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Wet Leasing Agreement

A wet leasing agreement is a contractual arrangement between two airlines or aviation companies in which one entity leases an aircraft, along with its crew, maintenance, and insurance, to the other on a temporary basis. This type of agreement is commonly used in the aviation industry to meet the seasonal or ad hoc demand for aircraft, or to provide operational support to airlines during a period of aircraft shortage.

Under a wet lease agreement, the lessee airline assumes responsibility for the operations of the leased aircraft, which are controlled by its crew. This means that the lessee airline is responsible for fuel, landing fees, and other operational costs associated with the aircraft. Additionally, the lessee airline is responsible for scheduling the flights, determining the routes, setting the fares, and handling the passengers. In essence, the lessee airline has complete control over the use of the aircraft.

There are several benefits of wet leasing agreements for both lessor and lessee airlines. For lessor airlines, wet leasing allows them to optimize their fleet utilization, especially during off-peak periods, and generate additional revenue without any additional investment in the aircraft. For lessee airlines, wet leasing offers flexibility and cost savings, as they can acquire aircraft on a short-term basis without committing to long-term leases or purchasing the aircraft outright.

However, there are also some risks associated with wet leasing agreements. One major risk for lessee airlines is that they may not have complete control over the quality of the crew, aircraft maintenance, and safety procedures, which can affect the safety and reliability of their operations. Additionally, the lessee airline may face unexpected operational and financial challenges if the leased aircraft experiences technical problems or is grounded due to regulatory issues.

To mitigate these risks, it is essential for both lessor and lessee airlines to carefully negotiate and document the terms and conditions of the wet leasing agreement. It is important to clearly define the responsibilities, liabilities, and obligations of both parties, including the roles and duties of the crew, the maintenance standards, the insurance coverage, the termination clauses, and the dispute resolution mechanisms.

Overall, wet leasing agreements can be an effective tool for airlines to optimize their operations, meet the demand for aircraft, and reduce costs. However, it is crucial that both parties approach such arrangements with careful consideration and due diligence to ensure successful outcomes.