BW Insights

What Questions Should I Ask Before Dry Leasing an Aircraft?

Written by Brennan Block | Aug 19, 2022 1:01:55 PM

I am contacted routinely by individuals that are interested in dry leasing an aircraft for either business or personal use (or both). These individuals have made the decision that they are willing to accept the risks of a dry lease of an aircraft (as opposed to a charter), which includes the party leasing the jet (the “dry lessee”) assuming full responsibility for operational control of the aircraft during flights. 

Unless individuals are experienced in these matters, they typically have only a rudimentary understanding of the questions they should be asking the party that owns (or has the right to lease) the aircraft. Below is a list of questions that dry lessees should ask and, better yet, make sure they are addressed in their written dry lease agreement. 

Questions When Dry Leasing an Aircraft 

General Lease/Financial Questions  
  • What is the term of the lease? 
  • Is it an exclusive or non-exclusive lease? If non-exclusive, how many other leases for the aircraft are there? 
  • Is a security deposit required upfront? How much is the security deposit and who holds the security deposit? 
  • How will I buy hours of operation of the aircraft? Do I buy hours of operation upfront or as I go? 
  • What if I do not utilize the hours that I have purchased? Will those hours carry over into any subsequent periods? 
  • Am I able to go over my allocated number of hours of operation of aircraft in any period? At what cost? 
  • How is taxi time counted? 
  • Who tracks the leased hours and how do they track them? 
  • Can I keep the aircraft parked and available for me for a week while I am at my second home? Do I ever need to pay for the repositioning of the aircraft? 
  • How do I buy fuel? How much does fuel typically cost? 
  • Are there other expenses I must pay, like landing fees, ramp fees, cleaning charges, de-icing, internet, catering, and pilot travel costs? 
  • Are there any federal or state taxes owed by the dry lessee? 
  • Is the aircraft financed? If so, does the lender know about this lease and has the lender consented to this lease? 
Scheduling Questions  
  • How do I find pilots to hire to fly the leased aircraft? 
  • How do I schedule flights on the leased aircraft? 
  • Who has priority if there are scheduling conflicts? 
Condition of the Aircraft Questions 
  • Who maintains the aircraft? 
  • Do I pay any charges for maintenance programs in addition to my lease rate? 
  • Can I take a demo flight in the aircraft before I lease the aircraft? 
  • Does the aircraft have Wi-Fi? Is the Wi-Fi included in the lease? How fast is the Wi-Fi?
  • How much baggage can the aircraft hold? 
  • How many passengers can the aircraft hold? Does the aircraft have an operational lavatory?  
  • Will this plane require a stop when flying to and from my most frequent destinations? 
  • Can this aircraft land at the airport at my most frequent destination? 
Liability Questions  
  • Who obtains the insurance for the aircraft? Am I covered by the insurance? How much liability insurance is provided? How much property (hull) damage insurance is provided? Is this insurance sufficient to cover the risk presented? Will I receive a certificate from an insurance company showing that I am covered? 
  • Who is ultimately responsible if there is an accident, and the insurance policy is not sufficient or does not cover the accident? 
  • Who is responsible if I or one of my passengers accidentally damage the interior of the aircraft? 

These are just a few of the questions you should ask when contemplating a dry lease of an aircraft. It is wise for you to engage an aviation attorney, and potentially even an aviation tax professional, to then confirm that any answers an aircraft lessor has provided you are correct (and, where reasonably necessary, contractually binding). Owners desiring to lease their aircraft should similarly be prepared to answer these questions and should similarly have their lease agreements drafted to support their answers.  

If you have any questions or want to discuss a dry lease arrangement, please do not hesitate to reach out to Brennan Block via email to brennan.block@brownwinick.com or via phone at (515) 242-2441.