Aircraft Leasing Structures and Agreements
Expert-defined terms from the Executive Certificate in Aircraft Financing and Leasing course at London School of International Business. Free to read, free to share, paired with a globally recognised certification pathway.
Aircraft Leasing Structures and Agreements #
Aircraft Leasing Structures and Agreements
Aircraft leasing structures and agreements refer to the various legal and financ… #
These structures and agreements are crucial in aircraft financing and leasing as they dictate the terms, conditions, and responsibilities of both lessors and lessees.
1 #
ACMI Lease (Aircraft, Crew, Maintenance, and Insurance)
ACMI lease is a type of aircraft leasing agreement where the lessor provides the… #
This type of lease is commonly used by airlines that require additional capacity during peak seasons or to cover maintenance downtime.
Example #
ABC Airlines entered into an ACMI lease agreement with XYZ Leasing Company to operate flights to a new destination.
2 #
Bareboat Lease
A bareboat lease, also known as a dry lease, is a leasing agreement where the le… #
The lessee is responsible for all operational aspects of the aircraft during the lease term.
Example #
DEF Airlines signed a bareboat lease with GHI Leasing Company for a fleet of new aircraft to expand its operations.
3 #
Capital Lease
A capital lease is a long #
term lease agreement that is treated as a purchase for accounting purposes. The lessee records the leased asset as an owned asset on its balance sheet and is responsible for maintenance, insurance, and other operational costs.
Example #
JKL Aviation Company opted for a capital lease to acquire new aircraft for its fleet expansion.
4 #
Dry Lease
A dry lease, also known as a bareboat lease, is a leasing agreement where the le… #
The lessee is responsible for all operational aspects of the aircraft during the lease term.
Example #
MNO Airlines decided to enter into a dry lease agreement with PQR Leasing Company for its regional aircraft requirements.
5 #
Finance Lease
A finance lease is a type of lease agreement where the lessor finances the purch… #
The lessee is responsible for maintenance, insurance, and other operational costs.
Example #
STU Aviation Group secured a finance lease to acquire new aircraft for its international routes.
6. Full #
Service Lease
A full #
service lease is a comprehensive leasing agreement where the lessor provides the aircraft, crew, maintenance, insurance, and other services to the lessee. This type of lease is a hassle-free solution for airlines that prefer a one-stop leasing arrangement.
Example #
VWX Airlines opted for a full-service lease with YZ Leasing Company for its long-haul flights.
7 #
Operating Lease
An operating lease is a short #
to medium-term lease agreement where the lessor retains ownership of the aircraft. The lessee pays for the use of the aircraft and is not responsible for maintenance, insurance, or other operational costs.
Example #
ABCD Airways chose an operating lease to meet its seasonal aircraft requirements without long-term commitments.
8 #
Wet Lease
A wet lease is a type of aircraft leasing agreement where the lessor provides th… #
This type of lease is commonly used for short-term capacity needs or to cover maintenance downtime.
Example #
EFG Airlines leased additional aircraft on a wet lease basis from HIJ Leasing Company to meet increased demand during the holiday season.