Recently, the Ministry of Civil Aviation provided relaxation in the rules of wet leasing of wide-body aircraft to Indian airlines. It extended the existing time limit of six months to one year. Though dry leasing is already allowed for 12 months with an optional extension of another 12 months. But before we march ahead, you must know what wet leasing is and why the Indian government has relaxed the rules for it? Why do airlines lease aircraft? We have all these answers below:
First things first, wet leasing refers to taking the aircraft along with cabin crew and engineers. On the other hand, dry leasing stands for taking the aircraft on rent without crew members and engineers. It is difficult for the Directorate General of Civil Aviation (DGCA) to monitor operations of a plane on wet lease and hence it is granted for a shorter duration as compared to dry lease.
As per the official website of OAG, a global travel data provider firm, “The technical term for wet leasing is ACMI which stands for aircraft, crew, maintenance and insurance. These are the aspects of the operation that the wet lease airline takes care of, while the airline client will still be responsible for paying for direct operating costs such as catering and fuel as well as fees such as airport fees, ground handling charges and navigation fees.”
Now that it is clear what wet leasing means, let’s talk about the Union Govt’s recent decision of extending the wet lease limit. It has been learnt that IndiGo, the country’s biggest airline, requested the Ministry of Civil Aviation to relax the rules. The government considered the airline’s request and allowed extension to all the Indian airlines operating in the country.
“We have plans for inducting B777 aircraft on wet/damp lease basis during the current winter schedule,” said IndiGo to PTI. The extension in wet lease will be on the basis of global destinations that the airline wishes to start flights to. It is being seen as a wonderful move from the government as the wet leasing of wide-body aircraft will enable more flyers and subsequently resulting in larger revenues for the airlines as they had a dreadful last couple of years due to COVID-19.
Last but not the least, why do airlines lease aircraft? Well, it is not a hidden fact anymore that over 50 percent of the aircraft deployed by airlines worldwide in their day-to-day operations are not owned by them but leased. These airlines lease planes in order to avoid huge lump sum payments that purchasing them would result in. Moreover, the airlines across the world also lease aircraft to increase frequencies on certain routes even on a temporary basis.
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