Wet Lease Agreement: What You Need to Know
If you are in the aviation industry, you are likely familiar with the concept of leasing. In fact, leasing is a common practice in the airline industry and it comes in different forms. One of the types of lease agreement is the wet lease agreement. In this article, we will discuss what a wet lease agreement is, what it entails, and what you should consider before entering into one.
What is a Wet Lease Agreement?
A wet lease agreement is a contract where one airline (the lessor) provides an aircraft, crew, maintenance, and insurance (ACMI) to another airline (the lessee). This means that the lessee does not only rent the aircraft but also the crew, who will operate the aircraft on behalf of the lessee.
The term “wet lease” is derived from the fact that the aircraft is “wet”, indicating that it is fully operational and ready to fly. In contrast, a “dry lease” is an agreement that only involves the rental of the aircraft, without any additional services such as crew, maintenance, or insurance.
What Does a Wet Lease Agreement Entail?
When entering into a wet lease agreement, there are several things you should consider. These include:
1. Length of the agreement – Wet lease agreements can be short-term or long-term. Short-term agreements typically last for a few months or even weeks, while long-term agreements can last for several years.
2. Aircraft type – The lessor will usually provide the lessee with a specific type of aircraft that meets the lessee`s needs. It is important to ensure that the aircraft is suitable for the route and passenger capacity that you require.
3. Crew – As previously mentioned, the lessor provides the crew for the aircraft. However, it is important to ensure that the crew are properly trained and certified to operate the aircraft.
4. Maintenance – The lessor is responsible for the maintenance of the aircraft. However, it is important to clarify in the agreement who is responsible for any maintenance costs that may arise during the lease term.
5. Insurance – The lessor is also responsible for providing insurance for the aircraft and crew during the lease term. However, it is important to clarify the extent of the insurance coverage and who is responsible for any deductibles.
What Are the Benefits of a Wet Lease Agreement?
A wet lease agreement can provide several benefits to airlines. Some of these benefits include:
1. Increased flexibility – A wet lease agreement can provide airlines with the flexibility to add capacity or expand their route network without having to make a long-term commitment.
2. Reduced costs – Wet lease agreements can be more cost-effective than purchasing or leasing aircraft, especially for short-term or seasonal needs.
3. Reduced risk – Since the lessor provides the crew and maintenance, the lessee can reduce their risk and liability.
Conclusion
In conclusion, a wet lease agreement can be a valuable tool for airlines looking to add capacity or expand their route network. However, it is important to understand the terms of the agreement and ensure that the aircraft, crew, and insurance coverage meet your needs. As with any contract, it is recommended to seek legal and financial advice before entering into a wet lease agreement.
