Wet Lease Agreements: A Comprehensive Overview
Wet lease agreements, also known as wet leasing or ACMI leasing, have been a popular option for airlines since the 1970s. This type of leasing arrangement involves leasing an aircraft along with its crew, maintenance, and insurance from one airline to another. In this article, we will dive deep into the details of wet lease agreements, how they work, and their benefits and drawbacks.
What is a Wet Lease Agreement?
A wet lease is a type of leasing arrangement where one airline (the lessor) provides another airline (the lessee) with an aircraft, crew, and other operating items such as maintenance and insurance. The lessor remains responsible for the maintenance and insurance of the aircraft, while the lessee operates the aircraft as if it were its own, bearing all the expenses related to fuel, landing fees, and other costs associated with airline operations.
Wet leases are often used by airlines when they require additional aircraft to meet seasonal demand or to cover for unexpected maintenance downtime of their own aircraft. They are also used by airlines to test new routes, and to save costs on acquiring and maintaining their own aircraft.
How do Wet Lease Agreements work?
A typical wet lease agreement includes an aircraft, crew, maintenance, and insurance. The duration of the lease can vary from a few weeks to several months, depending on the agreement between the lessor and the lessee. During the lease period, the lessee operates the aircraft under their own AOC (Air Operator Certificate) and is responsible for all operational aspects of the leased aircraft.
The contract will also stipulate the specific terms and conditions of the lease, including the payment schedule, the insurance coverage, and the technical specifications of the aircraft.
Benefits and Drawbacks of Wet Lease Agreements
The benefits of wet leasing include the following:
– Flexibility: Wet leasing provides airlines with the flexibility to respond to changing market conditions by adding or reducing their leased fleet according to demand.
– Cost-effectiveness: Wet lease agreements can be more cost-effective than buying and maintaining aircraft, especially for short-term requirements.
– Access to new markets: Wet leasing can allow airlines to test new markets or routes without committing to the acquisition of an aircraft.
However, there are also some drawbacks to wet leasing:
– Lack of control: The lessee has limited control over the leased aircraft, crew, and maintenance, which can lead to quality or service issues.
– Limited customization: The lessee may not be able to customize the leased aircraft to meet their specific operational requirements.
– Dependency: The lessee may become dependent on the lessor for their aircraft needs and may also face difficulties in returning the aircraft if the lessor is not available.
Conclusion
In conclusion, wet lease agreements can be a good option for airlines to meet short-term requirements, test new markets or routes, or save costs on acquiring and maintaining their own aircraft. However, they also come with challenges such as lack of control, limited customization, and dependency. It is important for airlines to carefully evaluate their requirements and options before entering into a wet lease agreement.