Aircraft Wet Leases: Accounting Dissonance with Competitive Strategy and Travelers’ Perspectives

  •  Francesco Bellandi    


Under IFRS 16 and Topic 842 a lessee’s right to control the use an aircraft in a wet lease is an asset. On the other hand, contract analysis sees a wet lease as an opportunistic, external, temporary, competitive tool for flight flexibility and tactic cost advantage. Finally, travelers may be worried of safety and service quality or disruption in a wet lease, as the flight is not operated by their airline. This article addresses the accounting for aircraft wet leases as an exemplar case of a lease with substantial services, to discover that there is dissonance between the economic views behind accounting, business model and competitive strategy, and user service perspective.

After a thorough analysis of IFRS 16 and Topic 842 applied to wet leases for the first time in a public study, a review of disclosures in financial statements of 59 sampled airlines confirms a clear contrast between the competitive analysis, traveler’s perspective and the accounting view. Such a dystonia is supposed to reflect the view of investors and creditors, which the IASB’s and FASB’s Conceptual Frameworks denote as primary users of financial statements, as opposed to other members of the public, including customers. This results in a failure to give enough space to the indirect effects of such alternative views on customers’ demand and revenue, hence company’s prospects for future net cash inflows, which according to the Conceptual Framework is the main driver of investors and creditors decision making.


  • Contract analysis is provided on wet leases as a business model competitive tool.
  • Analysis under IFRS 16 and Topic 842 and IAS 17/IFRIC 4 and Topic 840 is provided.
  • Above views are compared with travelers’ concerns about safety and service quality.
  • Airline financial statements disclosures on these three views are analyzed.

Views are traced to primary versus other users’ conflict in the Conceptual Framework.

This work is licensed under a Creative Commons Attribution 4.0 License.