What is the Difference Between a “Wet” and “Dry” Aircraft Lease, and Why Does It Matter?

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What is the Difference Between a “Wet” and “Dry” Aircraft Lease, and Why Does It Matter?

Due to the high cost of aircraft ownership, many owners make their aircrafts available for leasing. These transactions can help owners ensure that the aircraft is used more frequently and allow them to recoup at least some of the costs of ownership.

Under a wet lease, an aircraft owner, or the lessor, provides both the aircraft and the flight crew to a lessee, and retains operational control over the flight. The aircraft owner must have an operating certificate issued by the Federal Aviation Administration (FAA), since the FAA considers the lessor to be providing air transportation. The aircraft owner is also responsible for providing adequate maintenance on the aircraft and insurance coverage. For these reasons, airlines and charter flight operators (as well as other non-air carriers in certain situations) usually utilize wet leases.

By contrast, in a dry lease, an aircraft owner provides the aircraft, and the individual or company leasing the aircraft is responsible for providing the flight crew. As a result, the lessee is fully liable for the flight operation, since he or she is in sole possession and control of the aircraft.

Why does it matter? In some situations, operators try to work around federal regulations by dry leasing an aircraft through a business entity that is under their financial control, and then providing the lessee with pilots through a different business entity, which is also under their control.  Essentially, they end up offering a wet lease, but without taking responsibility for maintenance, insurance, and liability. This can trigger disputes with the FAA, which considers this situation to be a Part 135 rather than a Part 91 operation.

Williams Mestaz, L.L.P., are advocates for general aviation – operators and FBOs. We handle the legal matters of individuals, businesses, and other entities facing a wide variety of business and aviation related disputes and regulatory hurdles. Call our office at (602) 256-9400 schedule an appointment to speak with us today.

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