VOLUME 12 INTERNATIONAL AVIATION
CHAPTER 2 FOREIGN AIR CARRIERS OPERATING TO THE U.S. AND FOREIGN OPERATORS
OF U.S.-REGISTERED AIRCRAFT ENGAGED IN COMMON CARRIAGE OUTSIDE THE U.S.
Section 9 Lease and Interchange Agreements, and Charter Arrangements
12-349 GENERAL. The leasing of large transport category aircraft between a U.S.
and foreign air carrier or between two foreign air carriers is widely used.
The Federal Aviation Administration (FAA) defines an aircraft lease as a contract
by which one person grants the right of exclusive possession and use of a certain
aircraft to another person for a specified period or a defined number of flights.
Lease agreements can be characterized as a dry lease, an interchange agreement,
or a wet lease. (Additional definitions may be found in
Volume 3, Chapter 13, Section 2.)
12-350 DRY LEASE. The term “dry lease” means any arrangement whereby
a lessor agrees to provide an entire aircraft without crew to an operator. The
lessee operator of the aircraft must hold the necessary economic and operating
authority for the aircraft, and it must exercise operational control over the
aircraft. Accordingly, the lessee must provide the necessary flight and cabin
crewmembers, ground personnel, dispatchers, and ground facilities to operate
the leased aircraft.
A. Operations Specifications (OpSpecs). The dry leasing of U.S.-
or foreign-registered aircraft (without crewmembers) by foreign air carriers
operating to the United States and foreign persons engaged in common carriage
outside the United States is a common practice. Where the lessor of the aircraft
is a U.S. or foreign air carrier, the Federal Aviation Administration (FAA)
must remove the leased aircraft from the lessor carrier’s OpSpecs and list it
on the lessee’s OpSpecs, except when the lease is in the form of an interchange
B. Regulatory Compliance.
1) Each foreign air carrier operating to the United States must
comply with part
129 and the applicable provisions of part
91 of Title 14 of the Code of Federal Regulations (14 CFR).
2) When operating a U.S.-registered aircraft within or outside
the United States in common carriage, each foreign air carrier and foreign person
also must comply with:
a) All applicable regulatory requirements in 14 CFR, including, but not
limited to, the following:
43 (maintenance) and
65 airmen other than flight crewmembers), as applicable.
61 (in particular, §§
63 (in particular, §§
63.42 (personnel licensing requirements for flightcrew members (pilot, flight
engineer, and flight navigator)) (see Volume 5, Chapters 2 and 4)).
91 (in particular, §§
129.24, and subparts B and C. (U.S.-registered aircraft operated solely
outside the United States in common carriage by the foreign person or foreign
air carrier. See §
b) Title 49 of the Code of Federal Regulations (49 CFR) part 175 (rules
for loading and carrying dangerous articles and magnetized materials in any
civil aircraft in the United States and in civil aircraft of U.S.-registry anywhere
in air commerce); and
c) All applicable orders and regulations of other U.S. agencies and courts,
and with all applicable laws of the United States.
C. OpSpecs Applications and Amendments. Foreign air carriers should apply
for OpSpecs or seek an amendment of their OpSpec authorizing the use of any
dry leased U.S.-registered aircraft in accordance with §§
129.11. The FAA will process such applications in accordance with Volume
3, Chapter 1.
12-351 INTERCHANGE AGREEMENT. An interchange agreement is a form of a
dry lease agreement. An interchange agreement permits two air carriers to connect
two or more points on a route using the same aircraft but each operator’s crewmembers.
For example: operator “a” (the primary operator) operates an aircraft from point
“x” to point “y” (the interchange point). At point “y,” operator “b” (the interchange
operator) assumes operational control of the same aircraft to fly from point
“y” to point “z” with operator “b’s” own crew.
A. Definitions. The following definitions apply to interchange
1) The Primary Operator. The primary operator under an interchange
agreement is the U.S. or foreign air carrier that would normally operate the
aircraft if the interchange were not in effect. The primary operator always
retains responsibility for the maintenance control of an aircraft that is the
subject of an interchange agreement.
