In addition, under the Civil Aviation Act, passengers must be informed that the aircraft is being leased with crew. In this context, a local aircraft operator that leases its aircraft either to another local aircraft operator or to an international operator must provide its passengers with information about the factual operator (i.e. the lessor) as soon as possible or at least before boarding. Jet leases accounted for less than 2% of the fleet in 1976, followed by 15% in the early 1990s, 25% in 2000 and 40% in 2017, with lessors involved in 62% of mid-life used aircraft transactions since 2000: 42% in Europe and 29% in North America. [1] In 2015, more than $120 billion in commercial aircraft were delivered worldwide, and half of the world`s donors were based in Ireland. [2] Airlines that cannot afford to do well on direct factory aircraft, or airlines that prefer to remain flexible, can lease their aircraft with an operating lease or finance lease. In practice, short-term wet-leases often enter into force without the permission of the Directorate-General for Civil Aviation. However, even in such cases, a form must be completed and submitted to inform the Directorate-General of the agreement. While short-term wet leasing offers convenience for both the tenant and lessor, it is limited to operations that are a maximum of 72 flight hours per month. If a short-term wet lease covers operations of more than 72 hours per month, it is considered a general wet lease agreement and must comply with the terms of those agreements (including obtaining authorization from senior management).

Aircraft leases are leases used by airlines and other aircraft operators. Airlines lease aircraft to other airlines or leasing companies for two main reasons: to operate aircraft without the financial burden of the purchase and to allow a temporary increase in capacity. The industry has two main types of rentals: wet rental, which is typically used for short-term rentals, and dry rentals, which are more normal for longer-term rentals. The industry also uses wet and dry combinations. For example, if the aircraft is leased to set up new services, the airline`s flight or cabin crews, if trained, can switch to dry rental. There is another clear reason for leasing – finances. Buying an airplane can be difficult for many reasons, from practicality to financial strength. Leasing is an attractive option that allows operators to do without the financial stress of a real purchase. This is not surprising at all – but it can also cause a problem when a lease is arranged to circumvent FAA regulations and rules. For laymen, leasing simply means transferring an aircraft without transferring its title. The landlord (also known as the owner) retains legal title – but the property passes to the tenant.

Why would an operator want to lease aircraft? The first reason for the rental is to ensure the possibility of temporarily increasing the capacity. Commercial airlines do this even more frequently, but charter aircraft operators may also need additional capacity. The global wet-lease market is expected to grow from $7.35 billion in 2019 to $10.9 billion in 2029, representing a CAGR of 4.1%. Editor`s Note: For the latest developments on this topic, see (February 2020) A dry leaseholder is authorized to work under Part 91 of 14 CFR and does not have to meet many of the most restrictive and costly requirements of Parts 121 or 135. And federal excise tax is not due on the amounts the tenant pays to the landlord, although sales tax is often set at the rental rate. For private operators, these are significant advantages. However, they must also be weighed against the responsibilities and potential liability that come with operational control of a 14 CFR Part 91 dry lease transaction. A dry lease (not a term defined by the Federal Aviation Regulations (FAR)) is slightly different: the landlord always provides an aircraft to the tenant – but without a crew. Ownership of the aircraft is not subject to a wet lease, making it an exception to a typical lease. Under a wet lease, the lessor has operational control. And unless there is an exception, a crewed lease signals the need for an FAA Commercial Operations Certificate.

A wet lease is a normal part of Part 135 operation, while part 91 shared aircraft generally involve dry leases. A wet lease is a lease agreement in which the lessor (i.e., an airline or aircraft operator) provides an aircraft to a lessee (i.e., another airline or aircraft operator) as well as its crew (full crew or cockpit crew only), maintenance and insurance (fuselage and civil liability). The tenant pays the landlord in proportion to the hours worked. The four main elements involved in a wet lease are therefore the aircraft, crew, maintenance and insurance. In the charter industry, the FAA regulates two main types of aircraft leasing: a dry lease or a wet lease. While these distinctions may seem simple, the meaning of «who has operational control,» as defined in 14 CFR 1.1, leaves room for interpretation. As the FAA explains, «Determining in any situation whether the landlord or tenant exercises operational control requires consideration of all relevant factors present in each situation. The terms of the lease itself are important, but as they may not reflect the true situation of 2/10/16 AC 91-37B 4, actual agreements and responsibilities need to be looked at very carefully. In 2002, there were fewer than 100 aircraft leasing companies in the world, and the two largest controlled more than 40% of the market share. Only 17 years later, there are more than 150 suppliers, with the top two holding only 20% of the market share.

Today`s aircraft tenants have more options than ever when choosing an aircraft leasing partner, but not all offer the same level of expertise and value. When choosing an aircraft leasing provider, look for solid legal expertise, financial stability, a history of successful transactions, and an integrated approach to ensure your leased aircraft is operating at optimal performance. Wet leases are governed by the Civil Aviation Act and related legislation and are ideal and practical for start-up airlines, exploring new routes or seasonal fluctuations and sudden spikes in demand. In addition, wet leases are also likely to meet interim needs arising from long-term fleet expansion plans, while maximizing market share in the short term. In 2007, Beijing allowed Chinese banks to start leasing units, and nine Chinese lenders were among the top 50 in 2017, led by ICBC leasing in the top ten, with the value of their fleet under management increasing by 15 percent since 2016. [5] In some cases, Chinese owners forgot that they had to enter into secondary leases and missed the time of redelivery by leaving the planes stranded for a few months. [6] When reviewing a lease agreement, the FAA will look beyond actual written agreements to determine the relationship between the parties. While a lease can be written as a dry lease, and the agreement says «dry lease,» for example, that doesn`t mean the FAA can`t take the position that the agreement is actually conducted as a disguised crewed lease. If the FAA takes this position, if the landlord who actually operates the aircraft for the lessee does not have an aviation certificate, it could be a problem for the landlord and perhaps also for the tenant. Under the Civil Aviation Act, general wet leases require branch approval, which are valid for up to six months before they can operate manned aircraft. .