Study On The SPV Model For Aviation Finance Lease In Domestic Free Trade Zones

As a core growth area of the future global air transportation industry, China will see its aviation finance lease industry enter a window of opportunity of rapid development. Although major international leasing companies have given domestic leasing companies huge competitive pressure with their first-mover dominance, the Chinese Characteristic SPV model for aviation finance lease in the domestic Free Trade Zones will become an important opportunity for China’s future aviation finance lease industry to take off. This model refers to domestic leasing companies setting up Special Purpose Vehicles, i.e. SPV, within the domestic Free Trade Zones, and providing aviation finance lease services to airline companies.Based on the research on the development of foreign and domestic aviation finance lease, this article analyzes the advantages of foreign and domestic aviation finance lease SPV models, and the case where China Eastern Airlines leased airplanes from China Aircraft Leasing Group using finance lease SPV model in Shanghai Free Trade Zone. The study found that comparing to the traditional finance lease model, the SPV model in the domestic Free Trade Zone helps the lessee(airline companies) to save transaction costs, optimize cash flow structure, thus contributing to the rapid expansion of fleet size, and it also helps the lessor(leasing companies) to enjoy tax benefits, control project risks, thus ensuring the profitability of the projects.As China’s air transportation industry entering a rapid growth phase, and government policies and supporting measures gradually improving and enhancing, the SPV model for aviation finance lease in domestic Free Trade Zones will continue to mature and innovate, and its operating advantages will provide China’s leasing industry and air transportation industry more favorable economic environment and development momentum.