2) The Interchange Operator. The interchange operator is the
other U.S. or foreign air carrier party to the interchange agreement.
3) The Interchange Points. The interchange points are those airports where
an aircraft may be transferred between the primary operator and the interchange
operator. The transfer involves the replacement of the flightcrew of one operator
with the flightcrew of the other operator.
B. Sample Scenarios. The following scenarios may arise when amending
OpSpecs to document interchange agreements involving foreign air carriers and
operations to the United States:
1) If the primary operator under an interchange agreement is
either a U.S. operator or a foreign air carrier operating to the United States,
the aircraft subject to the interchange will be identified in paragraph A029
of the primary operator’s OpSpecs and included in the list of the primary operator’s
aircraft in paragraph A003 of its OpSpecs.
2) If the primary operator under an interchange agreement does
not provide service to the United States, then the interchange points must be
located outside the United States. The FAA would not issue OpSpec A029 to the
3) If the interchange operator provides service to the United
States, the aircraft subject to the interchange will be identified in paragraph
A029 of the interchange operator’s OpSpecs. If the interchange operator does
not serve the United States, the FAA would not issue OpSpec A029 to the interchange
operator. The interchange points must be located outside the Untied States in
4) When U.S.-registered aircraft are included under an interchange
agreement between two part
129 air carriers, those aircraft shall also be listed in paragraph D085
of the primary operator’s OpSpecs.
NOTE: The parties to the interchange agreement may transfer operational control
of the aircraft only at an interchange point designated in the appropriate OpSpecs.
C. U.S. or Foreign Registry. Under an interchange agreement, the aircraft
may be of either U.S. or foreign registry. However, if the aircraft is foreign-registered,
it must specifically comply with
14 CFR part
121.153(c) or part
135.25(d), as appropriate, in order to be operated by a U.S. certificate
holder. If the aircraft is of U.S. registry, the foreign air carrier or foreign
person must comply with the applicable 14 CFR requirements while it has operational
control of the aircraft (see Volume 3, Chapter 13, Section 5).
12-352 WET LEASE. As defined in
14 CFR part
110.2 and part
119.53 a wet lease is any leasing arrangement whereby a person agrees to
provide an entire aircraft and at least one crewmember. A wet lease is a commercial
arrangement whereby an aircraft owner leases both the aircraft and at least
one crewmember to another person for his/her exclusive use for a specified period
or a defined number of flights. A wet lease does not include a code-sharing
NOTE: When an air carrier provides less than an entire aircraft crew,
the wet lease is occasionally referred to as a “damp lease.” Title 14 CFR authorizes
only a wet lease or dry lease; therefore, the term "damp lease" is used for
commercial purposes only.
A. Office of the Secretary of Transportation (OST) Characterization.
When the OST characterizes a lease as a wet lease, the OST’s definition of the
term applies to economic authority. The OST’s characterization of wet lease
does not necessarily make the lessor responsible for operational control, which
is one of the safety considerations for a wet lease authorized by the FAA. Therefore,
the FAA’s definition of “wet lease” in §
110.2 and in OpSpec A002 is different from the OST definition and applies
solely to the safety authority falling under FAA’s oversight.
B. FAA Restriction. A U.S. air carrier may not wet lease an aircraft
from any foreign air carrier or foreign person, as described in part
121.153(c), and part
135.25(d). This restriction is based in part on the prohibition on cabotage
under Title 49 of the United States Code (49 U.S.C.) Chapter 411, § 41703, and
partially on safety oversight considerations under § 44701.
NOTE: OST may authorize a U.S.
air carrier to obtain an entire aircraft with crew under certain arrangements
characterized as wet lease agreements by parties involved. The FAA and OST refer
to these agreements as provision of airraft with crew arrangements. More details
may be found in paragraph 12-354.
C. Operational Control. Depending on the laws of the State of Operator,
a foreign air carrier may be able to wet lease aircraft from a U.S. air carrier
or from another foreign air carrier. Although the FAA permits U.S. air carriers
to wet lease aircraft to foreign air carriers and foreign persons, those operators
usually prefer to dry lease aircraft in order to have operational control of
the leased aircraft.
