Wet lease vs dry lease comes down to one legal question: whose air operator certificate (AOC) the aircraft flies under. EU aviation law, which the UK kept after Brexit, defines a dry lease as an agreement under which the aircraft is operated under the AOC of the lessee, and a wet lease as one between air carriers under which it is operated under the AOC of the lessor. That single distinction decides who holds operational control, who supplies and supervises the crew, who maintains and insures the aircraft, which approvals the parties need and who answers to the regulator if something goes wrong. This comparison explains the ACMI and damp lease variants, the approval rules in the EU, the UK and the US, how insurance and costs are allocated, the counterparty risk that the April 2026 collapse of a UK wet lease carrier exposed, and how airlines, lessors and their advisers choose between the two structures.
Wet Lease vs Dry Lease: ACMI, Operational Control and EU and UK Approval Rules
By The Corporate INTL Newsroom · 30 October 2026
Wet lease vs dry lease: the short answer
In a wet lease the lessor provides the aircraft together with the people and systems that fly it, and keeps operating it under its own AOC; in a dry lease the lessor provides only the aircraft, and the lessee operates it under the lessee's AOC as part of its own fleet. Everything else in the comparison follows from that.
A wet lease is therefore a capacity contract. The lessee buys flying, usually to cover a seasonal peak, a delayed delivery or an aircraft out of service, and the lessor remains the operator in law. A dry lease is an asset contract. The lessee takes the aircraft, puts its own crew in it, maintains it within its own maintenance system and carries the regulatory responsibility for every flight. Wet leases therefore tend to cover short periods and dry leases longer ones.
| Issue | Wet lease (ACMI) | Dry lease |
|---|---|---|
| Whose AOC | Lessor's | Lessee's |
| Operational control | Lessor | Lessee |
| Flight crew | Lessor (cabin crew too, unless a damp lease) | Lessee |
| Maintenance and airworthiness | Lessor | Lessee, within its own approved system |
| Hull and liability insurance | Lessor arranges as operator | Lessee arranges as operator, naming lessor and financiers |
| Typical use | Short-term or seasonal capacity, cover for grounded aircraft | Fleet building over several years |
| Key EU and UK approval | Prior approval for wet leasing in; strict conditions for third-country aircraft | Prior approval under aviation safety law |
| Main legal risk for the lessee | Dependence on another operator's safety and solvency | Full operator liability and return conditions |
Because the choice moves regulatory responsibility from one company to another, it is rarely a purely commercial decision. Airline counsel and the aviation lawyers who advise operators and lessors usually start from the AOC question and work outwards.
What a wet lease is: ACMI and damp leases explained
A wet lease is an arrangement in which one airline supplies another with a complete operating package, and the industry usually calls it ACMI, short for aircraft, crew, maintenance and insurance, the four elements the lessor provides. Reporting on the 2026 failure of a UK provider describes exactly that model: the carrier operated on an Aircraft, Crew, Maintenance, Insurance (ACMI) basis on behalf of other carriers.
The lessee typically sells the seats or cargo space under its own flight numbers and brand, while the lessor's crew fly the aircraft and the lessor's AOC covers the operation. That is why EU law describes a wet lease as an agreement "between air carriers": both sides must be licensed airlines, because the lessor is still the operator.
Damp leases
A damp lease is a variant in which the lessor supplies the flight deck crew but not the cabin crew. The UK Civil Aviation Authority defines a damp lease as a wet-leased aircraft that includes a cockpit crew but not cabin attendants. Airlines use damp leases to keep their own cabin service, language skills and onboard product while borrowing an operator's aircraft and pilots. Legally it remains a wet lease: the aircraft still flies under the lessor's AOC, so the lessee's cabin crew are working within another operator's safety system, which raises training, rostering and employment questions that are worth settling with employment advisers before the first flight.
The three types of aircraft lease
When people ask about the three types of aircraft leasing they usually mean wet, damp and dry. Finance lawyers add a further distinction within dry leasing between operating leases, where the aircraft goes back to the lessor at the end of the term, and finance leases, where the lessee is effectively paying for ownership. That split matters for accounting and tax, but for the regulatory questions in this article the relevant line is between wet (lessor's AOC) and dry (lessee's AOC).
