With the long boom in air traffic continuing, airlines are eager to keep older aircraft in service but often need to refurbish or upgrade cabins with fresh seats. Yet airline finances may be strained by purchasing seats.
One alternative, seeking a seat lease or other long-term financing from an independent financial institution does not work very well, according to Geven Marketing Manager Rodolfo Baldascino. “This involves long and expensive discussions with the banks they work with or other financial entities.” Baldascino explains. “In most cases the leasing terms and rates offered for acquisition of passenger seats are not competitive due to . . . no historical track record of residual value and re-marketing practices.”
So Geven and Velantis Seat Financing Solutions have agreed to offer passenger-seat leasing to airlines, operators and aircraft lessors. Geven will give all its customers, both line-fit and retrofit, the opportunity to lease the seats from Velantis, an Irish financial and leasing specialist.
The idea has been floating in the cabin interiors industry for several years, but until now there was no solution available that offered this option from the seat vendor to the seat end user. Velantis will be much more familiar with customers, leases and residual values than a typical unaffiliated financial institution and thus should be able to offer more attractive terms.
The program will work much like aircraft or engine leases. Upon agreement, Velantis will pay Geven the purchase price for the seats. Velantis and the customer will have arranged mutually agreeable lease terms.
Baldascino says the leases are likely to last three to seven years. The customer may pay a flat rate per month or perhaps a charge per flying hour. During the term of the lease, Velantis will own the seats, but Geven will provide technical support as it usually does for its equipment.
Contract terms may be arranged so that the customer pays off the total cost by lease end and thus owns the seats. Or customers may end the lease by the return of the seats to Velantis, with Geven helping with any needed refurbishment and the necessary remarketing of the seats.
Baldascino says he is seeing a lot of interest in the new seat-financing deal from potential customers.