What is an Aircraft Timeshare?
A time sharing agreement is defined in FAR 91.501 as an arrangement where a person leases his airplane with flight crew and no charge is made for the flights other than those specified in FAR 91.501, paragraph (d).
What Can you Charge for A Timeshare Flight
Per FAR 91.501(d) a charge of two times the cost of fuel for the flight, plus a few listed miscellaneous expenses can be charged. The list of what can be charged under FAR 91.501(d) is:
- Fuel, oil, lubricants, and other additives
- Travel expenses of the crew, including food, lodging, and ground transportation
- Hangar and tie-down costs away from the aircraft’s base of operation
- Insurance obtained for the specific flight
- Landing fees, airport taxes, and similar assessments
- Customs, foreign permit, and similar fees directly related to the flight
- In flight food and beverages
- Passenger ground transportation
- Flight planning and weather contract services
- An additional charge equal to 100 percent of the expenses listed in paragraph (d)(1) of this section.
The FAA Interprets the Regulations
Reading the regulation is not enough. Amounts due to a maintenance service plan and the pro-rated annual insurance premium are not allowable charges.
Risks of Non-Compliance
The FAA proposed a civil penalty of $3.3 million and the DOJ filed suit against an aircraft operator over its aircraft timeshare operations in 2018.
Give Yourself a Check-Up
Check in With Accounting & Tax
If it has been a while since you checked your aircraft timeshare agreements and how your accounting personnel are billing for timeshare flights, give yourself a check-up. Also check-in with the tax advisor to make sure the federal excise tax (FET) has been collected and remitted to the IRS for timeshare flights.
Check-in With your Insurance Agent
Also, check your insurance policy to make sure your current policy provides coverage for timeshare operations. If you changed insurance agents or insurance underwriters your timeshare flights may have inadvertently been left out of the new coverage.
Please contact Jetstream Aviation Law for legal assistance with timeshares for your business aircraft.
The information provided here is not legal advice and does not purport to be a substitute for advice of counsel on any specific matter. For legal advice, you should consult with an attorney concerning your specific situation.
Michelle M. Wade is a partner with the law firm of Jetstream Aviation Law and counsels clients on the acquisition, financing and operation of corporate jets operated under Part 91 and Part 135 of the Federal Aviation Regulations. Jetstream Aviation Law can be found at www.JetstreamLaw.com.