Wet Leasing vs. Dry Leasing an Aircraft: What’s the Difference?

Wet Leasing vs. Dry Leasing an Aircraft: What’s the Difference?

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Aircraft are an incredibly expensive hobby to have. Considering the global inflation that seems to have descended in the recent past over the entirety of humanity, more and more people are now reconsidering their choice of buying a luxury airplane outright. The fact of the matter is that private jets have always been quite expensive, which has encouraged the growth of alternative pathways of being able to enjoy private jets. No one can seem to stop thinking about the unabated luxury that private jets offer to the passenger. Chartering a private jet has now slowly crept up into being the most popular way of getting yourself around the world with a touch of luxury that is hard to find anywhere else at all. The main reason is that it is quite a price-conscious decision sometimes to charter a private jet. In fact, in some situations, it is cheaper per passenger to charter a private jet than to fly first class! It is obvious that the difference in experience between a private jet and flying first class is quite a bit. While flying first class is certainly a very luxurious experience, it does not hold a candle to the passenger-focused approach that private jets are able to employ.

There is a plethora of options that one can exercise when it comes to accessing a private jet for personal use. From the simple option of chartering a jet to fractional ownership of a jet, people interested in private jets are blessed with a lot of options. Today, we will be having an in-depth look at the differences that are present in a comparison between wet-lease vs dry lease. However, before we get into that, it is first pertinent to have a look into other options as well.

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Fractional Ownership

When you get right down to it, fractional ownership is quite an ingenious concept. It basically operates on the assumption that one private jet for the usage of a single individual is too much. Most individuals’ needs for air travel are able to satisfy only a fraction of the true capacity of a single jet. The final conclusion is simply the fact that individuals can pool in to buy a single jet and use it to their heart’s content.

Essentially, the jet is owned by a management company. Whatever share you own of the company, that share translates to your ownership of the jet. This practice has several advantages that are readily apparent. The biggest is that fixed costs are neatly divided amongst the individuals. The biggest fixed cost, the jet itself, becomes much more palatable once it has been divided amongst individuals. Other fixed costs such as the salary of the crew and the hanger costs of the jet are also greatly reduced for a single individual. However, there are certain disadvantages that can be summed up by the word ‘compromise’. The fact of the matter is that sharing something means that you do not have full ownership of it in any way. You have to adhere to the schedules of the other individuals that are involved in the fractional ownership arrangement as well. If the aircraft is scheduled to be in the possession of someone else and you need it urgently, you will not be able to obtain it. There are policies that mitigate this issue as well. Some providers will offer you an alternative aircraft of a similar model and make it for your use if yours is busy at that moment. The shares are mostly 1/16, which translates to about 50 flying hours, or even 1/8, which will translate to 100 flying hours. For the vast majority of people, 100 flying hours per year is more than enough to fulfill their requirements.

The owners have to pay a monthly management fee that takes care of things like maintenance, upgrades, salaries, and even the training that the staff might require. Fuel is also another cost that the owners need to keep in mind, with an additional surcharge being added on top of the fuel cost in order to account for volatility.

Leasing Aircraft

Now that we have established an understanding of the most popular alternative to leasing, fractional ownership, we can go ahead and start talking about leasing. Leasing is essentially the practice of using another entity’s asset in exchange for a payment that is usually carried out over a fixed period of time. In aircraft terms, you can lease an aircraft and have to pay a fee per unit of time for usage of that asset. Once the fixed time period is over, the aircraft is handed back into the possession of the original owner. The biggest advantage this has over owning an aircraft outright is that you do not need to pay the purchase price of the aircraft. This eliminates the biggest expense of all, the price. Compared to fractional ownership of an aircraft, you do not need to share the aircraft with anyone else. It is all yours for the stipulated time period. Now, there are essentially two types of aircraft leases. Dry leases and wet leases.

Dry Leases

In a dry lease, the only thing the original owner of the aircraft is required to provide is the aircraft itself, nothing else. There is also no requirement for the air carrier certificate under specific conditions. It is also extremely important to mention that in dry leases, the lessee (the party leasing the aircraft) is required to assume all of the responsibility for the aircraft. This can also be seen as an advantage, with the lessee being able to have complete control over the operations of the aircraft and putting it in the hands of a crew that the lessee has deemed to be completely up to the job. It also decreases a lot of the time wastage that might be taking place as well, with the aircraft being up for possession almost immediately as there isn’t anything else except the aircraft itself taking hands. Naturally, it is much cheaper as well compared to wet lease as well.

Wet Lease

Certainly the more popular of the two options, wet leases have become a big part of the private air travel industry. Even the use of wet leases in commercial traveling is quite significant now. Since there are peak times in the commercial industry when airliners need more aircraft than their existing fleet, wet-leasing a large commercial aircraft becomes the only viable option for them. For a lot of airlines, testing new routes needs to be done with the greatest cost-effectiveness possible, this means that adding a new aircraft into the fleet outright is not the best option available. In situations like these, a wet lease is a perfect option. In a wet lease, the lessor bears much less of the operational burden and hence the responsibility. It can almost be understood as an aircraft-for-rent service, complete with a crew and operation readiness. Comparing that to a dry lease, the big plus point is the fact that the hiring of the crew and other requirements are completely circumvented and the aircraft can directly go for operating. The maintenance is also generally considered to be under the purview of the owner as well, not the lessee.

These are the main differences between wet leasing and dry leasing an aircraft. On one side, you have the advantage of faster mission readiness with wet-leasing. However, that does come at a greater price as well, with a dry lease being cheaper.

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