Pt 91 Cproprate Partnership Question

[HA XPEH]

How do you guys structure your airplane agreement when it is involved with more than one owner? I know this question has been discussed at great legnth, but I am trying to shed some new light on this without going crazy. This is easier to do with a small single piston such as a flight club, but when one moves on to a turboprop/jet operation the setup always becomes much more complicated.

Company A and Company B want to share an airplane and remain part 91. I have researched this to death and keep coming back to the same problem-Setting up the agreement as an LLC crosses over the line to Pt. 135. Some attorneys say that the only way to legally do this pt 91 is with a joint ownership agreement, but others say that it is possible with both companies being owners of the LLC and the LLC owns the airplane. One aviation attorney even went on to say the only way to ever get the answer to this would be through litigation. Nobody ever wants to go down that road. It can also get very complicated as to where the flight crew is employed with. Will the flight crew will be employed from the LLC, or as a "Flight Department Manager" from company A or B?

Sorry about the mess. Thoughts? Much appreciation to thoughtful/helpful responses.

 

[LJ45]

pick an attorney, let them decided, you ask them if it is an legal part 91 operations, don't ask anymore questions, ...just my two cents.

 

[taters]

You might also research with NBAA, they deal with this all the time and even have some special exemptions available to members for leasing etc that could apply here.

 

[54fighting]

I think two months ago, BCA had a very good article regarding this situation. If the owner is setting up an LLC for the sole purpose of operating the airplane and the LLC conducts no other business, the FAA says you cannot do that part 91. Yes we spoke at great lengths with an aviation attorney about this.

But again, I am just a pilot :laugh:

 

[LJ45]

I think two months ago, BCA had a very good article regarding this situation. If the owner is setting up an LLC for the sole purpose of operating the airplane and the LLC conducts no other business, the FAA says you cannot do that part 91. Yes we spoke at great lengths with an aviation attorney about this.

But again, I am just a pilot :laugh:

That is true and the FAA legal dept has ruled on this.

 

[guido411]

I missed the BCA airticle. So the LLC owns the airplane then hires the services of a management company, legal then?

 

[54fighting]

Part 135 yes, 91 no.

 

[Choppy]

Can someone please post this article if you can or point me in the direction of the month of the article referencing this?

 

[54fighting]

May 2011. Article is titled Illegal Chartering, starts on page 32.

 

[LJ45]

When the only asset in the LLC is the aircraft, the FAA views the LLC as being set up to provide transportation, hence 135.

 

[Choppy]

.....

 

[ksu_aviator]

You are not 135 unless you are "holding out" to the general public. So long as the only two entities to pay for the aircraft are the owners of the LLC it is not 135. That is very important. The two owners cannot take $1 to fly friends or family.

See AC120-12A and 119.21

There are literally hundreds of LLCs set up for the sole purpose of sharing an aircraft.

You will need an accountant, but the LLC should have an account to make payroll and pay expenses. How the owners contribute to the fund is up to them. Most split the salaries, pay an hourly for expected maintenance and pay for the fuel, hotels, meals and other trip related expenses outright.

 

[LJ45]

do some searches for LLC etc. here :

http://www.faa.gov/about/office_org.../agc/pol_adjudication/agc200/Interpretations/

It is not as cut and dry as some may make it appear.

 

[REINER]

After many hours of paid legal and accounting the best way around this is a lease. Owner A buys the aircraft under the LLC established has the holding company for the aircraft. That LLC then leases the aircraft back to the owner's company or to the owner personally. The leases are done in accordance with FAA leasing standards and regulations. The important point here is that the LLC holding the airplane cannot pay the pilots. The checks must come from the Lessee. This would also work in a joint ownership situation, where A and B both own the LLC and each have their own lease from that LLC. This scenario also helps greatly with sales and use tax implications.