Airplane expenses being split .. legal vs. illegal

[English]

Why not just sell the other pilot/s a share of your aircraft? It could be as small or large a share as you'd like, I suppose. With them as owners, they can pay for anything they want.


I had two partners in an aircraft, and we each owned a 1/3 share. However, they rarely flew the airplane unless they went somewhere with me. They paid for 2/3 of the tiedown, insurance, maintenance, etc. A partnership made in heaven.

 

[FN FAL]

"Lets say they act LIKE partners (aren't partners) and just buy stuff for the plane."

They have to BE REAL partners. Partners is documented through incorporation, registration, operating agreements and paper trail. This is where DOCUMENTATION is a good thing.

None of the owners can be making a dime off of the other owners from the operation of the aircraft itself...not one dime off of the hourly costs, not one dime off of the fixed costs. This is key.

An owner may fly the other owners as a pilot services pilot for them and CHARGE the going rate for pilot services! Last time I worked pilot services, 300 a day is what we charged for piston pilot services and 350 a day is what we charged for turbine pilot services.

Don't believe me? Ask the freaking feds or go pay a proffesional, I highly recommend doing both anyway. You are going to want to let the FEDS know what you are doing with your partnership, so they don't have to get a call from some hayseed with a piper cub ratting out what he thinks is an illegal charter operation, or forbid some charter operator trying to throw a wrench in your monkey business.

The only way partners works is written above...go see your aviation lawyer and send a letter to FSDO once you got your situation properly set up and documented...then enjoy your real partnership and getting paid as pilot services pilot by your partners.

 

[FN FAL]

Alright, here is a new twist. You create a flying club which owns the multi aircraft above. Set the prices high enough so that you can get paid the 'real' expenses (or 150% of the real expenses and the CEO [who is you] get the profits at the end of the year - like what CFIs do sometimes to get around being liable for damages if they crash).

Then rent the aircraft from the flying club and have the pax pay half.

That doesn't work, what you said.

A flying club, is a partnership. 8 guys buy a plane, set up a partnership, 8 owners. This works.

A non profit club, cannot be owned by a person and make a profit. Otherwise it wouldn't be non profit. Talk to an attorney on that one, but that is how my old skydiving place was set up. No owners, no profits, but a lot of good old fashioned Democrat skimming going on...that's why that club of fourty is now a club of like 3 nobodys...but that's a different story.

Then rent the aircraft from the flying club and have the pax pay half.

promise me you won't do that. Don't operate a not-for profit club that you really run for profit and then take your friends flying and charge them HALF! There is so much wrong there, it isn't funny. Sharing costs means pro-rata...not half (unless you only fly with one friend! then half = pro rata!)

A group of people can legally own a plane together...incorporate a non-profit partnership, corporation or "club" if you will. They can all share fixed costs based on percentage of ownership and they can all re-emburse the club for cost of hourly operation and if one of the club members is a pilot, they as individuals can share a contract to cover the pilot services.

Pay an aviation attorney...go check it out. Totally legal. Not only that, corporations can be share holders in the club as well. Not just individuals.

Get daddy to give you 250,000 go find yourself 5 CEO types that want to form a flying club on a new or used King Air...Incorporate your partnership, sign an operating agreement (a plan of operation!!!), get insurance, send a copy of all your stuff down to FSDO or call them and go have coffee with all your paperwork. Then one of the pilot partners draws up his pilot services contract and makes money off of being hired to fly their shares for them.

Hell...0nce you got that done, you'll have the confidence to ask your partners to let you shoot for a single pilot, single aircraft 135 up the road, then lookout!!! the sky's the limit!

 

[Jedi_Cheese]

That doesn't work, what you said.

A flying club, is a partnership. 8 guys buy a plane, set up a partnership, 8 owners. This works.

A non profit club, cannot be owned by a person and make a profit. Otherwise it wouldn't be non profit. Talk to an attorney on that one, but that is how my old skydiving place was set up. No owners, no profits, but a lot of good old fashioned Democrat skimming going on...that's why that club of fourty is now a club of like 3 nobodys...but that's a different story.
promise me you won't do that. Don't operate a not-for profit club that you really run for profit and then take your friends flying and charge them HALF! There is so much wrong there, it isn't funny. Sharing costs means pro-rata...not half (unless you only fly with one friend! then half = pro rata!)

A group of people can legally own a plane together...incorporate a non-profit partnership, corporation or "club" if you will. They can all share fixed costs based on percentage of ownership and they can all re-emburse the club for cost of hourly operation and if one of the club members is a pilot, they as individuals can share a contract to cover the pilot services.

