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Wet Aircraft Lease
In a wet lease , the lessor (an airline) provides the aircraft, crew, maintenance, and insurance (ACMI) to the lessee (another airline, air travel broker, or private individual), who pays by the hours operated. The lessee will pay for fuel costs, airport fees, and any other duties and taxes, and use their own flight numbers. These leases are often used during high traffic periods, annual heavy maintenance checks, when regular aircraft are temporarily unavailable, or to start new routes.
Dry Aircraft Lease
In a dry lease , the lessor provides the aircraft without crew or ground staff. The lessee is required to put the aircraft on its own air operator’s certificate and aircraft registration. These leases will include conditions for depreciation, maintenance, insurance, and other considerations.
Ultimately, the choice between an aircraft lease and a loan comes down to choosing whether you’re looking for flexibility or ownership. Leasing is beneficial for operators who need short-term capacity during high-traffic periods, or who would like to start new routes or wish to avoid upfront costs and annual maintenance checks.
With aircraft loans, on the other hand, you own the aircraft outright and are usually required to make a down payment. Owning the aircraft means you will be responsible for all associated expenses, such as crew, maintenance, fuel, insurance, fees, etc., but you also have complete control over the aircraft and build equity.
Credit History
One of the first things lenders will look at is your business and credit history, including your personal credit score. A good credit score will help your company secure a lower rate, while a bad credit history will likely lead to a higher rate.
Financial Health
A strong financial record built over time, including annual revenue, stability, and time in business, will improve yours or your company’s chances of getting favorable rates. A new business without a lengthy financial history will pay higher rates than an established business with a good credit score.
Aircraft Specification
The cost of the aircraft chosen also impacts interest rates. More expensive aircraft tend to lead to a higher rate, though lenders often offer more competitive rates for newer aircraft that will hold their value well.
National Interest Rate
The Federal Reserve sets this. Many loan institutions use the Federal Funds rate as a benchmark for their own offers. So, when the federal rate is high, loan rates tend to rise accordingly.
Regulatory or Tax-Law Changes
Such changes may affect aviation, depreciation rules, or bonus depreciation eligibility of your aircraft.
Aviation Industry Health
Broader aviation market context, including demand for business aviation, fleet utilization, and other factors.
Requirements For An Aircraft Loan
Once you’re ready to buy, you’ll need:
- The aircraft’s spec sheet
- Financial statements
- Tax returns
- Your identification
- Completed loan application.
How To Buy Aircraft?
First time buying an aircraft or need a quick refresher? Check out CurrencyAir’s Aircraft Buyer’s Guide for a step-by-step walkthrough of the process, or visit Controller.com to shop for new or used aircraft from jets to turboprops, floatplanes, warbirds and many other kinds of aircraft.