January 13, 2025
Aircraft leasing might seem straightforward—an operator leases aircraft, pays rent, and returns the asset when the lease ends.
But those in the industry know that it’s never that simple. Lease management is a multifaceted process involving financial, operational, and technical elements that must be carefully balanced to protect asset value, ensure compliance, and maximize returns.
At every stage of a lease’s lifecycle—whether during negotiation, mid-term management, or redelivery—lessors encounter critical decision points. These decisions can have significant financial and operational implications if handled poorly or without foresight. Here are some insights we’ve gathered over years of working closely with lessors and airlines on lease management processes:
- Structuring Lease Provisions to Protect Asset Value
Residual value protection is always top of mind for lessors. Every lease should include clear, enforceable provisions for maintenance, modifications, and asset usage. Key clauses—such as those regulating return conditions and maintenance requirements—must be carefully worded to avoid ambiguity while ensuring enforceability.
A common challenge arises when negotiating fallback positions with operators. Lessors want strict oversight to protect their asset, while lessees seek operational flexibility. The trick is to find a balance that works for both without compromising long-term asset value.
- Managing Maintenance Obligations
Maintenance reserves and return conditions are often sticking points in lease negotiations. Without a robust reserve management process, lessors can find themselves underfunded when major overhauls are due. Similarly, poorly enforced return conditions can leave lessors scrambling to cover costly redelivery maintenance tasks.
An effective lease management strategy involves not just setting reserve rates but also ensuring clear communication and ongoing collaboration with lessees to track maintenance milestones and upcoming events.
- Ensuring Smooth Redelivery Processes
Aircraft redelivery is where things can get particularly tricky. From documenting the condition of the aircraft and ensuring regulatory compliance to handling disputes over return conditions, this phase requires meticulous planning and strong project management. Delays and disputes during redelivery can result in significant downtime, lost revenue, and strained lessee relationships.
A proactive redelivery plan—ideally started 12 to 18 months before the lease ends—helps mitigate these risks. Clear documentation, early inspections, and frequent communication with lessees are critical success factors.
HOW ZEEVO CAN HELP.
Lease management is a complex, dynamic process that requires deep industry expertise, a proactive approach, and robust operational controls. Lessors who excel at managing these complexities can enhance asset value, reduce risk, and strengthen lessee relationships over the long term.
At Zeevo, our team brings years of hands-on experience managing every aspect of the lease lifecycle—from initial negotiations to redelivery—helping lessors navigate these challenges efficiently and effectively. If lease management is something you’re thinking about, let’s talk. We’ve been there, and we get it.
About Zeevo Group LLC:
Zeevo Group LLC (“Zeevo”) provides business, finance and information technology consulting services and products to a broad range of clients representing such key industries as aircraft leasing, technology and consumer products. zeevogroup.com
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