Deep Dive: The World of Aircraft Leasing

Deep Dive: The World of Aircraft Leasing

DALLAS — Aircraft leasing has become a significant aspect of the commercial aviation industry. It allows airlines and other businesses to operate aircraft without the need for massive capital investments.

Essentially, aircraft leasing is a financial arrangement in which an airline or other company rents an aircraft from a lessor for a specified period, which can extend from a single dedicated flight to even an entire lifetime of an airplane.

This practice is not new in commercial aviation. In fact, the first ever recorded aircraft lease took place in 1914, when Thomas W. Benoist, an American aviation pioneer rented three of his self-made airplanes to Anthony Jannus, in order to create the first-ever scheduled airline in the world: the SPT Airboat Line, between St. Petersburg and Tampa, both in the state of Florida.

Despite this, aircraft leasing did not become world-spread until the 1960s, when the commercial aviation sector in the United States really took off when the first airline deregulation took place. Until then, airlines tended to purchase and operate their own airplanes without considering the possibility of adjusting their fleets according to rises and drops in demand by yearly cycles.

Hundreds of leasing companies compete in this particular aviation market every day, and it has grown in popularity in recent years as more and more airlines operate like real businesses today rather than as government-subsidized enterprises. The global airline leasing market was estimated to be worth over US$300bn in 2020 by industry experts, and between 2021 and 2028, it is anticipated to grow by up to 6%.

Today, aircraft leasing is not limited to passenger airlines. Other businesses such as cargo carriers, charter operators, package travel companies, and even governments are turning towards leasing aircraft to avoid the burden of ownership.

To adapt to all types of customers and needs, the market has created three main categories of arrangements, each with its own advantages and disadvantages.

Dry-lease companies focus on managing aircraft rents. That is the reason you won’t see any “Air Lease” aircraft painted in real life. Render: Air Lease Corporation

Dry Leasing


Aircraft dry leasing is a popular method where the lessee only rents the airplane, without any crew, maintenance services, or insurance the lessor provides. This means that the company that operates the aircraft is in full charge of its operational and financial control.

If, for example, Delta Air Lines (DL) acquires a Boeing 767 following the dry leasing method, it would need to previously have trained its own pilots for the aircraft, develop a specific maintenance plan for the type and contract an external insurance program to cover any damages or emergencies related to it.

This is the most suitable option for airlines that operate a more consistent route network, that is less sensitive to big modifications in demand and seat capacity. In those cases, a carrier may arrange leasing for an aircraft from its fabrication to 10 or 20 years or almost until its retirement, with the benefit of having the possibility to pay the lessor for the airplane on a yearly basis, instead of investing all the capital at once.

Most of the airline order announcements for dozens of aircraft are usually dry leasing agreements with companies specifically designed to operate in this market. Some of the most famous dry-leasing entities are Avolon, with 800 aircraft, GECAS, with 1500 units, and AerCap, the largest, with more than 1800 airplanes registered that currently fly for other airlines across the world.

On the other hand, airlines focused on leisure passengers, which is a market that presents very high peaks in demand in summer but also heavy drops in winter, may almost never choose this method because they will end up paying for an airplane even when it’s grounded at the airport during the low season.

In that case, the second option that can best suit them is the practice of wet leasing.

Atlas Air is, by far, the largest ACMI operator for both the passenger and air cargo markets in commercial aviation, and is also the largest 747 operator worldwide. Photo: Yifei Yu/Airways

Wet Leasing


For airlines that need aircraft due to extraordinary circumstances, such as an incident with their own aircraft or a sudden rise in demand for a specific flight, enter wet leasing. Wet leasing, also known as ACMI services (Aircraft, Crew, Maintenance, and Insurance), is the rental of airplanes for a short or long period of time that also covers all the costs related to the operation of said aircraft.

These services are much more complex for lessors, as their airplanes have to be constantly in good shape and prepared to serve any type of sudden agreement. That can involve the takeoff of an aircraft in less than two hours after the signing of a wet-leasing contract. Additionally, wet leasing involves having a reserve crew of pilots and assistants prepared at all times to hop onto the airplane at any given moment.

These advantages make wet-leasing an expensive practice for airlines, and receiving ACMI services from a lessor for a long period of time incurs costs that not many companies can handle in the long term. However, on separate flights for travel agencies like the TUI Group or Jet2 Holidays, or AOG (Aircraft On Ground) situations in any normal carrier, the wet lease alternative is not only the most convenient but also the cheapest decision to make.

A particular situation where ACMI services are most demanded is the period of “Hajj”, which is the time when the Muslim community makes its pilgrimage to Mecca, located in Saudi Arabia. During these weeks, millions from across the world travel to Jeddah (JED), Riyadh (RUH), and Medina (MED), and home carriers such as Saudi Arabian Airlines (SV) or Flynas (XY) lease dozens of aircraft to meet the rise in demand for that period of time.

