The terms “leasing” and “leaseback” (sometimes referred to as “sale-leaseback”) can be confusing as they are often used incorrectly and/or interchangeably, but the two actually mean very different things. This raises the following point about renting planes directly to other people. Outright leases are full of traps and potential violations or civil penalties for improperly reselling time on an aircraft without FAA certification. For more information about AOPA Pilot Protection Services, see www.aopa.org/pps. The Aircraft Owners and Pilots Association has worked closely with other industry experts to create a comprehensive publication that breaks down important regulatory information related to chartering. The General Aviation Dry Lease Guide addresses concerns about illegal activities, including “fictitious dry leases”, when an aircraft is chartered without a crew. 14 CfR 110.2 defines a “wet lease” as “any lease agreement in which a person agrees to provide an entire aircraft and at least one crew member”. (Don`t pay attention to any reference to fuel.) Generally, parties entering into wet leases are certified air carriers such as airlines operating under Part 121 of 14 CFR and charter operators operating under Part 135 of 14 CFR. However, 14 CFR 91.501(c) provides for certain timeshare and exchange agreements in which the aircraft and crew are supplied together. And while these agreements are considered wet leases because they include both aircraft and crew, they are 14 CFR Part 91 operations where the parties to the transactions don`t necessarily have to be air carriers. You will not find the terms wet lease or dry lease in the definition and abbreviations in Part 1 of the Federal Aviation Regulations. Instead, we are forced to rely on the opinions of the FAA`s chief prosecutor and NTSB jurisprudence to guide our meanings. The FAA generally considers a wet lease to be an operation where the lessor provides both the aircraft and the crew and maintains operational control of the flight.
In contrast, a dry lease is a process in which the lessor provides only the aircraft and the lessee pilots the aircraft or provides the crew independently of the lessor. And what`s important is that with a dry lease, control of the business shifts from the lessor to the tenant. Operational control is an important concept to consider and is defined in Part 1 of the FAR. It is essentially the exercise of authority over the initiation, execution or termination of a flight. In these areas, the FAA is really here to help. You can also request a written statement from the FAA about your lease agreement and the specific rental document itself. The FAA could never accuse you of first asking for their opinion before embarking on some sort of lease agreement. A “lease” is an agreement in which the landlord allows another person or business to use that property for a certain amount of money for a certain amount of time. The landlord – called the “lessor” – retains ownership of the property, and the person who pays the landlord to use the property is called the “tenant”. Those who intentionally violate the FAR are the main targets of the FAA`s efforts, and rightly so.
However, it appears that another objective of the FAA is to ensure that aircraft allegedly operated under “dry lease” contracts are a common and legal agreement allowing an aircraft owner to forgive the use of an aircraft are not secret “wet leases”. When reviewing a lease agreement, the FAA will determine the relationship between the parties beyond the actual written agreements. While a lease can be written as a dry lease and the agreement says “dry lease,” for example, that doesn`t mean the FAA can`t take the position that the agreement is actually like a disguised crewed lease. If the FAA takes this position, if the landlord who actually operates the aircraft for the lessee does not have an aviation certificate, it could be a problem for the landlord and perhaps also for the tenant. The FAA`s increased scrutiny of charter flights with such dry leases — which has largely taken shape as part of the agency`s Safe Air Charter initiative — has prompted aircraft owners and lessors to seek more clarity on agreements so they can fully ensure adequate compliance. One of the key issues that distinguishes a wet lease from a dry lease is “who has operational control, as defined in 14 CFR 1.1. In a “wet” lease situation, as the lessor provides both the aircraft and the crew, the lessor retains operational control of all flights. In a “dry” rental situation, the tenant provides his own crew and the tenant exercises operational control over his flights.
The difference between a dry lease and a crewed lease, which is likely to require airline certification, is often misunderstood. For the uninitiated, one of the FAA`s concerns about leases is that “irresponsible companies” can claim to operate under a dry lease, but in reality operate illegally as uncertified airlines. You may also consider leasing your aircraft to a Part 135 certificate holder for use in charter operations. These leases are more complicated than club/school leases and are subject to additional rules in Part 135. For example, these aircraft are subject to the maintenance requirements of Part 135, which are much more stringent. So what`s wrong with a wet lease? In the absence of the regulations granted to timeshare agreements in FAR 91,501(b)(6) and (c)(1), which do not apply to most of us, the FAA will conclude that wet leasing is the carriage of passengers for compensation and rent and is governed by Parts 119 and 135 of the FAR. .