Aircraft is an expensive product. The a average list price of a brand new Airbus A 320 ( in 2011 ) is $ 85 million. Boeing 737-800 is listed for $84.4 million. Aircrafts, hoverever, do not sell at the listed price. There is bargaining, if the order is large and after negotiations, discounts from 10 to 40 per cent are offered. All depends on the type of aircraft ordered, delivery dates requested, the engines selected and the interior options specified.

At the time of signing the deal to buy the aircraft, only one percent of the cost of the aircraft is paid by the airline . They pay small percentages of the cost to the manufacturer at pre-determined intervals before the delivery date.

The deal is is financed by the banks by way of long-term loans at pre-determined rates.

The role of the leasing companies such as GECAS (General Electric group ) and ILFC ( International Large Finance Corporation, of AIG group ) is important. They buy the aircraft from the manufacturer and then lease them to the customers. This happens prior to delivery.In India, the leasing deal is concluded before delivery. The leasing company pays the manufacturer. The ownership papers are given to the airline. These are then transmitted to the leasing company. The airline can sell an aircraft to the leasing company at a higher price and make a profit.

The aircraft engine may not be bought from the aircraft manufacturer. There are separate deals with engine manufacturers. There are per hour basis deals with engine companies. Engines can be swapped around the aircrafts.

The lease agreement factors in the profit made by the airline. The lower the profit, the lower the lease rental. The average lease rental on a brand new A 320 or 737-800 ranges between $ 500,000-750,000 per month.There is no depreciating asset on  airline’s books The lease payments are operational expense.