Understanding aircraft dry leases: what you need to know before leasing a private jet

What is an aircraft dry lease?

How a Dry Lease Differs from Other Aircraft Leasing Options

When exploring private jet options, understanding the difference between a dry lease and other types of aircraft leasing is essential. In aviation, a dry lease refers to an arrangement where the lessor provides only the aircraft to the lessee, without any crew, maintenance, or insurance. This is in contrast to a wet lease or ACMI leasing, where the lessor supplies the aircraft, crew, maintenance, and insurance.

What Does a Dry Lease Include?

With a dry lease, the lessee takes on significant responsibilities. You receive the aircraft itself, but you must arrange for your own flight crew, cabin crew, maintenance, and insurance. This gives you more operational control, but also means you need to have the right resources and certifications, such as an air operator certificate, to legally operate the aircraft. Dry leases are common for business aircraft, private jet charters, and airlines looking to expand their fleet for the long term.

• Aircraft only: No crew, maintenance, or insurance included
• Operational control: The lessee manages all aspects of flight operations
• Long-term focus: Dry leasing is typically used for longer periods, often several years
• Regulatory requirements: The lessee must meet all aviation authority regulations

Who Uses Dry Leases?

Dry leases are popular among airlines, business aviation companies, and private individuals or corporations with the infrastructure to manage their own aircraft. Leasing companies often offer dry leases to clients who want to add flexibility to their fleet without the ongoing costs of crew and maintenance provided by the lessor.

If you are considering leasing a private jet, understanding the real cost of renting a private jet can help you make informed decisions about which lease structure best fits your needs and budget. Dry leasing can offer significant advantages, but it also comes with unique responsibilities and risks, which we will explore further in the following sections.

Key benefits of choosing a dry lease for private jets

Why Many Choose Dry Leasing for Private Jets

Dry leasing an aircraft has become a popular option in the private aviation sector, especially for businesses and individuals seeking flexibility and control. Unlike a wet lease, where the lessor provides the aircraft, crew, maintenance, and insurance (ACMI), a dry lease involves only the aircraft itself. The lessee is responsible for arranging the flight crew, cabin crew, maintenance, and operational control. This structure offers several distinct advantages for those considering private jet leasing.

• Operational Control: With a dry lease, the lessee gains full operational control over the aircraft. This means you can select your own crew, manage flight schedules, and oversee maintenance, giving you a tailored aviation experience.
• Cost Efficiency: Dry leasing can be more cost-effective for frequent flyers or businesses with access to their own crew and maintenance resources. You avoid the premium costs associated with wet leases and ACMI leasing, making it easier to budget for long-term use. For a deeper dive into budgeting and costs, check out this resource on understanding the costs of renting a private jet.
• Fleet Flexibility: Leasing companies and airlines often use dry leases to expand or modernize their fleet without the long-term commitment of ownership. This flexibility is valuable for adapting to market changes or seasonal demand.
• Regulatory Advantages: For operators with an air operator certificate, dry leases allow integration of leased aircraft into their existing operations, maintaining compliance with aviation authorities while retaining control over safety and service standards.
• Privacy and Customization: Business aircraft lessees can customize the jet’s interior, onboard services, and branding to suit their needs, which is often not possible with wet leases or jet charters.

Choosing a dry lease can be a strategic move for those who value autonomy and have the resources to manage the operational aspects of private jet use. However, it’s important to weigh these benefits against the risks and responsibilities discussed in the following sections.

Risks and challenges associated with dry leasing

Potential Pitfalls and Challenges in Dry Leasing

When considering a dry lease for a private jet, it’s important to understand the unique risks and operational challenges that come with this arrangement. Unlike a wet lease, where the lessor provides the aircraft, crew, maintenance, and insurance (ACMI), a dry lease only covers the aircraft itself. This means the lessee is responsible for sourcing flight crew, cabin crew, maintenance, and insurance, which can introduce several complexities.

• Operational Control and Responsibility: The lessee assumes full operational control of the aircraft. This includes ensuring compliance with aviation regulations, securing an air operator certificate if required, and managing the day-to-day operations. For those new to aircraft leasing, this can be a significant undertaking.
• Maintenance and Insurance: All aspects of maintenance and insurance fall to the lessee. This requires a deep understanding of the aircraft’s technical needs and the ability to coordinate with qualified maintenance providers. Failing to maintain the aircraft to regulatory standards can lead to costly downtime or even legal issues.
• Regulatory Compliance: Dry leasing often involves cross-border transactions. Different countries have varying rules regarding aircraft registration, operational control, and leasing structures. Navigating these regulations is crucial to avoid penalties or grounding of the aircraft.
• Financial Risks: While dry leases can offer cost savings over wet leases, unexpected expenses can arise. Maintenance, crew salaries, and insurance premiums can fluctuate, impacting your budget. It’s essential to forecast these costs accurately over the lease term.
• Fleet Integration: Integrating a leased aircraft into an existing fleet or business aircraft operation can present logistical challenges, especially if the aircraft type or configuration differs from what your crew and maintenance teams are used to.

For private jet lessees, understanding these risks is vital before committing to a long term lease. If you’re considering expanding your fleet or exploring options for business aviation, it’s wise to consult with experienced leasing companies and legal advisors. For a deeper dive into the complexities of acquiring specific aircraft models, such as the Eclipse Jet, check out this guide to buying an Eclipse Jet. Dry leasing can be a powerful tool for airlines, jet charters, and private operators, but only when you fully understand the operational and regulatory landscape.

