What are the most common aircraft leasing structures?

1 Dry Lease

A dry lease is a type of aircraft lease where the lessor provides only the aircraft itself, without any crew, maintenance, insurance, or operational support. The lessee is responsible for all these aspects and has full operational control over the aircraft. A dry lease is usually long-term, ranging from several months to several years, and is often used by airlines, charter operators, or private owners who need additional capacity or want to avoid the risks and costs of ownership.

2 Wet Lease

A wet lease is a type of aircraft lease where the lessor provides not only the aircraft, but also the crew, maintenance, insurance, and operational support. The lessee pays a fixed or variable rate per hour or per block hour, and has no operational control over the aircraft. A wet lease is usually short-term, ranging from a few days to a few months, and is often used by airlines, charter operators, or private owners who need temporary or seasonal capacity, or who want to test a new market or route.

3 Sale and Leaseback

A sale and leaseback is a type of aircraft lease where the owner sells the aircraft to a lessor and then leases it back for a fixed period and rate. The owner can free up capital, reduce debt, and enjoy tax benefits, while the lessor can earn a steady income and depreciation allowances. A sale and leaseback is usually long-term, ranging from several years to the end of the aircraft's useful life, and is often used by airlines, charter operators, or private owners who want to improve their balance sheet or liquidity.

4 Operating Lease

An operating lease is a type of aircraft lease where the lessor retains the ownership and residual value risk of the aircraft, while the lessee pays a monthly or quarterly rental fee and has the option to return, renew, or purchase the aircraft at the end of the lease term. An operating lease is usually medium-term, ranging from a few years to less than 75% of the aircraft's useful life, and is often used by airlines, charter operators, or private owners who want to avoid the risks and costs of ownership and have flexibility in their fleet management.

5 Finance Lease

A finance lease is a type of aircraft lease where the lessor transfers the ownership and residual value risk of the aircraft to the lessee, who pays a monthly or quarterly rental fee and has the obligation to purchase the aircraft at the end of the lease term. A finance lease is usually long-term, ranging from more than 75% to 100% of the aircraft's useful life, and is often used by airlines, charter operators, or private owners who want to own the aircraft and enjoy tax benefits.

6 Synthetic Lease

A synthetic lease is a type of aircraft lease where the lessor is a special purpose entity (SPE) that borrows funds from a lender and leases the aircraft to the lessee, who has the option to purchase the aircraft at the end of the lease term. A synthetic lease is usually long-term, ranging from several years to the end of the aircraft's useful life, and is often used by airlines, charter operators, or private owners who want to off-balance-sheet financing and tax benefits.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?