If you or your business are looking at taking out an operating lease on an aircraft, you are in good company. Roughly one third of all commercial aircraft are currently held on operating leases. This arrangement is growing steadily in popularity, especially for smaller companies or those looking to try out a new arm of business, as the costs of buying aircraft outright have increased. An operating lease (really just a fancy way of saying “rental”) can make an aircraft affordable, but even if you’ve decided that an operating lease is the right option for you, there are still a lot of specifics to be nailed down. Here, we take a look at a few different options for operating leases and how they differ from each other.
Wet or Dry
The first thing to decide is whether you want to do a wet lease or a dry lease. In a wet lease, the leasing firm provides not only the aircraft but a crew and fuel, as well as other operating costs. A dry lease, on the other hand, includes only the aircraft. This means you will cover the costs of operational expenses, repairs or even when you need to buy metal clad for the aircraft. A wet lease may be a particularly good option for a company who needs the craft for only a short period of time, or if it is only beginning to explore air transport, as it saves on the need to hire and train more personnel or worry about operational expenses.
Time Commitment
Operating leases are available in time periods anywhere from a few months to 10 years. The right time frame will depend entirely on what your company needs the aircraft for. Many airlines lease extra aircraft just to get through peak months of the year, but the most common length is around 5 years. Whatever your needs are, it is certain that you can find a lease that will suit them.
Leaseback
One option in leasing an aircraft is to do a leaseback, in which the lessor purchases the craft from you, and then leases it back to you. This can help to defray the cost of purchasing a new aircraft, and can be a good option as the lessor will then handle all maintenance costs on the aircraft. In some leaseback situations, you will technically retain ownership of the aircraft, but this will make it available for the lessor to rent out to other companies when you’re not using it.
Value Protection
An aircraft is a big investment for any company, and yet it is sadly one which has a lot of potential to depreciate in value over the years. This can be caused not only by the advancement of technology, but the noise and emissions laws of the countries you operate in can greatly affect the value of your aircraft or upgrades such as adding thermoplastics for aviation interiors. Operating leases can help protect the value of your aircraft. When you return the aircraft at the end of its lease period, the lessor takes no account of any changes in value experienced since the lease started.
An operating lease can be an excellent option for any company looking to acquire new or previously owned aircraft and may not have the capital to invest in buying one outright. In addition to the many benefits that leasing offers over buying, operating leases are themselves highly flexible and offer you a range of options for satisfying your company’s needs.
