Aircraft Leasing in Bangladesh: Key Legal Terms to Get Right

Across the region, most commercial aircraft fly on lease rather than on an airline’s balance sheet. That makes the lease agreement, not the aircraft, the thing that decides who carries the cost and the risk. A handful of clauses do most of the work.

What should an aircraft lease agreement cover?

An aircraft lease should clearly set the rent and payment terms, maintenance and maintenance-reserve obligations, insurance, the redelivery condition, security deposits, events of default, and deregistration and repossession rights. For cross-border leases, registration and export authorisations such as an IDERA are central.

Operating lease or finance lease

The first question is the type of lease. An operating lease is a rental, the aircraft goes back to the lessor, who keeps its residual value. A finance lease is closer to a funded purchase, with the operator generally taking the aircraft’s value and long-term risk. The choice drives maintenance, redelivery, insurance, and accounting, so it should be a deliberate decision, not a default.

The clauses where money moves

• Rent and security. Payment terms, security deposits, and letters of credit backing the lease.
• Maintenance and reserves. Who maintains the aircraft, and the maintenance-reserve payments that fund major checks.
• Redelivery condition. The precise state the aircraft must be returned in, a frequent source of end-of-lease disputes.
• Insurance. Hull and liability cover, and the lessor’s protections as an additional insured.
• Default and repossession. What counts as default and how quickly the lessor can act.

Repossession and the Cape Town framework

For cross-border aircraft, the Cape Town Convention and its aircraft protocol, where they apply, give lessors and financiers internationally recognised remedies, including deregistration and export through an IDERA. Getting these registrations and authorisations right at signing is what makes them work at default.

Where this firm fits

Aircraft leasing and aviation documentation are handled within the firm’s aviation and space law practice, which sits alongside its broader aviation compliance work, by an advocate formally trained in the field. Whether you are leasing in, leasing out, or financing an aircraft, the terms are worth a careful read before signature, speak with the advocate.