Introduction

Aircraft leasing is one of the principal mechanisms through which airlines build and renew their fleets. Airbus A320/A321neo, A330 and A350 aircraft, as well as Boeing 737 MAX, 777 and 787 aircraft, may be acquired outright, but a significant commercial alternative is to place them into service through operating leases, finance leases or wet-lease/ACMI structures.

The expression “Airbus lease” or “Boeing lease” should not be misunderstood. The manufacturer is not necessarily the lessor. The owner may be a global aircraft leasing company, an SPV, a bank, a fund or another financing entity.

The distinction between Airbus and Boeing becomes particularly relevant in the technical schedules dealing with maintenance, manuals, modifications, records, engines, delivery and redelivery requirements.

Legally, however, the central structure is largely the same:

an aircraft lease is simultaneously an asset-use agreement, financing structure, maintenance-risk allocation mechanism, international secured transaction and aviation-regulatory arrangement.

For that reason, the headline monthly rent represents only one part of the legal and economic exposure.

1. Dry Lease Versus Wet Lease

The first question is whether the transaction constitutes a dry lease or wet lease.

Under Türkiye’s current SHT-KİRALAMA regime, a dry lease is an arrangement under which the aircraft is operated under the lessee’s operating licence, whereas a wet lease is operated under the lessor’s operating licence.

The distinction materially affects operational responsibility.

For wet-lease and short-term wet-lease operations under the Turkish regime, continuing airworthiness, flight operations and other administrative responsibilities generally remain with the lessor/operator, while commercial responsibility rests with the lessee, and this allocation must be reflected in the lease arrangement.

By contrast, under a long-term dry lease the airline assumes operational control of the aircraft under its own operating structure.

2. Regulatory Approval as a Condition Precedent

A sophisticated lease should not treat regulatory approvals as post-closing formalities.

The Turkish DGCA currently maintains separate application procedures for Wet-Lease In, Wet-Lease Out, Dry-Lease In and Dry-Lease Out operations.

In addition, current Turkish rules provide that cross-border dry-lease operations between Turkish and foreign operators are implemented through an Article 83 bis transfer-of-functions arrangement between the Turkish DGCA and the relevant foreign civil aviation authority.

Accordingly, regulatory approvals, registration and operational acceptance should normally form part of the lease’s conditions precedent.

An airline should not become economically locked into an aircraft that it cannot legally introduce into its fleet.

3. Delivery Condition

The first major risk allocation exercise concerns the delivery condition.

The lease should identify the agreed technical condition of the airframe, engines, APU, landing gear, components and records.

Relevant variables may include:

airframe hours and cycles, engine status, LLP remaining life, maintenance check status, AD compliance, structural repairs, cabin configuration and completeness of technical records.

A simple representation that an aircraft is “airworthy” may be insufficient.

An aircraft may be legally airworthy on delivery while being only a short period away from an extremely expensive engine shop visit or heavy maintenance event.

4. Technical Acceptance

From the lessor’s perspective, delivery acceptance should bring finality.

From the airline’s perspective, however, an overly broad acceptance clause may transfer previously unidentified technical risks to the lessee.

If missing records, undocumented structural repairs, inaccurate LLP data or undisclosed damage are discovered after delivery, an extensive “as is, where is” acceptance regime may restrict the airline’s contractual remedies.

Pre-delivery technical due diligence therefore has a direct legal function.

5. Rent Is Not the Entire Cost

The basic monthly rent is only one element of the aircraft’s actual lease cost.

The lessee may also be required to provide:

security deposits, letters of credit, maintenance reserves, supplemental rent, insurance payments, taxes and end-of-lease compensation.

For this reason, aircraft should be compared using total lease economics rather than headline rent alone.

A nominally cheaper Boeing 737 or Airbus A320 may ultimately be more expensive if its redelivery and maintenance obligations are substantially heavier.

6. Maintenance Reserves

Maintenance reserves are among the most commercially sensitive provisions in an aircraft operating lease.

Payments may be collected against future events relating to:

• engine performance restoration;
• engine LLPs;
• heavy airframe maintenance;
• landing gear overhaul; and
• APU maintenance.

The lessor seeks to protect the residual value of the aircraft.

The lessee must focus on whether reserves can actually be recovered.

The agreement should therefore define the reimbursement procedure, qualifying maintenance events, evidence requirements, reserve shortfalls, excess balances and cost-escalation methodology.

