Call for Evidence - Aircraft and Airline Leasing in the United Kingdom

Aircraft leasing is the rental, rather than purchase, of aircraft by an air carrier (i.e. commercial air transport operator) or a non-airline entity.

For the purposes of this Call for Evidence, aircraft ‘leasing’ includes planned wet leasing, damp leasing, emergency wet leasing, dry leasing and rapid dry leasing.

A planned ‘wet lease agreement’ is an agreement between air carriers where the aircraft is operated under the Air Operator cCrtificate (AOC) of the lessor. The air carrier (the lessor) provides an aircraft, complete with crew, maintenance and insurance (ACMI) to another airline (the lessee).

‘Emergency wet leasing’ is where a UK carrier requires wet leasing from an air carrier not on a pre-approved list (known as the White List) on an urgent basis need as a result of exceptional circumstances.

A ‘damp lease agreement’ is an agreement where the aircraft is leased with partial crew.

A ‘dry lease agreement’ is an agreement between parties where the aircraft is operated under the AOC of the lessee. In a ‘dry lease agreement’ the aircraft is leased without crew.

‘Rapid dry leasing’ is a dry lease agreement for rapid deployment (short lead-time assisted by streamlined internal approvals, standardised lease template and pre-negotiated inter-carrier arrangements). The lessor retains beneficial ownership or registration oversight for the lease term. In addition to the lease agreement, an operational agreement or support agreement between the lessor and lessee (e.g. for maintenance interface, crew relief, repositioning, regulatory oversight) is in place.   

The current leasing framework is a product of a number of UK Regulations and CAA Policies. The summary set out in this section is complemented by a detailed outline in Appendix B. Together, they capture the ‘Current Leasing Framework.’

UK air carriers are required to hold an AOC and an Operating Licence. An Operating Licence may be granted if a UK air carrier has at least one aircraft at their disposal through ownership or a dry lease agreement. In line with International Treaties and Obligations, aircraft capacity required in a UK carrier’s operations should normally consist of aircraft operated by the carrier on their own AOC.  

There is also a requirement for aircraft used by a UK air carrier to be registered in the UK. However, in circumstances where a UK air carrier has a wet lease or dry lease agreement the aircraft can be registered in the UK or in another country if certain regulatory requirements are met.

 UK AOC holders must ensure that their Operations Manual, Part A, Section 13 (Leasing) entry reflects the leasing activities required for their operation.

Subject to obtaining regulatory approval, a UK air carrier can operate wet leased in or dry leased in aircraft registered in the UK or the Community (being an EU or EEA Member State ,or Switzerland) except where this would lead to endangering safety.

The CAA has implemented a ‘White List’ process for UK air carriers wet leasing-in aircraft. The White List process conducts the safety assessment ahead of time and aircraft on a UK air carrier ‘White List’ can be called on to provide a leasing service if required. The White List will also show how a company can undertake the oversight of those carriers in a leasing situation. The White List is not an approval to lease however it accelerates the decision-making process for approvals.

A UK air carrier can wet lease in from Third Countries (being a country outside of the UK or the Community) on the basis of exceptional needs, to satisfy seasonal capacity needs and to overcome operational difficulties. The Third Country Operator (TCO) must hold a Foreign Carrier Permit, the lessor’s pilot must hold a third country pilot licence validation (unless they have been granted an exemption) and the TCO must hold a Part-TCO Authorisation, all issued by the UK Civil Aviation Authority (CAA).

A UK air carrier can dry lease-in aircraft registered in a Third Country, subject to certain compliance with Regulations, if an operational need has been identified that can’t be satisfied through using a UK aircraft and if the duration of the dry lease does not exceed seven months in any 12-month consecutive period.  

All leasing-in agreements are subject to prior approval from the CAA and the approvals may be subject to conditions. In some circumstances there are prior approvals in place, for example there is a General Approval in place allowing UK air carriers to lease a UK registered aircraft from another UK AOC holder (ORS4 1626 – General Approval for Leasing Agreements Entered into by a UK Air Carrier) and there is a General Approval in place allowing a UK air carrier to wet lease in aircraft from the UK or the Community in urgent circumstances (ORS4 1625 - General Approval for Wet Lease-in Agreements in Exceptional Circumstances).

A UK carrier may wet lease-out a UK registered aircraft to a UK Operator. A prior approval is not required as there is a General Approval in place in relation to this leasing arrangement. The UK air carrier needs to notify the CAA of this arrangement.

A UK carrier may wet lease-out a UK registered aircraft to any operator (Community or TCO), if the correct notification procedures are followed and if the UK carrier’s AOC covers the areas of operation.  

A UK carrier may dry lease-out a UK registered aircraft to a UK operator. A prior approval is not required as there is a General Approval in place in relation to this leasing arrangement. The UK air carrier needs to notify the CAA of this arrangement.

A UK carrier may dry lease-out a UK registered aircraft to a community operator or a TCO only if they have obtained prior approval from the CAA.