A good number of aviation companies rely exclusively on wet lease activities and ACMI services. Some of the most significant are Atlas Air (5Y), HiFly (5K), SmartLynx (6Y), Avion Express (X9), and Wamos Air (EB). It is a market that can perfectly maintain a company in perpetual profitability if the carrier is managed correctly.

Wamos Air, one of the largest ACMI operators worldwide, is a big partner of airlines such as TUI or Jet2, which tend to wet lease aircraft to expand its fleet during the summer season. Photo: Julian Schöpfer/Airways

The Process of Leasing an Airplane


Wet leasing an aircraft is not a simple process and, in some cases, it can be a nightmare for both the customer and the lessor. There are a few steps to follow for an ACMI service to work that start from the very first moment a new airplane is needed to the time it starts to carry passengers or cargo with the customer.

Once the need for an airplane is identified, it is time to look for the lessor. This is not usually a problem, as there are currently hundreds of ACMI specialized operators, and even flag carriers can make use of their airplanes by leasing them to other companies, i.e. soccer teams or large enterprises.

Once the lessor has been selected and the agreement signed, the lessor completes a series of preparation processes that include checking if the plane is airworthy or if it’s undergone the necessary maintenance. Then, a team of pilots and cabin crew members is selected to fly the aircraft to the region of operation and, if needed, the required airspace permits and approvals are arranged and signed for the aircraft to start operating as soon as possible.

However, in remote areas such as Oceania, where the concentration of this type of carrier is much lower, finding a wet lease company can become a nightmare. Air New Zealand (NZ), for example, felt the need in November 2022 to rent an airplane to operate their daily flight from Auckland (AKL) to Perth (PER), but it could not find a reliable wet leasing company nearby.

The airline was then forced to lease an Airbus A330 from EB, which was based in Madrid (MAD). The operation required the long-term movement of an entire pilot, cabin crew, flight dispatchers, and more employees with the airplane.

EC-NBN, which is the A330-200 operating NZ’s 7-hour hops to Australia, had to fly almost empty more than 10,600 nautical miles with a stop in Kuala Lumpur (KUL) for refueling in order to get to New Zealand on the exact antipode of the Earth.

Norwegian (DY) did not bother applying its own livery after leasing this Boeing 737 from Anadolu Jet (TK), as its clientele would certainly not judge that much the scheme of the carrier. Photo: Adrian Nowakowski/Airways.

Painting a Wet Leased Airplane, Is It Worth It?


An aircraft livery is something to consider when wet-leasing from an ACMI operator. The aircraft scheme is, in the end, the first thing a passenger sees when boarding the airplane. In some cases, an aircraft livery is important to help airlines build brand recognition for short one-week or even one-day wet lease services.

For cases where the carrier cares much about its brand, typically seen in premium and prestigious companies such as Singapore Airlines (SQ) or Delta Air Lines (DL), it would be logical for them to ask the lessor to add a partial paint scheme to the leased aircraft, including the logo and name of the airline.

On the other hand, if prestige and luxury are not a priority for the carrier; that is, if its main objective is to simply get its passengers from A to B, it is less likely that the airline would ask for a repaint of the leased aircraft. This is commonly seen in leisure and low-cost carriers, such as TUI, Condor (DE), or Jet2, which are accustomed to leasing airplanes during the summer travel season and don’t bother with a complete paint job.

The pattern found when looking at wet lease carriers is the fact that most of their aircraft fly as whitetails, or, in some cases, fly with unassuming name markings that can be quickly removed. This is a logical move, as those airplanes spend their lives switching from one customer to another on ACMI services; it would be at a high cost to constantly apply and remove livery that in other circumstances would not be recognized by other companies.

Painting an airplane is costly, and choosing to add this cost to the wet lease service depends on the length of time the airplane will fly for the lessee. On separate occasions, small airline logo stickers can be placed nearby the first door of the aircraft, a common practice on non-aviation entities such as soccer teams or enterprises that charter airplanes for a single flight.

Hybrid Aircraft Liveries


The world of aircraft leasing has much to do with the financial conundrum of painting or not painting an aircraft that will eventually be transferred to the next lessee. As a result, many airlines have chosen to stay in the middle.

Thanks to dry and wet leasing, commercial aviation has seen hybrid airplane liveries that feature logos and schemes from two or more airlines on the same fuselage and tail.

What are your thoughts on these exceptional aircraft paint schemes? Have you seen any hybrid ones? Let us know by describing them on our social media channels.


Featured image: Titan Airways (ZT) is one of the most famous and successful ACMI and charter airlines in the world. Photo: Fabrizio Spicuglia/Airways

Correspondent - Europe & Middle East
Commercial aviation enthusiast from Madrid, Spain. Studying for a degree in Air Traffic Management and Operations at the Technical University of Madrid. Aviation photographer since 2018.

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