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U.S. Department
of Transportation
Federal Aviation
Administration
Advisory
Circular
Subject: Truth in Leasing Date: 2/10/16 AC No: 91-37B
Initiated by: AFS-800 Change:
1 PURPOSE. This advisory circular (AC) provides information and guidance for lessees
and conditional buyers of U.S.-registered aircraft. While truth-in-leasing requirements are
required by regulation for aircraft weighing more than 12,500 pounds, the Federal
Aviation Administration (FAA) prepared this AC to ensure any person who is seeking to
lease an aircraft understands the meaning of operational control and does not enter into an
agreement where operational control is not clearly maintained by the appropriate party.
2 CANCELLATION. AC 91-37A, Truth in Leasing, dated January 16, 1978, is canceled.
3 INTRODUCTION. Operational control is not dependent on aircraft size or the number
of aircraft operated; it is instead a matter of legal responsibility. There are instances
where lessees and conditional buyers of aircraft did not realize that they were legally
responsible for operational control of the aircraft as defined in Title 14 of the Code of
Federal Regulations (14 CFR) part 1. In other cases, even if the lessee or conditional
buyer did realize it, very few recognized their responsibilities for compliance with
regulations. If you or your company, school, club, athletic team, fraternity, social, or
other group are planning to charter an airplane, take a moment to learn about chartered
and leased aircraft and how to use them safely to your best advantage.
3.1 It is possible for aircraft owners to evade compliance with the applicable certification and
operating rules of 14 CFR parts 121 and 135 governing air carriers and commercial
operators, through the use of devious leases and conditional sales contracts. This evasion
of compliance makes it appear that the lessees and conditional buyers are responsible for
operational control, when in fact they do not have that responsibility. This knowing or
unknowing assumption of responsibility creates a serious problem in air safety and may
involve legal liabilities.
3.2 To gain better insight and understanding of this matter requires an explanation of charter
flights. Generally, a charter flight involves the hiring of a company to fly your group to a
given destination and return. The company is required by FAA regulations to provide you
with a certificated and properly maintained aircraft, flown by a properly trained and
certificated crew. In flight, the captain is in command. The company and the captain are
responsible for complying with all applicable Federal safety regulations.
2/10/16 AC 91-37B
2
3.3 To legitimately engage in charter air service, a company must be FAA-certificated as a
14 CFR part 121, 125, or 135 operation. No one may legally offer charter air service for
compensation or hire unless he or she has a valid air carrier or operating certificate issued
by the FAA.
3.4 The FAA-issued air carrier certificate requires varying degrees of aircraft maintenance,
servicing, and operating procedures. There are more requirements for a part 121 or 135
air carrier certificate than for aircraft operated under 14 CFR part 91 general operating
rules. If the operator has an operator’s certificate, for example, it is not equivalent to what
is required to maintain an aircraft operating under a part 121 air carrier certificate.
The FAA safety standards for a part 121 or 135 air carrier certificate require compliance
with a higher level of pilot training and certification, aircraft maintenance procedures,
and operational safety rules than those required for flights conducted under part 91
general operating rules. Pilots, crewmembers, and the aircraft are checked periodically by
FAA inspectors, and crewmembers have regularly required proficiency checks to
maintain their certifications by the FAA.
3.5 There are aviation companies certificated to offer charter air service; however, there are
also dozens of other companies or individuals who have no air carrier or operating
certificate but who are willing to violate the law by evading safety requirements. Some
evade air carrier certification by using devious leasing schemes intended to appear
legitimate. Before you sign for a charter air service, ask to see their air carrier operating
certificate issued by the FAA. Additionally, before entering into an aircraft lease, ensure
you understand and are willing to accept your responsibilities for compliance with air
safety regulations.
4 DEFINITIONS. The parties to lease or contract a conditional sale should be familiar
with the meaning of the following terms as used in the Federal Aviation Act of 1958 (FA
Act) and part 1:
4.1 Conditional Sale. Conditional sale is defined in the FA Act as “(a) any contract for the
sale of an aircraft…under which possession is delivered to the buyer and the property is
to vest in the buyer at a subsequent time, upon the payment of part or all of the price, or
upon the performance of any other condition or the happening of any contingency; or
(b) any contract for the bailment or leasing of an aircraft…by which the bailee or lessee
contracts to pay as compensation a sum substantially equivalent to the value thereof, and
by which it is agreed that the bailee or lessee is bound to become, or has the option of
becoming, the owner thereof upon full compliance with the terms of the contract.
The buyer, bailee, or lessee shall be deemed to be the person by whom any such contract
is made or given.”
4.2 Conveyance. Conveyance is defined in the FA Act as “a bill of sale, contract of
conditional sale, mortgage, assignment of mortgage, or other instrument affecting title to,
or interest in, property.”
