MARCH 2016 AviationPros.com 15
COVER STORY
way to approach GSE fnancing is to match
the cash fows of the seasonality with the
lease payments. For example, companies
that offer deicing tend to draw all of their
revenue within six months of any given
year. The practice came into use in the
early 1900s for the purchase of agricultural
equipment. In 1923, the Agricultural Credit
Act was passed providing short-term and
intermediate credit. This method of "pay
when you can" or, when it's the most
opportune time, was typically referred to
as a "harvest plan."
"Simply put, get the equipment and sup-
plies you need today then pay when your cash
fows are at their greatest," Banfeld says.
X COS T SAVINGS THROUGH FLEE T
RENEWAL – GSE feet operators actually
require less equipment as new, more
reliable GSE is added. Reliable feets no
longer need redundant equipment to serve
as backups while broken GSE is in the shop.
"When a feet goes from a preventive to
a reactive maintenance strategy, they will
exponentially decrease the operating cost per
hour," says Banfeld. "That will add addition-
al savings to the operating budget that will,
hopefully, fow over to the CapEx budget.
From there, the renewal and replacement
cycle gets even better for the GSE arena."
In the end, airlines, ground handlers and
FBOs need new equipment. The method of
acquisition is becoming increasingly irrele-
vant with the multitude of options available.
"It's utilization of the asset that the end user
wants, not pride of ownership," Banfeld says.
"I defy anybody to walk out on the tarmac
and see somebody out there Turtle Waxing
and Armor All-ing a tractor. It's never going
to happen."
Overall, margins have increased, and the
industry as a whole is reinvesting capital to
make improvements. As this activity contin-
ues, ground handling professionals who stay
on top of fnancing trends and make smart
decisions with regard to how they acquire
ground support equipment will thrive.
AviationPros.com/12074727
ABOUT THE AUTHOR:
Justin Piot is Regional Manager of the GSE Division at Summit Funding Group, an
Ohio-based company that provides equipment lease and finance solutions to busi-
nesses across the U.S. and Canada. Founded in 1993, Summit Funding Group has
originated more than $2.5 billion in equipment lease and finance transactions to date.
Contact him at jpiot@4sfg.com.