1) FAA’s policy requires each U.S. air carrier to retain operational control
of each wet-leased aircraft listed on its OpSpecs regardless of whether the
aircraft is U.S.- or foreign-registered. This policy applies to aircraft wet-leased
to any foreign air carrier and to any foreign person. If there is any ambiguity
in the terms of the lease agreement (e.g. operational control, or whether the
arrangement should be referred to OST for review as a provision of aircraft
with crew or other charter agreement), the PI should refer the lease to the
Regional Counsel for a determination.
2) To make a proper determination of operational control, it
may be necessary to ask the lessor to submit any clarifying or supplemental
information regarding the lease arrangement. Section
119.53 provides that the FAA will determine that a party has operational
control of flights if that party exercises authority and responsibility for
a specified number of operational functions. In cases where doubt or controversy
exists, the Administrator will also consider additional factors such as who
is responsible for maintenance, servicing, and crewmember training.
D. OpSpecs Amendments. Prior to engaging in a wet lease operation to or
from the United States, a foreign air carrier must apply for, or seek an amendment
of its OpSpecs to list the aircraft in OpSpec A028. The FAA requires such an
amendment whether the other party to the wet lease is a U.S. or foreign air
carrier. In support of the amendment, the foreign air carrier must submit to
the FAA a copy of the wet lease arrangement or a written memorandum of the pertinent
terms of the wet lease. The FAA will review the documents pertaining to the
wet lease as follows:
1) Identify the aircraft that are subject to the wet lease. If
the lessor is a foreign air carrier, OpSpec A003 of the lessor’s OpSpecs must
list the aircraft, and in addition, if the aircraft is U.S.-registered, OpSpec
D085 must also list the aircraft. If the lessor is a U.S. air carrier, OpSpec
D085 must list the aircraft.
2) Determine if the lessor or grantor transfers legal, or actual
possession (i.e, custody) of the entire aircraft (see Volume 3, Chapter 18,
Section 3, and OpSpec A028). If not, the arrangement is not covered by the §
119.53 wet lease prohibition, and the arrangement should be referred to
OST (see paragraph 12-354).
3) Determine which air carrier will exercise operational control
over the wet lease operations. If the lessor is a U.S. air carrier, it must
retain operational control of each wet-leased aircraft.
4) Confirm that each party to the wet lease arrangement holds
the necessary operating and economic authority to conduct the wet lease. Each
foreign air carrier must hold the appropriate economic authority from the OST
to conduct wet lease operations to the United States.
E. FAA/OST Differences. Because of differences in the way the FAA
and the OST define and apply the term “wet lease,” the analysis of a wet lease
transaction can be complicated. For example, the OST also includes wet lease
transactions within the scope of what constitutes a charter (see paragraph 12-354).
F. Wet Lease Types. Operational control under an FAA-defined wet
lease will be one of two types.
1) The Lessor/U.S Certificate Holder Will Have Operational Control
of the Listed Aircraft. If the lessor certificate holder will have operational
control, that certificate holder is authorized to conduct operations in accordance
with each applicable wet lease arrangement identified in the first table of
a) The certificate holder issued this authorization must at all times be
responsible for and maintain operational control and airworthiness of each aircraft
identified in each lease arrangement. The first table of the OpSpec must list
the lease arrangement(s).
b) The nationality, registration, and serial number of each aircraft used
under the terms of the wet lease arrangement will be identified in paragraph
D080 or D087, as applicable, and D085 of the certificate holder’s OpSpecs.
c) While conducting operations under this authorization, the lessor may
be authorized to use the call sign and flight number(s) of the lessee, provided
that, for all flights the lessor certificate holder explains, in the remarks
section of the applicable flight plan, that the lessor is conducting the flight
under the call sign and flight number(s) of the lessee.
d) Both lessor and lessee certificate holders will have their role and information
on the wet lease arrangement documented in OpSpec A028 of their respective OpSpecs.
