Airplane expenses being split .. legal vs. illegal

[Vik]

Let me also add that they would be paying the non-flying expenses regardless of whether they flew the plane or not.

 

[FN FAL]

Now if I split time, this can work, HOWEVER, the FAA will rip me a new one for charging $100/hr to split time on a plane that costs $60/hr for fuel and oil.

I don't think splitting time is an issue in the matter of a renter hiring you back as a safety pilot...if there are renter guy's under the hood flying the plane and you are a required safety pilot...what's there to spliting time in the FAA's eyes. You are renting him the plane so HE can build time, you are along to fufill required duties as a safety pilot.

Quit confusing us...when you said flying buddies before, you never said they were rated pilots that could fly the plane.

Also, being an MEI helps.

I don't think you have to split costs with someone that rents your plane to build time and needs you aboard as a safety pilot. The only reason people split multi time is because they are poor and cannot afford their own twin or cannot afford to pay for the twin rental themselves...in most cases they are not splitting costs to make the faa happy with holding out issues, its for financial reasons.

If your insurance requires you to ride along with one of these "renters" till they meet insurance minimums, you may be even more in the clear...because in order for them to fly the plane, they need you aboard till they meet mins.

I think you are on the right track, buying a twin to build time and renting it out so you can build time as well. Keep in mind you don't owe these people a thing. They are wearing out your plane and you are the one that will be stuck with the bills and the financial albatross around your neck when it's time to sell. Don't give anything away for free. If they are building time in your plane, you should make sure they are renting it for as much as you can make off of them. They wont be feeling bad when you blow a jug or two or wind up with a cracked landing gear trunion or expensive wing spar ad.

rent them the plane and charge them for your services as a safety pilot. If the dude that rented your plane is flying you around in it, it's not holding out. It's flight instruction or pilot services (for being a safety pilot).

The time you get in your log book for riding along is yours for owning the plane.

I guarantee when they are done, and your plane is sitting out on the tarmac tied down, out of annual and weeds growing underneath it, that they will be long gone.

Everybody is your brother, till the rent comes due.

 

[midlifeflyer]

I'm going to repeat some of the reply I posted to your questions on another forum FWIW in this discussion.

I'm not focusing so much of the "trees" of the rules but the "forest" that the rules are part of.

I doubt that you will get a straight answer from your FSDO, unless they take the easy way out and just say no. Even FAA Legal has avoided answering questions that aske them to paint a bright dividing line between what is okay and what is not.

When we're talking about 61.113 and the other rules in this topic, we're talking about the line between private and commercial operations. Unfortunately that's a line that is incredibly fuzzy. If you go back to the reasons for the policy and look at the creative ways people use to try to get around it, you can almost understand why it has to be fuzzy.

The question you have to =honestly= ask yourself about the various methods you're thinking about is:

***What do the friends who make those contributions get in return?***

If the answer is "transportation by air with me as the pilot in command" then you have to either meet commercial operation requirements or meet the requirements of the cost-splitting-for-a-joint-purpose bucket presented by 61.113.

But if the answer is =really= something other than that, whether it be real gifts for a friend or picking up the tab at lunch or flight time in your airplane, IMO, there's no problem. (Unless you enter another bucket, like providing flight instruction)

The =really= is the catch. If someone tries to do all of the things that =sound= legit but with the purpose of receiving compensation for air transportation, it will end up looking like the phony scheme it is. If it quacks like a duck...

Paying your hangar rent just out of friendship is not air transportation. Paying your hangar rent in exchange for getting access to your airplane to build flight time is not a problem. Paying your hangar rent in exchange for being flown to business trips in the next state =is= a problem.

 

[surfnole]

Its a stupid rule. I don't understand the point.

For example, I have a buddy who owns a plane and is a pilot. I need to travel 300 miles for a business trip. I am a pilot, and I like flying also. I pay for the entire cost of the trip because its a write off for me. What harm is there in that? I know its against FAA regs, but whats the point?

