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ACMI: An Easy-to-Understand Guide  

Confused by the term ACMI? Wondering how they might benefit airlines? Here, an air leasing company in the UAE explains exactly what ACMIs are, how they are arranged, and how they benefit the parties involved.
What is an ACMI?

ACMI is a term used to encompass the leasing of an aircraft from one air operator to another. ACMI is an acronym that stands for:

  • Aircraft
  • Crew
  • Maintenance
  • Insurance

With an ACMI lease, the lessee is paying not only for the use of an aircraft, but also its crew, its general maintenance, and the necessary insurance. As such, when taking on an ACMI lease, the client will receive an aircraft that is essentially ready to fly. 

In the industry, ACMIs are often known as “wet leases.” The term “damp lease” is also used at times; this generally means the lease of an aircraft without the crew. 

How do ACMIs work?

To operate a route, an airline needs an aircraft. To do this, it can either purchase its own plane or it can take out an ACMI lease. ACMIs are facilitated by air leasing companies that can liaise between aircraft owners and those that wish to lease one, the lessor and the lessee. 

ACMIs can be arranged on a short-term or long-term basis. Operators may also want to lease one or more aircraft. The air leasing company takes care of both the lessor and lessee’s needs, ensuring that the lessee gets their required aircraft for a sum agreeable to both parties. 

When an operator takes out an ACMI lease, they get an aircraft that is more or less ready to go. They must brand the flight and sell tickets, but the aircraft leasing company takes care of the rest.

Aircraft leasing companies will offer a range of aircraft and cabin configurations from their network of lessors, allowing their lessees to select an aircraft best suited to their operation. When taking out an ACMI, the leasing company will ensure the aircraft is ready to fly and fit for purpose. It will have had all necessary maintenance performed and secured the appropriate certifications. In the case of long-term ACMIs, leasing companies may also prepare the aircraft with the appropriate livery, using temporary stickers, at the customer's request. 

The aircraft can be leased with its own flight and cabin crew to cover all positions. This means that the aircraft can be operational from day one of the lease. 

Some airlines choose to use a mix of their own cabin crew personnel with the personnel provided to ensure the needs of their customers are met (e.g., to ensure that the necessary languages can be understood and spoken aboard the flight). 

However, it is possible for the lease company to oversee the management of the entire crew for the duration of the lease. 

The leasing company will be responsible for all maintenance needs and certification throughout the lease period, and the logistics of delivering and collecting the aircraft. 

In practice, leasing companies often have contracts with maintenance teams at airports around the world who provide the services on their behalf. In addition, where airlines would prefer to use their own maintenance staff, adjustments to the ACMI contracts can often be made.  

The leasing company will also fully insure the aircraft, including third-party liability, and insurance for the crew supplied. 

Why do airlines lease aircraft through ACMIs?
There are several reasons why an airline might opt for an ACMI over purchasing its own aircraft.
Lower upfront costs
Purchasing an aircraft is clearly a major purchase. Taking out an ACMI lease removes the need for a large, upfront payment during fleet expansion. Instead, airlines can focus on investing in new routes and testing the market with a view to purchasing later. An ACMI is the most flexible option. 

Quick to arrange
In comparison to aircraft purchases, ACMIs can be completed very quickly. This allows airlines to be far more agile and efficient, and respond to consumer demand. Short-term ACMI agreements between established airlines and leasing companies are a well-established approach that covers a range of eventualities.  

Ideal for emergency situations
In emergencies or unexpected situations, ACMIs can come to the rescue because they are so simple to arrange. There are lots of reasons an airline might unexpectedly find itself with too few aircraft to operate its standard routes: accidental damage of an aircraft while stationary; technical maintenance issues; the late delivery of purchased aircraft, and many more. 

In these instances, a short-term ACMI can cover until the full fleet is back up and running. Cancellations can be avoided and loss of revenue is minimized. 

To cope with peak demand
Certain times of year will be busier than others for all airlines. ACMIs can help them cope with peak demand seasons while ensuring that they never have grounded craft of their own during quieter periods. This ensures they can operate with maximum efficiency and optimize the use of their own aircraft. 

What are the advantages for the lessors?
Leasing aircraft to other airlines means that no aircraft is grounded at a cost to the lessor. If an aircraft is currently surplus to requirements, it could sit unused. However, there would still be continued maintenance and upkeep costs, as well as the issue of where to store a grounded plane. The aircraft would not be gaining any revenue, so it would therefore be a financial drain.

The solution is to lease the plane to another airline so that it continues to be profitable. An aircraft leasing company can connect the lessor to the lessee and handle all the negotiations. This means that the airline can focus on its normal operations, while knowing that no aircraft is left idling, eating into profits.

The comprehensive nature of strongly regulated ACMIs means that risks to both lessee and lessor are very low. 

Are ACMIs the same as charter flights?
No, charter flights are a fully customizable travel solution for private individuals and businesses, not airlines. However, they can often be organized through the same air leasing companies as ACMIs. 

Charters can be organized for bespoke business travel, for families, groups and individuals, even pets. To find out more about business jet charter, or luxury travel arrangements, or to discuss ACMIs in more detail, talk to an air leasing company operating near you.  

Author: Chiyako Ikeda   

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