How to Properly Structure Aircraft Leasing To Avoid Illegal Charter
Created on August 20, 2020
Many times, an aircraft owner who is not fully utilizing the owner's aircraft will lease the aircraft to maximize the use of the aircraft and to recover some of the aircraft owner's overhead expenses. A lessee operating under a properly-structured aircraft "dry" lease is permitted to operate under the FAA's non-commercial rules found at 14 C.F.R. Part 91 and is not required to comply with many of the more restrictive and costly requirements of 14 C.F.R. Parts 121 or 135, the Federal Aviation Administration's rules that apply to commercial scheduled and on-demand aircraft operations. Also, the additional federal excise tax that would normally apply to commercial operations will not be due on the amounts paid by the lessee to the lessor under a properly structured dry lease, although sales tax is often assessed on the lease rate.
While these Part 91 leasing arrangements need to be structured and documented correctly, they quite often are not. Improper structuring, documentation, or operation can result in the FAA taking the position that the aircraft lessor is conducting operations that require a Part 135 certificate, and without such a certificate are illegal charter operations.
This course will provide details on the various FAA rules that have a significant impact on how businesses or individuals can utilize private aircraft, as well as how counsel can properly structure Part 91 dry-leasing arrangements and avoid the consequences of improper structure and conduct of illegal charter flights.
- Review relevant federal and state laws and regulatory activity applicable to aircraft operations
- Assess how these laws apply to different types of aircraft operations
- Identify proper Part 91 dry-leasing arrangements
- Provide practical guidance to properly structure private aircraft operations and avoid illegal charter
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