IATA Aircraft Lease Guidance

Guidance Material and Best Practices for Aircraft Leases
Section 3—Delivery
1
Background
2
Pre-delivery
3
Delivery
4
Operations
5
Redelivery
After the Lessee has considered more legal aspects of the lease agreement, it is time to agree on the
technical condition in which the aircraft should be delivered. The parties will negotiate and agree areas
including minimum remaining life of major components and maintenance clearance periods, airworthiness
standards for the aircraft including any clearance period for airworthiness directive compliance, and the
general condition of the aircraft including key areas such as paint and any agreed modifications required by
the next operator. Agreement will also need to be reached in relation to the inspection rights of the incoming
Lessee, including physical access to the aircraft, inspection of records, participation in a demonstration flight
and performance of borescope examination of the engines. Agreement in these areas will often be informed
by the redelivery conditions to be satisfied by the prior Lessee. It is important for the incoming Lessee to
understand that delivery and acceptance of the aircraft is almost always concluded on a strict “as-is, where-is
basis”, which means that the Lessee accepts the aircraft with all faults and defects, whether patent or latent,
and unless expressly noted as exceptions to the agreed delivery condition prior to acceptance, there is no
recourse to the Lessor for discrepancies which are discovered following delivery. For this reason, it is critical
for the incoming Lessee to ensure that any inspection rights agreed in the lease are sufficient to enable it to
perform a thorough physical inspection and a comprehensive records review to satisfy itself that the aircraft
is in compliance with the agreed delivery conditions, or to note any discrepancies, prior to accepting delivery
of the aircraft.
Besides legal and technical aspects, the Lessee must take in consideration which procedures and regulations
are applicable when an aircraft is transferred between states. Only when the aircraft complies with the
requirements of the appropriate authorities of the Lessor, and the Lessee, can the aircraft be accepted. After
the certificate of acceptance, with no exceptions of conditions attached, is signed, the aircraft is ready for
take-off.
3.1 Delivery Conditions
3.1.1 Technical Aspects for Delivery
There are different objectives for both Lessor and Lessee during the delivery or pre-lease phase of the
aircraft. The Lessor and the outgoing Lessee will prefer to keep the costs related to the delivery event as low
as possible whilst ensuring that the aircraft is in compliance with both the redelivery conditions of the
previous Lessee and the delivery conditions for the next lease. For this reason, the status in which the aircraft
is delivered to the new Lessee depends largely on the commercial negotiations, and, except in case of new
delivered aircraft, often is highly dependent on the redelivery conditions of the previous operator (i.e. the
18 4 th Edition 2017