From UPSC perspective, the following things are important :
Prelims level : Wet and dry leasing
Mains level : Not Much
In efforts to boost international air traffic, the civil aviation ministry has allowed Indian airlines to take wide-body planes on wet lease for up to one year.
What is Wet Leasing?
- Wet leasing means taking the plane along with the operating crew and engineers, while dry leasing refers to taking only the aircraft on rent.
- 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.
- This includes catering and fuel as well as fees such as airport fees, ground handling charges and navigation fees.
- Operations of an aircraft on wet lease are more difficult for the Directorate General of Civil Aviation (DGCA) to monitor, which is why it is allowed for shorter durations.
What are the new rules?
- The rules had been relaxed, allowing the wet leasing for a year as opposed to the six months permitted so far.
- Dry leasing was already allowed for up to 12 months, with the option to extend the contract for 12 another year.
Why has govt extended limit now?
- The civil aviation ministry’s decision came on a request by the country’s largest airline, IndiGo.
- It plans for inducting B777 aircraft on wet/damp lease basis during the current winter schedule.
- The relaxation will be available to all Indian carriers and will be granted based on international destinations they wish to operate to.
- With Covid-related restrictions lifting, international travel is lifting up, and the wet leasing will allow airlines to fly more routes and rounds.
- Wide-body planes can accommodate more passengers, thereby boosting revenue.
Why airlines lease aircraft?
- About half the planes used by airlines around the world are not owned but leased.
- Airlines and aircraft operators prefer leasing planes in order to avoid massive lump sum payments that buying them would entail, and to quickly increase capacity, perhaps temporarily, on certain routes or sectors.
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