Aviation is all about aircraft industry and the activities surrounding human flight. Aircrafts are machines designed by humans for atmospheric flight. Aviation started in the 18th century with the development of hot air balloon. Aircraft includes fixed wings rotary wings, as well as lighter-than-air craft such

as balloons. In the early period of the19th century, the first aero plane was constructed, which brought a significant advancement in the aviation technology. With the introduction of jet aviation, the industry has been technologically revolutionized and it is now a major form of transport throughout the world.

Types of Aircrafts

Aircrafts can be classified into two types.

1. Heavier than air.

2. Lighter than air.

Heavier than air

Aircrafts are helicopters, autogiros and conventional fixed wings aircrafts, which are airplanes and aero planes. Fixed wing air craft generally use an internal combustion engine in the form of piston engine or a turbine engine, to provide thrust that moves the craft forward through the air. The movement of air over the wings produces lift that causes the aircraft to fly.

Lighter than air

Aerostats use buoyancy to float in the air in the same manner as ships float in the water. These aircraft use a relatively low density gas such as helium, hydrogen or heated air, to displace the air around the craft. Examples are balloons and airships.

According to their usage, aviation can be divided into two categories:

1. Military Aviation

2. Civil Aviation

1. Military Aviation: The aircrafts used for military purposes come under military aviation. Examples of military purposes are patrolling, search and rescue, reconnaissance transport and training etc.

2. Civil Aviation: The aircrafts used for private and commercial purposes come under civil aviation, which includes scheduled airline flights and general aviation. The vast majority of flights flown around each day belong to the general aviation category.

Business Finance Aviation

The Aviation industry is going through an amazing period of change and finance has become a very important factor. There are many ways to finance a aircraft .One can get a loan and as in any loan, the key items one has to be aware of are the money one needs to contribute, interest rates, terms, etc.

As soon as the person decides on the source of the aircraft loan, you will need to follow all the formalities that are required for the loan to be approved. The paper work starts with the loan application,finance application or credit application, as it is called and the rest of the formalities begin from there. Most lenders will require the balance sheet and the financial position of the business and various other credit information about the company, in order to ascertain the viability of the business. The interest rate can be fixed or variable. The term of the loan usually ranges between 5 to 25 years for most aircrafts. The amount of down payment can depend upon the lender, how much the person is financing, the age of the aircraft and can be as low as 10% or as high as 25%.

The payment calculator will allow you to figure out the Aircraft payment on different amounts, interest rates, taxes, and insurance.

It is a 5 step process,

1) Enter the amount of the loan needed.

2) Enter the current interest rate for the loan.

3) Enter the number of years the loan will be financed.

4) Enter the sales tax rate the state.

5) Enter the amount of the Aircraft insurance policy.

Most Aircraft buyers are very worried about how their credit report will affect their ability to buy an Aircraft. The Aircraft loan industry grades ones credit, based on such things, such as payment history, amount of debt payments, bankruptcies, equity position, credit policy, credit scores, etc.

The Finance companies provide finance for almost all types of air crafts, like jet, turbine, helicopter, single piston engine double piston engine. etc., They provide Finance up to 90% of the purchase price or the fair market value or whichever is less. These loans are simple interest loans. The finance companies provide finance for new and used aircraft from $10,000 to over $45,000,000 in value. Flexible individual payment programs are customized to fit customer requirements, providing low monthly payments and a wide variety of payoff options. Even refinance is available for aircrafts, to upgrade the engine, upgrade the avionics panel, to refurbish the paint and interiors.

The value of the Air craft should be first calculated. Then one has to provide the Aircraft information, personal information, co-applicant information and a personal financial statement. Before signing a contract the customers can apply for a pre-approval. Pre-approval gives flexibility and one can negotiate for the best price at any dealership nationwide.

The Aircraft loan applications process may take two business days to get an approval and it may take longer on aviation loans which are above $750,000 and on applications with complex financial profiles.

All parties who are involved in the aircraft financing transaction, the buyer, the seller and the lender have to apply to file on the International Registry.

The airplanes and engines which must register with International Registry are

Airframes that are type certified to transport at least eight people including crew.

Helicopters that are type certified to transport at least five people including crew.

Jet propulsion aircraft engines with at least 1,750 pounds of thrust or its equivalent.

Turbine powered or piston powered aircraft engines with at least 550 rated take off horsepower or its equivalent.

Some of Aviation Finance Companies are :

1) NAFCO (National Aircraft Finance Company)

2) USAF (United Sates Aircraft Finance)

3) AAFCO (American Aircraft Finance Company)

4) BCC (Boeing Capital Corporation)

5) DORR AVIATION

6) BEACON AEROCREDIT

There are a number of reputed financing companies in the aviation finance industry, which offer customized solutions depending on the needs of the customers. These companies have a wide selection of aircraft for single aircraft owners as well as fleet owners. The financing alternatives include aircraft mortgage, finance lease and hire purchase facilities.

In the Finances lease agreement, the client and the company agree to rent a piece of equipment over a fixed time with a predefined residual value. In this agreement, the company obtains legal ownership of the item being leased, by paying a sum as mentioned on the suppliers invoice. The client has to pay rent for the use of the equipment over the term of the lease. The company is responsible for the maintenance, insurance and operating costs of the equipment. This type of lease is available for aircraft engines.

A number of companies like GE, offer various financial options like secured loans, securitization to help their customers in increasing liquidity, decreasing debt. Some companies also offer asset-based financing of commercial jet aircraft for airlines seeking to renew their fleet.

Several companies offer airlines operating leases for a variety of aircraft like Airbus, Boeing, Bombardier and Embraer. These leases are for three to twelve years. The main advantage about this kind of a finance, is that one has lower cash outlays and hence more working capital. It gives the airline the option of introducing or changing routes and capacity quickly. The other major advantage is that one does not have to make large down payments with the manufacturers even for newer aircraft types. Companies offer spare engines as well as exchange options for engines.

Various finance options like short-term rentals and longer-term options are available.

Short-term rentals

Several times spare engines are required due to sudden breakdown in between busy schedules. In such case engines can be rented for some days and up to a year. This saves the airline on heavy downtime costs for the unscheduled maintenance and it also covers the gap between the availability of a spare engine.

Long term solutions are available for one to ten years. These help the airline to focus on its main operations. It also gives access to any kind of engine required.