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Dry Lease: Some wet lease agreements may also include additional services
In dry lease, the lessor will lease out the air- like catering, ground transportation, or flight planning assistance,
depending on the contract terms. The major advantage of wet
craft to the lessee without any additional lease is that it provides airlines with the right solutions for capac-
services or crew. This means that the lessee ity expansion, avoiding heavy financial burdens. It also offers
gains possession and control of the plane a practical way to adapt to market fluctuations and increase
during the lease period and assumes respon- operational efficiency.
sibility for all operational aspects, including
flight crew, maintenance, insurance, fuel, and
other expenses.
Pros of Wet Leasing:
Dry leasing can be further classified into two
segments- operating lease and capital lease. In wet lease, the lessor takes care of all operational aspects, and
The most important difference between these the lessee does not have to bother about logistics. As the lessor
two is that in an operating lease, the leased provides a professional crew of pilots, stewards, and attendants,
asset does not appear on the lessee’s balance along with maintenance, a smooth operation is assured. The
sheet, and the lease payments are considered lessee will also get more options as they can choose the model
operating expenses, which are recorded in suitable for specific routes or travel. The burden of responsibility
the income statement. If it is a capital lease, is transferred to the lessor.
the aircraft appears on the lessee’s balance
sheet as an asset, and they also recognize a It also allows airlines to increase their fleet to meet the surge in
corresponding liability for the lease payments. passengers without purchasing and integrating new aircraft. Wet
leases, with their shorter durations, offer clients the advantage of
avoiding long-term contracts and the freedom to explore alterna-
Benefits & Drawbacks: tive options as their needs evolve. According to Market Research
The primary benefit of a dry lease agreement Future’s analysis, the wet-leasing segment is expected to capture
the largest share of the global leasing market mainly because
lies in the lessee’s aircraft utilization flexibil- of its dependability, customisation potential, and affordability.
ity, enabling operation according to specific
requirements while complying with global avi-
ation regulations. This arrangement permits
airlines to seamlessly switch between various Responsibilities of the Lessor:
aircraft and minimize depreciation expenses.
Mainly used by commercial companies, cargo Taking a cue from these positive trends, many players in the
operators, charter companies, and private jet industry have decided to focus on wet lease, as it offers com-
operators, dry lease enables them to maintain prehensive solutions and significantly reduces airlines’ burdens.
their desired service standards by providing Additionally, as the lessor, it is very important that crew qual-
their own crew. ity is maintained and so today, professional aviation training
organizations are much in demand. Cultivating a talented and
The disadvantages of dry leasing revolve professional crew is an essential part of a wet lease and provid-
around limited control for the lessee, as they ers must take the responsibility of assisting lessees in overcoming
essentially acquire only the aircraft. Fuel and logistical challenges, ensuring efficient operations, and minimiz-
insurance costs, stringent payment schedules, ing disruptions. A meticulous approach to security protocols,
and the absence of tax benefits further add data protection, and operational confidentiality is also crucial.
to these challenges. Additionally, the lessee Such an approach instill confidence in airline partners, fostering
is responsible for damages and maintenance a strong foundation for long-term collaborations.
expenses. Moreover, unless equipped with
trained manpower, the lessee must hire pilots As per the study by Precedence Research, the Asia-Pacific region
and crew members independently. notably emerged as the largest market for aircraft leasing in
2022 by generating more than 51 percent of the revenue share.
Wet Lease:
Looking ahead to the future, I firmly believe that APAC will con-
The technical term for wet leasing is ACMI, tinue to be a significant region, leaving a profound impact on
which stands for Aircraft, Crew, Maintenance, the aircraft leasing industry. The interplay of various factors
and Insurance. In a wet lease arrange- and socio-political-economic influences will undoubtedly shape
ment, the lessor provides the lessee with a the trajectory of this growth. Despite the challenges, the out-
well-maintained and insured aircraft for a spe- look remains promising, and the industry is poised for continued
cific period, along with an experienced crew. upward momentum in 2023 and beyond.
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