a helpful guide to different types of aircraft leasing options.
ACMI - Aircraft, Crew, Maintenance & Insurance
The LESSOR provides the
aircraft, one or more complete crews (including engineers) including their
salaries and usually allowances, all maintenance for the aircraft and
insurance, which usually includes hull and third party liability. The
LESSOR will charge for the block hour (choc off to choc on) and depending
on the aircraft type sets a minimum guaranteed block hours limit per month.
If the airplane flies or not, the LESSEE must pay the amount for the minimum
guaranteed block hours.
The LESSEE has to provide all fuel, landing/handling/parking/storage fees,
crew HOTAC including meals and transportation as well as visa fees, import
duties where applicable as well as local taxes. Furthermore the LESSEE
has to provide passenger/luggage and cargo insurance and in some cases
need to cover the costs for War Risk. Furthermore the LESSEE has to pay
the over flight/navigation charges. This point is a bit complicated. When
flights are operating they use a flight number, which is issued to airlines
by the ICAO. In order to cover the costs of air traffic control services,
states over flown will send a bill to the owner of the flight number,
which can be readily identified by its code. The aircraft owner will probably
have a code, but will not want to use it because he will end up paying
the bills. Therefore, an ACMI lease requires that the LESSEE provide his
own flight number, so that the bills can be directed to him. Thus, an
ACMI lease can usually only take place between two ICAO member states
airlines unless other arrangements have been made between LESSOR and LESSEE.
Is basically ACMI as explained
above. The period can go from one month to usually one to two years. Everything
less than one month can be considered as ad-hoc charter.
Is similar to ACMI and Wet
leasing however usually without cabin crew. The LESSEE will provide the
cabin crew. This can only be done if the cabin crew receives SEP (Safety
and Emergency Procedures) training by the LESSOR, in order to be acquainted
with the differences of the airplane. This term is not often referred
Is the lease of the basic
aircraft without insurances, crew, maintenance etc. Usually dry lease
is utilized by leasing companies and banks. A dry lease requires the LESSEE
to put the aircraft on his own AOC and provide aircraft registration.
A typical dry lease starts from two years onwards and bears certain conditions
as far as depreciation, maintenance, insurances etc. are concerned. This
depends on the geographical location, political circumstances etc.
There is generally two types
of dry lease, an Operating Lease and a Finance Lease
Operating Lease: generally a lease term that is short compared to the
economic life of the aircraft being leased. An operating lease is commonly
used to acquire aircraft for a term of 2-7 years. With an operating lease
the aircraft doesn't appear on the Lessee's balance sheet.
Finance Lease: also known as a capital lease, is defined when on of the
following conditions are met:-
1) at the end of the lease term the Lessee has the option to purchase
the aircraft at an agreed price.
2) the lease payments are more than 90% of the market value of the aircraft.
3) the term of the lease is over 75% of the aircraft's usable life.
With a finance lease the aircraft appears on the Lessee's balance sheet,
as it is viewed as a purchase.