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Not all airlines own the aircraft they fly. In fact, more than half the commercial planes in the air today are leased. Leasing helps operators scale capacity, manage capital and adapt to changing demand without taking on the risks of long-term ownership.
Dry lease is the most common lease model. It plays a major role in long-term planning for airlines that want to grow operations or reduce asset-heavy exposure.
Air Charter International brings 30+ years of experience in ACMI and Private Charter Service solutions. This article sheds light on what is a dry lease and how it works. We further draw a comparison to other aircraft lease models like ACMI or wet leasing to better understand.
What Is a Dry Lease?
A dry lease is a type of agreement where an aircraft is leased without crew, insurance or maintenance included. The aircraft is delivered as a clean asset. All operational responsibilities fall on the lessee, typically under their own commercial Air Operating Certificate (AOC) which grants the airline the right to advertise publicly and sell passenger seats or cargo capacity to the open market.
The dry lease aeroplane contract states that:
- The lessor provides only the aircraft
- The lessee must operate the aircraft under their own AOC
- The lessee handles crew, maintenance (CAMO), permits and insurance
*CAMO stands for: Continuous Airworthiness Maintenance Organisation
The dry lease is usually for an agreed fixed term. This is anywhere from 1 to 5 years. In some cases, the term may extend further depending on the airlines fleet strategy. This structure gives the operator full control. It also allows the lessor to retain ownership of the asset.
A dry lease plane must meet all the regulatory and compliance requirements under the lessee’s national or regional aviation authority i .e. EASA or FAA are two good examples. EASA is the European Union Aviation Safety Agency whilst FAA is the USA Federal Aviation Authority, but there are several national authorities with different operational restrictions imposed to be aware of. So, the lessee needs to have the technical and legal readiness to operate independently.
If you are trying to understand the full dry lease meaning, think of it as loaning out an aircraft asset without any flight operations bundled in. The aircraft is yours to run operationally within the laws of the land, but the responsibility for any incidents is also entirely yours. This is a common model in aviation dry lease markets. This is because long-term planning, cashflow forecasting, aircraft rotation and operational independence are key.
Who Uses Dry Leases?
Dry leasing an aircraft goes beyond just simple fleet expansion. It is part of a strategic plan used by different airlines and operators:
- Established airlines with an AOC
These carriers have in-house teams. They manage operations and prefer control over how the aircraft is operated and maintained.
- New airlines that are already certified
Start-ups that secured an AOC – Aircraft Operating Certificate and have operational teams in place. They often use dry lease aircraft to avoid high capital expense outlays from the outset.
- Aircraft leasing companies
These firms raise funds and act as the principal mortgage holder of the asset and go out to the pre-owned market and OEM’s (Original Equipment Manufacturer) to purchase aircraft and place them with airline clients on dry lease terms as part of an asset-leasing financial model.
- Operators scaling without upfront investments
A leasing solution allows the operator to respond to market demand quickly without having to buy a new aircraft for seasonal demand, or take on all the risks and the high capital repayment requirements associated with a purchase. You can’t mitigate delays in the OEM own delivery schedules. There are many cases of significant delays from original to actual delivery schedule in recent years in part due to the pandemic period which significantly disrupted the aviation sector supply chains.
Benefits of a Dry Lease
For lessees:
- Lower capital requirement
Compared to buying, leasing means you do not tie up huge capital. This keeps your balance sheet lean.
- Flexible fleet planning
Aircraft can be returned, replaced or upgraded. However, it depends on the contract terms. This is helpful when managing route demand.
- Full operational control
You select your own crew, maintenance partner and service delivery standards. It is certainly beneficial for those operators with their own in-house capabilities.
For lessors:
- Stable revenue stream
Lease income is contractually fixed, with predictable cost v returns over the term.
- Lower operating exposure
There is no responsibility for crewing or flight operations. That risk is passed to the lessee.
- Control over resale
The aircraft remains in their asset base, available for future placement or resale.
How Is Dry Lease Different from ACMI or Wet Lease?
