Q5

Part II

Lion Airline (Customer) enters a 3-year contract with an aircraft owner, Jumbo Ltd (Supplier). Every Monday, Wednesday, Friday, Saturday, and Sunday Jumbo will exclusively transport passengers of Lion Airline from Sydney to Adelaide at 10 am and at the same day from Adelaide to Sydney at 6 pm. The type of aircraft is specified by Lion Airline. Jumbo Ltd owns more than one aircraft of this type. Jumbo is permitted to substitute the aircraft at any time during the contract period and must substitute the aircraft if it is not working. Furthermore, Jumbo is responsible for operating the aircraft, using its own crew. The contract requires Lion Airline to make monthly fixed payments to Jumbo Ltd as well as variable payments that are a percentage sale derived from sale of air tickets.

Requirement

Does the contract between Lion Airline and Jumbo Ltd contain a lease? Refer to AASB16 Leases in your response.