Spring Air Plans to Start Aircraft Leasing Business in Shanghai

(Bloomberg) Spring Airlines Co., China’s first low cost carrier, aims to start aircraft leasing by setting up a base in Shanghai’s free-trade zone to get lower tax rates and reduce costs for the budget carrier.

While the carrier will first lease aircraft to itself, the leasing company will also seek clients outside of China, Tian Chao, the carrier’s finance manager said in an interview in Hong Kong. The company is in the process of registering the business in Shanghai’s free-trade zone and approvals may come by the end of the year, he said.

“The main purpose is to help our company reduce costs,” Tian said on the sidelines of an airline conference. “We have been in talks with other possible clients in the mainland and overseas, but that’s not an immediate priority.”

AirAsia Bhd., the continent’s biggest budget airline, also set up an aircraft leasing entity this year, while Hong Kong billionaire Li Ka-shing is seeking to enter the leasing business by bidding for planes from Terra Firma Capital Partners Ltd.’s Awas arm.

Spring Air, started by Chairman Wang Zhenghua in 2005, said in May it plans to spend about 2.5 billion yuan ($409 million) to expand its fleet and network. The airline received approval for an initial public offering on Oct. 15. In the preliminary prospectus, the carrier said it would buy a maximum of nine Airbus Group NV’s A320 aircraft and three A320 simulators.

Tian said there are no plans for new plane orders for Spring’s planned leasing operation and the company will rely on Spring’s order book for now.

Source: Bloomberg News