Do you know what a dry lease means to the FAA? Many people believe it means a lease of an aircraft without fuel. However, the real definition of a dry lease is a lease of an aircraft without any crew where the lessee assumes operational control of the flights conducted under the lease. A dry lease doesn’t have anything to do with liquids, it is determined by whether the lessor provides any pilots to the lessee.
Wet Lease
A “wet lease” is what you get if the aircraft lessor provides at least one crewmember with the aircraft, and the lessor retains operational control of flights conducted under the lease. Aircraft that are wet leased generally cannot be operated under 14 C.F.R. Part 91. However, there are certain limited exceptions, such as a time sharing agreement under 14 C.F.R. 91.501.
FAA Guidance on Dry Leases
The FAA worked with industry associations to issue the General Aviation Dry Lease Guide, which provides additional details on distinguishing between wet and dry leases, and the concept of operational control with respect to leases. The requirement for the lessee to select and engage its own crew is a critical component of a dry lease, but there are other attributes of operational control that must be considered. The FAA will consider the totality of the facts and circumstances in making determinations regarding which party has operational control.
Truth in Leasing Requirements
While it is always a good idea to have a written lease agreement in place for an aircraft lease, a written lease is required by the FAA for certain leases of U.S. registered large aircraft under the FAA’s Truth-in-Leasing requirements. 14 C.F.R. 91.23 also requires:
- That a copy of the lease be sent in to the Aircraft Registration Branch, Technical Section within 24 hours execution,
- That a copy of the lease be carried on board the aircraft, and
- That the responsible Flight Standards office be notified at least 48 hours before takeoff of the first flight under the lease.
Even straightforward FAA regulatory issues can be complex. The help of an attorney experienced in business aviation can help reduce costs and ensure regulatory compliance.
Michelle M. Wade is an attorney with the law firm of Jetstream Aviation Law, P.A. and counsel clients on the acquisition, financing and operation of corporate jets operated under Part 91 and Part 135 of the US Federal Aviation Regulations. Jetstream Aviation Law can be found at www.JetstreamLaw.com.
The information provided here is not legal advice and does not purport to be a substitute for advice of counsel on any specific matter. For legal advice, you should consult with an attorney concerning your specific situation.