7. Engine Economics Can Matter More Than the Airframe Brand

The economics of an aircraft lease cannot be understood solely by comparing Airbus and Boeing.

Engine type may have an equally significant effect on lease economics.

Maintenance programmes, shop-visit exposure, LLP structures and OEM support arrangements vary between engine families.

The contractual description of the leased aircraft should therefore precisely identify the installed engines and applicable serial numbers.

8. Engine Substitution

Commercial engines may be removed, exchanged or temporarily replaced during the lease term.

The lease must therefore regulate engine substitution.

A lessor will generally seek to ensure that a replacement engine has:

clear title, no liens, appropriate technical compatibility and an equal or superior economic and maintenance status.

The issue has particular legal significance because qualifying aircraft engines can constitute aircraft objects within the Cape Town system independently of an airframe. The Convention and Aircraft Protocol are designed to create predictable and enforceable international interests in high-value mobile assets.

9. Maintenance and Continuing Airworthiness

A long-term dry lease typically places extensive maintenance obligations on the airline.

The lessor’s objective is not merely to ensure that the aircraft can fly during the lease term; it also seeks to protect the aircraft’s residual value.

This creates particular tension regarding non-mandatory Service Bulletins and modifications.

The airline may reasonably resist expenditure that is not legally required, while the lessor may argue that the work is necessary to preserve marketability at lease expiry.

A carefully drafted lease should distinguish mandatory compliance from discretionary lessor-driven enhancements.

10. Aircraft Records

Technical records are economically inseparable from the aircraft.

A component whose maintenance history cannot be satisfactorily established may suffer substantial diminution in value even if the physical component itself is serviceable.

Accordingly, aircraft leases normally impose extensive obligations regarding maintenance records, electronic backups, inspections and preservation of documents.

Missing records at redelivery can create substantial compensation exposure for the airline.

11. Insurance

Aircraft insurance clauses protect not only the operator but also the owner and financing parties.

Typical arrangements address hull all-risks insurance, war-risk insurance and third-party aviation liability.

Lessors and financiers may require appropriate additional-insured, loss-payee or contractual protections.

The current Turkish leasing framework also expressly addresses the allocation and maintenance of appropriate insurance coverage in relevant leasing operations.

12. Total Loss

The lease must establish what happens if the aircraft is destroyed or otherwise becomes a contractual Total Loss.

The lessor will normally seek an agreed economic recovery based on a stated loss value.

The lessee must ensure that the insurance value and contractual loss-value mechanics are aligned.

Otherwise, the insurance proceeds may be insufficient to satisfy the amount contractually owed to the lessor.

13. Indemnities

The lessor usually does not exercise day-to-day operational control under a dry lease.

It therefore seeks broad indemnification against operational liabilities such as passenger, cargo, third-party and regulatory claims.

From the airline’s perspective, the indemnity should contain appropriate exclusions for matters attributable to the lessor itself, including title defects and, depending upon negotiations, gross negligence or wilful misconduct.

14. Tax Gross-Up

Aircraft leases frequently contain tax gross-up clauses.

The commercial concept is simple: the lessor expects to receive the agreed net rent.

If withholding taxes are imposed on lease payments in the lessee jurisdiction, the contract may require the airline to increase the payment so the lessor receives the same net amount.

For the airline, this can materially alter lease economics.

Tax structuring should therefore be completed before execution of the lease rather than after delivery.

15. Sanctions and Export Controls

Sanctions have become a central contractual issue in cross-border aviation.

Lessors and their financiers may restrict operations involving certain States, entities or counterparties.

The legal challenge is to distinguish genuinely applicable sanctions restrictions from an excessively broad contractual policy.

For an airline, an overbroad sanctions clause may transform otherwise lawful commercial operations into an Event of Default.

16. Events of Default

Events of Default determine when the lessor may terminate the lease or pursue enforcement remedies.

Typical triggers include:

non-payment, loss of insurance, unlawful operation, maintenance breaches, insolvency, material misrepresentation and loss of regulatory authorisation.

The airline should pay particular attention to cure periods and materiality thresholds.

A short administrative delay should not necessarily produce the same consequence as prolonged non-payment of rent.

17. Cape Town Convention Protection

The Cape Town Convention and Aircraft Protocol are particularly important in international aircraft leasing and finance.