If fact, I did something very similar to the above. My coworker and I had a business trip 400 miles away. My flight instructor flew us up in a our flying club twin and he flew home by himself. Two days later returned and picked us up. I don't have a multi rating. My coworker and I paid for both flights. Everybody wins. My flight instructor gets 10-12 hours of multi time. I get the joy of riding in a twin and learning some stuff. My coworker and I have a far shorter travel time than any commercial flight because we don't have to change planes in Atlanta. Why should the FAA care?

 

[A Squared]

I agree with Midlife here, we're not seeing the forest for the trees. To put it a little differently:


If you own an airplane, it is perfectly legal for you to rent that airplane to certificated pilots for however much you want. No certificate is needed.

You may give bona-fide flight instruction in that airplane for hire, for whatever rate you want. All perfectly legal. note that I said bona fide flight instruction. "flight instruction" which is a sham to get around charter regulations is not legal, and the FAA is not fooled a bit.

Let's say one of your multi engine rated friends comes to you and says, hey, I want to take your plane up for some practice approaches. You say, no problem, pay me $160 hour but I have to be sitting in the right seat, acting as the pilot in command. In order to do the practice approaches, there *must* to be someone in the other seat anyway. Flight schools all over the United States do this every day, with no operating certificate.

Say that same mel rated pilot friend comes to you and says hey, next saturday, I want to do a little round-robin cross country to log some multi time. That's the sole purpose of the trip. you don't drop off anyone or any thing, and you just fuel up and grab a bite to eat at each of your stops. At the end of the day, you're back at home base. He does the flying and you only log time when he's under the hood. You can charge him 100% of the operating costs, or 110 %, or 75%. No regulations being broken there. You're renting your airplane to a pilot and going along for the ride for insurance and to be a safety pilot.

Now, let's say that your friend had a business meeting in another state. Could you rent your airplane to him to fly himself to that meeting and back. Of course. If he does it solo, there's absolutely no problem, you can charge whatever you like. Now what if you go along? Ummm, well now it's entering a grey area, it's starting to look from the outside that it's a charter. If he truly was doing the flying, and you truly were there only to look after the airplanes best interests, it wouldn't be in violation, but, I think the FAA would take a very dim view of this as it is starting to *appear* like you might be flying people around the country for hire and lying about who's flying as a dodge.

Posted by Surfinole Its a stupid rule. I don't understand the point............. Why should the FAA care?

They care because there is a fundamental concept that predates flight which says that members of the public who purchase transportation services have a right to expect a certain level of safety. Now, if the FAA places a substantial regulatory burden on charter operators, it has an obligation to prevent people from skirting around those rules, and the charter operators who have complied with hte regulations have a right to expect the FAA to protect them from otheres skirting the rules. Trust me, if you'd jumped through all the hoops to establish a 135 operation, you'd be pretty pissed off to see someone in the next hangar doing bootleg charters.

The second scenario is jut that, an bootleg charter. Yeah you can claim it was an instructional flight, but in reality it was not, the pilot took you there in an airplane and then returned. Later he flew back, picked you up and brought you back. That's not instruction that's a charter. Is the world going to come to a halt because it happened? well probably not. The fact remains that the purpose of the flights was air transportation, and as such is required by law to be done by a certificated operator.

 

[FN FAL]

If fact, I did something very similar to the above. My coworker and I had a business trip 400 miles away. My flight instructor flew us up in a our flying club twin and he flew home by himself. Two days later returned and picked us up. I don't have a multi rating. My coworker and I paid for both flights. Everybody wins. My flight instructor gets 10-12 hours of multi time. I get the joy of riding in a twin and learning some stuff. My coworker and I have a far shorter travel time than any commercial flight because we don't have to change planes in Atlanta. Why should the FAA care?

In regards to your post, all you have to do is retain the CFI or Commercial Pilot as your "Pilot Services" Pilot. Real simple.

You don't have to use a contract, but if I was your CFI, I would draw up a simple contract that indicates that he has been retained by you or members of your club to be their "Pilot Services" pilot and have all your club members sign it. This is structure. This is documentation. This legal and not an issue in regards to holding out for transportation...you are allowed to own an airplane and retain a commercial pilot to fly it for you. Ding, pies are done!

