An airplane can be an expensive asset to own. For this reason, aircraft owners will often lease their planes out when they are not in use.
The owner of the plane can lease it under a “wet lease” or “dry lease” arrangement. Knowing the difference between these options could help you avoid financial damage and exposure to legal risks.
What are the differences between dry and wet aircraft leases?
In a wet lease, the lessor (the aircraft owner) is providing the aircraft and crew and maintains operational control of the flight. In a dry lease, the lessee (person or business the aircraft is leased to) provides their own crew and usually retains control of flights.
There are many financial, legal and time frame differences between wet and dry leases. If you enter into a lease agreement, make certain you know what you are signing.
Certifications and regulations
Wet leasing is an accepted practice within the industry. However, there are some companies that use wet leases to relinquish operational control, thereby reducing their legal responsibilities. A company may do so if it is not FAA-certified or it is attempting to cut costs.
One example could be a lease that appears to be dry, but is actually wet. Under this scenario, the leasing company provides the aircraft, crew, pilot and maintenance. Despite providing these, the lessee is forced to maintain operational control of the aircraft and assume the associated legal responsibilities.
If a dispute arises regarding the terms of a lease, the FAA may conduct an investigation. When determining operational control, the FAA might ask:
- Who makes decisions on assigning crew, flight requests, or initiating, conducting and terminating flights?
- Who do the pilots work for?
- Who is maintaining the aircraft? Where is it maintained?
- Who decides when maintenance is completed? Who pays for maintenance?
- Who determines fuel requirements? Who pays for the fuel?
- Who pays airport fees, hangar costs, food service or rental cars?
The entity or individual responsible for the any of the above has some form of operational control. This may require a revision or clarification to the lease in order to comply with FAA rules and to place the risk of liability with the rightful party.
It is important to know and understand the details of your aircraft lease. The rules and regulations regarding wet and dry leases are complex, and there are advantages and disadvantages for lessees and lessors regarding financial costs, safety and legal responsibility.