DGCA cracks down on Indian carriers seeking wet lease bargains in smaller markets

Aircraft fleet

India's aviation regulator has tightened oversight on short-term aircraft 'wet leases' or plane rentals that include crew and maintenance, potentially hobbling operations of financially weak airlines as they struggle to expand fleets amid soaring travel demand, industry experts said.

This arrangement allows airlines to temporarily rent planes from another airline to meet sudden demand surges or replace grounded planes.

Last week, the regulator Directorate General of Civil Aviation (DGCA) proposed stricter norms for leasing planes from foreign operators following a series of operational and technical problems faced by Indian airlines in 2024, forcing several domestic carriers to terminate their wet lease agreements.

New regulatory framework

The DGCA's proposed regulatory changes aim to restrict wet/damp leases to countries with a robust safety oversight system. The aviation watchdog also seeks to standardise its surveillance on wet leased operations.

"Indian carriers have been using wet leases to address the short-term grounding of their aircraft, a trend that has accelerated due to engine and supply chain issues," the DGCA said in its statement on September 12.

The draft proposes that aircraft can only be wet leased from International Civil Aviation Organization (ICAO) contracting states with an average effective implementation score of at least 80 percent (and no less than 70 percent in each area) in personnel licensing, airworthiness, and operations, according to the latest ICAO Universal Safety Oversight Audit Programme (USOAP) results. The lessor must not have any active significant safety concerns under the ICAO Universal Safety Oversight Audit Programme (USOAP).

The draft also introduces new requirements for reporting safety occurrences, sharing flight data, and ensuring compliance with DGCA’s breath-analyzer policies for foreign crew. DGCA inspectors will have access to all records for physical inspections at any time.

Under the proposed changes, the maximum period for wet/damp leases will be extended from the current 3 months (with a 3-month extension) to 6 months, with an additional 6-month extension if required.

Operational challenges 

According to senior government officials, several airlines faced difficulties with their wet leased aircraft due to faulty parts, lower fuel efficiency, and unavailability of flight crews.

"The move to introduce stricter safety norms for wet leased planes comes after complaints from domestic carriers about planes being grounded due to faulty parts and crew shortages," a senior official told Moneycontrol.

The official added that in their rush to expand fleets and capitalise on the growing air traffic, some Indian airlines opted for older, less expensive aircraft, which increased safety risks. These aircraft, often leased from smaller markets, frequently faced technical issues.

"Indian carriers have reported cases where crews were unavailable to fly because of safety issues flagged by DGCA inspectors at airports," the official said.

Another senior official noted that a financially struggling domestic airline encountered multiple operational problems with its most recent batch of wet leased planes in 2024.

"While no serious safety incidents occurred, there were cases where parts had to be replaced, causing flight delays. These delays could have escalated into safety concerns if not addressed promptly," the official said. Some aircraft leased from European and Southeast Asian airlines experienced repeated part failures, which led to several hours of being grounded.

Rising use of wet leasing in India

Wet leasing has become a popular option for Indian carriers in recent years. In November 2022, the Ministry of Civil Aviation allowed Indian airlines to wet lease wide-body planes for up to one year, up from the previous six-month limit, as part of its efforts to position India as a global air traffic hub.

This trend continued in 2023, with the DGCA approving the wet lease of 20 aircraft for two major Indian carriers during the festive season. India’s largest airline announced plans in July to wet lease a few Boeing MAX 8 aircraft from Qatar Airways to operate flights between India and Doha. This arrangement mirrors IndiGo’s wet lease of Boeing 777 aircraft from Turkish Airlines for its routes to Istanbul.

SpiceJet, which has been struggling with financial challenges, is also adding 10 Boeing 737s on wet lease to cater to rising travel demand during the upcoming holiday season. The airline grounded 36 of its 64 aircraft earlier in 2024 due to cash flow and debt issues. SpiceJet has already returned three wet-leased aircraft that were brought in for operations in March 2024, including four Airbus 340 planes for its 2024 Hajj flights.

The road ahead for Indian carriers

As Indian airlines continue to explore wet leasing options to meet the demand for aircraft, the DGCA's new rules are expected to introduce a more structured and standardised approach. The enhanced regulatory framework will require airlines to balance the need for rapid expansion with adherence to stricter safety norms, ensuring the wet leased planes they operate meet the required safety standards.

The increasing use of ACMI-leased aircraft is seen as a solution for airlines to tide over short-term capacity shortages, but the DGCA's move is a signal that safety must remain a priority as the domestic aviation industry continues to grow.