What a dry lease is and who carries the operating burden
A dry lease transfers the use of the aircraft alone, and the lessee adds it to its own fleet and operates it under its own AOC, with its own crew, maintenance arrangements and insurance. The UK CAA describes dry leasing in the same terms as EU law: an agreement between undertakings pursuant to which the aircraft is operated under the AOC of the lessee.
The wording "between undertakings" is deliberate. The lessor in a dry lease need not be an airline at all: it is commonly a leasing company or a financier that owns the airframe and never operates it. The lessee, by contrast, must hold an AOC that covers the aircraft type and the intended operations.
Because the lessee becomes the operator, it carries the full operating burden. It must bring the aircraft onto its AOC, satisfy its regulator on airworthiness and continuing airworthiness management, train and qualify crew on the type, and meet the minimum insurance requirements discussed below. It also takes on the commercial burden that comes with a long lease: rent for the full term, maintenance reserves or end-of-lease compensation, and redelivery conditions under which the aircraft has to be returned in an agreed state. Those obligations explain why dry leases are a fleet-planning tool rather than a quick fix.
Dry leasing can also run the other way. An airline that has surplus aircraft can dry lease them out to another operator, which then flies them under its own AOC. The CAA's dry leasing guidance therefore covers both directions, with separate information requirements for leasing an aircraft into and out of the UK operation.
Operational control: the test that decides the wet lease vs dry lease question
Operational control is the authority over whether, when and how a flight operates, and in a wet lease it stays with the lessor while in a dry lease it passes to the lessee. US federal aviation regulations define it precisely: operational control, with respect to a flight, means the exercise of authority over initiating, conducting or terminating a flight.
In Europe the same idea is expressed through the AOC. The operator whose certificate the flight sits under is accountable for crew qualifications, flight time limitations, maintenance standards and safety management, whatever the commercial paperwork says. That is why the label the parties give their contract does not decide the matter. An agreement called a dry lease, under which the lessor in practice supplies and controls the crew, can be treated by a regulator as a disguised wet lease, with the consequence that the wrong company has been operating without the right approval.
Operational control matters well beyond licensing. It frames who regulators and prosecutors look to after an accident, and courts in several countries have shown that corporate responsibility for aviation safety can lead to criminal liability, as the Paris appeal court's conviction of Airbus and Air France over the AF447 disaster illustrated. It also shapes insurance, because hull and liability policies respond to the operator named in them, and it drives the allocation of indemnities in the lease.
For lessees, the practical lesson is to align three things: the contract, the AOC on which the flights actually operate, and the approvals obtained. Where they diverge, regulators, insurers and passengers will all look to the operator of record. More on how disputes in the sector develop can be found in our aviation coverage.
EU rules: Article 13 of Regulation 1008/2008
In the EU, Article 13 of Regulation 1008/2008 allows airlines to use both wet and dry leased aircraft, but subjects most leases to prior approval and puts strict conditions on wet leasing aircraft registered outside the EU. Its starting point is permissive: a Community air carrier may have one or more aircraft at its disposal through dry or wet lease agreement, and may freely operate wet-leased aircraft registered within the Community except where this would lead to endangering safety.
Approval then attaches in two layers. First, a dry lease to which an EU carrier is a party, or a wet lease under which an EU carrier is the lessee, is subject to prior approval under the applicable aviation safety law. In practice that is handled by the national authority that oversees the carrier's AOC. Second, an EU carrier that wet leases an aircraft registered in a third country needs prior approval for the operation from its competent licensing authority, and that approval is conditional.
The third-country wet lease conditions
The licensing authority may approve a wet lease of a third-country aircraft only if the EU carrier shows that safety standards equivalent to EU or national law are met, and, unless an international wet-leasing agreement signed by the Union provides otherwise, one of three conditions applies:
- Exceptional needs. Approval may be granted for up to seven months, renewable once for a further seven months.
