The financial world regularly uses exclusive dry leases of various types to allow a lessor to purchase an aircraft and lease it to an unmanned tenant as part of a long-term lease. Here, the lessee also provides the crew and assumes all obligations under the lease for the maintenance, custody and control of the aircraft for the duration, including for maintenance, crew, operation, cost payments, insurance and taxes. The guide focuses on what it means to have operational control of a flight. However, it contains a troubling formulation that seems to give equal weight to all the details of the lease related to operational control. In practice, this may not always be the best approach. Despite the availability of leases, owners of new and existing aircraft still frequently violate the FAR when their LLCs operate the aircraft, but have nothing to do but own and operate their aircraft, thus turning llLCs into illegal “flight service companies.” Such a single-purpose LLC cannot legally perform these transactions, share the aircraft for remuneration (something of value) or offer the aircraft for lease to others, unless the CLC obtains an aviation certificate under Part 119 and operates the aircraft in accordance with Part 135. It is entirely possible to use non-exclusive or exclusive dry leases to remedy or prevent these violations. Dry lease refers to an aircraft transaction in which the lessor provides the aircraft, the lessee independently provides the crew members, and the lessee retains operational control of the flight. Far 1.1 defines a central regulatory concept of operational control in relation to a flight as “the exercise of authority over the initiation, operation or termination of a flight”. The second type of rental, a “dry lease”, is completely different.

This type of lease is a common method of acquiring the use of an asset such as an aircraft, with the lessee providing flight crew, fuel and generally maintenance, insurance, storage and other needs to be able to maintain the aircraft. A dry lease is similar to the type of lease most of us used to buy a car or truck, for example. The lessee leases the vehicle from the lessor, which is often a bank or financial services arm of the manufacturer or dealer of the vehicle from which the vehicle was purchased. The owner has nothing to do with the day-to-day operation of the rented property. The renter provides the driver, provides service to the vehicle, fills the fuel, procures and pays for insurance and operates the vehicle in all practical senses, as if the renter were the owner. Leasing is really just a financing tool to get the car or truck. Imagine a legitimate aircraft dry lease in the same way. The renter assumes what the FAA calls “operational control” of the aircraft and its flights, which means that the renter has control of the flight from start to finish. Operational control also includes the power to start, operate, terminate and terminate a flight prematurely when circumstances – such as inclement weather or a mechanical situation with the aircraft – occur that make it desirable to land at an unforeseen destination or to take a diversion route to the intended destination. Since the COVID-19 crisis, we have all seen a drastic decline in regular flight operations.

Many of those who can justify the increase in costs have turned to private flights to meet their travel needs. Unfortunately, dishonest operators ignored far and the costs associated with complying with the rules and sold potential customers on a dry lease to operate their flights. Honest businessmen have become the target of these dishonest operators who can be aggressive when they suggest using a dry lease as the best way to get a private jet to transport them from point A to point B. Please call a competent aviation lawyer to review the situation. If you take an illegal charter flight, the FAA cannot charge you with anything illegal unless you are complicit and know that the flight will be illegal. What awaits you may be even worse. In the case of illegal charter flights, the insurance available to the operator of the flight will probably not be in effect due to the illegal nature of the flight. If an accident occurs, there is a high probability that no insurance coverage is in effect and any damage you suffer is not covered by the insurance. Illegal chartering is a thriving cottage industry because it costs a legitimate charter service a lot of money to provide the improved level of service and safety that the FAR needs. Constant flight crew training, frequent and thorough aircraft maintenance, and proper planning are costly. An unscrupulous illegal operator can undermine the prices of legitimate operators.

If you are presented with a lease agreement for someone else`s use of the aircraft, call us or your usual aviation lawyer to review the situation. .