Tianjin leads China in plane leasing

China's US$400 billion aircraft leasing market is heatting up, with Tianjin emerging as the dominant hub for deals in the rapidly growing sector.

An average of 15 aircraft were being delivered every month by leasing companies registered in the northern city's Dongjiang free-trade port (DFTP) zone, said Zhang Zhongdong, deputy director of its administrative commission. Some 409 aircraft had been delivered from the zone since the first transaction in late 2009, with the figure expected to reach 450 by the end of the year, he said. That is equivalent to the fleet size of a major Chinese airline.

"The DFTP accounts for 99.3 per cent of aircraft leasing deals on the mainland," Zhang said.

Forty aircraft have been leased through Shanghai, two from Shenzhen, and two via Xiamen, which are other pilot zones permitted to conduct aircraft leasing with preferential policies.

The mainland's aircraft leasing market was dominated by foreign lessors until 2007, when state-owned banks were allowed to own leasing subsidiaries and rapidly increased their market share. Chinese lessors now accounted for 300 passenger jets flown by domestic airlines, or 14 per cent of the mainland's total fleet of more than 2,000 aircraft, said Tao Mei, vice-president of ICBC Financial Leasing, which accounts for 107 aircraft, making it the largest player in the domestic market.

Boeing forecasts China will need more than 6,000 passenger jets worth US$870 billion in the next 20 years. "At least 50 to 60 per cent of that will be financed through leases," Tao said.