Pay an aviation attorney...go check it out. Totally legal. Not only that, corporations can be share holders in the club as well. Not just individuals.

Get daddy to give you 250,000 go find yourself 5 CEO types that want to form a flying club on a new or used King Air...Incorporate your partnership, sign an operating agreement (a plan of operation!!!), get insurance, send a copy of all your stuff down to FSDO or call them and go have coffee with all your paperwork. Then one of the pilot partners draws up his pilot services contract and makes money off of being hired to fly their shares for them.

Hell...0nce you got that done, you'll have the confidence to ask your partners to let you shoot for a single pilot, single aircraft 135 up the road, then lookout!!! the sky's the limit!

What he said... However you do it, it's paperwork hell, you will need a lawyer, and in the end it will be cheaper flying the aircraft for free and taking pax along.

 

[FN FAL]

What he said... However you do it, it's paperwork hell, you will need a lawyer, and in the end it will be cheaper flying the aircraft for free and taking pax along.

Incorporation and operating agreements are done all the time, in flying clubs and in non-aviation business as well. I guess it depends on how hard you are willing to work at something.

I have a corporation that I use for billing people for BFR's or for when I fly for this dropzone. I even used my corporation as a means to transfer the possession of a suppressor, which is classified and registered as an NFA firearm. Which I plan on doing again pretty soon, because it saves half the paper work shuffle with the BATF. No police chief sign offs and no fingerprint cards. The BATF transfers take half the time using a corporation, because they don't have to send fingerprint cards to the FBI for processing. It's kind of hard to fingerprint a corporation. Plus, any officer of my corporation may possess the NFA registered firearm. Comes in handy if the wife has to bring me the item, since she is an officer in the corporation and therefore legal to possess the item. My only corporate asset, a silencer.

If you are looking at bagging a hundred hours of multi to go to the regionals, this is not the set up for you. If you want to create a situation where you are 1/6th owner of a Barron, Pilatus or King Air, plus get paid as pilot to do most of the clubs flying...then go see the aviation attorney, go see fsdo and fly on.

 

[Vik]

It isn't for pax as much as it is for my flying buddies (2 of them) that want to split time in the plane. I guess I could make them partners, in which case, they'd be paying to maintain the plane and what not just as much as I would be.

Obviously at half the cost of fuel and oil, I'll be making a HUGE loss on the plane. I might as well just fly the plane myself and put an ad for safety pilot twin time at $40/hr.

What a bind ..

 

[414Flyer]

When did the FAA rewrite the regs so it was plainly spelled out? For a long time it was not...so you had a lot more leeway to let others pay for most all of the flight.

 

[nosehair]

Well, I agree with everyone about how certain individuals in the FAA will go after you if they even get the slightest whiff of a non-135 certificated pilot paying one dime less than the pro rata share of a shared purpose flight. Yep, I'm with you there. But, on close inspection of the actual regulation, 61.113(d) "A private pilot may not pay less than the pro rata share of the operating expenses of a flight..." The operative word is "a flight". The sentence seems to be speaking to "that flight". So, other expenses, not asscociated with "that flight" are not regulated. Of course, you would need an attorney to say it for you. And what about "airport expenditures"...anybody got a legal definition of that one. I would say hangar expenses, and so would some FAA guys, but others would say "only landing/parking fees". Eh, you need an attorney.

 

[midlifeflyer]

It isn't for pax as much as it is for my flying buddies (2 of them) that want to split time in the plane.

FWIW, I think there is a huge difference between splitting costs with passengers and splitting flight time with another pilot. Many of the rules about passengers is grounded in centuries-old policies of protecting the public from non-qualified commercial operators.

Now, that doesn't mean that the splitting rules go out the window because the passenger happens to be a pilot, but there is no FAR I know of that controls what someone can pay for the privilege of flying your airplane, whether or not you are also on board.

You do, however, want to check your insurance to make sure that this "private rental" doesn't void your coverage. I know Avemco recently amended it policies to permit some degree of private renting of personal aircraft, so it maybe something to check out.

 

[Vik]

I'm with Avemco. Yes, the policy allows me to rent the plane to approved renters for profit. This means above and beyond direct operating expenses of that particular flight. So I can charge $200/hr to let one of my approved pilots go fly my plane solo. It is above and beyond the direct op expenses written by the FAA.

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'm going to try and get a meeting with the local FSDO and get them to give me an official WRITTEN reply. I don't see why my buddies can't pay for non-flying expenses -- hanger, insurance, etc.

Vik

You do, however, want to check your insurance to make sure that this "private rental" doesn't void your coverage. I know Avemco recently amended it policies to permit some degree of private renting of personal aircraft, so it maybe something to check out.