Posted on June 29th, 2021
The FAA updated the Legal Interpretation of a Dry Lease on November 23, 2021, General Aviation Dry Leasing Guide.
The FAA discussed the regulation of aircraft wet and dry leases. Under a dry lease of an aircraft, the lessor provides the aircraft, and the lessee supplies their own flight crew, retains operational control of the flight, and may operate under FAR Part 91. Under a wet lease, the lessor provides both the aircraft and the crew, retaining operational control of the flight. Still, the lessor is usually required to hold an operating certificate because the FAA considers it to be providing air transportation.
According to the Interpretation, “a key consideration in differentiating a dry lease from a wet lease is whether the aircraft and flight crew are obtained separately, or provided together as a package.” For example, if evidence shows that the parties are “acting in concert” to furnish an aircraft and crew, then the FAA would likely consider the arrangement a wet lease. However, whether an aircraft lease is a dry or wet lease is determined on a case-by-case basis.
The Interpretation goes on to state that the regulations do not limit the number of lessees that may lease an aircraft, nor do they establish hourly requirements for aircraft leases. Those issues are “contractual terms negotiated by the owner and the lessee.” Additionally, a lessee may hire the same management company that the owner uses, provided that the facts and circumstances do not show that the arrangement is “merely a wet lease in disguise.”
The Interpretation also notes that a lessee may contract with the same flight crew that is contracted for by the aircraft owner, so long as the evidence does not suggest that the arrangement is really a wet lease. Generally, the FAA would consider an arrangement where a person leases an aircraft from its owner and secures the flight crew from another source to be a dry lease. If the aircraft and flight crew are provided as a package, the lease would be a wet lease.
Finally, the Interpretation indicates that the FAA “does not have specific requirements regarding collection of payment for the flight crew. However, the method of payment may serve as indicia of whether the parties have entered into a wet- or dry-lease agreement.”
Since the 2021 interpretation, the FAA has increased its oversight of leasing structures, with a particular focus on preventing “sham dry leases” that are, in practice, disguised charter operations. Industry groups, such as NBAA, report heightened enforcement activity and emphasize that operators must carefully distinguish between Part 91 leasing and Part 135 commercial charter operations.
The FAA’s internal guidance (FAA Order 8900.1) provides additional detail on transferring aircraft between operators’ OpSpecs, truth-in-leasing documentation, and the requirement to notify the Aircraft Registration Branch in certain dry lease scenarios. Compliance with 14 CFR § 91.23 truth-in-leasing requirements has also been updated, with revised notification processes for lessees beginning operations under a lease.
In addition, aircraft insurance markets often treat dry leases as higher-risk than traditional operations, which can lead to increased premiums. Both lessors and lessees should negotiate clearly who carries liability, how coverage applies, and how claims would be handled.
If you enter into aircraft lease arrangements, it is essential to be familiar with these FAA interpretations and policy updates. While the 2021 guidance provides a general framework, each arrangement is reviewed on a case-by-case basis. The “devil is in the details”—and having an aviation attorney review the facts, draft, or revise the lease agreement can help protect aircraft owners, lessees, and flight crews from FAA enforcement risk.
At JetOptions, we work exclusively with fully compliant FAA Part 135 operators, ensuring that every charter or lease structure meets the latest FAA standards. This protects our clients and provides peace of mind when arranging private flights.
The Federal Aviation Administration (FAA) continues to refine its guidance on private jet charter operations, particularly regarding lease structures. On November 23, 2021, the FAA released an updated General Aviation Dry Leasing Guide. This interpretation clarified the distinctions between wet leases and dry leases—two arrangements that affect operational control, liability, and compliance with FAA Part 91 and Part 135 rules.
For private jet travelers and aircraft owners alike, understanding these definitions is essential. Misclassifying an agreement can lead to unexpected regulatory scrutiny, fines, or even FAA enforcement action. Below we share details of the FAA’s interpretation, originally summarized by aviation attorney Greg Reigel of Reigel Law Firm, along with why it matters for today’s charter clients and operators.
The FAA updated the Legal Interpretation of a Dry Lease on November 23, 2021, General Aviation Dry Leasing Guide.
These answers were initially posted by Greg Reigel of Reigel Law Firm, Ltd.
The FAA discussed the regulation of aircraft wet and dry leases. Under a dry lease, the lessor provides the aircraft, while the lessee supplies their own flight crew, retains operational control, and may operate under
FAR Part 91. Under a wet lease, the lessor provides both the aircraft and the crew and retains operational control of the flight. In most cases, the lessor must also hold an operating certificate because the FAA considers it to be providing air transportation.
A key consideration in differentiating a dry lease from a wet lease is whether the aircraft and crew are obtained separately or provided together as a package. If evidence shows the parties are acting in concert to furnish both, the FAA will likely consider it a wet lease. However, each case is reviewed individually.
The Interpretation further clarifies that regulations do not limit the number of lessees that may lease an aircraft, nor do they establish hourly requirements. These are contractual terms negotiated between owner and lessee. Additionally, a lessee may hire the same management company or flight crew used by the owner, provided the overall arrangement does not amount to a wet lease in disguise.
The FAA also notes that while there are no specific requirements regarding payment for the flight crew, the method of payment may indicate whether the agreement is actually a wet or dry lease.
Generally, the FAA would consider an arrangement where a person leases an aircraft from its owner and secures the crew from another source to be a dry lease. If the aircraft and crew are provided together, the lease would be considered a wet lease.
If you enter into aircraft lease arrangements, it is important to understand this FAA interpretation. While it provides general guidance, every case is fact-specific. Having an experienced aviation attorney review lease agreements can protect aircraft lessors, lessees, and flight crews from FAA enforcement actions.
At JetOptions, we only work with FAA Part 135 certified operators and ARGUS & Wyvern-rated aircraft. Every charter is arranged with safety, compliance, and transparency at the forefront. If you’re considering a private jet lease or charter, our team can provide guidance and arrange a compliant flight experience tailored to your needs.
Request a private jet charter quote today or contact us to learn more.
Tags: wet lease, lease aircraft, dry lease
