What is aircraft leasing and why do airlines need an aircraft for lease ?
ACMI – Aircraft Crew Maintenance Insurance.
ACMI is a form of wet or damp leasing when the company that operates the aircraft (the lessor) agrees to provide services for another company that uses the aircraft to cover its own needs (the lessee) and pays for the hours operated.
The lessor is responsible for:
• Aircraft – lessor provides fully airworthy and good to go aircraft. Aircraft may be branded with the lessee’s logos and colors, depending on the agreement between them.
• Crew – lessor is responsible to crew the aircraft with fully trained staff according to the air operator’s certificate and ensures that the flight crew meets all flight operation regulations.
• Maintenance – lessor, as a holder of an air operator’s certificate, is liable for maintaining the aircraft in a good shape all the time. In other words, that is the lessor`s responsibility to arrange all appropriate maintenance work away from the home base. Usually, it is done by signing the contract with local maintenance providers (outsourcing). Lessee may offer its own facilities (if the company has them), but ultimately the lessor decides how and who is going to take care of the aircraft away from the base.
• Insurance – basic insurance package is also covered by the lessor, including third party liability insurance for the aircraft and insurance for the crew.
Lessee is responsible for:
• Marketing and sales – it is up to the lessee to advertise and sell the seats on the airplane. As mentioned above, the lessor gets paid “hourly” for flying an aircraft and has absolutely no control over fulfilling the cabin with passengers.
• Other expenses – lessee covers fueling of the aircraft, airport fees, ground handling of the aircraft (parking, servicing, deicing if required, etc), passenger handling (check-in, transportation, etc), overflight charges, and any other duties and taxes.
• Additional insurance – operation into the countries with high risk (war zone or military conflict) might impose additional insurance requirements as well as regulator itself might require special insurance, which in this case, will be covered by the lessee.
Why Aircraft Lease?
The information above gives theoretical knowledge about ACMI aircraft leasing. In this block, the main question will be answered, namely: “Why do companies use this option of aircraft for lease?”
Imagine a situation when an aircraft is getting ready to depart but accidentally got hit by a tow truck. Initial maintenance check shows that structural damage does not allow that airplane to operate safely. Aircraft becomes AOG until the necessary work is completed. Multiple legs on this airplane are canceled for today and the following days when the aircraft remains unserviceable. This situation becomes a huge issue for small operators, which does not have a big fleet to play with. Cancellations of all scheduled flights on this aircraft, reimbursement of the costs, and associated penalties jeopardize the financial sustainability of the airline.
ACMI leasing allows affected airlines to quickly get the job done and move the passengers the same day without enormous financial loss. It allows winning crucial time and moving all scheduled flights on the affected airplane.
There is a tendency all over the world to enhance passenger rights and regulators in different countries set more rigid rules and policies protecting air travelers. Delays and cancellations are getting too expensive and the ACMI option becomes a more attractive and effective way of dealing with AOGs.
Companies also use ACMI to test the new routes. If an airline is unsure about profitability of the new route and does not have enough resources to allocate the airplane, train crew and so on, leasing the fully trained and ready crew for a month or two is a great idea to find out the load factor on the route and its profitability in general.
Optimizing the fleet availability during high and low seasons is another good example of right aircraft lease usage. A collaboration of European and Canadian tour operators is a classic example. Summer time is a peak for European charter operators flying passengers to the Mediterranean Sea, the Coast of Africa and Asia, whereas the Canadian recreational market is relatively calm. Everything changes during winter, when millions of Canadians want to escape from the harsh winter down to the Caribbean and Mexico. Airlines from both European and Canadian markets enjoy the ACMI aircraft leasing formula and keep their fleet and crews busy throughout the entire year.
In brief, that is what ACMI is about. Email us to share your ACMI experience or to get a free consultation on a specific case. Key Jet Charter makes sure every client gets the best possible ACMI solution.