Defence Ministry’s RM16 Billion Lease Contract for Helicopters: A Comprehensive Package
Introduction
The Malaysian Defence Ministry has signed a RM16 billion lease contract for 28 helicopters over 15 years, which includes a comprehensive package covering various essential services. Defence Minister Datuk Seri Mohamed Khaled Nordin explained that the package encompasses maintenance, repair and overhaul (MRO) services, spare parts storage, and training programmes for about 1,300 pilots and flight crew.
Key Components of the Lease Package
The lease package involves skill transfer and continuous training for engineers and technicians from user agencies, as well as insurance coverage for assets, all crew members, passengers, and third parties, along with financing or loan costs. Mohamed Khaled emphasized that this approach eliminates incidental costs that the government would otherwise have to manage.
Benefits of Leasing over Purchasing
Addressing concerns that an outright purchase might be cheaper, Mohamed Khaled pointed out that the leasing package eliminates the need for advance payments, progress payments, or capital expenditures. Payments will only begin once the helicopters are fully delivered, and will be made on a monthly basis according to usage and spread over 15 years. This approach allows the government to acquire high-cost, sophisticated, and modern assets without requiring a large allocation.
Aircraft Availability and Operational Readiness
The contract mandates the leasing company to guarantee a minimum aircraft availability and operational readiness of at least 85 per cent at all times. Aircraft availability will be managed using the ‘power by the hour’ (PBH) concept, ensuring that spare parts are always available rather than being procured only when needed.
Risk Management
All risks related to fleet provision and ownership will be borne by the lessor, who is responsible for insuring the fleet throughout the lease period. This transfer of financial and operational risks to the company allows the user agency to fully focus on air operations without worrying about aircraft maintenance, spare parts procurement, funding availability, or training.
Conclusion
In conclusion, the RM16 billion lease contract for 28 helicopters is a comprehensive package that provides a range of essential services, including maintenance, repair, and overhaul, spare parts storage, and training programmes. The lease approach allows the government to acquire high-cost, sophisticated, and modern assets without requiring a large allocation, while eliminating the need for advance payments, progress payments, or capital expenditures.
Frequently Asked Questions
Q: What is the total value of the lease contract?
A: The total value of the lease contract is RM16 billion.
Q: How long is the lease contract for?
A: The lease contract is for 15 years.
Q: What services are included in the lease package?
A: The lease package includes maintenance, repair, and overhaul (MRO) services, spare parts storage, and training programmes for about 1,300 pilots and flight crew.
Q: How will payments be made?
A: Payments will only begin once the helicopters are fully delivered, and will be made on a monthly basis according to usage and spread over 15 years.