PBH Lease & Dry Lease

Dry lease: the aircraft, nothing else

A dry lease is the standard aircraft leasing arrangement — the lessor provides only the aircraft itself. No crew, no maintenance, no insurance. The lessee operates the aircraft under its own Air Operator Certificate (AOC), staffs it with its own crews, maintains it under its own maintenance program, and insures it. This is the default assumption behind almost everything described in the Operating Lease and Financial Lease primers on this platform — when someone says "AerCap leased an aircraft to an airline," that's a dry lease unless stated otherwise. The counterpart concept is a wet lease (see the ACMI primer), where the lessor provides the aircraft with crew, maintenance, and insurance included.

PBH (Power-by-the-Hour): a maintenance contract, not a lease

Power-by-the-Hour is a completely different kind of arrangement, and grouping it with "dry lease" is really grouping two answers to two different questions — "who owns/provides the aircraft" versus "how does the airline pay for engine maintenance." Under a PBH agreement, an airline pays an engine OEM or MRO (maintenance, repair, and overhaul) provider a fixed rate per flight hour (sometimes per cycle, or a blend of both) in exchange for that provider guaranteeing engine maintenance and overhaul coverage over the contract term. Well-known commercial names for this kind of program include Rolls-Royce's TotalCare, GE Aviation's OnPoint, and various Pratt & Whitney fleet-management programs, though the underlying PBH concept is used across the industry beyond any one OEM's branded offering.

The commercial logic is risk transfer and cash-flow smoothing: engine maintenance is genuinely lumpy and expensive — a full overhaul is a large, irregular capital event — and PBH converts that lumpiness into a predictable per-hour operating cost the airline can budget for cleanly, while the OEM/MRO absorbs the risk that maintenance turns out to cost more than expected (in exchange for pricing the per-hour rate to cover that risk on average across its whole customer base).

Why they end up discussed together

Both concepts touch the same practical question an airline treasury or fleet-planning team asks when evaluating an aircraft acquisition: what's the full, real cost of operating this aircraft, not just the headline lease rate? A dry lease's rental rate says nothing about engine maintenance cost — that's a separate decision (PBH vs. self-insuring maintenance reserves) layered on top, regardless of whether the airframe itself is dry-leased, finance-leased, or owned outright.

Risks and considerations

• Dry lease: the airline bears full maintenance and airworthiness responsibility — a real operational and cost commitment beyond the rental rate itself.
• PBH: contract exclusions matter — most PBH agreements have carve-outs (foreign object damage, certain failure modes) that can leave the airline exposed for costs it assumed were covered; reading the actual contract terms matters more than the headline "power-by-the-hour" framing.
• PBH rates are typically set based on the OEM/MRO's own fleet-wide utilization and failure-rate assumptions — an airline with an atypical utilization pattern (very short or very long average sector length) can end up with economics that don't match a "typical" operator's experience.