4.3 Large Aircraft. Large aircraft is defined in part 1, § 1.1 as “aircraft of more than
12,500 pounds, maximum certificated takeoff weight.”
2/10/16 AC 91-37B
3
4.4 Lease. For the purpose of part 91, § 91.23, a lease means any agreement by a person to
furnish an aircraft to another person for compensation or hire, with or without flightcrew
members, that is not a contract of conditional sale. The person furnishing the aircraft is
referred to as the lessor and the person to whom it is furnished is referred to as the lessee.
4.5 Operate. As defined in § 1.1, operate “with respect to aircraft, means use, cause to use or
authorize to use aircraft, for the purpose (except as provided in § 91.13 of this chapter) of
air navigation including the piloting of aircraft, with or without the right of legal control
(as owner, lessee, or otherwise).”
4.6 Operational Control. As defined in § 1.1, operational control “with respect to a flight;
means the exercise of authority over initiating, conducting or terminating a flight.”
Operational control involves three basic areas: Aircrew, Aircraft, and Flight
Management. These areas, summarized below, are intended to give a general
understanding of operational control. When chartering an aircraft, the charter air carrier
has operational control and is responsible for regulatory compliance and the safety of the
flight. When an aircraft lessee operates an aircraft under general operating rules, the
lessee accepts operational control responsibilities. Operational control is an important
regulatory concept for lessees to understand and it is explained in more detail in
FAA Order 8900.1, Flight Standards Information Management System (FSIMS),
Volume 6, Chapter 2, Section 22, Safety Assurance System: Operational Control
Inspections, available at http://fsims.faa.gov.
4.6.1 Aircrew. Ensures that crewmembers are trained and qualified in accordance with the
applicable regulations and remain in compliance with all applicable flight, duty, and rest
requirements including designating a pilot in command (PIC) for each flight.
4.6.2 Aircraft. Ensures that an aircraft is Airworthy and is in compliance with applicable
regulations.
4.6.3 Flight Management. Specifies the conditions under which a flight may be operated, such
as determining weather minimums, proper aircraft loading, center of gravity (CG)
limitations, icing conditions, and fuel requirements. Handles the monetary and logistical
issues associated with the aircrew and aircraft.
5 TYPES OF LEASES. A lease involving aircraft is sometimes referred to as a wet lease
or a dry lease. Title 14 CFR part 110, § 110.2 defines a wet lease as “any leasing
arrangement whereby a person agrees to provide an entire aircraft and at least one
crewmember. A wet lease does not include a code-sharing arrangement.” Leasing of an
aircraft without the crew is considered to be a dry lease.
5.1 Normally, in the case of a dry lease, the lessee exercises operational control of the
aircraft. Conversely, in a wet lease the lessor normally exercises operational control.
The determination in each situation as to whether the lessor or lessee exercises
operational control requires consideration of all relevant factors present in each situation.
The terms of the lease itself are important but since they may not reflect the true
2/10/16 AC 91-37B
4
situation, the actual arrangements and responsibilities should be given very careful
consideration.
5.2 There may be situations during which the lessor provides both the aircraft and the
flightcrew (pilots, Flight Engineers (FE), and flight navigators) but the lessee provides
the cabin crew (flight attendants (F/A)). In this case the lease would be considered a wet
lease. On the other hand, when the lessor provides the aircraft and the lessee provides the
flightcrew and the cabin crew, it would be considered a dry lease.
6 LEASING AN AIRCRAFT. Before a leased aircraft is turned over to you or your
group, be sure that specific use purposes are clearly spelled out in the lease. For example,
do you or your group have exclusive use of the aircraft? May it be flown internationally?
Are more than two parties involved? The important point is that when you dry lease an
aircraft for your use, you normally become the aircraft operator. Conversely, when you
wet lease an aircraft, the lessor is normally the aircraft operator.
6.1 When dry leasing, you do not need an FAA-issued operator’s certificate as long as you do
not carry persons or property for compensation or hire. However, for larger aircraft
operating under part 125, please review § 125.1 for the certificate requirements of your
intended operations. You will need to know how to maintain and operate the aircraft in
accordance with 14 CFR. The minimum safety standards for dry-leased aircraft, with
regard to aircraft maintenance and pilot proficiency, are not as exacting as those required
when persons or property are carried for compensation or hire.
6.2 Wet leasing aircraft is a common and approved practice, carried out by hundreds of
legitimate organizations; unfortunately, there are some irresponsible companies which
may use various ways to confuse the issue concerning who is the actual aircraft operator.
