A "soggy lease" (often referred to as a "wet lease" in aviation or a specific type of industrial lease) is an agreement where the owner (lessor) provides the asset—such as an aircraft or locomotive—along with specific operational support, typically including maintenance and sometimes insurance, but not necessarily the full operating crew. It acts as a middle-ground solution between a "dry lease" (asset only) and a "full-service lease".
“Wet leases tend to be more expensive than dry leases, and the lessee has limited control over flight crews and operational standards.”
Key Components of a Wet Lease Agreement
Maintenance: The lessor retains responsibility for the aircraft's maintenance, ensuring it remains in optimal condition and compliant with aviation safety standards.
Lease agreements generally fall into one of the following: • Dry lease – a lease arrangement whereby a lessor provides an aircraft without crew to the lessee. Wet lease – a lease arrangement whereby a lessor provides an aircraft with crew to the lessee.
A wet lease generally lasts 1–24 months. A wet lease is typically utilized during peak traffic seasons or annual heavy maintenance checks, or to initiate new routes. A wet-leased aircraft may be used to fly services into countries where the lessee is banned from operating.
From wet + lease. The origin is uncertain, but it is widely believed that the term wet refers to the inclusion of fuel in the lease agreement.
Wet leases offer a complete package, bundling the aircraft with crew, maintenance, and insurance in one convenient solution. This all-inclusive approach stands in stark contrast to dry leases, which offer the aircraft alone, placing operational responsibilities entirely on the lessee.
The main disadvantage of leasing a vehicle is that you never own it, meaning you build no equity and have no asset at the end of the term, essentially paying for a long-term rental with potential extra costs like mileage overages, wear-and-tear fees, and early termination penalties, leading to continuous payments if you keep leasing.
Advantages of Wet Leasing
For starters, it provides a comprehensive package that includes aircraft, crew, maintenance, and insurance—all managed by the lessor. This level of service ensures smooth and efficient operations, allowing you to focus on your travel plans instead of logistics.
The 90% rule in leasing is an accounting guideline for classifying leases, stating that if the present value (PV) of a lessee's minimum lease payments equals or exceeds 90% of the leased asset's fair market value (FMV), the lease should be treated as a finance lease (or capital lease) rather than an operating lease, reflecting essentially a purchase for accounting purposes. This rule helps determine if the lease transfers substantially all the risks and rewards of ownership, requiring balance sheet recognition of the asset and liability.
Fixed-term lease
It is the most common type of residential lease, giving landlords reliable rental income and reduced vacancy rates. Many landlords prefer this lease type as it provides long-term financial security and minimizes tenant turnover.
Term-of-year leases last for a fixed period and automatically terminate on the date specified as the end of the lease term.
Here are some red flags to watch out for when signing a lease:
The prototypical example of an appropriate wet lease is the charter of an aircraft to a passenger by a properly certificated charter operator under FAR Part 135. Examples of wet leases permitted under the non-commercial rules of Part 91 of the FAR include time sharing and interchange agreements.
Aircraft Rental Rates
Below are "WET RATES" which means that the rate is inclusive of fuel. Beware of seemingly low "DRY" rates that others advertise! Fuel is a significant cost of aircraft operation and is hidden by listing a "dry" rate.
The lease payment for a $45,000 car typically ranges from $300 to $500 per month, depending on factors like the down payment, lease term, residual value, and interest rate.
The "1% lease rule" is a guideline in both real estate (rental income should be 1% of property cost) and auto leasing (monthly payment ideally under 1% of MSRP), used for quickly assessing potential deals, though it's a simplified benchmark that doesn't account for all expenses or market variations. In car leasing, a $40,000 car should ideally lease for around $400/month (before tax), while for real estate, a $200,000 home should aim for $2,000/month in rent.
Excess mileage fees
Most leasing companies charge 15 to 25 cents per mile you drive over your lease's limit. For example, if you end up driving 15,000 miles on lease with a 12,000-mile annual limit, you might pay $450 to $750 in overage fees for those 3,000 extra miles.
The drawbacks of wet leasing for the lessee include the following:
4.1 Wet Lease: Wet lease covers the complete cost of vehicle at the time of lease, cost of driver during the contract period, complete maintenance of vehicle during the contract period and offers the buyer the facility to buyback the vehicle at the market value at the time of exhausting of the lease agreement.
Wet = with fuel. Dry = you pay for fuel separately.