What Is A Dry Lease Agreement

In 2007, Beijing allowed Chinese banks to launch leasing units and nine Chinese lenders were among the top 50 in 2017, led by ICBC Leasing in the top 10, with the value of their managed fleet increasing by 15% since 2016. [5] In some cases, Chinese owners forgot that they had to receive a secondary lease and missed the time of re-delivery when they failed planes for a few months. [6] A dry leasing (which is not defined by the Federal Aviation Regulations (FARs) is somewhat different: the owner always provides an aircraft to the tenant, but without a crew. No possession of the aircraft is carried out under the conditions of a wet lease, making it an exception to a typical lease. As part of a wet lease, the owner has control of the operation. And if there are no exceptions, a wet leasing indicates the need for an FAA commercial operating certificate. Water leasing is a normal part of Part 135 compliant operation, while leasing aircraft that are shared under Part 91 generally include dry leases. Although there is no limit to the number of parts to which an aircraft can be leased, reflections are under way. A dry lease is a lease agreement in which an aeronautical finance company (lease), such as GECAS, AerCap or Air Lease Corporation, provides an unmanned aircraft, ground personnel, etc. Dry leasing is generally used by leasing companies and banks, with the taker required to put the aircraft on their own Air Transport Operator (AOC) certificate and allow aircraft to be registered. A typical dry contract lasts up to two years and has certain conditions of depreciation, maintenance, insurance, etc., depending on the geographical location, political circumstances, etc.

Aircraft leasing saves operators the financial burden of buying expensive assets. However, as the aviation leasing market is still maturing and diversifying, airlines are striving to immediately reduce CapEx. Under a leasing model, airlines can rapidly increase or reduce their fleets without expensive assets on the ground. Compared to buying an airplane, leasing speeds up the process of taking off your plane and making a profit. The choice of aircraft rental also gives airlines the flexibility of short-term commitments, a structure that opens the door to new cost savings in the form of “correct” routes where aircraft capacity corresponds to passenger demand. In 2002, there were fewer than 100 aircraft leasing companies worldwide, and the two largest controlled more than 40% of the market share. Only 17 years later, there are more than 150 suppliers, the first two holding only 20% of the market share. Today`s aircraft leasing partners have more opportunities than ever in choosing an aircraft rental partner – but they don`t all offer the same level of know-how and value. When selecting an aircraft leasing provider, ensure strong legal know-how, financial stability, a balance sheet for successful transactions and an integrated approach to ensure that your leasing aircraft operates at a high level.

In the charter industry, the FAA regulates two main types of aircraft leasing: a “dry lease” or a “wet water lease.” There is no doubt that buying, owning and operating an aircraft is an expensive undertaking. That`s why we find our customers looking for more profitable private aircraft arrangements. Most of the time, an aircraft charter or leasing contract is a customer`s objectives rather than outright possession of an aircraft.