- Seasonal capacity. The carrier must show the capacity cannot reasonably be met by leasing aircraft registered within the EU; approval may then be renewed.
- Operational difficulties. The carrier must show it is not possible or reasonable to lease EU-registered aircraft; approval is limited to the duration strictly necessary to overcome the difficulties.
The authority may attach conditions, which then form part of the wet lease agreement, and may refuse approval where there is no reciprocity on wet leasing between the EU or the member state and the country where the aircraft is registered. The international agreement exception was inserted by Regulation 2019/2, which amended Article 13 to accommodate wet-leasing agreements based on air transport agreements signed before 1 January 2008.
The policy behind these limits is protection of EU safety standards and of EU carriers' crews from long-term substitution by non-EU operators. For lessees, the effect is that third-country wet leasing is a stopgap that must be justified, documented and time-limited. Carriers planning a summer programme on third-country capacity should build the approval timetable into the commercial deal, and many take advice from regulatory advisers on how their licensing authority applies the conditions.
UK rules after Brexit: DfT, CAA and the dry lease clock
The UK kept Article 13 in its retained version of Regulation 1008/2008, so the structure is the same, but "third country" now means any country other than the UK or an EU member state, and approvals are split between the Department for Transport and the CAA. The retained text allows UK carriers to freely operate wet-leased aircraft registered in the UK or the EU, subject to safety, and keeps the seven plus seven month, seasonal and operational difficulty routes for other aircraft.
Wet leasing in
According to the CAA's wet and damp leasing guidance, a UK AOC holder can wet lease from operators in EASA member states under a general approval, notifying the CAA through its online form before the lease starts. It remains accountable for the safety of the operation and must oversee the lessor's standards within its own safety management system.
Wet leasing in from any other third-country operator needs three permissions: lease approval from the Department for Transport under Article 13(3); lease approval from the CAA under the Air Operations Regulation after the lessee demonstrates compliance with the leasing requirements in ORO. AOC. 110; and a permit under Article 250 of the Air Navigation Order 2016. The application has to be supported by a copy or description of the lease, the lessee's safety audit of the foreign operator, the operator's AOC, certificates of registration, airworthiness and noise for each aircraft, and a certificate of insurance meeting the minimum passenger and third-party levels. The lessor's pilots also need validations of their licences or an exemption.
The CAA notes that a charge may apply depending on how much assessment is required.
Wet leasing out and dry leasing
A UK operator wet leasing a G-registered aircraft out to another operator does not need lease approval under Article 13(2), but must notify the CAA before the aircraft goes, and its AOC must cover the areas of operation. Dry leases are approved by the CAA and are short by default: the CAA says the period of transfer will not normally exceed seven months, extendable for up to a further five months to a maximum of 12, after which at least five months should elapse before another application for the same aircraft. Operators based in England or elsewhere in the UK that plan longer arrangements should discuss the structure with the CAA early.
US rules: truth-in-leasing and the operational control clause
In the US, the wet versus dry distinction is policed mainly through operational control, and leases of large US-registered civil aircraft must carry a written truth-in-leasing clause. Under 14 CFR 91.23, the lease must include, in large print immediately before the signatures, the regulations under which the aircraft was maintained and inspected in the preceding 12 months, the name, address and signature of the person responsible for operational control, and a statement that an explanation of operational control can be obtained from the responsible Flight Standards office.
The rule has procedural teeth. A copy of the lease must be mailed to the FAA Aircraft Registration Branch within 24 hours of execution, a copy must be carried in the aircraft, and the responsible Flight Standards office must be notified at least 48 hours before the first flight under the lease, unless that office authorises otherwise. The rule does not apply where the aircraft is leased to an airline or certificate holder operating under the commercial parts of the regulations, or to a foreign air carrier, because those operators are already subject to their own operational control oversight.
The truth-in-leasing regime is aimed at a familiar risk: a lease described as a dry lease that in reality functions as an unlicensed charter, with the owner supplying crew and controlling flights for payment. For cross-border lessors, the point is that the same aircraft can be analysed differently under US, EU and UK law, so a structure that works on the European side should be checked by advisers in the United States when the aircraft is on the US register.
