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A deep dive into one of the commercial airline’s daily business – leasing aircraft capacity to grow, replace, or cover with additional aircraft.
ACMI, or Aircraft, Crew, Maintenance, and Insurance, is something everyone who deals with the airline business, has come across at some point or another. It is a form of aircraft leasing. It helps airlines in distress but is also the most expensive and least cost-effective form of financing an airline operation.
In this insight, I will explain what ACMI is, go over the four main pillars of ACMI, and take a look at when ACMI is a good solution for airlines. ACMI is an acronym that stands for the words; Aircraft, Crew, Maintenance, and Insurance, which are the four pillars that are being “leased” by an operator from another operator. There may be some variations to the ACMI formula, but in general, the lessee receives a “full meal deal” – an aircraft that is ready to fly almost immediately after the lease contract has been signed.
ACMI is a wet lease option, which in my opinion is more of a purchase of a service than an actual lease. The lessee signs an ACMI contract for an aircraft or fleet of aircraft that is being operated by their current operator, albeit under the lessee’s AOC.
This paragraph may be confusing, so let me simplify it: In an ACMI lease, you hire an aircraft that is ready to fly on your routes. You sell the tickets, brand the flight (in-flight magazines, food on board, etc.), and that’s it. The company from which you lease the aircraft needs to do the rest. “The rest” in this case means anything from flight planning and crew rostering to ensuring proper maintenance is being performed. ACMI customers don’t have to worry about anything other than sales – after all, they have to pay for ACMI.
It is important to understand that ACMI stands for Aircraft, Crew, Maintenance, and Insurance. These are the four pillars of ACMI leasing, each of which plays an essential role in ensuring the aircraft is safe, operational, and compliant with regulations.
When it comes to the “A for Aircraft” in ACMI, the lessor must ensure that the aircraft is airworthy and fit for its operations, including current C of A and ARC, and all maintenance performed to the current requirements. Additionally, the lessee may ask for the aircraft to be branded to their liking, which is normally done by temporary stickers, hence operators opt for all-white aircraft.
Moving on to the “C for Crew” and “M for Maintenance,” both pertain to crew and maintenance. The lessor is responsible for providing sufficient flight and cabin crew, ensuring that they meet all current flight operations regulations and that proper aircraft maintenance is performed at all times.
Finally, under an ACMI lease, the lessor is responsible for all insurance “I for Insurance” matters, including appropriate insurance for the crew and 3rd party liability insurance for the aircraft.
All required elements work together to ensure that the ACMI lease runs smoothly and delivers the desired results for both parties.
Airline operators with small fleets but no backup aircraft available can benefit from generic ACMI contracts signed with multiple ACMI operators. These contracts can come in handy if an aircraft goes AOG due to damage or other unforeseen circumstances and becomes unserviceable for days or weeks.
With an ACMI contract, the airline can engage an ACMI operator to provide a ready-to-fly airplane, enabling a resumption of operations that would otherwise have been canceled.
The most significant advantage of ACMI, in this case, is the speed with which such lease operations can commence, unlike traditional aircraft leasing, which takes a long time and requires several formalities and approvals that airlines can’t afford to lose out on. Furthermore, ACMI can also be a great option for virtual operators, and optimizing fleet availability during peak and low seasons. In the latter case, partnering with an airline in a region with a conflicting operating calendar can keep both aircraft and crew engaged throughout the year, making ACMI an ideal option.
While ACMI has numerous benefits such as flexibility, it comes with a major drawback; cost. In fact, it can be considered one of the most expensive ways of obtaining an aircraft. It is comparable to that of hiring a private jet, but with the additional responsibility of carrying up to 180 passengers rather than a select few.
ACMI operators are responsible for covering the complete operational costs of the airplane, in addition to expenses such as the crew’s travel and accommodation arrangements, as well as business uncertainty factors. Furthermore, their clients usually hire the aircraft for short-term periods of a week or up to 6 months, which means that dealing with business uncertainty and fluctuations is taxing for the ACMI operator.
Despite this, there are customers who are in dire need of an airplane and that is why the ACMI operator can offer their services at a high price with the assurance that it will be accepted, as canceled flights can further lead to significant financial loss.
Capacity Aviation is perfectly situated to provide aircraft leasing capacity to airlines worldwide through our dedicated Aircraft Leasing division.
Whether you require a short-term ACMI sub-charter or are seeking additional aircraft capacity to fulfill a busy seasonal flight schedule, our team of experts offers a broad scope of options for airlines and travel agencies:
Capacity Aviation is connected over all continents, with access to all aircraft types and live-aircraft availability monitoring, overseen and managed by our consultants. We listen to our customer’s needs and treat our customers individually, to exactly suit their needs.