When Lessor Can Mean More!

Performing maintenance on leased aircraft requires a careful approach as there are more parties involved than for an owned aircraft. Bernie Baldwin reports on the challenges involved.

The maintenance of an aircraft through its operating life might easily be considered to be a straightforward process. The aircraft is taken off the line, then enters the hangar for all the necessary procedures and processes (which are often less than straightforward), all the work is signed off by qualified personnel and the aircraft returns to service.

This is the case when the aircraft are owned by the operating airline, but is not quite so clear-cut when aircraft are leased by the operator. And according to IATA, it’s now more than 20 years since a majority of aircraft were owned rather than leased, and that the percentage of leased aircraft now sits around the 60% level and has done for some years.

In these circumstances, of course, the lessor is the actual owner of the aircraft or is managing the lease on behalf of a third-party owner. These entities therefore have the final say over how the asset (the aircraft) is maintained.

With multiple parties involved, therefore, the lease contracts must include all the details of which party has responsibility for each part of the maintenance process. This also means the apportioning of costs. Thus, each party must be aware of their role and understand what is expected of them as the asset goes through its time with the operator.

This allocation of responsibilities mainly applies to dry leases, as wet (ACMI) leases include maintenance services, so the lessor does the handling of maintenance. With a dry lease, only the aircraft is provided by the lessor, hence the need to specify the responsibility of each party across the term of the lease.

Generally, with a dry lease, the aircraft operator is the party responsible for ensuring the aircraft’s airworthiness, working with an MRO provider approved by all parties in the terms of the lease. Naturally, the operator will be required to follow all the regular maintenance procedures and regulations, and will mostly bear the cost of all that, just as they would if the asset was owned.

One particular area of dispute is that lessors do not often approve the use of PMA parts. Usually, parts from the OEM are the preferred option when component replacement is required. Lessors believe this practice helps to retain a higher residual value of the asset, leading to better lease rates when an aircraft is moved on from one lessee to another.

TrueNoord is a specialist in regional aircraft leasing and its head of technical, Jack Bos, is closely involved in the negotiations regarding the maintenance of assets which are on dry lease. He outlines the level of oversight the company generally takes on the MRO work done – from simple checks to C-checks or refurbishments, to choice of provider for engine and airframe work – by the lessee on an asset.

“TrueNoord lease contracts contain the provision that all maintenance work should be performed by an Approved Maintenance Provider. In principle such a maintenance provider should be an EASA/FAA approved facility. However, for airframe work up to a certain work scope we will approve locally approved facilities,” Bos explains. “Furthermore, the work scope of each engine shop visit needs to be approved in advance by the lessor.

“During the lease, TrueNoord performs periodic annual audits of our aircraft. These consist of an extended walk-around inspection of each aircraft and a detailed inspection of the aircraft records generated since the previous annual review. If possible, such an annual review will be scheduled during an airframe hangar check,” he reports. “Other than that, we do not send inspectors to monitor MRO events performed during the lease, except for the redelivery check. The lessee is entitled to ‘quiet enjoyment’ of the aircraft during the lease period.”

Bos also emphasises the level to which those conducting oversight are trained and certified. “People conducting an annual physical review, or monitoring the redelivery check (mostly consultants), should have extensive experience as an engineer, ideally on the aircraft type to be monitored,” he says. “Reviews of the aircraft’s technical records are mostly performed remotely using digital copies of those records. These are performed by separate records specialists.”

As a lease moves towards its end, the parties involved need to ensure that the asset is being returned in a satisfactory condition, which can lead to much greater involvement with the lessee as there are likely to be specific areas which generally require close attention from those performing oversight.

“TrueNoord’s lease contracts contain very detailed redelivery conditions that need to be complied with by the lessee,” Bos confirms. “The redelivery inspection will consist of a detailed inspection of the aircraft and the monitoring of the redelivery check, the redelivery demonstration flight and the borescope inspection of both engines and, if applicable, the APU. Furthermore, all technical records generated during the lease will be reviewed in great detail, ensuring all required status listings and statements are provided by the lessee.”

After the return of an asset from its first lease, there is occasionally a period before the aircraft is re-delivered for a subsequent lease. During this time, the aircraft may undergo some MRO work to meet the new lessee’s requirements. Bos explains the return and redelivery procedure.

“In an ideal situation, a transition between two leases is ‘back-to-back’. This means that the lessor is not required to perform any MRO work between two leases because the delivery condition of the next lease is mirrored from the redelivery condition from the previous lease, and the whole process takes place within a matter of days,” he notes.

“In practice, however, this seldom happens. In the case of extended periods between return and delivery, for example, if a new lessee has not yet been contracted at the time of return (in some cases a repossession), we must place the aircraft in storage at an MRO facility under the control of a CAMO (Continuing Airworthiness Management Organisation),” Bos confirms. “The work package to be performed prior to delivery to a new lessee could consist of an airframe calendar check, modifications – such as a LOPA (layout of passenger accommodations) change – component maintenance and in some cases even engine shop visits.

“All MRO work performed ‘in between leases’ is closely monitored on-site by TrueNoord representatives,” he emphasises.

This practice relates to one of the first things TrueNoord does regarding maintenance when drawing up a lease agreement. “Before TrueNoord contracts work to an MRO it can take some time to negotiate a GTA (General Terms Agreement) with the involvement of our legal department to define commercial terms, such as the applicable labour rates and handling charges for materials. We prefer to work with a shortlist of selected and experienced MROs,” Bos asserts.

While planning maintenance may be less straightforward on leased aircraft, clear definitions at such a stage will undoubtedly make the process smoother.

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Article courtesy of Aviation Business News

15 September 2025