2) The Lessor/U.S. Certificate Holder Will Not Have Operational Control
of the Listed Aircraft. This type of arrangement is rare. For the FAA to
approve such an arrangement, the parties will have to establish, to the FAA’s
satisfaction, how the lessee will exercise operational control of the aircraft.
For the party to each applicable wet lease who will not have operational control,
that determination must be stated in the second table of the respective certificate
holder’s OpSpec A028. Under this example, the lessor certificate holder not
having operational control will exercise the wet lease arrangement(s) listed
in the second table with the following limitations and provisions:
· The lessee, as the party exercising operational control, is solely
responsible for the safety and regulatory compliance of the flights.
· The lessee, as the party having operational control in the wet
lease arrangement listed in the second table, must at all times be responsible
for, and maintain, the operational control and airworthiness of the aircraft
identified in each wet lease arrangement listed.
· The lessor certificate holder is not authorized to have, and may not
have, operational control of any operation conducted by the lessee certificate
holder under this paragraph of the OpSpec.
· Both lessor and lessee certificate holders will have their role
and information on the wet lease arrangement documented in OpSpec A028 of their
A. Definition. A charter is an agreement whereby a person agrees
to provide all, or part of, the lift capacity of an aircraft it operates to
another person for a defined period of time or number of flights. In short,
a charter is the provision of a flight service.
B. Elements. In a charter arrangement, the following elements
are usually present and distinguish a charter from a wet lease arrangement.
· The provision of all or part of the aircraft’s lift capacity to
· The person contracting for the lift capacity is not the operator
of the aircraft;
· A specific aircraft is not identified; and
· There is no transfer of exclusive possession and use of that aircraft
to the other person. For example, the person providing the lift capacity either:
· retains the right to substitute other aircraft for the aircraft
identified in the agreement; or
· retains the right to use the aircraft identified in the agreement
for its own purposes when the aircraft is not needed by the operator receiving
the lift capacity.
C. Economic Authority. A foreign air carrier conducting charter operations
to or from the United States must hold the appropriate economic authority from
14 CFR part
375. The FAA does not issue OpSpecs to those operators. However,
129 operators conducting nonscheduled flights to or from any point in the
United States must provide prior notification, in accordance with the reporting
requirements of OpSpec A001.
12-354 PROVISION OF ENTIRE AIRCRAFT WITH CREW. Under an OST-approved
provision of aircraft with crew arrangement, a foreign air carrier may provide
an entire aircraft with crew to a U.S.-certificated air carrier without acting
contrary to the FAA’s regulations that generally prohibit a foreign air carrier
from wet leasing aircraft to a U.S-certificated air carrier. This agreement
has features that are characteristic of a charter, however, the parties to the
agreement may characterize it as a wet lease. If the lessor/grantor never transfers
legal possession of the entire aircraft, the arrangement is not a prohibited §
119.53 wet lease. Likewise, if the arrangement makes it clear that the lessor/grantor
never transfers actual possession (custody) of the entire aircraft, the arrangement
is not a §
119.53 wet lease. In both cases, the arrangement might actually be a charter
(a services agreement for provision of a flight service to a customer).
A. Approval Process. Under regulatory guidance issued
by the OST, the foreign operator providing the lift capacity for the U.S. air
carrier will include in its application a copy of the agreement. The FAA will review the agreement against the essential
elements in this paragraph 12-354(B) and provide its recommendation to the OST.
The OST will review the FAA’s recommendations and determine if the operation
meets the requirements of 14 CFR part 212, is in the public interest, and whether
to grant the authorization.
NOTE: The responsible Flight Standards District Office (FSDO), International
Field Office (IFO), and International Field Unit (IFU) for the operator providing
the entire aircraft with crew must maintain a copy of the agreement as specified
Volume 12, Chapter 5, Section 1, paragraph 12-454.
B. Essential Elements of the Provision. The essential elements
of a provision of an entire aircraft with crew arrangement by a foreign air
carrier to a U.S. air carrier are as follows:
1) Operational control remains with the operator providing the
NOTE: The operational control determination will be based on the terms
of the agreement and all other relevant factors, such as authority over initiating,
conducting, or terminating a flight.
