Dry-Leases and Contract Pilots

This article is meant to help operators understand the concept of dry-leases, the execution of a dry-lease, pros and cons, as well as potential stumbling blocks. However, this article is not comprehensive and we strongly suggest seeking advice from legal council before participating in a dry-lease of a business aircraft.

Written By Tyler Flagg

Last updated About 1 year ago

Understanding Dry-Leases

A dry lease refers to an arrangement where an aircraft owner (lessor) leases the aircraft to another party (lessee) without providing a flight crew. This transfer gives the lessee full operational control over the aircraft, making them responsible for its safe operation under Federal Aviation Regulation (FAR) Part 91.

Key Features:

Ownership vs. Possession: The lessor retains ownership, while the lessee assumes possession and operational responsibilities.
Operational Control: The lessee oversees decisions related to the aircraft, such as maintenance, crew hiring, and flight scheduling.
Regulatory Framework: Dry leases are commonly used for private, non-commercial flights to comply with FAR Part 91.

Executing a Dry Lease

To implement a dry lease, consider the following steps:

Draft a Written Agreement:

Include FAA-compliant truth-in-leasing provisions (FAR 91.23).
Clearly define the lessee’s operational control responsibilities.

Pilot Procurement:

The lessee must independently hire or contract flight crew.
Crew should not be employed or arranged by the lessor to avoid classification as a wet lease.

Maintenance and Insurance:

Assign maintenance responsibilities in the lease, typically to the lessee for airworthiness checks.
Secure appropriate liability and hull insurance coverage, ensuring the lessee is named on the policy.

FAA Notification:

For large aircraft (over 12,500 lbs. MTOW), submit a copy of the lease to the FAA Aircraft Registry within 24 hours and notify the Flight Standards District Office before the first flight.

Coordinate Operations:

Implement processes for delivery and redelivery of the aircraft to delineate operational responsibility between lessor and lessee.

Pros and Cons of Dry Leasing

Pros:

Cost Efficiency: Lessees can access an aircraft without the upfront investment of ownership.
Flexibility: Non-exclusive leases allow multiple lessees to use the aircraft at different times.
Control: Lessees gain operational control, tailoring aircraft use to their specific needs.

Cons:

Regulatory Compliance: Missteps can result in FAA scrutiny and potential penalties.
Liability Risk: The lessee assumes full responsibility for the aircraft’s operation.
Insurance Complexities: Coordinating policies for multiple lessees can be challenging.

Cautions Based on NBAA Guidance

The FAA closely monitors leasing arrangements to prevent “sham” dry leases, where operational control remains with the lessor. Here’s how to ensure compliance:

Avoid Arranging Pilots: The lessor must not provide or even recommend specific pilots to lessees.
Independent Crew Procurement: Pilots must have no financial ties to the lessor.
Transparent Maintenance: Document maintenance arrangements to clarify lessee responsibility.
Operational Clarity: Clearly define roles and responsibilities in the lease, ensuring the lessee understands their obligations.

How Flying Company Helps

Flying Company empowers lessees to efficiently staff pilots for a dry-leased aircraft by connecting directly with the open market for quotes. This critical step ensures compliance by avoiding any potential “gray area,” as it prevents the use of crew employed or arranged by the lessor

Open Market Access: Create an aircraft profile, create a trip, and receive quotes directly from pilots across the country.
Operational Flexibility: Avoid illegal wet leases by hiring pilots through our platform, ensuring compliance with FAR 91.501.
Supportive Resources: Access tools to find pilots who meet the Open Pilot Policy (Warranty) for the aircraft.

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