What is a con of leasing an aircraft?

Leasing an aircraft can present the challenge of lease rate fluctuations. This means that the cost of leasing the aircraft may vary over time, potentially increasing the overall expense of operating the aircraft. When a company enters into a lease agreement, it may initially benefit from a fixed rate, but market conditions can change, leading to higher lease rates upon renewal or during the term of the lease. Such fluctuations can affect budgeting and financial forecasting for companies relying on leased aircraft, making cost management more difficult.

In contrast, aspects like no loan covenants are typically advantageous, as they allow greater financial flexibility without stringent requirements that can be present in traditional financing. The acquisition of equity and asset ownership are other benefits that come with purchasing an aircraft outright, but leasing does not provide these long-term financial advantages, highlighting the drawbacks of variability in lease rates.