Aircraft Leasing Legal Issues

The operational lease risk allocation model has worked well to enable the significant expansion of the secular aircraft fleet that has taken place over the past two decades. Low barriers to entry have led to a significant increase in the number of aircraft leasing companies and indirectly other investors, whether through products such as JOL or JOLO or through capital market vehicles. The global fleet is about half leased and half owned, and in general this is also considered a desirable breakdown for the fleet of a single airline. Access to liquidity through competing aircraft leasing companies has allowed airlines to benefit from highly competitive rental rates. The clause applies to a broad class of leases of large U.S.-registered civil aircraft, including timeshare agreements and section 91.501 exchange agreements. It is most often used for the «dry lease» of an aircraft, when the lessor provides the aircraft and the lessee employs or contracts the crew members and has operational control of the flight. The lessor cannot provide flight or cabin crew members in a dry lease agreement. The guidelines clarify the often-discussed term «flight standards office» as the office whose service area covers the operator`s primary location – the operator`s physical address, and not the office whose service area covers the base location or registration location of the aircraft. However, Eileen Gleimer, a partner at Crowell & Moring, believes that the structural issues surrounding leases are too general and could affect legal dry lease structures that are not used as a final race around Part 135, but to address other legitimate goals in a way that ensures aviation safety. For example, in some legitimate post-drying leases, the landlord may perform or arrange maintenance work to increase safety, but this should not necessarily mean that the lessor has retained operational control of the aircraft. The determination of which party has operational control is usually based on all the circumstances. Dry lease agreements can be useful – and legal – tools for aircraft rental companies and tenants, but «fake» dry leases are sometimes used in illegal charter operations.

The FAA has stepped up its enforcement of illegal charter operations, and this directive appears to be the final step in that effort. When aircraft are funded, lessors must consider their obligations under this funding in relation to airline applications – are consents required before a response can be given? When does the notice of assignment terminate the landlord`s relationship with the tenant and replace the security guard? In the case of managed aircraft, it will be necessary to consult with aircraft owners and review the status of discussions with the lessee to ensure that there is no discrimination between clean and managed leased aircraft. The FAA recently released new guidelines for inspectors in the Flight Standards Information Management System to help aviation safety inspectors determine whether an aircraft lease complies with the truth clause in the lease of § 91.23 and other requirements of Part 91 of the FAR for leases and conditional purchase agreements. The COVID-19 situation was not a major topic of discussion at the Dublin conferences on aircraft financing in January – the scale of the problem was not obvious at the time. At that time, expectations for aircraft leasing activities for the next twelve months were as usual with the likely return to service of the B737 MAX aircraft, increased attention to environmental issues, potentially a return of sales and leaseback activities with airlines seeking liquidity, continued commercial activities and access to capital markets for financing and as part of the negotiation. It is true that there were more airlines on credit compliance than in the past, but in general, the world of aircraft leasing seemed relatively stable and, as a result, liquidity continued to be available for new investments in aircraft leasing or leasing. Check out an hour of NBAA news to avoid illegal charters. Currently, flights are an integral part of our lives. When we sit on the plane, we entrust our lives not only to the crew, but also to the plane. Today, aviation requirements are extremely high. But don`t forget that the planes we fly with are often leased.

And we`d like to address aviation leasing issues in this article. In civil law law law and theory, there are no concepts of aircraft lease and aircraft lease. An aircraft lease agreement is a contract under which the lessor undertakes to acquire ownership of the aircraft (aircraft) specified by the lessee for business or other business purposes from the seller specified by the lessee and to make that property available to the lessee for remuneration in temporary possession and temporary use. The contract may provide that the choice of seller and the property purchased is determined by the owner. In teaching and practice, there is no consensus on the type of lease, and scientists cannot agree on the nature of such a contract: whether it is trilateral or bilateral or whether it represents two contracts (rental and delivery). In civil law, one of the most controversial issues is whether the lease should be considered a separate type of civil contract or a type of lease. If COVID-19 affects air travel over an extended period of time, even systems and CVAs or their local equivalents will only be allowed to provide temporary support: a number of airlines could then face official bankruptcies. Recent bankruptcies of British airlines (such as Monarch and Thomas Cook) have been terminal, with the airline`s operations halted immediately after insolvency proceedings entered, planes grounded and passengers stranded. As a result, the funds available to the airline`s creditors in insolvency proceedings are not yet exhausted by the repatriation of passengers (which is then financed by the ATOL system and/or taxpayers), although the cost of repatriation may be lower with the significant decrease in the number of flights and passengers.