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Aircraft Lease Agreements

What is the difference between Dry and Wet Lease?

A Dry Lease involves leasing the aircraft without crew, insurance, or maintenance. A Wet Lease (ACMI) includes the aircraft, Crew, Maintenance, and Insurance provided by the lessor.

Is it mandatory to register the lease agreement in Georgia?

Yes, for an aircraft operated by a Georgian carrier, the lease agreement typically needs to be filed with and approved by the Georgian Civil Aviation Agency (GCAA) for safety oversight and registration purposes.

Does Georgia recognize the Cape Town Convention?

Yes, Georgia is a party to the Cape Town Convention, which provides standardized remedies for default in financing agreements, including the ability to file an IDERA.

How long does the lease registration process take?

The timeline can vary depending on the complexity of the agreement and document completeness, but it generally takes a few weeks to complete the review and registration with the GCAA.

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Aircraft leasing is one of the most critical and complex components of the aviation industry, requiring not only in-depth knowledge of commercial terms but also strict adherence to international and local legislative regulations. In Georgia, where the aviation sector is actively developing and the country serves as a regional transport hub, airlines and operators frequently resort to lease agreements to expand or optimize their fleets. Aircraft Lease Agreements govern the relationship between the owner (lessor) and the operator (lessee), defining the terms of aircraft operation, insurance, maintenance, and registration.

What does Aircraft Lease Agreement service cover?

Legal services related to aircraft lease agreements are a multifaceted process covering all stages of the transaction—from negotiations to contract registration. Specialists work in the following key areas:

  • Dry Lease: Drafting agreements where an airline leases only the aircraft without the crew. This requires detailed provisions regarding maintenance, insurance, and operational responsibilities.
  • Wet Lease (ACMI): Drafting agreements where the lease includes the aircraft, crew, maintenance, and insurance. Lawyers ensure the protection of parties' rights regarding operational control and liability allocation.
  • Lease Agreement Audit: Legal analysis of existing agreements, risk assessment, and determination of compliance with Georgian legislation and international standards.
  • Registration and Deregistration: Ensuring procedures for registering the aircraft in the Civil Aviation Register of Georgia or removing it from the register, as well as executing IDERA (Irrevocable De-Registration and Export Request Authorization).
  • Tax Advisory: Analysis and optimization of tax obligations (VAT, import tax, withholding tax) related to lease transactions.

Common Situations and Needs

There are frequent cases in practice where qualified legal intervention is decisive:

  • Seasonal Demand: A Georgian airline needs an additional aircraft for the summer tourist season and plans to sign a "Wet Lease" (ACMI) with a foreign company.
  • Establishing a New Airline: A startup airline begins operations and wants to acquire several aircraft on "Dry Lease," which requires complex negotiations with international leasing companies.
  • Aircraft Return: After the lease term expires, a dispute arises between the lessor and lessee regarding the technical condition of the aircraft (Redelivery conditions).
  • Border Crossing and Customs Procedures: A foreign company needs to bring an aircraft into Georgia for temporary use and requires the correct structuring of customs and tax regimes.

Georgian Legislation and Regulations

The field of aircraft leasing is regulated by both local laws and international conventions. The primary regulatory act is the Air Code of Georgia, which defines the rules for the operation and registration of aircraft. Contractual relationships are regulated by the Civil Code of Georgia, which establishes general principles of leasing, although the specifics of aviation require more detailed regulation. Additionally, the Tax Code of Georgia is important as it defines the taxation regime for leasing operations. Georgia is also a party to the Cape Town Convention (on International Interests in Mobile Equipment), which gives lessors additional guarantees and rights, including the possibility of using the IDERA mechanism, reducing risks in international transactions.

Service Process

Working with a specialist involves several stages:

  1. Initial Consultation and Structuring: Analysis of client needs, selection of lease type (Dry vs Wet), and development of the transaction structure.
  2. Agreement Drafting/Review: Preparing a detailed draft of the lease agreement or reviewing the draft submitted by the other party to exclude risks.
  3. Negotiations: Active involvement in negotiations to agree on commercial and legal terms.
  4. Regulatory Interaction: Submitting documentation to the Civil Aviation Agency, registration, and obtaining permits.
  5. Closing and Delivery: Signing the agreement, executing acceptance-delivery acts, and issuing legal opinions.

Why Legal.ge?

Aviation law is a narrow and specific field where mistakes can cause millions of dollars in losses. Legal.ge gives you access to experienced lawyers practicing in Georgia who have practical experience in international aviation transactions. Specialists represented on the platform will help you navigate the labyrinth of complex regulations and protect your business interests. Find a qualified aviation lawyer on Legal.ge and ensure the safety of your transactions.

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