Insurance: who insures what in a wet or dry lease
The operator insures: in a wet lease the lessor carries the liability and hull cover as the operating carrier, and in a dry lease the lessee does, usually naming the owner and financiers as additional insureds. Whoever operates must meet the statutory minimums. Regulation 785/2004, as retained in the UK, requires passenger liability cover of at least 250,000 SDRs per passenger, and sets third-party liability minimums per accident for each aircraft that rise with maximum take-off mass.
| Maximum take-off mass (kg) | Minimum third-party cover (million SDRs) |
|---|---|
| Under 2,700 | 3 |
| Under 6,000 | 7 |
| Under 12,000 | 18 |
| Under 25,000 | 80 |
| Under 50,000 | 150 |
| Under 200,000 | 300 |
| Under 500,000 | 500 |
| 500,000 or more | 700 |
Article 7 also allows war and terrorism third-party risks to be insured on an aggregate basis if per-accident cover is unavailable, a provision that becomes live whenever conflict disrupts the market, as our analysis of what war risk insurance covers in shipping shows for a parallel sector.
Statutory minimums are only the floor. In a wet lease the lessee should check that the lessor's policies cover the specific routes and operations, that the lessee is named as an additional insured where it bears exposure, and that cancellation notice provisions give it time to react. In a dry lease the lessor and its financiers will insist on agreed hull values, loss payee clauses and contract liability cover for the indemnities the lessee gives. The CAA's insistence on a certificate of insurance with every third-country wet lease application reflects how central this is. Lessees and lessors often bring in insurance specialists to review the certificates and endorsements before delivery.
Costs and contract allocation: what each structure puts on the lessee
The cost difference between a wet and a dry lease is structural: an ACMI price bundles the aircraft with the lessor's crew, maintenance and insurance, while dry lease rent buys the aircraft alone and leaves the lessee to fund everything needed to operate it. Market rates vary with aircraft type, season and availability, and are negotiated privately, so the useful comparison is of what each side pays for rather than of headline numbers.
Under a wet lease, anything outside the four ACMI elements has to be allocated expressly. Fuel, airport and navigation charges, ground handling, passenger compensation for delays and cancellations, crew accommodation away from base and the cost of a replacement aircraft if the leased one goes unserviceable are all common negotiation points. A minimum guaranteed number of hours, if the lessor asks for one, turns a flexible capacity purchase into a fixed commitment.
Under a dry lease, the lessee carries rent for the full term, its own crew and training costs, maintenance and continuing airworthiness, insurance, and the redelivery obligations at the end. Lessors usually protect themselves against the aircraft coming back in poor condition through maintenance reserves or end-of-lease compensation, and against default through security deposits and letters of credit. Those terms are where airline finance and leasing lawyers spend most of their time, and they make dry leasing a balance sheet decision rather than an operational one.
The practical test is utilisation and time horizon. A short, peaky requirement rarely justifies the fixed costs of bringing an aircraft onto the lessee's AOC; a multi-year requirement rarely justifies paying another operator's crew and overhead for every hour flown.
Passengers and branding: telling travellers who operates the flight
Wet leased flights are usually sold under the lessee's brand, but EU and UK law require passengers to be told which airline actually operates them. Under Regulation 2111/2005, the air carriage contractor must inform the passenger of the identity of the operating air carrier upon reservation, keep them informed if the identity is not yet known, and if the operator changes after booking take all appropriate steps to tell them as soon as possible, and in all cases at check-in or boarding.
The CAA's wet leasing guidance reminds UK operators of the same duty. For lessees this is a contract and process point as well as a regulatory one: reservation systems, websites and airport messaging need to name the operating carrier, and the wet lease agreement should require the lessor to supply the information promptly when it substitutes an aircraft. Disclosure also affects passenger claims, since passengers who experience delays or cancellations will look to the operating carrier, and the lease should say how the cost of those claims is shared between the parties.
Dry leases raise no equivalent issue, because the lessee is the operating carrier and its own brand and AOC match.
