Cheaper Air Travel With Leasing
Aircraft leasing is one way to use an aircraft without having to bear all the costs of ownership
. Leasing is defined as the aircraft being provided by the owner of the aircraft, such as the airline and in technical terms this is referred to as a lessor. The lessee refers to the person or organisation or airline who is leasing the aircraft. The lessee pays the lessor a monthly fee for the use of the aircraft and the lessee is able to use the aircraft in any way that they choose as long as it lies within the stipulations of the signed contract. Airline leasing is popular as one can operate aircraft without the financial burden of buying them. There are two main types of leasing wet lease or ACMI which is used for short and medium term leasing and dry lease which is for long term leases. There are three other types of leasing too damp lease, operational lease and financial lease.Wet lease or ACMI - ACMI refers to aircraft, crew, maintenance and insurance, which are the 4 main components of a wet lease. The lessor provides the aircraft, one or more complete crews or just the cockpit crew, maintenance and insurance (hull and third party liability) to the lessee, which pays by the hours operated. The lessor charges for the block hour, and sets a minimum guaranteed block hour limit per month.
Damp lease is similar to ACMI or wet lease, and is sometimes referred to as AMI. It comes with all the features of ACMI, without cabin crew. Therefore the lessee has to provide flight and cabin crew that have to undergo safety and emergency procedures training for the particular type of aircraft that is leased.
Dry lease refers to the lease of the basic aircraft without any insurance, crew or maintenance. This requires the lessee to acquire an Air Operators Certificate and provide aircraft registration.
An operating lease is used to acquire aircraft for a duration of 2-7 years, and is short compared to the economic life of the aircraft being leased. This is advantageous to the lessee as the aircraft does not appear on the lessees balance sheet.
Financial leasing which is also known as a capital lease is where the lessee has the option of purchasing the aircraft they are leasing after the term has been completed. Other conditions for financial leasing are when the term of lease is over 75% of the aircrafts usable life, or when the lease payments are more than 90% of the market value of the aircraft. When this appears on the lessees balance sheet, it is viewed as a purchase.
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