To rent or to buy? Making the best decision for your GSE operation

When it comes to the subject of GSE acquisition, today’s handler basically has two choices: either an outright purchase of the GSE for his fleet or the possibility of GSE rental. Which is the best option? And how do you decide?

Fleet ownership

It has only been in relatively recent times that handlers have reconsidered how best to run their operation. Three decades back, it was standard practice for a handler to invest in GSE. Ownership was all: it gave a degree of kudos to the handler although, in fact, no-one on the ramp would have known whether the equipment was new, pre-owned, rented or purchased. 

Accumulating GSE in this manner would have involved finance packages, ensuring that there was provision for routine maintenance and calculating the optimum quantity of GSE for a given operation. But, as is well known, the aviation marketplace is a fickle one: flight frequencies can grow as well as shrink and it is left to the handler to adapt accordingly. Consequently, he might have had to increase the number of his units at short notice or, as recently happened with the spread of Covid, mothball some of his fleet – or even dispose of it to make economies.

These were, and continue to be, the realities of fleet purchase. But for one or two adventurous handlers, before the millennium unfolded, GSE rental was providing an alternative business model.

The rental proposition

As is usually the case with progress on the ramp, things take time to evolve. The pioneers in terms of rented GSE included the likes of carriers DHL and Sabena, back in the mid-1990s; by 2000, WFS was probably the first handler to look more closely at the concept and roll it out, albeit in a limited way.

So what attracted these players to the idea of rented GSE? And was it perceived as a risky move at the time?

The answer has to be no, because ultimately those using the facility had nothing to lose. The benefits were something that, in a world of tight operating margins and short contract lengths, could not be overlooked. If renting GSE gave an operating advantage to a handler, then he would have been deemed foolish not to have tried out the concept.  And those early adopters were far-sighted enough to realise that here was a viable option to the purchase of GSE. And they benefited accordingly.

Benefits of renting GSE

Cost.

That single word in many ways summarises the whole proposition. Renting GSE brings with it much more freedom than is experienced with a fleet of equipment that has been purchased. The biggest difference is that the GSE cost becomes an item that is off the balance sheet. It has the effect of enhancing the handler’s cash flow and, usefully, spreads the cost of the investment for the duration of the contract. At the contract’s termination, the GSE can simply be returned – or incorporated in a new contract.

A company like AVIACO offers a suite of rental possibilities, all of which are designed to alleviate the onerous situation that sees a handler having to dedicate a large chunk of capital to the purchase of his equipment. It is able to provide data on the pros and cons of rental compared to purchase, based on many years’ experience in this area; and it can offer case studies from clients who have subscribed to this acquisition option. Return on Investment (ROI) is the first question to ask – and AVIACO is well placed to answer this question.

But there is more to this solution. AVIACO, as a company well known for its refurbishment operations, can include overhauled, pre-owned equipment in its offer, effectively reducing further the overall cost of the arrangement. As a one-stop-shop, AVIACO is also able to source extra units, should they be required; alternatively, it can take back surplus equipment, should it prove to be redundant within the operation. All this is achievable without the need for searching the marketplace for acquisition and disposal solutions.

Maintenance packages are also available; these can be tailored to the individual operation. Such extras mean that the handler is freed up to focus on his core business, that of looking after his airline customer. When it comes to renting, flexibility underlines everything.

If you would like to find out more about what renting can do for your operation, contact us.

The future of GSE management awaits you.

Tags :

Share :

LinkedIn

Subscribe Our Newsletter

Get our latest news & update.

Read another news

Today, any handler operating a fleet of GSE, of whatever size, knows that it is imperative that his equipment is ready to function as soon as ...

Today, there is more talk about the future than ever before. Succession planning, SLA targets, pre-empting trends, growth forecasting and spotting coming opportunities are all facts ...