An example of this is a sham dry lease, in which you are provided with an aircraft on a
lease basis, although it is actually serviced and flown by the leasing company. Such an
arrangement (depending upon the terms of the lease) may make you the operator of the
aircraft, although you do not intend this and have in fact assumed no operational
responsibilities.
6.3 Some groups seeking charter air services may knowingly enter into an evasively worded
arrangement if the price is made attractively low. If you are tempted to do so, consider
that if you accept what amounts to charter service from a company that is not certificated
to operate charter flights, you may forgo the protection of certain safety standards
required by the FAA. You may also violate the law. Regardless of how the lease is
named, there are a few questions that can clarify who will maintain operational control:
1. Who makes the decision to assign crewmembers and aircraft; accept flight
requests; and initiate, conduct, and terminate flights?
2. For whom do the pilots work as direct employees or agents?
3. Who is maintaining the aircraft and where is it maintained?
4. Prior to departure, who ensures the flight, aircraft, and crew comply with
regulations?
2/10/16 AC 91-37B
5
5. Who decides when/where maintenance is accomplished, and who directly
pays for the maintenance?
6. Who determines weather/fuel requirements, and who directly pays for the
fuel?
7. Who directly pays for the airport fees, parking/hangar costs, food service,
and/or rental cars?
Note 1: If you are responsible for any of the criteria listed above, then you have
some operational control and should clarify your leasing arrangements
accordingly or you will be held accountable for violations of 14 CFR for
operation of the aircraft.
Note 2: If you are not responsible for any or all of the criteria listed above, then
you do not have operational control and the aircraft is a wet lease requiring full
compliance with the provisions of part 135 for air charter operations to carry
passengers for hire.
7 CONTRACT OF CONDITIONAL SALE. When an aircraft is purchased under a
conditional sale contract, possession is delivered to the conditional buyer who becomes
the new owner for purposes of registration.
1. Title 14 CFR part 47, § 47.5(d) states, “‘owner’ includes a buyer in
possession, a bailee, or a lessee of an aircraft under a contract of conditional
sale, and the assignee of that person.”
2. Section 47.3(b) states, “No person may operate an aircraft that is eligible for
registration under 49 U.S.C. 44101-44104 unless the aircraft–(1) has been
registered by its owner…”
3. Accordingly, from the above, it is clear that an aircraft purchased under a
contract of conditional sale must be registered by its owner. If this aircraft
falls under the criteria of § 91.23, it is also subject to the truth-in-leasing
clause requirements.
8 DETERMINING RESPONSIBILITY FOR OPERATIONAL CONTROL. If you
have any doubt about the legitimacy or the operating authority concerning the charter
flights you are arranging, check with the nearest FAA Flight Standards District
Office (FSDO).
8.1 You should note that operational control may remain with the lessor even though the
lease is characterized as a dry lease and expressly states that items such as flight
following, dispatch, communications, weather, and fueling are to be performed by the
lessee. Therefore, in some instances it may be necessary to look at the actual manner in
which the operations are conducted to determine which party on the lease has operational
control.
8.2 If requested, the FAA will determine whether the lessor or lessee has operational control
under 14 CFR. Such determination will be based on a careful review of the lease and any
2/10/16 AC 91-37B
6
other circumstances regarding the actual operation. Where a lease agreement is not clear
in regard to operational control of the aircraft, the FAA may ask the parties to amend the
lease to properly reflect the party that has operational control.
8.3 The FAA has taken the position that if a person leases an aircraft to another and also
provides the flightcrew, fuel, and maintenance, the lessor of the aircraft is the operator.
If the lessor makes a charge for the aircraft and services, other than as provided for in
part 91 subpart F, the operation of the aircraft is subject to 14 CFR part 121, 125, 129,
135, or 137 depending upon the type or size of the aircraft as described in § 91.501.
This position is supported by U.S. v. Bradley, 252 F. Supp. 804 (1966); and B & M
Leasing Corp. v. U.S., 331 F.2d 592 (1964).
9 MAILING THE LEASE OR CONTRACT TO FAA. Under § 91.23, a signed legible
copy of the lease or contract of conditional sale is to be mailed within 24 hours of its
execution to the FAA Aircraft Registration Branch (AFS-750), Attn: Technical Section,
P.O. Box 25724, Oklahoma City, OK 73125. Filing a lease or contract of conditional sale
under § 91.23 to satisfy the truth-in-leasing requirements does not constitute filing under
14 CFR part 47 or 49 to register the aircraft, or to record for public notice.
10 FAA NOTIFICATION OF PROPOSED FLIGHT. In addition to the lease mailed to
Oklahoma City, § 91.23 requires the lessee or conditional buyer (or the registered owner
if the lessee is not a U.S. citizen) to provide notification to the FAA at least 48 hours
prior to the first flight of an aircraft under that lease or contract.
