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An aircraft dry lease agreement is a contract between a lessor and lessee concerning renting an aircraft. The aircraft is leased without crew, insurance, fuel, or maintenance costs, which means that the lessee will not have to worry about payroll and other related operating expenses.
The lessee has no responsibility for any damage or wear-and-tear on the aircraft during the leasing term, so they don't need to take out an additional liability policy to protect themselves from such risks. The most desired benefits to an aircraft dry lease agreement include no crew expense, no insurance cost, no fuel cost, and no maintenance cost.
Below is a list of common sections included in Aircraft Dry Lease Agreements. These sections are linked to the below sample agreement for you to explore.
AIRCRAFT DRY LEASE
This Lease of aircraft is made effective as of June 12, 2008, by and between BH Holdings LLC, with an address of 700 17th St., Suite 1750, Denver, CO 80202 (“ Lessor ”) and Intrepid Potash, Inc., with an address of 700 17th St., Suite 1700, Denver, CO 80202 (“ Lessee ”).
The parties recite that:
WHEREAS, Lessor owns and is the registered owner of the airframe together with the Engines, APU(s) and all appliances, parts, instruments, avionics and appurtenances thereto, including any replacement part(s) or engine(s) which may be installed on the Aircraft from time to time, and all logs, manuals and other records relating to such Aircraft (collectively, the “ Aircraft ”):
| FAA Registration Number: | N518CL |
| Aircraft Serial Number: | 5180 |
| Aircraft Manufacturer: | Canadair, Ltd. |
| Aircraft Model: | CL-600-2B16 |
| Aircraft Year: | 1995 |
| Engine Serial Numbers: | 807282 and 807284 |
| Engine Manufacturer: | GE |
| Engine Model: | CF-34-1A |
WHEREAS, Lessee desires to lease the Aircraft under such terms and conditions as are mutually satisfactory to the parties.
The parties agree as follows:
LEASE OF AIRCRAFT
For Four Thousand Four Hundred Twenty Nine Dollars ($4,429) per flight hour, Lessor agrees to lease the Aircraft to Lessee, Lessee acknowledges that Lessor has also entered into a management agreement with Airmax, LLC, a limited liability company organized under the laws of the State of Colorado with an address at 8551 Aviator Lane, Centennial, CO 80112, pursuant to which Airmax, LLC shall manage the Aircraft according to 14 C.F.R. Part 91 and Airmax, LLC’s policies. It shall be conclusively presumed between the parties that Lessee has fully inspected the Aircraft having knowledge that it is in good condition and repair and that Lessee is satisfied with and has accepted the Aircraft in such condition and repair.
This Lease will commence on the date first above written and continue for one year after said date. Thereafter, this Lease will be automatically renewed on a month to month basis, unless sooner terminated by either party as hereinafter provided. Either party may at any time terminate this Lease upon thirty (30) days written notice to the other party, delivered personally or by certified mail, return receipt requested, at the address set forth above.
PRIVATE AND COMMERCIAL OPERATION
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(a) the personal transportation of Lessee and Lessee’s guests where no charge, assessment or fee is made for such transportation; or
(b) the transportation of Lessee’s officers, employees, guests and property where such transportation is within the scope of or incidental to Lessee’s business.
Lessee represents and warrants that it is not leasing the Aircraft for the purpose of charter or lease to third parties which could be considered commercial air transportation or air transportation for hire as set out in the Federal Aviation Regulations.
At all times during the term of this Lease, Lessor will also cause to be carried and maintained third party aircraft liability insurance, passenger legal liability insurance, property damage liability insurance, and medical expense insurance in the amounts set forth below:
Combined Liability Coverage for Bodily Injury and Property Damage Including Passengers -
Medical Expense Coverage -
Lessee’s proportionate share of the cost of the above insurance is included in Lessee’s lease payments to Lessor. Lessee will also bear the cost of paying any deductible amount on any policy of insurance in the event of a claim or loss.
Any policies of insurance carried in accordance with this Lease: (i) shall name Lessee as an additional insured; and (ii) shall contain a waiver by the underwriter thereof of any right of subrogation against Lessor; and (iii) shall provide that in respect of the interests of Lessor, such policies of insurance shall not be invalidated by any action or inaction of Lessee or any other person and shall insure Lessor (subject to the limits of liability and war risk exclusion set forth in such policies) regardless of any breach or any
violation of any warranty, declarations or conditions contained in such policies by Lessee or any other person; and (iv) shall provide that if the insurers cancel insurance for any reason whatsoever, or the same is allowed to lapse for non-payment of premium, or if there is any material change in policy terms and conditions, such a cancellation, lapse or change shall not be effective as to Lessee. Each liability policy shall be primary without right of contribution from any other insurance which is carried by Lessee or Lessor and shall expressly provide that all of the provisions thereof, except the limits of liability, shall operate in the same manner as if there were a separate policy covering each insured.
Lessor will submit this Lease for approval to the insurance carrier for each policy of insurance on the Aircraft. Lessor will arrange for a Certificate of Insurance evidencing appropriate coverage as to the Aircraft and the satisfaction of the requirements set forth above to be given by its insurance carriers to Lessee upon Lessee’s request.
RESTRICTIONS ON USE
Lessee may operate the Aircraft only for the purposes and within the geographical limits set forth in the insurance policy or policies obtained in compliance with this Lease. The Aircraft will be operated at all times in accordance with the flight manual and all manufacturer’s suggested operating procedures. Furthermore, Lessee will not use the Aircraft in violation of any foreign, federal, state, territorial, or municipal law or regulation and will be solely responsible for any fines, penalties, or forfeitures occasioned by any violation by Lessee. If such fines or penalties are imposed on Lessor and paid by Lessor, Lessee will reimburse Lessor for the amount thereof within thirty (30) days of receipt by Lessee of written demand from Lessor. Lessee will not base the Aircraft, or permit it to be based, outside the limits of the United States of America, without the written consent of Lessor.
The Aircraft will be flown only by certificated and qualified pilots and will be maintained only by certificated and qualified mechanics. Lessor agrees, represents and warrants that Lessee may make an independent choice in selecting crew members that Lessee uses on Lessee flights.
Lessee will not directly or indirectly create, incur, assume or suffer to exist any lien on or with respect to the Aircraft. Lessee will promptly, at its own expense, take such action as may be necessary to discharge any lien not excepted above if the same will arise at any time.
This Lease shall be subject and subordinate in law and equity to any existing or future security interest, mortgage or deeds of trust placed by Lessor upon the Aircraft.
Lessee acknowledges and agrees that the Aircraft shall not be available for use by Lessee during periods when Lessor is using the Aircraft or has reserved the Aircraft for use.