Aircraft leasing can be considered an alternative to purchasing an aircraft, and may offer advantages to some aircraft operators. A lease agreement can provide flexibility to operators by enabling them to take aircraft in and out of use more easily through shorter-term commitments. Aircraft leasing can be arranged as a wet lease (ie, the aircraft along with its crew, maintenance and insurance)1 or a dry lease (ie, without crew, maintenance and insurance).
The holder of an air operator certificate issued by the Civil Aviation Authority that wishes to dry lease or lease out an aircraft under an agreement that will necessitate the transfer or acceptance of safety oversight responsibilities to or from another contracting state (in accordance with Article 83bis of the Civil Aviation Act) should submit an application to the Turkish authority indicating the likelihood of transferring oversight duties and responsibilities to the authority in the state of operation.2 Before such agreement can proceed, the Directorate General of Civil Aviation has the right to enter the premises where the aircraft may be located for the purpose of inspecting and examining:
- the aircraft;
- its condition;
- its use and operation; and
l the books and records of the lessee relating thereto, in order to ensure the lessee's compliance with its obligations under the law and regulations.
In other words, the authority must evaluate the lessee and its capacity, capability and competence to undertake the effective safety oversight of the aircraft in question.
Once the agreement regarding transfer of authority under Article 83bis has been signed, the aircraft must be transferred to the lessee's registration without changing the aircraft's original registration mark. Furthermore, the directorate general must be informed 120 days before the operation date.3
Unlike wet leasing agreements, dry leasing agreements will be valid for a maximum period of 12 months. However, it is always possible for aircraft operators to extend this period by notifying the interested party.
In order to sign a dry lease agreement, aircraft operators must meet the following conditions:
- The lessor and lessee must have a valid air operator certificate;
- The lessor must ensure that the aircraft will be delivered to the lessee in an airworthy condition; and
- The aircraft must be properly registered in accordance with law.
During the course of a dry leasing period, the lessee must be the sole operator of the dry leased aircraft and maintain operational control of the aircraft. Moreover, the lessee will be responsible for operating the dry leased aircraft in accordance and compliance with all laws, ordinances and regulations relating to the possession, use, operation or maintenance of the dry leased aircraft.4 Accordingly, the lessee will be responsible for keeping and maintaining the dry leased aircraft in a good and airworthy condition during this period, in compliance with all applicable legislation.5
In relation to insurance, the lessee has no right to operate the aircraft outside the geographic limits set forth in the relevant insurance policies, or otherwise to operate the aircraft in a way that would violate or compromise such policies. In this context, under aviation regulations, national registered aircraft operators acting as lessees have no right to use dry leased aircrafts for the purpose of providing the transportation of passengers, mail or cargo in air commerce inside the geographic limits of Turkey.
During a dry lease period, any kind of incident or aircraft crash must be notified to the directorate general by the parties to the dry leasing agreement within 48 hours. In such case, the lessee will bear responsibility for third-party aircraft liability, passenger legal liability (death or bodily injury) and property damage liability (luggage loss or damage) if the incident happened during operation or ground handling services. The lessee will be released from liability if it can prove that all necessary precautions were taken in this regard.6
Although dry lease arrangements enable a lessee to be the sole operator and offer a free control mechanism for the aircraft during the leasing period, the lessor and its authorised representatives can reserve the right to enter the premises at which the aircraft may be located for the purpose of inspecting and examining the dry leased aircraft, or its condition, use or operation (at all reasonable times), in order to ensure the lessee's compliance with its obligations under the dry lease agreement and related laws and regulations.
(1) For further details on wet lease agreements in Turkey, please see Wet lease agreements: ideal solution for start-up airlines
(2) Article 6/f of the Civil Aviation Regulations.
(3) Appendix 7 of the Civil Aviation Regulations.
(4) Appendix 7-8 of the Civil Aviation Regulations.
(5) For example, the Civil Aviation Regulations or Part 145 of the European Aviation Safety Agency Regulations.
(6) Article 123 of the Civil Aviation Act.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.