Türkiye has elected to apply Aircraft Protocol Article VIII. It has also adopted Alternative A for insolvency proceedings with a 60-calendar-day waiting period and has elected to apply Article XIII relating to IDERA.

Türkiye’s Convention declarations also permit certain creditor remedies that are not expressly required by the Convention to involve a court to be exercised without court action.

However, Türkiye has also preserved or made registrable specified categories of non-consensual rights, including certain tax or governmental claims, so an International Registry registration should not be treated as eliminating every possible competing legal risk.

18. IDERA

An Irrevocable De-Registration and Export Request Authorisation, or IDERA, may form a central part of the lessor’s enforcement package.

Türkiye applies Article XIII of the Aircraft Protocol, while the DGCA’s current regulatory and forms systems continue to provide for IDERA registration and cancellation procedures.

For a foreign owner leasing an Airbus or Boeing to a Turkish airline, the IDERA structure should therefore be considered at closing together with International Registry registrations and local aircraft registration arrangements.

19. Airline Insolvency

Airline insolvency presents one of the most significant risks to an aircraft owner.

Even where legal title remains with the lessor, the aircraft may physically be located in a different country, at a maintenance facility or subject to operational disruption.

Türkiye’s adoption of Aircraft Protocol Alternative A with a 60-day waiting period is consequently a material feature of the creditor risk analysis.

Nevertheless, contractual enforcement planning should also consider aircraft location, records, engines, maintenance-provider exposure and practical access to the asset.

20. Quiet Enjoyment

Aircraft leases must also protect the airline.

Provided that the lessee is complying with the lease, it should be able to operate the aircraft without unjustified interference from the owner or financing parties.

A properly structured quiet enjoyment provision is therefore an essential counterpart to the lessor’s enforcement rights.

21. Redelivery

Redelivery is frequently the most expensive stage of an aircraft lease.

The aircraft may be required to meet defined standards relating to:

airframe checks, engine maintenance status, LLP life, landing gear, APU condition, AD compliance, modifications, paint, cabin and records.

A contractual requirement for minimum remaining months, hours or cycles before the next maintenance event can have enormous financial consequences.

For this reason, the redelivery schedule should be modelled economically before the lease is signed, not shortly before the aircraft is returned.

22. End-of-Lease Compensation

Some transactions use cash compensation rather than requiring every maintenance item to be physically restored before redelivery.

Such formulas may calculate consumed maintenance life by reference to current or projected costs.

The airline must therefore understand assumptions concerning shop-visit cost, LLP pricing and cost escalation.

A poorly constructed formula may result in a return payment materially greater than the actual technical cost borne by the lessor.

23. Governing Law and Dispute Resolution

International aircraft lease transactions may involve an Irish lessor, a Turkish airline, an offshore owner SPV, foreign financiers and an aircraft operating globally.

Governing law and dispute resolution are therefore strategically important.

Türkiye has elected to apply Article VIII of the Aircraft Protocol, which is relevant to party autonomy in choosing applicable law within the Cape Town framework.

The parties should also determine whether disputes will be resolved through courts or international arbitration.

The choice should take account not only of substantive contract law but also of interim remedies, repossession and enforceability.

Conclusion

The legal quality of an Airbus or Boeing lease cannot be measured by the monthly rental rate alone.

A sophisticated lease analysis should address at least five interrelated areas:

regulatory approval, technical condition, financial obligations, default and enforcement protection, and redelivery economics.

In transactions involving Türkiye, the current Turkish SHT-KİRALAMA regime, Article 83 bis arrangements for relevant foreign dry leases, the Cape Town Convention, International Registry registrations and IDERA may all become central to the transaction structure. The DGCA’s current regulatory register records amendments to SHT-KİRALAMA through 6 May 2026 and continues to maintain specific procedures for dry-lease and wet-lease approvals.

From the airline’s perspective, a lease that appears cheap at delivery may become extremely expensive through maintenance reserves, taxes and redelivery exposure.

From the lessor’s perspective, a high rental rate is meaningless if title, maintenance status, insurance, enforcement rights and residual value are not adequately protected.

Accordingly, the best aircraft lease is not necessarily the agreement that places the aircraft into the fleet at the lowest immediate cost.

It is the agreement that clearly allocates the financial, technical and legal risks from the moment of delivery until the final moment of redelivery.