All this retainer contract does, is state that you have retained Joe Schmoe as your pilot. That way nobody gets confused when there is a ramp check or a question from FSDO.

 

[Vik]

Ok, I re-read the regs carefully, have heard what everyone had to say and this is the summary .. if I'm wrong, lets hear it

1) The reg is there to make it clear that a private pilot cannot do charter ops. It has nothing to do with splitting flight time and expenses when both pilots are logging PIC time.
2) I can estimate the expenses of a light twin at say $150/hr and charge each of my pilot buddies that will be logging PIC, that they need to pay $75/hr for each hour of PIC time they log, and I can do this legally.
3) My insurance (Avemco) also will cover pilots on my approved pilot list and they allow me to charge over the direct operating expenses without any problems.

Thanks to everyone for their help. If anyone believes what I've written above is incorrect, please correct me and let me know why.

Thanks again,
Vik

 

[philo beddoe]

A good point was made here - if the person being transported is genuinely supplying the aircraft, the CFI can be considered to be providing pilot services.


Example 1: A non-pilot buys a 1/4 share of some other guy's Baron, and hires a CFI to fly him. Totally legal.

Ex 2: Mr. non-pilot enters into a legal lease agreement with an aircraft owner to purchase/rent a certain number of hours, contracts with a CFI to do the flying. Also legal, provided you can legitimately establish that you are not holding out to serve any and all potential passengers/customers. Documentation is the key.

Ex 3: CFI gets Mr. non-pilot to arrange to rent an airplane from some FBO (whether or not CFI works there). CFI then tries to claim pilot services only. Busted! The problem with this scenario is that the FAA sees this as something where you could establish this arrangement with someone new every day, and it could be entered into very quickly.

The first two scenarios take an act of deliberate financial committment on the part of the person being transported. This means that they are supposedly going into it with eyes wide open, as it were. They are no longer considered to be the general public, requiring protection. They are now arrangin their own private transport by air.

 

[FN FAL]

Ex 3: CFI gets Mr. non-pilot to arrange to rent an airplane from some FBO (whether or not CFI works there). CFI then tries to claim pilot services only. Busted! The problem with this scenario is that the FAA sees this as something where you could establish this arrangement with someone new every day, and it could be entered into very quickly.

First let me say, if the CFI works at the FBO in this scenario...he is gonna get busted. If you are tied in any way to the aircraft or FBO in this scenario, you are holding out. Whether you are the CFI, the A&P or the guy that leases the plane back to the FBO. Distance from the plane, distance from ownership of the plane and distance from profit made off of the rental income from the plane is key here.

Second, In this similar scenario, let's say I run outside to have a smoke. I run into the neighbor lady who is in sales and is rolling her luggage out of the car towards the stairs. She just got back from another business trip. So we get to talking and after our discussion, she winds up introducing me to Mr. Bush, her boss.

Mr Bush says, "can you do this and that and the other thing with a private airplane?"

I say yes I can! Retain me now as your commercial pilot and I will manage your flight department for you. First things first, we do the pilot services contract. Me and Mr. Bush establish documentation and structure into our relationship.

Then I point Mr. Bush to the FBO in our town. I am insurable on the Aztec, Seneca, Navajo, C-310, C-320, C-340, C-414 for sure and the Conquest with some finesse...maybe the CE-500 with the grace of dog spelled backwards and some money thrown at Pan-Am or SIM-Buddies or whoever.

Mr. Bush arranges a block lease or rental rate on all of those aircraft with the FBO owner and pays some block time in advance, because he knows he has some travel to get on. Mr bush has established documentation and structure into his relationship with the FBO.

This is legal. This scenario works and is done all the time. People lease or rent aircraft and hire flight crews all the time. A flight department manager must and will steer his employer in the right direction when it comes to the best course of action regarding leasing or renting or buying aircraft for the corporate flight department. Paperwork makes the structure and it creates a relationship of documentation.

Believe me, if my neighbor lady introduces me to Mr. Bush, I will definitely give Mr. Bush the time of day...