Aircraft leasing across national boundaries

The legal and administrative procedure associated with an operator leasing an aircraft

registered in a state other than the state where the lessee is based can, dependent on

circumstance, involve the Department for Transport (DfT), the Civil Aviation Authority (CAA), the foreign regulatory authority and the UK operator.

ICAO Contracting States undertake to regulate aviation in their country. The state of

registry of the aircraft sets criteria to ensure compliance for example, with design

standards, airworthiness and crew licensing; other matters are also covered. States

license and supervise certificated carriers (e.g. AOC Holders) with a view to setting

standards designed to achieve a certain level of safety.

When an aircraft registered in one state passes to the control of an operator in another state, the state of registry maybe unable to discharge the obligations allocated to it by the ICAO Convention. This situation can be resolved by the regulatory authorities of the two states agreeing to a

transfer of responsibilities.

A working agreement can be achieved whereby the state of registry agrees to transfer and the state of the operator agrees to accept ICAO Annex 6 responsibilities for the aircraft for a set period. In the UK, the period of transfer will not normally exceed six months per application.

Council Regulation (EEC) No 2407/92 dated 23 July 1992 places additional

responsibilities on European Union (EU) member states and licensing authorities.

 Most states place some restriction on the use of foreign registered aircraft for hire or

reward within their boundaries.

In this respect, the Secretary of State possesses certain powers, set out in the UK Air Navigation Order (ANO) Articles 138 and 140, and Article 8 of the EC Regulation 2407/92. In practice, the procedure is administered by the DfT, in conjunction with the CAA, the latter dealing with economic and safety matters. Within the CAA, the Economic Regulation Group (ERG), the Consumer Protection Group (CPG) and the Safety Regulation Group (SRG) are involved.

Again, dependent upon circumstance, the DfT and the CAA will need to grant appropriate Approvals, Waivers, Permissions, Licences and Exemptions, as necessary, before a leased aircraft can be legally operated for public transport or for aerial work. The documents granted vary according to the nationality of the operator and the state of registry of the aircraft, and the four types of lease are covered in detail later.

Complex arrangements may need putting in place before an aircraft leased across national boundaries can be operated. A UK operator proposing to become either lessor or lessee should give as much notice to the CAA as possible so that the arrangements can be made before the planned start date for the lease.

As offices outside the UK and the CAA are involved, it is impossible to predict how long the process will take. Experience indicates that one calendar month is the minimum time taken for the process to reach fruition, but in some instances two months have elapsed. In the case where foreign registered aircraft are to be 'dry' leased-in a longer delay may occur.

The definitions of 'dry lease' and 'wet lease' are:

A dry lease is understood to be a lease of an aircraft where the aircraft is operated under the AOC of the lessee. It is normally a lease of an aircraft without crew, operated under the commercial control of the lessee and using the lessee's airline designator code and traffic rights.

A wet lease is understood to be a lease of an aircraft where the aircraft is operated under the AOC of the lessor. It is normally a lease of an aircraft with crew, operated under the commercial control of the lessee and using the lessee's airline designator code and traffic rights.

It is usual for the CAA only to approve the 'dry' lease-in of a foreign registered aircraft where it is a type that has already been certificated in the United Kingdom, or a country of the European Union and where the particular aircraft in question meets any additional UK design requirements notified to the European Aviation Safety Agency under Article 10 of EC Regulation 1592/2002.