Technical Aspects Of Aircraft Lease

In the previous issue, we discussed the various categories of aircraft lease such as a wet lease, dry lease, and damp lease. We also covered broadly the legal requirements for leasing an aircraft in the UAE and its implications. The aviation lawyers at STA continue with part II of this series and discuss the technical and legal dimensions of aircraft lease in India and Singapore.

India

The Director-General of Civil Aviation (the DGCA) under Government of India is the authority regulating civil aviation industry. Following are the regulations which govern the legal aspects of leasing by Indian operators of Indian or foreign registered aircraft. DGCA's authorization or permission is mandatory before leasing an aircraft in India.

The lease to an Indian operator with or without change of aircraft registration is a "lease in" whereas "lease out" is referred to the lease of Indian registered aircraft to a foreign operator with or without change of aircraft registration. Leasing between scheduled and a non-scheduled operator is not permitted, and it should be between two scheduled or two non-scheduled operators.

Leasing process

The parties, to get aircraft on lease, must submit an application before DGCA (Air Transport Directorate) for approval of lease arrangement. The Indian operator or registered owner shall submit the following document(s) before forty-five (45) days of proposed commencement of operations: (a) 3 sets Aircraft Leasing Form (LF-1 - foreign registered aircraft leased to Indian operators);(LF-2 - Indian registered aircraft leased to foreign operator); (LF-3 - leasing planes by an Indian from another Indian player to ) (b) a copy of the lease agreement and other documentation that confirms compliance with Section 3, Air Transport Series 'C' Part I - Civil Aviation Requirements (c) Consent of Foreign Civil Aviation Authority - which is required before a leasing permission.

Requirements

While granting permission for a lease arrangement, the DGCA (ATC) will examine fulfillment of certain requirements which are as follows:

I. Foreign registered aircraft can be leased by Indian operator if they are operating at least one aircraft registered in India on its Air Operator Permit (AOP). Further, the aircraft eligibility requirement is provided to be considered eligible for seeking permission:

i. It must be in DGCA-type acceptance list;

ii. registered with the foreign State;

iii. have a valid Certificate of Airworthiness, and

iv. will not be the subject of another lease in the term of the lease authorized by DGCA for that specific aircraft;

v. less than 15 years of age for passenger transportation and less than 25 years of age for cargo operations;

vi. Further, the aircraft should not have completed more than 45,000 pressurization cycles free from accident or seventy-five (75%) of its design economic life and have its maintenance program approved by the foreign regulatory authority.

II. For Indian registered...