Learn more about the types of private jet leases, who they are for, key cost drivers, and more.
Aircraft Leasing Overview
Leasing an aircraft can be thought of as the transfer of control of an aircraft without the transfer of title or required upfront expense. As an alternative to buying, leasing offers advantages such as flexibility, reduced upfront costs, and access to diverse fleets.
- Leasing an aircraft gives the lessee use of the equipment without obtaining ownership or buying outright for a predetermined amount of time.
- Leasing an aircraft provides access to the aircraft without the large upfront capital it requires for ownership.
- Leasing an aircraft may restrict when or how you can use your aircraft when subject to the terms of the lease.
- Leasing an aircraft may be more expensive in the long run as opposed to an outright purchase depending on the length of the lease and intended usage of the aircraft.
- In some circumstances, leasing may not be more economical than chartering should the use of that aircraft not be enough to outweigh the cost.
Types of Aircraft Leases
Several Types of leases on aircraft including Dry Lease or Wet Lease/ACMI Lease (Aircraft, Crew, Maintenance and Insurance).
Dry Lease
Is an agreement where the aircraft owner (lessor) provides the aircraft to a lessee without a crew, maintenance or support services. The lessee maintains operational control of the aircraft and is responsible for the aircraft's airworthiness, maintenance, repairs, crew, management, and any flight associated costs.
Wet Lease or ACMI Lease
Is an agreement where the lessee rents the aircraft, crew, maintenance, and insurance from an operator and does not need to provide the services behind operating the aircraft. The lessor is responsible for all operational requirements of the aircraft including maintenance, regulations, crew, parking etc. As a result, this reduces the operational risk on the lessee. The lessee is responsible for fuel and specific flight associated costs.
Who is Aircraft Leasing For?
Dry Leasing
Dry Leasing is mainly for an operator who needs to expand their fleet to meet demand or have flexibility within their fleet. In this case, many different types of operators and/or corporations dry lease their aircraft. This kind of lease is typically long-term, often used by airlines, charters, and private jet owners.
- Part 135 Operator: This operator may dry lease their aircraft to meet demand or create flexibility for their fleet. The operator has the resources to operate the aircraft but does not want the burden or expense of outright purchasing the aircraft, therefore reducing their costs. These leases can come from the manufacturer, private owners, or from another operator.
- Part 121 Airline: Many airlines will opt to lease aircraft instead of purchasing. This helps keep the overall cost on their balance sheet lower, resulting in better margins on their RASM (Revenue Per Available Seat Mile).
- Part 121 or Part 135 Cargo Operator: Cargo operators dry lease aircraft due to the stringent aircraft requirements for transporting goods/commerce and specialty loading procedures.
- Part 91 Public Corporation: These are publicly traded companies who fly executives frequently on private aircraft for business travel. These are usually leased directly from manufacturers like Gulfstream, Bombardier, Dassault etc.
Wet Leasing/ACMI Leasing
Wet Leasing is more likely for an operator, end user, or company who does not have the capability and/or resources to operate the aircraft. Often these leases require use of the aircraft for a shorter term. This is considered the full package based on hours of operation and is most used by airlines.
- Part 135 Operator: This operator may utilize a wet lease to obtain an aircraft in-fleet that meets a specific requirement or supplements an aircraft down for maintenance. A leased aircraft can also give an operator the ability to operate their certificate in a foreign nation due to permits or cabotage reasonings.
- Part 135 End User or Corporation: This lessee usually requires the lease of an aircraft for a set period. These leases usually range from 30 days to 12 months. Typical usage for a Wet Lease is supplemental for when an owned aircraft is in maintenance, for athletic team travel, performing artists on tour, political campaigns and/or other client needs that require flexibility of the crew and overall aircraft availability.
- Part 121/135 Air Transport/Cargo: These lessees usually wet lease due to demand and tend to be seasonal or required to meet demand when they attain a large contract. Cargo operators will usually wet lease during the busy holiday season to keep up with demand for shipping packages, freight, and other commerce.
- Part 121/135 Government Transport: This lessee is usually a government body who may need to move military, space or specialty equipment and/or goods that they are not able to carry within their existing fleet.
Aircraft Lease Cost
The cost of leasing an aircraft depends on many different factors. The base of leasing any aircraft is the cost per hour to operate the aircraft in addition to costs associated with management, crew and fueling. Most leases are based on 30-60 hours per month.
- Dry Leasing the aircraft is more common and desirable as the operator is usually paying a fixed rate to lease the aircraft, and all other costs are consumed by the lessee internally.
- With Wet Leasing, the pricing will be fixed to a certain point. Depending on the contract of the wet lease, the aircraft's duties may then add additional cost. This can include the hours, locations, and type of operation the lessor will be performing.
- Wet Leases tend to have more terms included in their contract given the purpose of the lease is more defined based on the job required for the aircraft to perform.
Conclusion
Choosing between the types of aircraft leases depends on the lessee's operational requirements, crew availability, duration of the lease, and the level of responsibility desired by the lessee. The lessee, however, avoids the upfront cost of operating the aircraft themselves. Leases can provide flexibility for short periods and can quickly meet the requirements of the lessee, especially during peak holiday periods when chartered aircraft have limited availability.
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