Government advised to acquire cargo airplane ‘at’ dry lease or ‘higher purchase’


“ETHIOPIAN Prime Minister Hailemariam Desalegn Boshe (born July 19, 1965, age 51 years) flew back home after a two-day state visit to Tanzania last week with a bag full of goodies, one being a deal for Ethiopian Airlines to establish a cargo hub in Dar es Salaam”.

This is the opening sentence for a news item titled “Dar-Addis hub deal doesn’t augur well ‘with’ ATCL future prospects” (Daily Blog April 4, p. 6).

The writer is obviously not happy with this deal since he believes it will dampen the chances of Air Tanzania (ATCL), which the government is determined to put back on a business success track, to start or flourish in the cargo transport business.

Rather than let in Ethiopian Airlines, the writer is advising the government to acquire cargo planes and get air Tanzania to engage in cargo business. He is aware that acquiring an aircraft is very expensive but suggests a way to address this: Get a used aircraft. Do no buy outright.

“Getting a used freighter through leasing or ‘higher purchase’ is not that costly. Experts say Boeing 767-300 is a good freighter and can be obtained ‘at’ dry-lease at between 220,000 and 360,000 US dollars a month”.

The title of the article: “Dar-Addis deal does not augur well ‘with’ ATCL future prospects” should probably have members to the lessee (.i.e. the organisation or person who leases the aircraft).

Even more important, the owner also promises to conduct adequate maintenance and procure the insurance necessary to operate the aircraft. A dry lease on the other hand, is slightly different: The owner still provides the lessee with an aircraft – however, without a crew.

This is one of the options which the writer advises the Government to take, no doubt bearing in mind that we have adequately trained human resources in the country to operate any aircraft.

Leasing (wet or dry) means transferring an aircraft without transferring its title. The owner (i.e. the lessor) keeps the legal title – but possession transfers to the lessee.

Why would an operator wish to lease an aircraft? One reason is to increase temporary capacity for an airline when for example, it is experiencing an unusually high (but temporary) demand.

Two, finances. Purchasing an aircraft can be challenging for numerous reasons: from practicality to financial. Leasing is an attractive option that lets operators forgo the financial stress of an actual purchase and the intricacies that go with that.

If we in Tanzania decided to buy, can we get an aircraft on ‘higher purchase” as the writer suggests? We wonder since we are not aware that there is such a term as “higher purchase”.

We however know that the word “higher” sounds the same as the word “hire”. This may have misled the writer to go for “higher purchase” instead of “hire purchase”. So what is hire purchase? It is a method of buying goods (in this case, an aircraft) through making installment payments over time.

Under a hire purchase agreement, the buyer is leasing the goods and does not obtain ownership until the full amount of the contract is paid. This reduces the financial stress on the buyer although the end sum of the price for the aircraft may be higher than if the full price is paid in one installment.

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