On October 25, 2024, the Faculty of Finance at City University of Macau held a series of financial seminars at the Ho Yin Conference Centre. The seminar featured Ms. Li Juan from Beijing Docvit (Shenzhen) Law Firm as the keynote speaker, who participated online to share insights on the topic “Aircraft Financing Leasing: Business Models and Investment Strategies.” Present at the seminar were guests including Professor Chan Cheuk Wa from the Faculty of Finance and Teaching Assistant Mr Liu Jin Jian.

Ms. Li began by introducing the concept and definition of aircraft leasing, along with its historical development. She emphasized the unique characteristics of aircraft leasing, which encompasses a wide range of fields, involves substantial investment amounts, and has lengthy transaction cycles. Ms. Li explained the functional characteristics of aircraft leasing from both macroeconomic and microeconomic perspectives. Despite the significant impact of the pandemic in recent years, the aircraft leasing market has shown strong and stable growth. The demand for aircraft in the post-pandemic global market has surged rapidly, and the market for aircraft leasing is projected to be substantial over the next 20 years. Additionally, she highlighted China's recent positioning in the global aircraft leasing landscape and the close relationship between the banking sector and the aircraft leasing industry.

Next, Ms. Li provided a detailed explanation of the different types of aircraft leasing, categorizing them based on their nature, scope, financing sources, and payment subjects. There are various financing channels available for aircraft leasing, with secured and unsecured loans being the primary sources of funding. Aircraft leasing is generally divided into operating leases and financial leases based on the nature of the leasing business. Operating leases are relatively straightforward and typically include a "lease security deposit," which amounts to 2-3 months' worth of aircraft rental fees. Other arrangements, such as the use of letters of credit, can also be coordinated. In contrast, financial leases serve a dual purpose of financing and asset leasing. A key characteristic of financial leases is that the lease term encompasses all expenses and risks associated with operating the aircraft during that period. The legal ownership of the aircraft remains with the lessor, while the economic usage rights belong to the lessee. Essentially, aircraft financial leasing transfers all risks and rewards associated with the leased asset from the owner to the lessee.

Ms. Li shared the advantages and disadvantages of aircraft leasing, approaching the discussion from three perspectives: the lessee, the lessor, and external factors. She then identified several risk management mechanisms that can be implemented to mitigate or avoid potential issues. Additionally, Ms. Li presented various case studies of operating lease contracts to help students gain a more intuitive understanding of the important considerations throughout the contract process. Notably, she highlighted that aircraft leasing contracts include a "quiet enjoyment" clause, which prohibits the lessor from interfering with the lessee's use of the aircraft.

Ms. Li’s presentation left a profound impression on the students regarding financial leasing. During the discussion, they explored why aircraft leasing in Ireland has reached such a mature state. We extend our gratitude to Ms. Li for her valuable insights, which provided students with an opportunity to understand the operational processes of financial leasing. We look forward to the next seminar at the Faculty of Finance, City University of Macau.