Leasing an Airplane VS Buying: What You Need to Know
Having an airplane at your immediate disposal can open up a lot of new avenues and advantages for you, regardless of whether it’s for business or personal use. Deciding to have an airplane at a certain point in time is one thing, but deciding whether or not you should own one or lease one is another big decision altogether.
So what essential aspects should you consider before making that big step?
Purchasing an aircraft is quite like purchasing any item from the store: you either pay the full amount at once or pay via an installment plan over the course of a few months, even years. Upon full or initial payment, the item is officially in your possession. The stark difference is, an aircraft is extremely expensive. This option is great if you have large cash reserves, or have investors that can help support such a purchase.
If you are ready to purchase a particular aircraft but are unsure of its performance or quality, you can opt to lease the same model for a short amount of time and decide if it’s worth buying after the leasing terms have expired.
There is no shame in renting an aircraft. After all, even airlines cannot afford to own all the aircraft they use. Leasing is a fundamental transaction in the world of airlines and aircrafts, especially for airlines that are in need of an aircraft at short notice. Similar to how leasing contracts in apartments function, contracts in the aircraft industry are between an intermediary company that owns the aircraft and the party or organization that will temporarily utilize the aircraft as though it is their own. This contract’s validity is bound by a specified span of time (either short-term or long-term). Once it expires, the aircraft is then returned to its true owner.
Before you jump into leasing agreements, you have to know what kinds of airplane leases there are– you don’t want to jump into a lease you’ll regret soon after.
A wet lease is when the leasing company provides the aircraft and all that is needed to fly and take care of the plane: the pilots, the cabin crew, maintenance, equipment, and insurance. Take note that this isn’t the strict legal definition of a “wet lease”, as leasing an aircraft with even just a single crew member can be considered a wet lease. This is why it’s important to know what the specifics of the additions are to the aircraft to be leased. Make sure to clarify every detail of the agreement before approval.
This kind of lease is perfect for regular use, and for those who don’t want to hire pilots and their crew each time a flight is abound.
A dry lease is when the leasing company only provides the needed aircraft. This means that you will provide the pilots, crew, maintenance, and other needed equipment. This kind of lease is perfect for those wanting to expand their aircraft fleet, for those who have their own crew, or for those who can fly and maintain the aircraft themselves (or who are well-connected to those that do).
A damp lease is a combination of the two previous types of leases. This kind of lease offers the aircraft, pilots, maintenance, and equipment, but without the cabin crew. This is best for those who already have a trained cabin crew at their disposal. This option is also great for those who are undecided between getting a wet lease and a dry lease, both due to financial and resource limits.
Before purchasing or leasing an airplane, you must always inspect the plane and opt for a test flight before proceeding to any transaction finalities. Take note of important details such as the plane’s engine hours, installed equipment, damage history, airworthiness directives, and paint quality, as one of these factors can make or break your opinion of the plane in question. Make sure that you also have a copy of the written agreement between you and the manufacturing/leasing company.
Your aircraft is also going to need an aircraft hangar for storage and a regular supply of fuel to ensure your plane stays up and running for regular use. Make sure you consider these expenditures before making that final say.
Choosing whether you are going to purchase or lease an aircraft depends entirely upon your situation, with the key aspects to consider being financing/budget, manpower, logistics, frequency of need, and urgency of need. Always remember to be realistic about your expectations, especially when it comes to your finances, and always ask for clarifications when reading and discussing the fine print.
About AeroVision International LLC: Founded in 2003, AeroVision International has become a trusted business partner to business and regional aircraft MR&O facilities and operators worldwide. AeroVision supplies business and regional commuter engines and engine parts (PT6 / PW100 / JT15D / PW300 / PW500 / TFE-731 / AE3007) in support of operators and MRO facilities around the world. With a strong focus on Embraer ERJ-135/145 and EMB120 aircraft, AeroVision offers sales & leasing of aircraft, engines, auxiliary power units, avionics and landing gear as well as outright or exchange sales of all major internal and external spare parts.