Aircraft Leasing

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Aircraft Leasing

A Brief Introduction About the Aircraft Leasing

Aircraft leasing involves a lot of work to be done in getting the lease of the aircraft and its subsidiary works. Subsidiary works include Pilots, Cabin crew, Insurance, Maintenance, and Engineering Staff. All this includes a lot of manpower, skill, and expenses. This entire mechanism of getting the Aircraft Lease Agreement involves various discussions and parameters to be cordially acceptable to both sides of the party. Various types of Aircraft Lease Agreement are available, some of the most prominent ones being Dry Lease, Wet Lease, and Damp Lease Agreement. Insurance and Flight operation license always plays a pivotal role in facilitating the agreement.

Who Takes the Aircraft Leasing – People Involved?

The Aircraft lease agreement involves the Owner of the aircraft leasing companies and the Buyer of the Aircraft. The Lease period should be mentioned in the agreement. The people involved in the agreement should agree with all the terms mentioned and also execute the points mentioned in a sincere manner.

The Buyer should check the condition of the aircraft before procuring it and make an analysis of the resources available and required at the time of signing the Aircraft Lease Agreement. The aircraft lease agreement is valid for the mentioned duration, and its laws must be adhered to stringently, failing which, the organization could face huge financial losses. Aircraft leasing companies should be very careful and cautious while signing the agreement as it involves a lot of factors that have to be dealt with.

Purpose of the Aircraft Leasing – Why Do You Need It

The main purpose of the Aircraft Lease Agreement is to reach an understanding of the requirements of the Aircraft, such as the Crew, Maintenance, Pilots, Insurance, etc. All these factors need a lot of understanding and analysis. Resources available or unavailable should be listed out and checked in the agreement. The shortage of factors should be discussed and dealt with in an amicable manner. This is mainly used for commercial aircraft leasing. The type and size of aircraft, such as small aircraft leasing or large aircraft leasing, must be mentioned in this Agreement.

Contents of the Aircraft Leasing – Inclusions

The main types of Aircraft lease Agreement are:

  • Dry Lease
  • Wet Lease
  • Damp Lease

Dry lease: Dry lease involves the leasing of the aircraft without any cabin crew, maintenance, and pilots. The aircraft expenses will not appear in the balance sheet. The dry Lease agreement is of two types:

Operating Lease: Operating lease is normally a momentary rent when contrasted with the financial existence of the aircraft. Under the working lease, the hardware is typically obtained for a time of 2 – 7 years. The airplane, under the working lease, doesn’t shape a piece of the renter’s accounting report.

Finance rent: Finance rent can likewise be known as capital rent and depends on one of the accompanying conditions being met. At the development of the rent, the renter has the choice of buying the equipment. The all-out rent installments are over 90% of the absolute market estimation of the gear. The rent time frame covers in any event 75% of the usable existence of the hardware. Under fund rent, the airplane is treated as a benefit and thus shows up to be a determined sheet of the resident.

Wet Lease: A wet lease is an understanding under which the lessor consents to give at least one cabin team to the renter. Other than that, under this understanding, the lessor will likewise be capable of covering for significant upkeep of the aircraft and protection that may be important for the equipment to work.

Damp Lease: Under Damp lease, the lessor gives the gear to the tenant, however, without the lodge group. The remainder of the understanding continues as before on the loose. Under this lease, the resident should give the cabin crew, which must be appropriately prepared too. Be that as it may, the lessor for this situation will give an overseeing cabin crew. Damp lease in certain nations is otherwise called Wet Lease, Without Fuel.

[ Also Read: Aircraft General Terms Agreement ]

How to Draft the Aircraft Leasing

Points to Consider While Preparing the Agreement

  • Duration: The duration of the lease and payment dates should be discussed in the agreement and duly signed by both parties as per the agreement terms and conditions.
  • Adjustments, Modifications, and Additions: Adjustments, Modifications, and Additions are undertaken by the Renter, at his/her very own cost, will make adjustments and changes in and increases to the Aircraft as might be required to be produced using from time to time during the term of this Agreement under any relevant law in any case upon whom such necessities are, by their terms, ostensibly forced.
  • Maintenance: Tenant, at his own expense and cost, will support, fix, keep up and update, test or cause the equivalent to being done to the Aircraft during the term of this Agreement
    • (I) to keep the Aircraft in great working condition and appearance,
    • (ii) to keep the Aircraft in such working conditions as might be important to empower the airworthiness accreditation of the Aircraft to be kept up on favourable terms by any means times under all pertinent legislative guidelines and guidelines. Renter will look after all Aircraft Operating Lease Agreement records, logs, and different materials required.
  • Payments: The date of payment should be followed by both the parties involved in it. The date of rental payment, due date, gross date, and notice date should be mentioned in the agreement and adhered diligently.

Negotiation Strategy

Both the parties involved in the Aircraft lease agreement should convey their discrepancies and issues to each other through a communication channel and provide 10-15 days’ time for the other person to respond to it. The deal should be negotiated within the framework and stipulated guidelines of this Agreement.

Benefits & Drawbacks of the Aircraft Leasing

The Agreement has its own benefits and drawbacks. Various factors such as Pilots, Cabin crew, Maintenance Staff personal numbers and payment procedures, insurance are discussed and illustrated in detail in this Agreement. A lot of doubts and confusion occur in the payment, monetary aspects, and work allotment schedule, and resource management. All these are dealt with in a detailed manner in this Agreement.

In case of a sudden increase in passenger numbers, the Aircraft Lease Agreement helps expand operations and regulate the flow of passengers. During some seasons of the year, passenger flow and demand becomes high, during which time the Aircraft leasing agreement comes into the picture. Aircraft leasing rates should be mentioned. Financial resources can be saved by leasing aircraft.

The major drawback is that in case of an unexpected incident or accident, the situation cannot be dealt with in exactly the manner mentioned in the Aircraft Leasing.

What Happens in Case of Violation

A legal aspect must be verified and consulted for violation queries. In case of a deadlock or issues that cannot be resolved, legal experts must be consulted to resolve the matter.

As per the above discussion, all the tangible feasibilities should be explored and dealt with in a pragmatic manner, while working on the Aircraft lease agreement. This agreement serves as a guide for the persons who are in immediate need of renting or leasing the aircraft.