When it comes to aircraft leasing, there are several categories to be aware of, each with unique definitions and associated regulations. Whether you are leasing in or leasing out an aircraft, it’s essential to understand the distinctions between dry, wet, and damp lease agreements and the approval processes required by the UK’s Civil Aviation Authority (CAA) and the Department for Transport (DfT).
Types of leases and their definitions:
- Dry lease: A contract between entities that permits the operation of an aircraft under the lessee’s aircraft operating certificate.
- Wet lease: A contract between airlines that permits the aircraft to be operated under the lessor’s AOC.
- Damp lease: A partially crewed wet lease.
The intricacies of each lease type require approvals, permissions, and licences before the aircraft can legally operate under the lease agreement.
Additional leasing definitions:
- Lease: A lease is a “… contractual arrangement that allows an air operator with the appropriate licensing to obtain commercial control of an entire aircraft without transferring ownership.” (ICAO Document 8335).
- Lessor: “The party from which the aircraft is leased” is the lessor. (ICAO Document 8335).
- Lessee: “The party to which the aircraft is leased” is the lessee. (ICAO Document 8335).
- An Undertaking: “… any natural or legal person, whether or not they are in the business for profit, or any official entity, whether or not it has its own legal personality… (EC Reg 1008/2008, Article 2(3); Annex I, Paragraph 119, EU Reg 965/2012).
- An Air Carrier: “… an enterprise holding a current operating licence or its equivalent… Reference: EC Reg 1008/2008, Article 2(10).
- A Community Air Carrier: “An air carrier that possesses a current operating licence issued by an appropriate licensing body in compliance with Chapter II.” The EC Regulation 1008/2008’s Article 2(11).
- State of Registry: “The state in which the aircraft is registered.” (ICAO Document 8335).
- State of Operator: The state of the operator’s major place of business, or the operator’s permanent residence in the absence of such a place of business, is specified (ICAO Doc 8335).
- Principle place of business: “… the principal financial functions and operational control, including continued airworthiness management, of a community air carrier are exercised within the head office or registered office of the Community air carrier in the Member State.” (EC Reg 1008/2008, Article 2(26)).
Why lease approvals matter
For UK operators, getting the necessary approvals from the CAA and DfT can be complex, and the timeline for securing these can vary, especially for dry leases involving multiple agencies. With proper planning, lease arrangements can proceed smoothly, but it is critical to involve regulatory authorities as soon as possible.
Should you need further guidance please feel free to contact Frei Solicitors.
Book your 30 minute complimentary consultation with Hakan Doğancı.