Page 12 - Volume 17 Number 5

Types of AircraftOwnership aAfriend and business col- league calls to ask to use your aircraft, or to travel with you and share expenses of the flight, since his is down for mainte- nance. There are several pitfalls to this arrangement.Except under limited exceptions in the FARs, receiving payment of any kind for use, or sharing, of an aircraft with crew is considered a “commercial operation” by the FAA and can result in large fines, certificate actions against the pilots, and insurance exclusions in the event of an accident.The basic rule under the FARs is, anytime you receive anything of value in exchange for a flight, you are a “commercial operator” and therefore need to obtain an operating certificate from the FAA, typically under FAR Part 135.For small (less than 12,500 pounds), non-jet aircraft, the exceptions are especially limited. Expenses may only be shared on flights for a common purpose, and payments may only be accepted for things like ferry and training flights, aerial photography/survey, demonstrations of aircraft for prospective purchasers, and carriage of candidates for election.For large or turbine-powered multiengine aircraft, there are more exceptions for “related businesses.” Related businesses10 • TWIN & TURBINEinclude subsidiaries, affiliates, or divisions of the owner company, for use of the aircraft that is incidental to and within the scope of the business of the owner company; these exceptions do not extend to sharing the aircraft with the general public, or with non-related entities.One exception involves time- sharing, where an aircraft is leased to another related business, with crew, and no charges are made except for fuel and lubricants, crew travel expenses, hangar and tie-down costs, specific flight insurance, landing fees/airport taxes/assessments, customs fees, catering, special flight planning charges, plus 100 percent of the fuel and lubricant charges. The FAA has indicated that by permitting 100 percent of fuel and lubricant charges to be added to the actual costs, it is approximating the pro- rata share of pilot salaries and other overhead, while not permitting a profit to be made on the flight.Another exception is an interchange arrangement, whereby related businesses borrow each other’s aircraft for a trip when their aircraft is down for maintenance or otherwise unavailable. The exchange may be “equal time,” or there may be a monetary payment to equalize the difference in cost of ownership and operation. For instance, if one company has a business jet and the other a turboprop airplane, the total costs of operation would obviouslybe different, and could be reconciled by monetary payment.A third exception for large and turbine aircraft is joint ownership. This would be an arrangement whereby one of the registered owners (of a related business) hires and furnishes the crew, and each of the other owners pays a share of the charges specified in an agreement when using the aircraft. Under this arrangement, the parties may agree in advance as to the percentages of ownership, and therefore the respective shares of costs. The party with the largest share [e.g. 60%]By Jim RobbMAY 2013n