Legal and regulatory considerations

Understanding compliance and operational control

When considering a dry lease for a private jet, legal and regulatory aspects are crucial. Unlike wet leases, where the lessor provides both the aircraft and crew, a dry lease transfers operational control to the lessee. This means the lessee is responsible for sourcing flight crew, cabin crew, and ensuring the aircraft meets all aviation regulations. The lessee must also hold the appropriate air operator certificate or partner with a certified operator, as required by local authorities.

Key regulatory requirements

Aviation authorities, such as the FAA in the United States or EASA in Europe, set strict rules for dry leasing. These include:

• Ensuring the lessee has valid operational control over the aircraft
• Meeting maintenance and airworthiness standards for the entire lease term
• Securing proper insurance coverage, including maintenance insurance and liability protection
• Complying with international air traffic and customs regulations if the aircraft will operate across borders

Documentation and responsibilities

Both the lessor and lessee must clearly outline responsibilities in the lease agreement. This covers who handles maintenance, how operational control is managed, and what happens if regulatory issues arise. Leasing companies often require detailed documentation to prove compliance with aviation laws, especially for business aircraft or when the lease involves long term arrangements.

Risks of non-compliance

Failure to adhere to legal and regulatory requirements can result in serious consequences, such as grounding of the aircraft, fines, or even loss of operator certificates. It is essential for anyone considering a dry lease to consult with aviation legal experts and ensure all aspects of the lease, from crew sourcing to maintenance, are fully compliant with applicable laws. This is especially important for private jet operators and airlines expanding their fleet through dry leasing or ACMI leasing arrangements.

Financial implications and budgeting for a dry lease

Budgeting for a Dry Lease: What to Expect

When considering a dry lease for a private jet, understanding the financial landscape is crucial. Unlike a wet lease or ACMI leasing, where the lessor provides the aircraft, crew, maintenance, and insurance, a dry lease means you, as the lessee, take on more financial responsibility and operational control. This structure can offer flexibility but also requires careful planning.

• Lease Payments: Dry leases are typically structured with fixed monthly payments. These payments depend on the aircraft type, age, and term of the lease. Longer-term leases may offer better rates, but always review the terms for flexibility and exit clauses.
• Maintenance and Insurance: As the lessee, you are responsible for all maintenance and insurance costs. This includes scheduled and unscheduled maintenance, which can be significant for business aircraft. Maintenance insurance is often required by the lessor to protect the asset.
• Crew and Operational Costs: Unlike wet leases, you must hire your own flight crew and cabin crew or contract with an air operator. Crew salaries, training, and ongoing certification are direct costs to your operation. Operational expenses such as fuel, landing fees, and hangarage also fall under your responsibility.
• Regulatory Compliance: You must ensure the aircraft operates under a valid air operator certificate if it is used for commercial purposes. Compliance with aviation regulations can have cost implications, especially if modifications or additional equipment are needed to meet standards.
• Fleet Management: For those managing multiple aircraft or integrating a leased jet into an existing fleet, consider the impact on overall operational costs and efficiency. Leasing companies may offer support, but the primary responsibility remains with the lessee.

Hidden Costs and Financial Planning

Budgeting for a dry lease goes beyond the monthly payment. It is important to account for:

• Unexpected maintenance events
• Insurance premium fluctuations
• Currency exchange risks for international leases
• Potential downtime if the aircraft requires major repairs

Careful financial planning and a clear understanding of your operational needs will help you avoid surprises. Consulting with aviation finance experts or leasing companies can provide valuable insights into the true cost of dry leasing a private jet. This approach ensures your lease aircraft supports your business goals without straining your budget.

What to check before signing a dry lease agreement

Essential Checks Before Finalizing Your Dry Lease

When considering a dry lease for a private jet, it’s crucial to perform thorough due diligence before signing any agreement. The process is more complex than simply choosing an aircraft and agreeing on a price. Here are the main points to review to protect your interests and ensure a smooth leasing experience:

• Aircraft Condition and Maintenance Records: Inspect the aircraft’s maintenance logs and ensure all scheduled maintenance is up to date. Confirm the aircraft’s airworthiness and check for any outstanding technical issues. Maintenance and insurance responsibilities typically fall on the lessee in a dry lease, so clarity here is vital.
• Operational Control and Crew Arrangements: In a dry lease, the lessee assumes operational control, including sourcing qualified flight crew and cabin crew. Make sure you understand your obligations regarding crew hiring, training, and compliance with aviation regulations. If you lack an air operator certificate, you may need to partner with an approved operator.
• Lease Terms and Flexibility: Review the lease term and any clauses related to early termination, renewal, or extension. Understand your rights and obligations if you need to return the aircraft early or if your operational needs change.
• Insurance and Liability: Confirm the insurance requirements for the aircraft, including hull and liability coverage. The lessee is usually responsible for arranging and maintaining insurance throughout the lease period. Ensure the policy meets both your needs and the lessor’s requirements.
• Regulatory Compliance: Verify that the lease structure complies with local and international aviation regulations. This includes registration, operational approvals, and adherence to airworthiness directives. Non-compliance can result in fines or grounding of the aircraft.
• Financial Transparency: Request a clear breakdown of all costs, including lease payments, maintenance reserves, and any additional fees. Understand the payment schedule and any penalties for late payments or breaches of contract.
• Support from Leasing Companies: Choose reputable leasing companies with experience in business aircraft and private jet leasing. Their expertise can help you navigate complex lease structures, such as ACMI dry or long-term leases, and provide guidance on best practices.

Taking these steps helps ensure your dry leasing experience is both secure and efficient, whether you are expanding your fleet, seeking operational flexibility, or entering the world of private jet charters.