Cut through the misinformation about aircraft operating leases and discover who they benefit the most. Gerrard Cowan asks the industry about the common myths, and gains key tips on exploring if a lease is right for you...
Operating leases are a viable option for many private jet operators, particularly when it comes to budgeting. However, industry experts point to a range of common myths that surround the concept, both positive and negative, which could have an undue impact on a lessee’s decision-making. Following, we'll explore a few...
There are many types of leases, often with differing interpretations. However, at its most basic level, an operating lease is typically a ‘dry’ lease, meaning the lessee gains control of the aircraft for a defined period of time.
Within such an arrangement, the lessee does not own the aircraft, which remains the property of the lessor and is handed back at the end of the lease. Unlike a ‘wet’ lease, the lessee is in control of the flight and must supply their own pilot and crew members.
David M. Hernandez, Business Aviation and Regulation Sub-Practice Chair at Vedder Price, says it’s vital at the most basic level to understand what a lease actually is – notably whether it is a dry or a wet lease.
“People who are in the airplane – the passengers – might not realize that they’ve actually entered a legally-binding lease agreement and have responsibility for the insurance, the maintenance, and the pilots,” he says. “In a wet lease scenario, the lessor who operates the aircraft will be responsible for that.”
According to Ford von Weise, Head of Aircraft Finance at Citi Private Bank, and former President of the National Aircraft Finance Association (NAFA), the fundamental underlying precept of an operating lease is the transfer of risks associated with the future residual value of the aircraft.
This article was originally published by AvBuyer on October 13, 2023.
