Certified Aviation Manager (CAM) Practice Test

In a synthetic lease, who retains the title to the aircraft?

1. The lessee

2. The lessor

3. The aviation department manager

4. A financial institution

The correct answer is: The lessor

In a synthetic lease, the lessor retains the title to the aircraft while the lessee obtains the operational and economic benefits of using it. This structure is designed to provide lessees with the advantages of ownership without the capital investment typically required for purchasing an aircraft. Typically, the arrangement allows the lessee to treat lease payments as operational expenses rather than debt, which is beneficial for cash flow and financial reporting. At the same time, the lessor maintains title, which can have tax benefits and complies with financial regulations, keeping the asset off the lessee's balance sheet. This dual benefit is a key characteristic of a synthetic lease, making it a popular choice in aviation finance. Other options such as the lessee or a financial institution would not align with the specific characteristics of a synthetic lease, as they either imply ownership or do not directly relate to the structured nature of the lease. The aviation department manager's role is generally more about operational oversight rather than ownership or financing aspects.