The future holds… more wet-leasing

Wet-leasing is growing rapidly and experts predict such leasing agreements to become both longer in time and more frequent in nature in 2019.

Wet-leasing is the practice of airlines hiring aircraft with crew, maintenance and insurance (ACMI) to either cover an unforeseen short-term need or when business needs a longer-term (seasonal) capacity increase without necessarily buying and manning new aircraft. Wet-lease operators seem to agree with this outlook and have started preparations by consolidating, growing their fleet and increasing wet-lease offerings. What lies behind this sudden success and the growing need for more “seasonal capacity” and short-term fixes? [It certainly isn’t the longer summers /winters in Europe.]
In reality, a large share of wet-leasing in Europe – and this is the share that is booming ¬– has little to do with sudden growth or unforeseen short-term needs. It is a business strategy to replace airlines’ own operations at a lower cost. Wet-lease providers like CityJet, Go2Sky, Adria Airways, Danish Air Transport & Air Atlanta promise airlines flexibility, a better commercial risk management and lower operating costs for both equipment and aircrew. This “bonus-effect” of wet-lease is boosting its popularity, making it a desirable feature for many European airlines.

It is well known that crew hired by most wet-lease operators enjoy less favorable terms and conditions than those employed by traditional airlines. Some use crew via temporary work agencies or ask their pilots to become self-employed, or a combination of both. Rarely pilots at wet-lease operators would be unionized. Pilot associations have resorted to negotiating ‘scope clauses’ in their Collective Labour Agreements (CLAs) in an effort to prevent such practices considered by many as social dumping. Some of the scope clauses include an obligation for the employer airline to inform the union about any contract with wet-leasing provider, incl. mutual agreement on the alleged growth. The bottom-line is that wet-leasing translates into lower terms and conditions for aircrew across the industry and gives a boost to atypical employment schemes.

This development has – naturally – caught legislators off guard. EU Regulation 1008/2008 Article 13 prescribes that intra-EU wet-leases can be used without a limit in time as long as they are deemed safe. But there are neither necessary related social protections for employees, nor further considerations of the potential safety aspects of such semi-permanent use of wet-lease.
While indeed both the lessor (i.e. operator providing aircraft & crew) and the lessee (i.e. operator receiving aircraft & crew) are subject to EU/EASA rules, in practice, implementation, interpretation and enforcement vary from one EU Member State to another. The ability to oversee and scrutinise such complex operations also differs significantly from country to country, not least due to an increasing lack of resources in certain national aviation authorities, as EASA itself recently acknowledged. Particularly worrying is the ability of smaller authorities to oversee complex operations with long and unclear subcontracting chains (including big ACMI operators subcontracting operations themselves to smaller ones).

Publicerad 2020-02-08 av Rebecca