Counterparty risk: what happens when an ACMI provider fails
In a wet lease the lessee depends on the lessor's continued ability to operate, and an ACMI provider that loses its AOC or fails financially takes the capacity with it overnight. That risk materialised in the UK on 28 April 2026, when London Stansted-based Ascend Airways closed down and surrendered its AOC to the CAA, citing high jet fuel prices. The carrier had flown on an ACMI basis for airlines including TUI Airways, Oman Air, Air Sierra Leone and SpiceJet, and its Boeing 737s were handed straight back to their leasing company owners.
For the airlines relying on that capacity, the consequences were immediate: flights to cover, passengers to inform and re-accommodate, and claims to assess against an insolvent counterparty. Unsecured claims for prepayments or lost revenue rank behind secured creditors, a point explained in our guide to what happens when a company goes into administration.
Lessees can reduce the exposure through due diligence on the provider's finances and fleet ownership, by avoiding large prepayments, by requiring substitution obligations and notice of financial distress, and by keeping contingency options with a second provider. The aircraft owners behind the provider will also act quickly to recover their assets, which is why the dry lessors in the chain usually emerge better protected than the wet lessee. Where a provider is in trouble, early advice from restructuring advisers can make the difference between recovering a deposit and writing it off.
How to choose between a wet lease and a dry lease
Choose a wet lease when you need capacity quickly, for a limited period, without adding an aircraft type to your AOC; choose a dry lease when you need an aircraft for years and have the crew, maintenance capability and balance sheet to operate it. The table sets out the main decision points.
| Your situation | Usually points to | Why |
|---|---|---|
| Seasonal peak or a few months' gap | Wet lease | No need to bring the aircraft onto your AOC or train crew |
| Aircraft grounded or delivery delayed | Wet lease | Fastest replacement; EU and UK rules allow time-limited third-country approvals for operational difficulties |
| New route trial before committing | Wet or damp lease | Tests demand without long-term rent or redelivery liability |
| Fleet growth over several years | Dry lease | Lower cost per hour once crew and maintenance are in place |
| Brand and cabin product must be your own | Damp or dry lease | Your cabin crew deliver the service |
| Aircraft type new to your AOC | Wet lease first | Type certification of crew and maintenance takes time |
| Concern about counterparty solvency | Dry lease, or wet lease with strong protections | A dry lessee controls the operation; a wet lessee depends on the lessor |
Three contract points apply whichever route is chosen. First, governing law and forum: leases specify a governing law and either a court or arbitration, and the choice of arbitral seat decides which courts supervise any dispute. Second, enforcement: if the counterparty and its assets are abroad, consider in advance how a judgment or award would be enforced in another jurisdiction. Third, regulatory conditions: make approval a condition precedent, so neither party is committed before the regulator has signed off.
When to bring in an aviation lawyer
An aviation lawyer is worth involving before signature in any third-country wet lease, any dry lease that moves an aircraft between registers or AOCs, and any arrangement where the description of the deal and the way the aircraft will actually be operated might diverge. Those are the situations in which approvals can be refused, insurance can fail to respond and operational control can be found to sit with the wrong party.
Specialist counsel can draft and negotiate the ACMI or lease agreement, coordinate the approval applications with the DfT, CAA or the relevant EU licensing authority, align the insurance programme with the lease, and plan for default and redelivery. Many work alongside lessors and airlines in leasing centres such as Ireland, and in the jurisdictions where the aircraft are registered and operated. When disputes arise over redelivery condition, unpaid hours or a failed provider, dispute resolution specialists with aviation experience can assess the claim and the best forum. To compare advisers, start with the Corporate INTL directory of aviation law experts.
Frequently asked questions
What is the difference between a wet lease and a dry lease?
In a wet lease the lessor supplies the aircraft with crew, maintenance and insurance and operates it under its own air operator certificate. In a dry lease the lessor supplies only the aircraft, and the lessee operates it under the lessee's certificate, with its own crew, maintenance and insurance. The AOC decides who holds operational control.
