The aircraft leasing market has rapidly developed since its inception in the 1970s when airlines started to look at alternative sources to grow and finance their aircraft fleet. Carriers turned to leasing so they could operate aircraft without the financial burden of buying them, and to provide a temporary increase in capacity.  

Throughout the years, this business model has proven to be relatively successful for many airlines as well as aircraft lessors. It is worth noting that more than 40% of all commercial aircraft were subject to operating leases, according to Boeing data from 2019.

Over time, many other leasing alternatives have been developed, including dry lease, damp lease, hybrid lease, and ACMI (wet lease). 

But what is ACMI? 

ACMI stands for Aircraft, Crew, Maintenance, and Insurance. The ACMI model first appeared in the early 1990s with most ACMI providers based in Europe and North America, such as Atlas Air and SmartLynx Airlines.  

According to European Union regulations and the International Air Transport Association (IATA), ACMI, also known as a wet lease, is where the lessor provides an aircraft with crew, maintenance and insurance. The aircraft is also operated under the air operator’s certificate (AOC) of the lessor. 

Meanwhile, according to the United States Federal Aviation Administration (FAA), ACMI in aviation is “any leasing arrangement whereby a person agrees to provide an entire aircraft and at least one crew member”. 

ACMI opportunities and challenges 

Airlines face the risk of operational disruptions every day. This could be due to industrial action, aircraft groundings, late deliveries or incidents on the ground or in the air. 

The ACMI leasing business model offers an adaptable solution based on providing speed and flexibility in capacity management and is focused on customer satisfaction.  

Also, operating as an aircraft and air crew owner is not always the best alternative for some airlines as buying a new jet can put pressure on finances and operations.  

The benefits of aircraft ACMI leasing for the lessee include risk management, flight and cabin crew management and capacity management while delivering cost advantage and the possibility to manage extraordinary situations. Lease operations can be started quickly in response to immediate capacity requirements. 

Additionally, ACMI customers do not need to concern themselves with the recruitment, training, or preservation of crews. However, ACMI services can be expensive as it usually needs to cover aircraft maintenance, air crew retention and training costs.  

The future of ACMI leasing post-pandemic 

At the height of the COVID-19 pandemic, the ACMI market experienced a decline. Due to a low demand for air travel, many ACMI-leased aircraft contracts have been cancelled and returned to ACMI providers. 

According to an ACC Aviation report, in August 2020, ACMI rates declined by over 62% compared to the same period in 2019.  

However, ACMI is expected to play a large part in the post-pandemic recovery as airlines across the globe will need aircraft and air crew ready once travel demand picks up. 

“ACMI rates within Europe have stabilized off the back of the pandemic,” Dave Williams, Director of Leasing at ACC Aviation noted in a press statement dated March 2021.  “ACMI solutions are cost-effective substitutes for an airline’s own fleet and resources as they start to rebuild after a year on pause.”