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What is the typical rental period for an aircraft dry lease agreement?


 

Transcript:

Aircraft dry lease agreements are very common in the industry, but there’s a lot of misunderstanding of what a typical lease period might be when state or local taxing authorities take a look at these agreements. It’s quite typical that in a dry lease agreement the average period of use for the lessee is going to be by flight hour, so they’re hourly agreements very commonly. This is the case because aircraft expenses and operation vary dramatically by the number of hours the engine is going to run rather than whether or not you’re going to have possession and control of the aircraft for a period of months or years because aircraft value is largely determined by the use profile. While there may be financing leases that are long-term leases or block lease agreements that allow an individual lessee to receive 100 hours or 200 hours of time, it would be very uncommon for there to be a monthly or an annual lease that is actually designed for aircraft ownership or operation. Those type of lease agreements that have longer terms are generally a financing vehicle or a trust vehicle rather than a dry lease agreement for operations.

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