The world is witnessing a huge rise in economic uncertainties, which are impacting every sector of life. The aviation sector is in no way different in this regard. There has been added pressure on leasing prices due to increased competition between Chinese and American lessors. Meanwhile, the expanding demand for air travel across the world has not settled yet.
Considering these circumstances, an aircraft stakeholder and an aviation law firm decide to act. Their front-line struggle is to enable stable business revenue. Thus, aviation lawyers intend to take into account different choices and several financial structures. When a company aims to grow its airline fleet, tax payments are the major hurdle in its way. That is why most businesses prefer to get a plane on lease instead of purchasing it.
How an Aviation Law Firm Helps with Buying and Leasing Aircraft
Diverse legal aspects and interest rates linked with leasing make the aviation sector uncertain. But remember, leasing is not meant for everyone. Before leasing an entity like an aircraft, one must approach an aviation law firm. It will assess the utility and purpose of a plane and manage the complexities of lease agreements.
Professionals fully equipped with knowledge related to the aviation sector are an integral inclusive part of an aviation law firm. They encompass all facets related to the sector, including
- Air travel
- Business operations
- Leasing agreements and regulations
- Regulating the industry based on the Federal Aviation Administration FAA is an aviation law and regulations authority that handles all the intricacies of this sector.
Leasing airplanes is a time-consuming and complex process that needs legal consultation. Setting a lease involves technical characteristics and regulations to ensure the safety of passengers. For both lessors and lessees, an aircraft is a huge asset. Hence, to make this deal successful and less burdensome on both parties, an aviation law and regulations expert can help.
Whether to Get an Aircraft on Lease or Seek Ownership
Buying and leasing an airplane are difficult-to-make decisions. Having an aircraft at your immediate disposal can open up a myriad of new opportunities and avenues for you. In aviation, leasing an airplane can help build an airline’s fleet. Whether you want to make a personal purchase or a business deal, both choices are at hand. Get it on lease or seek ownership.
Before going into their details, it is crucial to differentiate the two terms. In this article, we will discuss what airplane ownership or leasing entails. Why should one go for leasing or buying aircraft?
What is aircraft purchasing?
Buying an aircraft can be the same as buying a utility from the store. You opt for one of the two payment plans. First, you might pay the full amount and buy the item. Second, you might opt for an installment plan that can stretch for months or even years. In the installment option, the entity comes into your possession after make a certain payment.
An outright difference is that an airplane is way too expensive. To make such a worthy purchase, you must have one of these:
- hHuge cash reserves to make an instant payment
- Investors to support such a big deal
Hence, you can think of buying an aircraft once you have sufficient cash. The next crucial step is to decide which model meets your standards for performance and quality. You might be unsure if this is your first airplane purchase. Here, you can take advantage of the option of leasing an airplane.
Get a plane with the same model on lease. Use it for a short amount of time and check out its specifications. Till the leasing terms expire, you will have enough time to decide whether it is worth buying or not.
What is aircraft leasing?
You can call it renting an airplane for a specific period of time. Airplanes are extremely expensive, and even big airlines cannot afford to purchase all the aircraft they use. Leasing planes helps them overcome financial barriers and build a personal airline fleet. In the world of aircraft and airplanes, leasing enjoys a fundamental position.
Airlines follow this fundamental transaction, particularly when they need a plane at short notice. A leasing process takes place between two parties.
- One is an intermediary company that owns the asset, an airplane
- Second is the organization or party that will use the vehicle as their own.
This contract is time-bound. Once the time expired, the plane returns to its actual owner. It depends upon the lessees which type of contracts he needs. It can be short-term or long-term.
For instance, consider an airline that manages air travel to a summer location. It will easily meet customers’ demands in the winter. But in summer, it will feel the true urge to lease airplanes to meet expanding summer trips.
Types of Aircraft Leasing
Leasing comes with different sorts of agreements which might put one in a varying range of technicalities. But before diving into these, let us first consider the type of leasing.
- Wet Lease
- Dry Lease
- Damp Lease
1. Wet Leasing aAircraft
A wet lease comprises a comprehensive deal. When you sign such a deal, leasing aircraft companies provide an aircraft and all the accessories. These include all the stuff and crew needed to take care of the plane and fly it. These are;
- Pilots and the cabin crew
- Maintenance and insurance
- The aircraft itself
Do not consider it a strict legal definition to describe “a wet lease”. If you get an aircraft with only a single crew member, it would still be a wet lease.
2. Dry Leasing Aircraft
In a dry leasing aircraft deal, you get only an airplane with no crew member. For a fixed amount of time, you get possession of the aircraft. Further, you are responsible for providing all the necessary equipment and crew members. This type of lease can work best for you if:
- You aim to expand your current airline fleet.
- have the capacity to maintain and fly aircraft by yourself.
- Have your own expert crew to handle new responsibilities.
3. Damp Lease
A damp aircraft lease is a mixture of the above two types. This is an ideal option if you have an expert cabin crew. In this deal, you get everything other than the cabin crew. This includes aircraft, maintenance, equipment, and pilots.
Last but not least
Aircraft are widely used to fulfill expanding needs of global traveling. To fulfill these demands, airlines either buy new planes or get on a lease. But these processes are not easy and follow legal and technical considerations. In this regard, an aviation law firm holds crucial significance. It consists of aviation experts handling intricate matters of leasing and purchasing new airplanes.