junejuly2024 - 24

Ground Service Providers
Based on a customer's short- and long-term
needs, Fortbrand works to design a strategic
procurement and asset management plan.
Financing Options for Ground
Support Equipment
One solution does not fit the diverse needs of all ground service providers.
BY REBECCA KANABLE
C
ommercial aviation is a
complex industry with
many variables. Within
each segment of the industry,
ground handling included, there
are many nuiances.
For example, just as the needs for
ground support equipment (GSE) can
vary from one ground service provider
to another so too can the solutions
for funding GSE.
" Some customers require shortterm
rentals until they receive delivery
of newly ordered equipment, while
some customers require long-term
leases which are used to permanently
fill their operational needs, " says
Nicole Romeo, who is a certified lease
and finance professional and serves
as airport maintenance equipment
and ground support equipment sales
manager at Fortbrand Services.
" This information is discovered
when we sit down with our customers
during the onset of their project,
allowing us to carefully craft the
appropriate lease/maintenance solution
that meets their specific need. "
While Fortbrand specializes in GSE
and airfield maintenance equipment,
as well as equipment maintenance
and financing, CSI Leasing provides
equipment lifecycle and finance solutions.
This range of options provides
flexibility for ground service providers
to utilize the equipment needed in
each individual operation.
Leasing vs. Renting
Leasing is one of the most common
options to finance GSE.
Lease options generally range
from 12 months up to 10 years.
If the term is shorter than 12
months, equipment rental may be a
better option.
Jeff Clark, GSE leasing specialist
at CSI Leasing, notes equipment
rental on a month-to-month basis
with no long-term obligation to the
renter will generally be more costly
than leasing or financing since
there is no commitment, or the
commitment is low.
" Leasing is a financial option
whereby the customer pays for the
use of equipment without bearing
the risk of full ownership or having
to outlay any initial capital investment, "
Romeo adds.
The customer, known as the
lessee, pays for the use of an asset
over a determined amount of time.
At the end of lease term, the
customer has multiple end-of-term
lease options. They include returning
the equipment, continuing to
lease the equipment or purchasing
the equipment for the fair
market value.
Romeo says the terms of the initial
contract can be short term or
long term, with the most common
terms ranging between 6 months
to 84 months.
24 || Ground Support Worldwide || June/July 2024
Fair Market Value vs.
Capital Leases
According to Clark, two popular
types of leases are fair market
value (or operating) leases and
capital leases.
A fair market value (FMV) lease
allows the customer to use the
equipment for a pre-arranged time
for a fixed monthly payment. At
the end of the term, the lessee has
the option to buy any or all of the
equipment on lease at its then-current
fair market value, return the
equipment or extend the agreement
for an agreed upon term and
rental rate.
" The leasing company invests a
residual value in the equipment, so
the customer effectively pays less
than the original equipment cost
over the initial lease term. Leasing
companies are able to do this since
they own the equipment at the end
of lease and can then refurbish and
resell it in the secondary market, if
they have the means to do so. With
an FMV lease, the leasing company
takes the risk of technological and
economic obsolescence during the
lease term and the lessee pays only
for its period of usage, " Clark says.
He adds at CSI, company representatives
find that the fair market
value and rental structures are the
most common in the industry and
satisfy most needs.
FORTBRAND
junejuly2024

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