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Last updated on 2024年6月4日

What are the common clauses in aircraft lease agreements that impact your airline's operations?

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If you are an airline operator, you may need to lease aircraft from lessors to expand your fleet, replace older models, or meet seasonal demand. However, aircraft lease agreements are complex and often contain clauses that can affect your operations, costs, and liabilities. In this article, we will discuss some of the common clauses in aircraft lease agreements that impact your airline's operations and how to negotiate them effectively.

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1 Lease term and termination

The lease term is the duration of the lease agreement, usually measured in months or years. The lease term determines how long you can use the aircraft and how much you have to pay in rent and maintenance fees. The lease termination clause specifies the conditions under which the lessor or the lessee can end the lease before the term expires, such as default, breach, damage, or loss of the aircraft. The lease termination clause also defines the obligations of both parties in case of termination, such as return of the aircraft, payment of penalties, or compensation for damages.

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Aliakbar Khalatbari

CAMO Aerospace Engineer. Licensed aircraft maintenance engineer. Airworthiness engineer
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Right to (Dry/Damp or Wet) Lease, On the Delivery Date, Lessor shall have the right to lease the Aircraft to Lessee under the Agreement.

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2 Maintenance and modification

The maintenance clause outlines the responsibilities of the lessee to maintain the aircraft in accordance with the lessor's standards and the manufacturer's recommendations. The maintenance clause may also specify the frequency and scope of inspections, audits, and records that the lessee has to provide to the lessor. The modification clause regulates the changes that the lessee can make to the aircraft, such as adding or removing equipment, painting, or reconfiguring the interior. The modification clause may require the lessee to obtain the lessor's approval, restore the aircraft to its original condition, or share the benefits of the modification with the lessor.

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Aliakbar Khalatbari

CAMO Aerospace Engineer. Licensed aircraft maintenance engineer. Airworthiness engineer
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Lessee shall comply with all mandatory inspection and modification requirements, ADs and similar requirements applicable to the Aircraft, any Engine or Part having a compliance date on or before the Expiry Date and that are required by the Aviation Authority, EASA or the FAA.

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3 Insurance and indemnity

The insurance clause requires the lessee to obtain adequate insurance coverage for the aircraft, the crew, the passengers, and the third parties. The insurance clause may also stipulate the minimum limits, deductibles, exclusions, and endorsements of the insurance policy, as well as the rights and obligations of the lessor as an additional insured or a loss payee. The indemnity clause protects the lessor from any claims, losses, or liabilities arising from the lessee's use or operation of the aircraft. The indemnity clause may also limit the lessor's liability for any defects, faults, or damages of the aircraft.

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4 Taxes and fees

The taxes and fees clause determines who is responsible for paying the taxes and fees associated with the lease, the aircraft, or the operation. The taxes and fees may include sales tax, value-added tax, withholding tax, customs duty, registration fee, navigation fee, airport fee, or environmental fee. The taxes and fees clause may also specify how the taxes and fees are calculated, collected, and remitted, as well as the consequences of non-payment or late payment.

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5 Redelivery and remarketing

The redelivery clause defines the conditions and procedures for returning the aircraft to the lessor at the end of the lease term or upon termination. The redelivery clause may include the requirements for the physical condition, maintenance status, documentation, and location of the aircraft, as well as the timing and costs of the redelivery process. The remarketing clause allows the lessor to market and lease the aircraft to another operator before the end of the lease term or upon termination. The remarketing clause may also grant the lessee the right of first refusal, the option to extend the lease, or the opportunity to participate in the remarketing process.

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Aliakbar Khalatbari

CAMO Aerospace Engineer. Licensed aircraft maintenance engineer. Airworthiness engineer
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On the Expiry Date or termination of the leasing of the Aircraft under the Agreement,Lessee shall, unless a Total Loss has occurred, at its expense, return and redeliver the Aircraft and Aircraft Documents to Lessor at the Re-delivery Location in a condition, free and clear of all terms.

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6 Dispute resolution and governing law

The dispute resolution clause sets the methods and venues for resolving any disputes or conflicts that may arise from the lease agreement, such as negotiation, mediation, arbitration, or litigation. The dispute resolution clause may also specify the rules, procedures, and costs of the dispute resolution process, as well as the enforceability and finality of the outcome. The governing law clause determines the legal system and jurisdiction that apply to the interpretation and enforcement of the lease agreement, as well as the rights and remedies of the parties.

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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?

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Aliakbar Khalatbari

CAMO Aerospace Engineer. Licensed aircraft maintenance engineer. Airworthiness engineer
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Aircraft Parts: (a) Each life limited or hard time controlled Part, excluding Engine Parts, shall have not less than(?) FH, (?) Cy or (?) months (whichever is the most limiting factor) remaining to the next scheduled removal in accordance with the MPD or OEM recommendations. (b) Each calendar limited Part (including hard time controlled Parts with calendar limits but excluding Engine Parts) will have at least(?)months remaining to its next scheduled removal or overhaul in accordance with the MPD recommendations or OEM recommendations in the event that the Airframe Manufacturer’s MPD does not provide intervals. (c) Each “on-condition” and “condition monitored” Part will be serviceable and have been maintained in accordance with the MPD.

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What are the common clauses in aircraft lease agreements that impact your airline's operations?

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1 Lease term and termination

2 Maintenance and modification

3 Insurance and indemnity

4 Taxes and fees

5 Redelivery and remarketing

6 Dispute resolution and governing law

7 Here’s what else to consider

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