2) Legal, and actual possession (custody) of the aircraft remains
with the operator providing the lift capacity. Factors relevant to the determination
of legal and actual possession include:
· The right to substitute other aircraft for the aircraft identified
in the agreement; or
· The right to use the aircraft identified in the agreement for
its own purposes when the aircraft is not needed by the operator receiving the
3) The country that issued the air operator certificate (AOC)
of the operator providing the lift capacity will oversee the operations and
would be continuously rated as Category 1 under the FAA’s International Aviation
Safety Assessment (IASA) program;
4) The U.S. air carrier obtaining the lift capacity has assessed
the level of safety of the service to be provided by the foreign air carrier
involved and has found it to be satisfactory.
5) Both parties to the agreement must apply to the OST for any
necessary amendments to their economic permits.
NOTE: The operator providing the lift capacity must provide all necessary
flight and ground crew, crew training, ground handling, communications, dispatch
of the aircraft, decision of the particular aircraft to be used in any given
operation, and authority over the pilot in command (PIC) in all matters concerning
flight operations, and be carried out in accordance with standards and practices
as set out in its Flight Operations Manual (FOM).
NOTE: Agreements between part
129 air carriers, or between a foreign person and a part
129 air carrier to wet lease aircraft, or provide an entire aircraft with
crew must also be reviewed against the principles described in paragraphs 12-353
and 12-354 to determine whether the arrangement is a wet lease, typical charter,
or provision of an entire aircraft with crew.
12-355 ARTICLE 83 BIS. Under international law, the State of Registry
of an aircraft is responsible for overseeing the airworthiness of the aircraft,
the licensing of its flightcrew members, and compliance by the operator of the
aircraft with the applicable rules of the air.
A. Diminished Ability to Carry Out Oversight Responsibilities. When an operator
certificated in one country operates an aircraft registered in another country,
the ability of the State of Registry to carry out its oversight responsibilities
may be diminished or less efficient. In such cases, the State of Registry and
the State of Operator may enter into an agreement pursuant to Article 83 bis
of the Convention on International Civil Aviation (the Chicago Convention),
transferring some or all of the oversight responsibilities of the State of Registry
to the State of Operator.
NOTE: The term “bis” is a Latin term used throughout the convention
to designate the articles created between existing sequentially numbered articles.
For further information on the Chicago Convention, refer to Volume 12, Chapter 1.
B. Transfer of Oversight Responsibility. Among the visible effects
of a transfer of oversight responsibilities pursuant to an Article 83 bis agreement
are the following:
1) If the State of Registry transfers its airworthiness oversight
responsibilities under the Article 83 bis agreement, the State of Operator will
issue a certificate of airworthiness to the aircraft and oversee the continuing
airworthiness of the aircraft in accordance with its laws and regulations.
2) If the State of Registry transfers its personnel licensing oversight responsibilities
under an Article 83 bis agreement, the flightcrew members will hold airman certificates
issued or validated by the State of Operator pursuant to its laws and regulations.
Each person acting as a flightcrew member must hold a certificate or license
that shows the person’s ability to perform duties in connection with the operation
of the aircraft.
3) An aircraft that is subject to an Article 83 bis agreement will continue to
be registered in the State of Registry and to bear that State’s registration
marks. The State of Registry will issue the registration certificates, which
must be carried aboard the aircraft. A copy of the Article 83 bis agreement
may also be carried aboard the aircraft.
C. Article 83 Bis Agreement. A State of Registry and State of
Operator are not required to enter into an Article 83 bis agreement as to a
particular aircraft. However, once they execute such an agreement, it becomes
effective as to third party States only when they register it with the International
Civil Aviation Organization (ICAO) and when ICAO makes it public, or when one
of the parties to the agreement communicates the existence and scope of the
agreement to those third party States.
D. Certification Oversight of Air Carriers Transfer of Responsibilities.
The State of Operator cannot transfer the responsibilities for the certification
and oversight of an air carrier to another State pursuant to an Article 83 bis
RESERVED. Paragraphs 12-356 through 12-370.