Mid-Lease Inspection – Technical Records Audit

During the asset Life-Cycle the lessor has a duty to carry out aircraft due diligence on a periodic basis at a frequency agreed in the Aircraft Lease Agreement, this due diligence is commonly referred to as the “Mid-Lease” or “Mid-Term” Inspections.

In advance of the mid-lease inspection if representing a lessor or owner then it is important to define the required scope of what data needs to be collected.

The requirements have changed significantly over the years and in particular the volume of Technical Records required has increased.

The checklist is broken down into several areas and we will consider these over a series of posts.

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Aircraft Repossessions Considerations & Cape Town Agreement

First of all we can consider an agreement commonly referred to as the Cape Town Convention 2001.

The Cape Town Convention (2001) is often referred to during an Aircraft Repossession and has circa 80 countries as members. Within this we can consider the “Matters Specific to Aircraft Equipment” and the aim of the Protocol is to protect the title and security interests in the aircraft and engines. 

The Protocol brings speed, certainty, and cost savings to the process of repossessing aircraft and engines on an insolvency or other default, particularly where these assets are in a country whose legal system would otherwise give cause for concern in such matters.

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Aircraft Lease – Asset protection – Lessee Considerations prior to lease

IALTA

When you lease an asset such as an aircraft, the value is large and as such constant oversight and many financial considerations are required.

For example, you can insure the asset against loss of value, you can mitigate the risk of unpaid maintenance through the use of maintenance reserve funds (MRF) – this means along side the monthly lease costs for the aircraft a second charge often referred to as supplemental rent is paid which is a breakdown of the expected costs of maintenance as per the usage of the aircraft.

While maintenance reserve funds are used in a cycle – lessee pay to lessor and then when maintenance is carried out the lessor releases money to lessee in a very simple overview it is not enough to compensate for all risks.

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EASA Ferry Flight Awareness / General & Repossession Considerations

For many reasons it is most likely that a repossessed aircraft will operate under a “Permit to Fly” – this can often be the case where maintenance is overdue, or a relocation flight is required, and the aircraft is not an on AOC (Aircraft Operation Certificate) such as the case might be when the company operating it has failed.

Regarding EASA registered aircraft, it is important to be aware of some of the requirements for aircraft flights as operations are split into 2 major categories: that of commercial and non-commercial.

Non-commercial operations are broken into NC Non-Commercial & SPO Special Operations

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Aircraft Repossession & Asset monitoring – Ferry Flight Preparation

When we want to move an aircraft after a repossession will occur, we need to ensure some details are in place. Often we will need some details such as the details for the installed Engines/APU and landing gear for example, we will need the current maintenance status, hours and cycles for the aircraft and scheduled maintenance also for example. 

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