Few hours after one of the aircraft of United Nigeria Airlines (UNA), diverted to Asaba International Airport on Sunday, rather than the Nnamdi Azikiwe International Airport (NAIA), Abuja, the Nigeria Civil Aviation Authority (NCAA), has suspended all the wet-leased aircraft under the airline.
A source close to NCAA, On Monday says the apex civil aviation regulatory body took the decisi on on Monday via a letter communicated to the Chief Operating Officer (COO) of the airline.
Few hours after one of the aircraft of United Nigeria Airlines (UNA), diverted to Asaba International Airport on Sunday, rather than the Nnamdi Azikiwe International Airport (NAIA), Abuja, the Nigeria Civil Aviation Authority (NCAA), has suspended all the wet-leased aircraft under the airline.
A source close to NCAA, confided in Nairametrcs on Monday that the apex civil aviation regulatory body took the decision on Monday via a letter communicated to the Chief Operating Officer (COO) of the airline.
Immediate suspension
According to the source, all the wet-leased aircraft in the operations of the airline would remain suspended pending the outcome of an investigation on the Sunday incident, involving one of the wet-leased aircraft in the fleet of the airline.
It was gathered that immediately the incident gained traction on social media on Sunday, the Director-General of Civil Aviation (DGCA), Capt. Musa Nuhu called an emergency meeting of the agency, where it was resolved that the excuse given by the airline was not tenable to the authority.
What Are The Differences Between Wet Lease, Dry Lease, & Leaseback For Aircraft?
Since aircraft leasing first arrived on the scene in the 1970s, demand has grown rapidly. According to Boeing’s 2019 Current Aircraft Finance Market Outlook, leasing now represents 40% of in-service commercial aviation ownership. The entry of more leasing companies has driven diversification, leading to innovative solutions that are delivering new levels of value for commercial airlines and other lessors.
Aircraft leasing saves operators the financial overhead of purchasing costly assets. However, as the aviation leasing market continues to mature and diversify, airlines are looking to leasing for more than just an immediate reduction of CapEx. Under a leasing model, airlines can rapidly increase or decrease the size of their fleet without expensive assets sitting on the ground. When compared with purchasing an aircraft, leasing expedites the process of getting your aircraft in the air and producing profit. Choosing to lease an aircraft also gives airlines the flexibility of shorter-term commitments, a structure that opens the door to further cost-savings in the form of “right sized” routes in which aircraft capacity matches traveler demand.
As the aircraft leasing market continues to mature, innovative models are connecting customers with customized solutions tailored to their business’ needs. But when you’re considering aviation leasing, it’s critical to start with the three predominant models: wet leasing, dry leasing, and leasebacks.
Key types of aircraft leasing
Understanding the differences between dry leases, wet leases, and leaseback agreements is about more than just choosing the option most aligned with your business’ needs. Each leasing arrangement comes with its own regulatory requirements and obligations. Because the Federal Aviation Administration (FAA) closely reviews each agreement, it is critical to consider all aspects of a leasing arrangement before moving forward.
Dry lease: In a dry lease, the owner provides the aircraft to the lessee without a crew. Neither party is required to have an air carrier certificate so long as the aircraft does not carry people or property for compensation or hire. The lessee typically exercises operational control—as in, legal responsibility—of the aircraft under this lease type.
Wet lease: Under a wet leasing arrangement, the owner supplies the aircraft as well as at least one crew member, according to the FAA. The owner assumes operational responsibility, which includes performing maintenance, procuring insurance, and other legal responsibilities of operations.
Leaseback: Under this type of agreement, the aircraft owner sells the aircraft to the lender or lessor, who then immediately leases the aircraft back to the original owner. This transaction type is often employed to free up capital resources for the company without interruption in aircraft operations.
Although these distinctions may seem straightforward, the meaning of “who has operational control,” as defined in 14 CFR 1.1, leaves room for interpretation. As the FAA explains, “The determination in each situation as to whether the lessor or lessee exercises operational control requires consideration of all relevant factors present in each situation. The terms of the lease itself are important but since they may not reflect the true 2/10/16 AC 91-37B 4 situation, the actual arrangements and responsibilities should be given very careful consideration.”
To ensure you secure the best arrangement for your business and operational requirements, it’s critical to choose a provider with transparent terms and proven expertise in the legal complexities of leasing agreements.