Design of a Virtual Operating Lessor business Model for ING Aviation

‘Capacity Matching in the Aircraft Operating Lease Industry’

ING Aviation is part of ING Wholesale Banking’s Asset Based Finance department which is the worldwide lease and asset finance specialist of ING Group. Since 1986 ING Aviation underwrites, arranges, provides debt for and syndicates aircraft financing and leasing structures for the aviation industry.
In the 1980s banks moved away there interest from direct lending to airlines to financial leases and asset-based financings as a result of deteriorating airline credits. Currently, 33 percent of all commercial jet aircraft is financed on an operating lease basis and it is expected that this share will continue to grow to 40 percent in 2016. This development indicates that airlines are more and more shifting the aircraft (residual) value risk to aircraft lessor companies and aircraft financing banks by engaging in aircraft operating leases. ING Aviation wishes to exploit this development. To this purpose a study is conducted to explore the possibilities and impossibilities of ING Aviation to extend its services into aircraft operating leases. Therefore the main research question is:

How can ING Aviation create a sustainable added value for its customers by offering them aircraft operating leases?

Within this study the critical success factors of an aircraft lessor are determined. Furthermore, alternative aircraft lessor business models from practice are evaluated and potential customers have been consulted by means of in-depth interviews. It is found that ING Aviation can create a sustainable added value by a better capacity matching of aircraft for airlines that have to cope with seasonal air travel demand peaks and lows.
For the final design a virtual business model is set up and a financial forecasting model is developed that shows the financial viability of the virtual operating lessor.



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