AOC and operating license: what legally makes an airline an airline

A logo, a few leased jets and a booking portal: that is how many people picture starting an airline. Legally, that doesn’t come close. Before an aircraft takes off with paying passengers, the company needs two official documents – the air operator certificate, known internationally as the AOC, and the operating license. This article explains what each one covers, who issues them and why knowing about AOCs helps you as a spotter when assigning registrations, ICAO codes and wet lease aircraft.

AOC and operating license: the short answer

Legally, an airline is a company that holds a valid AOC and an operating license. The AOC answers the safety question: does this company have the organization, personnel, manuals and technical support to fly safely? The operating license answers the business question: may it carry passengers, mail or cargo for payment? To decide that, the authority checks headquarters, owners, finances and insurance.

In the EU the two documents are firmly linked. Regulation (EC) No 1008/2008 provides that an operating license depends at all times on holding a valid AOC that covers the approved activities. The technical requirements for the AOC itself are in the EU air operations regulation (EU) No 965/2012. The brand on the tail plays no legal role. What matters is whose AOC the aircraft is flying under.

The AOC: the safety approval

The air operator certificate goes back to the standards of the International Civil Aviation Organization, ICAO. Under Annex 6 to the Chicago Convention, commercial air transport may only be operated with an AOC from the state where the operator has its principal place of business. So this certificate exists worldwide, even if authorities call and issue it differently.

For an AOC, a company has to show that it has flight operations under control as an organization. In the EU this mainly includes:

• Responsible management: an accountable manager and named post holders for flight operations, crew training, ground operations and continuing airworthiness.
• Management system: a system that identifies risks, monitors processes and analyzes errors.
• Operations manual: the binding documentation of all organizational and flight operations procedures. According to the LBA service description, it consists of Parts A, B, C and D – from the general part through aircraft type-specific procedures and route and airport information to training.
• Technical support: an approved continuing airworthiness management organization (CAMO) and a suitable maintenance organization. How maintenance itself proceeds in stages is described in the article on aircraft maintenance and checks.

The AOC comes with the operations specifications. They state what the company is specifically allowed to do: which aircraft types, in which areas, with which special approvals – for example for dangerous goods, all-weather operations or long-haul flights with twinjets far from alternate airports (ETOPS). An AOC is therefore not a blanket license. If a company wants to introduce a new aircraft type, it needs an amendment to its operations specifications.

The operating license: the business approval

While the AOC looks at flight operations, the operating license examines the company as a whole. Article 4 of Regulation 1008/2008 lists the basic conditions:

• The principal place of business is in the member state that issues the license.
• The company holds a valid AOC from an authority of the same member state.
• It has at least one aircraft at its disposal, owned or on a dry lease – that is, rented without crew.
• Member states or their nationals hold more than 50 percent of the company and exercise effective control.
• It meets the financial requirements, the insurance obligations and the requirements on the good repute of those responsible.

The financial review is the hardest part. A first-time applicant must prove that it can meet its actual and potential obligations for 24 months from the start of operations. It must also be able to cover fixed and operating costs for the first three months without counting any revenue from flight operations. In addition there is a business plan for at least the first three years.

There is relief for small operators: those who use only aircraft under ten tonnes maximum takeoff mass or with fewer than 20 seats can instead prove net capital of at least 100,000 euros. The authority may still demand the full review, for example for scheduled services or annual turnover above three million euros.

	AOC (air operator certificate)	Operating license
Core question	Can the company fly safely?	May it carry commercially?
EU legal basis	Regulation (EU) 965/2012 (flight operations)	Regulation (EC) 1008/2008
What is checked	Organization, personnel, manuals, training, maintenance, management system	Headquarters, ownership and control, finances, insurance, good repute
Relation to aircraft	Operations specifications with types and special approvals	at least one aircraft owned or on a dry lease
Dependency	Basis for the operating license	valid only with a valid AOC

How approval works in Germany

In Germany the Luftfahrt-Bundesamt (LBA) in Braunschweig is responsible as soon as commercial air transport is operated with aircraft outside performance class B, with technically complex helicopters or under instrument flight rules. In these cases the LBA issues both the operating license and the AOC. According to the service description on the federal portal, the process looks like this:

Processing typically takes six to twelve months, depending on how quickly the documents are complete. The aircraft enter the German aircraft register and thus carry a D registration – how that works is explained in the article on German aircraft registrations.

Not every flight needs these approvals. According to the LBA description, exempt are, among others, flights with unpowered aircraft, with motorized ultralights, sightseeing flights, specialized operations such as aerial work, and flights by private individuals on a cost-sharing basis. If you are a private pilot with a PPL taking friends along and splitting the direct costs, you are not running an airline.

Oversight during operations: checks, suspension, revocation

The review doesn’t end with issuance. Regulation 1008/2008 provides for a whole series of checkpoints:

• Two years after a new operating license is issued, the authority checks whether the airline still meets the requirements.
• Audited annual accounts are due no later than six months after the end of the financial year.
• Changes in ownership of ten percent of a holding or more must be reported within 14 days.
• If an airline has not started flight operations six months after issuance, or if operations are suspended for more than six months, the license must be reviewed again.