The three lease types serve different business needs. Here is a comparison chart:
| Lease Type | Aircraft | Crew | Maintenance | Insurance | Typical Use Case |
|---|---|---|---|---|---|
| Dry Lease | Yes | No | No | No | Long-term fleet control |
| ACMI Lease | Yes | Yes | Yes | Yes | Seasonal or startup ops |
| Wet Lease | Yes | Yes | Yes | Yes | Short-term urgent lift |
In a dry lease, the airline leasing the aircraft takes care of everything. This ranges from crew to maintenance and operations. In ACMI lease, the aircraft has crew and operational support. Here, the airline focuses on ticketing and scheduling. A wet lease is a complete solution where the lessor runs the entire operation. The airline simply uses the service.
Use Cases for Dry Leasing
- Fleet expansion for scheduled airlines: Dry leases support long-term capacity increases without fleet ownership.
- Network growth based on route planning: Adding aircraft for new destinations or time-sensitive expansion projects.
- Aircraft replacement: Phasing out older aircraft by leasing newer ones with better efficiency.
- Asset-light growth: Many LCCs (Low Cost Carriers) use dry lease models to avoid asset-heavy investments.
- Access to the latest aircraft types: Dry leases provide access to new-generation aircraft without outright purchase.
What Experts Say About Dry Leasing
A dry lease gives airlines long-term control and flexibility but comes with full operational responsibility. It works best for carriers that already have certified teams, a valid AOC operational certification and their CAMO maintenance infrastructure in place.
Get the Right Aircraft, Terms and Support with ACI
Finding the right dry lease deal takes more than picking an aircraft. At Air Charter International, we guide you through every step, such as:
1. Finding the right aircraft for your operation
Whether you require a narrow-body or wide-body, whether it needs to be younger than 20 years old, the seating configuration is super important to you, the cargo freighter capacity by tonnage carried and volume is crucial to your operation, range and performance under a harsh operational environment, we are your quiet professionals working behind the scenes helping you source and select the right solution, by utilising our analytical and data driven approach.
2. Make lease terms clear and workable
At ACI we help you understand the parameters, provide cost benefit analysis and assist with navigating all the standard and sometimes non-standard lease clauses. Clauses such as negotiating on all pricing and costs associated with the lease, assessing the maintenance reserves, crew requirements, safety assessments, acceptance and return condition of the aircraft and ensuring the lessee has sufficient flexibility during the term.
3. Help stay compliant from day one
The ACI team is here to help you derive a competitive short list, assist with physical aircraft pre-lease signing inspections, complete all approvals required to operate and handle all the required legal paperwork. Our team also supports you in staying compliant with the relevant aviation rules throughout the lease period which are sometimes subject to change at short notice.
4. Exploring other leasing options
If a dry lease is not the best option, explore other models. These include ACMI, Wet or damp lease solutions.
Need Help with Dry Leasing?
If you are an airline planning to grow or a lessor trying to place an aircraft, we can definitely support you. With over 30+ years of experience and a strong global network, you can be rest assured we will source the right aircraft, on fair equitable terms, facilitating your strategic plan to take-off smoothly. Get in touch and connect with us now!
FAQs
1. Do I need an AOC to take a dry lease?
Yes. Since you will be operating the aircraft, your company must have a valid AOC issued by your country’s civil aviation regulator.
2. Is the aircraft registered under the lessee?
In the majority of lease term arrangements, the aircraft is registered in the lessee’s name. It is then operated under the lessee’s required jurisdiction.
3. Who handles maintenance in a dry lease?
The lessee handles the ongoing maintenance. Furthermore, the operator must ensure compliance with all safety regulations and have a CAMO within its operation. This requirement can be third partied out as well if needed.
4. What happens at the end of a dry lease?
The aircraft is returned to the lessor in the pre-agreed condition as per the lease contract terms. This includes return to lessor physical inspections, logbook audits and any restoration required.
5. Can start-ups use a dry lease?
Yes, but only if they have an AOC and are operationally ready to perform to the regulators requirements with sufficient qualified personnel. Otherwise, an ACMI or wet lease option are better suited to your immediate needs.
Let us Help You Build Your Flight Vision together!
Author bio:
Stuart Wheeler is the CEO of Air Charter International (ACI). Established in 1994 and based in Dubai, ACI is an aviation services provider with a dedicated team of aviation specialists focused on delivering professional aircraft lease and charter services to the following regions – Africa, Arabia, Asia, Asia Pacific, Europe and the Americas.
