Dry lease of a business aircraft provides plenty of flexibility but needs to be properly thought through. Gerrard Cowan seeks industry insights into some of the often-overlooked challenges of the arrangement.
Dry leases are a popular choice for business aircraft operators, enabling access to all the benefits of an aircraft without having to acquire the platform. However, they come with unique demands, including a need to source the crew.
In a dry lease, the operator avoids having an aircraft on their balance sheet, along with the capital expenditure involved. However, they must source the crew, fuel, etc., themselves. In the US, dry leases are covered by Part 91 regulations, whereas a ‘wet’ lease arrangement, with the lessor also providing the crew etc., must be a charter arrangement operated under Part 135.
Typically, a dry lease is arranged between owners and their respective companies or close associates, explains Kevin McCutcheon, Founder, President & CEO of Flight Solutions.
“Furthermore, operational control considerations must be carefully reviewed to remain within the FAA and IRS regulations and to ensure proper insurance coverage is in place.”
Dry leasing an aircraft – especially a jet – can pose several unique challenges, according to McCutcheon. For example, securing a qualified flight crew is naturally a priority, and properly screening the right individuals can be challenging.
One option is to use the flight crew that currently flies the aircraft for the owner under a ‘side arrangement’. But this presents potential difficulties, setting the owner up for scrutiny from the authorities because “the lessee under a dry lease must have command and control over their own flights and specifically the flight crew,” McCutcheon notes.
Dry leases are usually low utilization arrangements, he adds, so it can be hard to justify a full-time flight crew. A dry lessee typically hires contractors at a daily rate to operate the aircraft.
“The arrangement must clearly show that the lessee and not the lessor is expressing operational control of its flights,” he adds. “The owner of the aircraft must remain removed from helping to schedule or provide flight crew.
This requires the lessee to have operational knowledge and understanding of the regulations to properly express their ‘operational control’ during dry lease flights.”
One area that is often overlooked is the need for dry lease operators to obtain approvals under ICAO and other licensing and navigation permits when flying internationally. Other areas include aircraft insurance requirements, including the need to ensure that underwriters are involved in all discussions.
“Dry lessees must understand that the operators are responsible, not the aircraft owner. This process can be time consuming and daunting for the uneducated,” says McCutcheon.
Aircraft Dry Lease: Liability Considerations
Dry leases can either cover exclusive use or be non- exclusive, says Keeley Burgess, an attorney at Aviation Legal Group. Each brings its own advantages and disadvantages depending on your position.
“From an owner’s perspective, multiple non-exclusive dry lease agreements can be advantageous because the leases will allow for multiple entities to enjoy operation of the aircraft,” she notes.
“From a lessee’s perspective, an exclusive use dry lease may be preferable because the lessee does not have to coordinate scheduling their use and maintenance of the aircraft with other parties.”
This article was originally published by AvBuyer on March 20, 2025.