If an airline gets into financial difficulty, the authority can suspend or revoke the operating license if it is no longer convinced that obligations can be met for twelve months. During a restructuring it may also issue a temporary license for a maximum of twelve months, provided safety is not at risk. If the AOC is suspended or withdrawn, the operating license must be suspended or revoked immediately. Many of the cases described in the article on major airline failures in Europe ended exactly at this point.

Wet lease, dry lease and the AOC behind it

For spotters, the AOC gets especially interesting with leasing. In a dry lease, an airline rents only the aircraft and flies it under its own AOC with its own crew. In a wet lease, it rents the aircraft together with crew, maintenance and insurance – the flying is then done under the lessor’s AOC. What these models look like in practice is explained in the articles on wet leasing and aircraft leasing.

The EU regulates wet leases with varying strictness, depending on where the aircraft is registered. Aircraft with the registration of an EU state may in principle be freely leased in, as long as safety does not suffer. For aircraft from third countries, prior approval is needed: equivalent safety standards and a special reason. For exceptional needs, the approval is under the basic rule limited to up to seven months and can be extended once by up to seven months. Seasonal capacity shortages and operational difficulties are also provided for as reasons. Since an amendment in 2019, EU air services agreements with third countries can allow different time limits.

Airlines from third countries that fly into the EU themselves additionally need a safety authorization from EASA, the TCO authorization (Third Country Operator). Only with it can a member state grant traffic rights. In the extreme case, those who don’t meet the safety standards end up on the EU air safety list and may no longer fly into the EU at all.

One group, many AOCs

Large airline groups are often legally a bundle of individual airlines. Each company with its own AOC has its own headquarters, its own codes and usually its own country prefix in the registration. Reasons for this are market access outside the EU, employment contracts under local law, cost structures and sometimes simply politics. More on the motives is in the article on multi-brand strategies.

Group	Company	Headquarters	Registration	What you can tell from it
Ryanair Holdings	Ryanair DAC	Ireland	EI-	the main airline with the harp
Ryanair Holdings	Malta Air	Malta	9H-	same look, ICAO MAY
Ryanair Holdings	Buzz	Poland	SP-	ICAO RYS, also its own charters
Ryanair Holdings	Lauda Europe	Malta	9H-	Airbus A320 instead of Boeing 737
Wizz Air	Wizz Air Hungary, Malta, UK	Hungary, Malta, United Kingdom	HA-, 9H-, G-	ICAO WZZ, WMT or WUK
easyJet	easyJet Europe	Austria	OE-	Austrian AOC since 2017, a response to Brexit (OE registrations)

German examples show how long the road to your own AOC can be. Discover Airlines received its air operator certificate in June 2021 and flew for the first time in July 2021. Lufthansa City Airlines, founded in 2022, received its AOC from the LBA in June 2023. Both belong to the Lufthansa Group but are legally independent airlines with their own approval.

What AOCs tell you while spotting

In everyday life at the fence you don’t meet the AOC as a document but in three traces:

• ICAO code and callsign: The three-letter ICAO code and the callsign are assigned to the operator, that is, the company with the AOC. That is why Malta Air and Ryanair DAC fly under different codes even though the aircraft look the same. Where some callsigns come from is shown in the article on airline callsigns. The system is explained in the article on IATA and ICAO codes.
• Registration: EU airlines usually register their aircraft in the country of their operating license. When an aircraft moves between group subsidiaries, it often gets a new registration. What happens then is in the article on re-registrations, and the basics in Understanding aircraft registrations.
• Livery: It is marketing and says little about the AOC. If an aircraft flies for a new company without having been repainted yet, the typical hybrid liveries result.

For clean sighting lists this means: note not just the brand but the operating airline. A Ryanair jet with a 9H registration counts as a Malta Air sighting for the statistics. And if you collect registrations, AOC changes show you how an aircraft moves through a group.

What to keep in mind

• Brand is not airline. A livery, a name on the ticket and a codeshare say nothing about the AOC. How several airlines share a flight number is shown in the article on codeshare flights.
• Charter is not a special privilege. Charter flights also need an AOC and an operating license. The difference from scheduled flights lies in sales, not in the approval – more under Charter flights and scheduled flights.
• Outside the EU, other authorities apply. The United Kingdom and Switzerland issue their approvals through their own aviation authorities; airlines from third countries additionally need EASA’s TCO authorization for flights into the EU.
• Registration abroad is not a contradiction. Leasing companies often register aircraft in particular countries. Why is explained in the article on offshore registrations.

Conclusion

What legally makes an airline an airline is two documents: the AOC as proof that the company can fly safely, and the operating license as permission to earn money with it. In the EU the two are closely linked, and the hurdles are high – from the 24-month financial review through the ownership rule to the complete operations manual. For spotters this is more than administrative knowledge: the AOC sits behind the ICAO code, the callsign and the registration, and thus behind every clean assignment.