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What is wet leasing of aircraft?

  • Published
    29th Nov, 2022
Context

In an effort to boost international air traffic, the civil aviation ministry has allowed Indian airlines to take wide-body planes on wet leases for up to one year.

About
  • The Directorate General of Civil Aviation (DGCA) released the Aircraft Leasing Manual in 2013, which was revised in 2017 to prescribe policy and guidelines regarding the management of an aircraft lease.

    What is Wet leasing?

    • Wet leasing means taking the plane along with the operating crew and engineers, while dry leasing refers to taking only the aircraft on rent.
    • The technical term for wet leasing is ACMI which stands for aircraft, crew, maintenance, and insurance. It aims to ensure that regulatory obligations are met and that operational safety is not compromised by the conditions of the lease.

Types of leases available:

  • Aircraft leasing options range from obtaining a wet lease, a dry lease, or a damp lease.
  • In a wet lease, the essential ACMI (Aircraft, Crew, Maintenance, and Insurance) are also leased along with the aircraft.
  • A dry lease does not include crew, maintenance, or insurance.
  • Finally, in a damp lease, the aircraft is leased along with the maintenance and insurance, but the aircraft crew is not leased.

Role of Directorate General of Civil Aviation (DGCA):

  • The aircraft register in India is maintained by the DGCA.
  • This register contains details in relation to the aircraft such as the type of aircraft, the year of manufacture, the full name and address of the owner or lessor, and the full name and address of the operator or lessee.
  • The DGCA issues the certificate of registration for the aircraft.

Duration of lease:

  • Earlier the duration of the lease was 6 months which has been extended to 1 year.
  • Operations of an aircraft on wet lease are more difficult for the Directorate General of Civil Aviation (DGCA) to monitor, hence it is considered to remain for a definite period only.

Why do airlines prefer to lease aircraft?

  • Airlines and aircraft operators prefer leasing planes in order to avoid the massive lump sum payments that buying them would entail, and to quickly increase capacity, perhaps temporarily, on certain routes or sectors.

Why Government has extended the limit now?

  • The relaxation will be available to all Indian carriers and will be granted based on the international destinations they wish to operate to.
  • Wet leasing will allow airlines to fly more routes and rounds and Wide-body planes can accommodate more passengers, thereby boosting revenue.
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