and under their direct budgetary control. When buying new, on the other hand, many special missions helicopters are often delivered bare or “green”, requiring the operator to select a completion centre/MRO or install the remaining equipment themselves. This delivery of “green” aircraft means that aircraft often sit in a hangar undergoing work, typically lasting any time from three months to one year. Some OEMs offer wide-ranging options for special missions equipment to be already installed at the time of delivery, but these options still remain somewhat limited and often do not completely fulfill an operator’s requirements.
Buying new also means facing long delivery or lead times, often one to three years, which can put some operators in a difficult predicament when they need to react quickly to government tenders or similar contracts. Buying new is a great option if the aircraft is correctly equipped, can be delivered on time and within the constraints of the operator’s budget, but this is not always possible and requires a lot of forward planning and advance notice from the government or other entity offering the operating contract. Sometimes leasing is the answer to eliminate the risk of holding very expensive, multi-million USD/EUR specially equipped or heavily customised machine(s) on your balance sheet and the prospect of an operating contract not being renewed.
Overall, special missions such as EMS, firefighting, SAR and humanitarian aid/transport can only continue to benefit from the alternative/diverse methods of aircraft procurement and the growing expertise and flexibility that leasing companies have to offer. The specialised support, not only on the financial side but also with technical and legal aspects, and optimisation of fleet management, allows operators to fully focus on what is most important – saving lives.
Originally published by RotorHub in the October/November 2025 issue: RotorHub International – HMG Aerospace
