International Lease Finance Corporation (ILFC)

During the early years of the Jet Age (not to mention commercial aviation in general), the only way to get into the airline business was to either have a lot of money to buy aircraft, or to be an aircraft manufacturer yourself. You may have heard of Howard Hughes (Hughes Aircraft Company), who was one of the latter.

Even once the aircraft had been secured, the business was not guaranteed. There were only a few profitable routes. As a result, there were only a few big airlines and they controlled the routes. If you lived in a small(ish) town, you were left to road or rail transport.

In 1973, International Lease Finance Corporation (ILFC) was co-founded by Steven F. Udvar Hazy using $150,000 of his own money and $1.2 million in loans. ILFC revolutionized the business. It introduced on-demand aircraft leasing. Smaller airlines started popping up, providing air service to a market starving for the convenience and speed of jet travel. These companies were able to lease aircraft from ILFC when they sold tickets, and get out of the lease when the route was not profitable. Since ILFC was providing the same aircraft to several companies operating on many routes, the same plane was leased to another small airline, which was able to turn a profit from another route!

This simple formula led to the modern commercial aviation industry, which brought competition and affordable travel to many cities all over the world. Driven by operating and cost efficiencies, many airlines today acquire new aircraft through leasing rather than shoulder the burden of direct purchase. Increasingly, as airlines consolidate, grow larger and focus on core competencies, there has been an ever-deepening trend toward leasing, even within the world’s largest airlines.

Even as the aviation industry consolidates and larger airlines take over smaller ones, the leasing model is here to stay. ILFC currently owns nearly 1000 aircraft and in the near future, expects that half the world fleet will be leased.