A method for leasing equipment or facilities using blockchain technology may include: receiving, through a blockchain network, a request from a lessor device or lessee device to initiate an electronic lease agreement transaction between a lessor and a lessee for a select equipment or facility; verifying an identity of the lessor and the lessee via a digital identity of the lessor and the lessee stored in a blockchain shared ledger to determine if the lessor and lessee are authorized users of the blockchain network; verifying an identity of the equipment or facility via a digital identity of the equipment or facility stored in the blockchain shared ledger; and if the identities of the lessor and lessee and the equipment or facility are verified, electronically executing a smart contract for the lease agreement between the lessor and the lessee, the smart contract including rules for enforcing the lease agreement.
Leasing equipment and vehicles, such as aircraft, may be complex, time-consuming, and inconsistent across the many organizations that participate in the leasing process. For example, in the aerospace industry, it may take 6-18 months for every aircraft redelivery and it may be very costly for lessors and lessees to undergo a lease transfer transaction. Organizations that participate in the leasing process, such as, for example, financial institutions, lessors, lessees, mechanical repair and overhaul (MRO) centers, or traders of spare parts, may face various challenges within the equipment leasing ecosystem.
Financial institutions may provide the monetary funds to enable leasing companies to acquire equipment assets. Financial institutions may desire to mitigate their risk and exposure appropriately. As such, it is important for lessors to ensure that the proper documentation is kept for the equipment in order to minimize the risk for severe and abnormal devaluation of the equipment. Lessors may be organizations that own the equipment that may be leased. As such, lessors may be primarily concerned with keeping the transferability of their equipment at a very high level. A lessor’s ability to turn the equipment around quickly to optimize working capital depends on expedited operations. Additionally, lessors may need to minimize equipment (e.g., aircraft) depreciation and ensure the valuable equipment is maintained to levels specified in a lease contract. Lessees, such as airlines and private aircraft fleet operators, may want to ensure that after the lease is expired, the cost to deliver the equipment or vehicle (e.g., the aircraft) back to the lessor are as low as possible. However, lessees may include a security deposit in reserve/escrow to cover any damages or valuation recoup. Further, lessees may use a logbook to keep a record for the leased equipment to ensure that the leased equipment is well maintained and that the lessee has followed the guidelines set by the lease agreement. However, in today’s equipment leasing industry, logbooks are mostly kept as handwritten entries on paper.
MRO centers help keep equipment or vehicles up and running by maintenance checks or one time repairs. Down time of the equipment (e.g., an aircraft) may be costly and MRO centers are critical to not only ensuring parts of the equipment are repaired to standard but also ensuring that the proper documentation is generated and stored. Proper documentation that is accessible gives all authorized parties the ability to view repair or maintenance history on the equipment. Events that show patterns of repeating, such as no fault founds (NFFs) are valuable to identify so that they can be prevented in the future. Spare parts traders may partake in the buying and selling of used equipment (e.g., aerospace equipment). In the spare parts industry, documentation may be very important. For example, in the aerospace leasing industry, quality documentation such as 8130 tags, Form 1, non-incident tag, trace, etc. may provide a higher value for the aerospace equipment to be leased.
Further, proper documentation may not always be kept for leasing equipment or facilities, such as aircraft. Documentation may be inconsistent and equipment (e.g., aircraft parts) tracking and recordkeeping may be difficult. The equipment or facility may have a multitude of physical documents related to the equipment or facility and the documents may be improperly or incompletely generated and stored. Financial backers and lessors may further want to ensure that the equipment or facility asset depreciation is minimized. In the aircraft leasing industry, once the aircraft reaches the end of its life and is dismantled at the serialized component level (i.e., the aircraft parts), a large portion of the value of the aircraft and its components depends on whether quality documentation is available. As such, a consistent recordkeeping and document storage process is needed to ensure the value of the equipment or facility is maintained.
Moreover, leasing contract clause execution is manual, subjective, and tedious. Each lessor may have their own version of a lease agreement with a lessee and lease agreements are currently interpreted and executed manually. For example, a lessor must manually audit the lessee to enforce the contract. Poor contract clause monitoring and execution may also lead to premature devaluation of the equipment or facility. In the aircraft leasing industry, lessees, such as international airlines, may keep records based on local regulatory environments of the country in which the airline is located. However, lessors may want the most stringent rules to be enforced.
Lastly, the deployment of a global, consistent process may require significant resources and labor. In the aerospace industry, for example, the current aircraft leasing ecosystem may not be conducive to becoming a globalized process. Without a pure transactional digital platform that includes documents, organizational verification, and contract execution, the current ecosystem may be growth restrictive.
The present disclosure is directed to overcoming one or more of these above-referenced challenges.
Read more at https://patents.justia.com/patent/20200184548.
Last modified on 2020-06-13