10.1 This notification must be made to the FSDO nearest the airport where the lease or
contract flight will originate. The notification must be in-person, via telephone, or via
email at the discretion of the FSDO.
10.2 To provide some relief in cases where the 48-hour requirement would cause a hardship,
the Administrator may allow receipt of the notification in less time. This decision is at the
discretion of the FSDO representative. Among the factors to be considered in
determining whether notification can be accepted in less than 48 hours are inspector
availability, location of departure airport in relation to the FSDO, and prior surveillance
of the proposed operator.
11 TRUTH-IN-LEASING CLAUSE. Figure 1, Sample Truth-in-Leasing Clause, is a
sample of the truth-in-leasing clause required by § 91.23, which should be written as a
concluding paragraph in large print immediately preceding the signature of the parties.
2/10/16 AC 91-37B
7
FIGURE 1. SAMPLE TRUTH-IN-LEASING CLAUSE
____________________ (insert type, model, and registration number of airplane, such as
Convair 240; N124W) HAS BEEN MAINTAINED AND INSPECTED UNDER
_______________ (insert appropriate 14 CFR part) FROM __________________
TO __________________ (insert date of execution of lease or contract after the word “to”; then
go back 12 months and enter that date after the word “from”). (If the aircraft has been maintained
under 14 CFR part 91 during part of the preceding 12 months and under 14 CFR part 121 during
other parts of the 12 months, for example, the dates and 14 CFR parts under which it was
maintained for each period should be specified.)
IT WILL BE MAINTAINED AND INSPECTED UNDER ___________________________
(insert appropriate 14 CFR part) FOR OPERATIONS TO BE CONDUCTED UNDER THIS
________________________ (insert lease OR contract of conditional sale, whichever is correct).
DURING THE DURATION OF THIS ____________________ (insert lease OR contract of
conditional sale, whichever is correct).
____________________________ (insert name and address of individual, company, or
corporation) IS CONSIDERED RESPONSIBLE FOR OPERATIONAL CONTROL OF ALL
AIRCRAFT IDENTIFIED AND TO BE OPERATED UNDER THIS
_______________________________ (insert lease OR contract of conditional sale).
AN EXPLANATION OF THE FACTORS BEARING ON OPERATIONAL CONTROL AND
THE PERTINENT FEDERAL AVIATION REGULATIONS CAN BE OBTAINED FROM
THE NEAREST FAA FLIGHT STANDARDS DISTRICT OFFICE (FSDO).
I, THE UNDERSIGNED ________________________ (insert name and address of responsible
party) CERTIFY THAT I AM RESPONSIBLE FOR OPERATIONAL CONTROL OF THE
AIRCRAFT AND THAT I UNDERSTAND MY RESPONSIBILITIES FOR COMPLIANCE
WITH APPLICABLE FEDERAL AVIATION REGULATIONS.
______________________________________ ____________________________
Signature and Title (lessor) Date and Time of Execution
______________________________________ ____________________________
Signature and Title (lessee) Date and Time of Execution
2/10/16 AC 91-37B
8
12 HOW TO COMPLY WITH TRUTH-IN-LEASING REQUIREMENTS.
1. Prepare the lease or conditional sales contract so that it complies with § 91.23.
2. Mail or deliver a copy of the contract to the FAA Aircraft Registration Branch
(AFS-750), Attn: Technical Section, P.O. Box 25724, Oklahoma City,
OK 73125, within 24 hours of the execution and signing.
3. Provide in-person or telephonic notice to the appropriate FSDO at least
48 hours prior to first flight under the contract.
4. Carry a copy of the contract in the airplane.
5. If you have any questions, check with the nearest FAA FSDO located nearest
to you by searching http://www.faa.gov/about/office_org/field_offices/fsdo/.
John S. Duncan
Director, Flight Standards Service
Advisory Circular Feedback Form
If you find an error in this AC, have recommendations for improving it, or have suggestions for
new items/subjects to be added, you may let us know by contacting General Aviation and
Commerical Division (AFS-800) or the Flight Standards Directives Management Officer.
Subject: AC 91-37B, Truth in Leasing
Date: _____________________
Please check all appropriate line items:
An error (procedural or typographical) has been noted in paragraph ____________
on page _______.
Recommend paragraph _____________ on page __________ be changed as follows:
______________________________________________________________________
______________________________________________________________________
In a future change to this AC, please cover the following subject:
(Briefly describe what you want added.)
______________________________________________________________________
______________________________________________________________________
Other comments:
______________________________________________________________________
______________________________________________________________________
I would like to discuss the above. Please contact me.
Submitted by: Date: ______________________
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