Aircraft Lease Agreements – Governing Law

Within the aircraft lease agreements, we often talk about aircraft leasing and the importance of a lease agreement; we also know that many lease companies (lessor) are not based in the same country as the company who leases the aircraft (lessee) – one topic of note therefor is always the lease agreement “Governing Law”.

You might be curious about the lease agreement and of course, where is the lease agreement valid and what law does it apply with regards to the governing body or jurisdiction.

This is covered in the lease agreement, and it is noted in a section that will state the governing jurisdiction; while not considered during a lease return or review looking at records directly, it is an important part of the lease agreement itself.

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CAMO and managing risk / change.

The CAMO or Continued Airworthiness Management Organisation is a key and pivotal part of airline safety and managing risk / change forms the heart of this.

The CAMO is tasked with a lot of responsibility regarding ensuring that aircraft are airworthy in their operation concerning all known tasks, defects, and concerns. Of course, we cannot govern the unknown, such as environmental factors or accidental damage – but we can ensure that an aircraft is maintained and operates within its intended scope.

There are many parts of a CAMO and one of these is the capability to realise and appreciate how change and the management of change is important. We can use risk assessments to consider and mitigate negative impacts we identify for any given changes we make.

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Aircraft Maintenance Plan & Lease Compliance

An aircraft maintenance plan and the lease compliance are not always hand in hand – this is for several reasons such as operator specific requirements customizing the maintenance plan for the aircraft and conditions, they operate in as such awareness of this, and an overview of the maintenance plan is essential during any lease or lease return.

An aircraft will always require maintenance to remain in an airworthy condition and to operate safely. There are 2 main types of maintenance that are required the planned and the unplanned!

One we can control and schedule, while the other we can do a lot to predict and monitor, but there will always be elements we cannot control and so must react to a situation – such as lightning strikes, bird strikes or component failure.

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Financial Security of an aircraft lease – managing assets

The financial security of an aircraft lease and managing assets is a complex topic, there is multiple different considerations and as aircraft are high-cost items, awareness is paramount. In some cases, there might be more than one interested party even for one aircraft (such as engines installed leased from a separate lessor that the fuselage). Also, by their very nature aircraft can operate worldwide.

Depending on where an aircraft is registered and or operates it can be challenging to seize back aircraft, not least if they end up held by an airport or an authority due to unpaid fees. The lessor will always be aware of risk and look to mitigate the risk by not only knowing the environment and maintaining an active appraisal of it, but also the lessee and how stable the lessee is.

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End of lease return check – additional work requests from the lessor

During an end of lease return check there might well be additional work requests from the lessor.

When an aircraft is leased to a lessee from the lessor it is provided in a certain configuration and to a standard. Ultimately this scenario is replicated at the lease hand back when the aircraft is returned.

The lessor is interested in maintaining the asset value and always having a marketable asset, in many cases one aircraft will be transitioned from one lessee directly to another.

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