What does ACMI stand for?
ACMI stands for aircraft, crew, maintenance and insurance, the four elements a wet lessor provides. It is the industry name for a wet lease. The lessee usually sells the flights under its own brand and flight numbers, while the lessor operates them under its own AOC and remains responsible for safety and crew.
What is a damp lease?
A damp lease is a wet lease in which the lessor provides the aircraft and flight deck crew but not the cabin crew. The UK Civil Aviation Authority defines it as a wet-leased aircraft that includes a cockpit crew but not cabin attendants. The aircraft still operates under the lessor's AOC, so it is regulated as a wet lease.
Who has operational control in a wet lease?
The lessor does. Because a wet leased aircraft operates under the lessor's air operator certificate, the lessor exercises authority over initiating, conducting and terminating each flight, supervises the crew and is accountable to its regulator. In a dry lease operational control passes to the lessee, which operates the aircraft under its own certificate.
Does a wet lease need regulatory approval?
Usually. Under Article 13 of Regulation 1008/2008, an EU or UK airline that wet leases in an aircraft needs prior approval under aviation safety law, and wet leasing an aircraft registered in a third country needs prior approval from the licensing authority, subject to strict conditions. UK lessees wet leasing from third-country operators also need a CAA permit.
How long can an EU airline wet lease a non-EU aircraft?
It depends on the justification. For exceptional needs, approval may be granted for up to seven months, renewable once for a further seven. Seasonal capacity approvals may be renewed if EU-registered aircraft cannot reasonably be leased instead, and operational difficulty approvals last only as long as strictly necessary. International agreements can provide otherwise.
How long can a dry lease last in the UK?
The CAA's guidance says the period of transfer under a dry lease will not normally exceed seven months, extendable by up to five further months to a maximum of 12. After a 12-month dry lease period, at least five months should elapse before another dry lease application is made for the same aircraft.
Who insures the aircraft in a wet lease vs dry lease?
The operator insures. In a wet lease the lessor carries hull and liability cover as operating carrier; in a dry lease the lessee does, normally naming the lessor and financiers. Either way the operator must meet the minimums in Regulation 785/2004, including passenger cover of at least 250,000 SDRs per passenger.
Do passengers have to be told when a flight is wet leased?
Yes. Regulation 2111/2005 requires the air carriage contractor to tell passengers the identity of the operating air carrier when they book, and to inform them as soon as possible if it changes, and in all cases at check-in or boarding. That applies when another airline operates a wet leased flight.
Sources
- Regulation (EC) No 1008/2008, Article 13 (Leasing), legislation.gov.uk
- Regulation (EC) No 1008/2008, Article 2 (Definitions), legislation.gov.uk
- UK Civil Aviation Authority: Wet and damp leasing
- UK Civil Aviation Authority: Dry leasing
- Regulation (EC) No 785/2004, Article 6 (passenger liability insurance), legislation.gov.uk
- Regulation (EC) No 785/2004, Article 7 (third-party liability insurance), legislation.gov.uk
- Regulation (EC) No 2111/2005, Article 11 (identity of the operating air carrier), legislation.gov.uk
- 14 CFR 91.23: Truth-in-leasing clause requirement, eCFR
- 14 CFR 1.1: General definitions (operational control), eCFR
- Aerospace Global News: UK ACMI airline Ascend Airways collapses in liquidation (28 April 2026)
About this article
This comparison was researched and written by The Corporate INTL Newsroom, which covers cross-border legal, regulatory and business developments for lawyers, professional advisers and financiers in over 150 jurisdictions. It has been checked against the text of Regulations 1008/2008, 785/2004 and 2111/2005, the UK Civil Aviation Authority's leasing guidance, the US federal aviation regulations and primary reporting. EU legislation is cited from legislation.gov.uk, which reproduces the text as it stood when the UK left the EU together with the UK's later amendments. This article is general information, not legal advice; for advice on a specific lease or approval, consult a qualified adviser. Last reviewed 30 October 2026. For more analysis like this, visit the Corporate INTL newsroom or subscribe to Corporate INTL.
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