Regulatory Considerations for Aircraft Leasing

When leasing an aircraft in or out of the UK, understanding the regulations is of utmost importance. Both domestic and international leases are subject to specific rules, approvals, and documentation requirements. Compliance with the Civil Aviation Authority (CAA) and other regulatory bodies is essential whether you’re leasing domestically or across borders.

International leasing regulations

International leasing occurs when an aircraft registered in another EU member state, or a ‘G’ Reg aircraft is leased to a non-UK AOC (including another EU State).

Since the aircraft is being leased across national borders under these arrangements, regulatory safety supervision duties from the State of Registry and the State of Operator must be taken into account.

The State of the Registry and the State of the Operator may differ depending on the kind of lease in question. For example, the UK CAA would take on the role of State of Operator. At the same time, the other authority would continue as the State of Registry if an aircraft registered outside of the UK is to be operated under a UK AOC (dry lease-in).

Domestic leasing regulations

Domestic leasing is limited to aircraft registered in the United Kingdom. It can be arranged between two UK AOC holders or from a private firm (such as a bank or leasing company) to a UK AOC holder. Although prior approval for leases is still necessary, it may be granted under the CAA’s General Approval of Leasing Agreements (included in the CAA’s Official Record Series 4) if the lease meets the requirements of the General Approval.

 

Please note that when leasing an aircraft, all parties must sign a statement confirming that they are aware of their respective obligations under the terms of the lease. This statement must be accompanied by the information found in AMC1 ORO.AOC.110 (GENERAL).

Dry leasing

EU legislation defines dry leasing as an “Agreement between undertakings under which the aircraft is operated under the AOC of the Lessee.”

In the United Kingdom, a transfer typically takes no more than seven months. However, this time may be extended for an additional five months, bringing the overall duration of the dry leasing agreement to a maximum of 12 months.

Note: At least five months must pass after the initial 12-month dry lease period before submitting a new dry lease application for the aircraft.

 Note: Applications for Dry leasing are subject to a fee.

Wet and damp leasing

Wet leasing is described as an arrangement between air carriers that permits the aircraft to be operated under the Lessor’s AOC under EU laws.

Damp leasing is characterised as a wet leased aircraft without cabin attendants but with a cockpit crew.

Note: Depending on how much assessment is needed, there can be a fee for wet/damp lease applications.

Scheme for Flight Time Limitation (FTL)

The EU-OPS Subpart Q is not a comprehensive framework for fast tracking because it leaves out some sectors that are still subject to national regulations and still need to be put through a scientific examination. Consequently, the CAA has informed the Commission that it will continue to use CAP 371 as the foundation for all UK AOC FTL schemes until Community regulations based on best practices and scientific knowledge are adopted, in compliance with EU-OPS recitals and as mandated by Article 8(4). Wet lease agreements must adhere to the FTL scheme regulations set forth by the approved FTL scheme of the UK operator.

Identifying the Operating Air Carrier

For UK operators, the obligations outlined in Article 11 of Commission Regulation (EC) No. 2111/2005, which mandates that the air carriage contractor disclose to passengers the identity of the operating air carrier or carriers, are recalled. Refer to Article 11 for more details.

Wet leasing in from a Community Member State [EEA and Switzerland]

The CAA has developed a new UK policy and procedure to facilitate the wet leasing-in of aircraft registered and operated from inside the Community, in response to recent changes to European Regulations (EASA Air Operations Regulation) and the evolving business models of UK operators.

With the implementation of Performance Based Oversight (PBO) and other changes to the CAA’s strategic approach, the new policy gives holders of UK AOCs more options for wet leasing-in aircraft from inside the Community.

The four main eventualities that UK AOC holders anticipated are covered by the new process: long-term WLI and short-term WLI, both of which can be planned or unexpected. The fundamental principle of the process is the understanding that, while utilising WLI services, the UK AOC holder is still responsible for the safety of its operations, and that, to ensure the safety of these operations, it must supervise WLI aircraft as part of its own Safety Management System (SMS).

Should you need further guidance please feel free to contact Frei Solicitors.

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