(CRIENGLISH.com)
Updated: 2007-07-20 15:14

China Aviation Industry Corporation I (AVIC I), the country's biggest aircraft maker, has started to launched financial leasing and operating leasing services for domestic aviation corporations.

Through its newly founded international leasing company, AVIC I trys to push China's regional aircraft more quickly into domestic and foreign markets, China Securities News reported.

The country's first private airlines Okay Airways signed the first hire-purchase contract for 10 Xinzhou-60 planes with AVIC I's subsidiaries Xi'an Aircraft Industry Group and AVIC I International Leasing Co on Wednesday.

The contract price of hire-purchasing the ten Xinzhou-60 planes is about 1.25 billion yuan. Xi'an Aircraft Industry (Group) Company will send the first batch of two planes to Okay at the end of this year.

"This is the first domestic order that Xinzhou-60 has got through financial leasing," said Lin Zuoming, general manager of AVIC I.

"It is also the first civil aircraft leasing contract since the founding of AVIC I International Leasing Co earlier this year. A solid foundation has been laid for Xinzhou-60 to step into the domestic air market in a mass-scale,"

At last year's Zhuhai Air show, Okay signed an ordering agreement with AVIC I with the intention of buying 30 Xinzhou-60 jets. "One third of the intention has been realized," Lin Zuoming said.

China's aircraft leasing sector is still weak, which is seen as a bottleneck restricting the country's civil aircraft industry and the development of air companies.

At present, aircraft leasing includes operating leasing and financial leasing. The former requires the renter to pay for the rent in due course. When the lease is due, the renter returns the aircraft. If it is financial leasing, the rental agreement is irreversible and the rent should also be paid in due course. When the leasing becomes due, the renter pays a certain amount of money and can own the plane.

Industry insider said aircraft leasing is one of the basic means taken by air companies worldwide to renew and expand their aircraft fleet. Aircraft leasing features low costs, high flexibility and various financing means.