Aircraft Leasing: Explained

Aircraft leasing is a practice in the aviation industry where airlines or other organisations lease aircraft from leasing companies rather than purchasing them outright. This arrangement offers several advantages, such as flexibility, reduced upfront costs, and access to a diverse fleet.

There are generally an overview of two types of aircraft leasing: operating leases and finance leases. Operating leases are shorter-term agreements where the lessor retains ownership of the aircraft and the lessee pays a rental fee for its use.

Finance leases, on the other hand, are longer-term arrangements that resemble ownership more closely, with the lessee assuming most of the responsibilities associated with the aircraft.

Leasing allows airlines to optimize their fleet size, respond to market demands quickly, and avoid the risks of aircraft ownership. It also provides leasing companies with a steady revenue stream and the ability to manage their asset portfolio effectively. Overall, aircraft leasing plays a crucial role in the aviation industry by enabling airlines to operate efficiently and meet the demands of a dynamic market.

Within the two overview types of leasing there are three different service forms of leasing which an aircraft lessor can provide to an airline:

Wet lease, damp lease, and dry lease, which are terms used to describe different levels of service and responsibility in aircraft leasing:

1. Wet Lease: In a wet lease, the lessor provides not only the aircraft but also the crew (including pilots and cabin crew), maintenance, and insurance. The lessor essentially offers a complete package, including all necessary operational components. The lessee, typically an airline, pays a fee based on the flight hours or other agreed-upon terms. Wet leases are often used for short-term or temporary needs, such as covering peak seasons, aircraft maintenance, or when an airline needs to quickly increase its capacity.

2. Damp Lease: A damp lease is a middle ground between a wet lease and a dry lease. In a damp lease, the lessor provides the aircraft, while the lessee is responsible for providing the crew and other operational aspects, such as maintenance and insurance. The lessee takes care of the day-to-day operations of the aircraft, while the lessor ensures its airworthiness. Damp leases are often preferred by airlines that have their own crews but require additional aircraft to meet demand or expand their fleet temporarily.

3. Dry Lease: A dry lease involves the leasing of an aircraft without any additional services or crew. The lessee (airline or organization) takes full responsibility for the aircraft's operation, maintenance, crewing, and insurance. Essentially, the lessor provides only the bare aircraft itself. Dry leases are typically long-term agreements and allow the lessee to have more control and flexibility in operating the aircraft according to their specific needs. Dry leases are commonly used when an airline wants to expand its fleet or replace older aircraft.

The choice between wet, damp, or dry leasing depends on factors such as the lessee's operational requirements, duration of the lease, availability of crew and resources, and the level of control and responsibility desired by the lessee.

A fascinating sector and with Ireland being the global hub of this industry, the above will come in useful if you are interested in working with a lessor.

Myself & Le Meas Executive Search work with some of the most exciting lessors globally so if you are a candidate interested in gaining experience within this space, please don't hesitate to send me a DM, or email me on: [email protected]