Sharing the expense of a business jet is appealing.
There are myths and many innovative ideas about sharing an aircraft, but the FAA regulations are real, not mythical and they haven’t innovated. You need a clear sense of the regulatory and tax landscape in order to meet sharing goals while staying within the letter of the law.
Common Aircraft Sharing Myths
Myth #1 – It is easy to find someone compatible to share an aircraft
Finding a compatible partner to share an aircraft who has the interest and financial wherewithal at the same time you find a business jet for sale can be challenging.
Myth #2 – I can buy a plane and start chartering it to my friends from my new LLC.
The FAA requires that any entity which wants to charter aircraft meet the FAA requirements and be issued a Part 135 charter certificate. Obtaining this FAA authorization takes time (think years, not days) and money.
Ways to Legally Share a Jet
Charter
Should you own the entire plane, lease is to a Part 135 charter company and allow them to charter the plane? Make sure you run the numbers and talk with others who charter their planes.
Dry Lease
Under FAR Part 91, the FAA allows you to “dry lease” the aircraft. There is no FAA cap on the amount you can charge. What the market rents are in your area? Is there any interest by potential lessees?
Timeshare
FAR part 91 allows you to timeshare the aircraft, however there is an FAA limit on the amount you can charge. Federal Excise Tax may also apply.
Joint Ownership or Co-Ownership
Will each of you own an interest in the plane? Do all of your prospective joint owners agree on the general purchase price, type of plane, and type of operation? Do you and your prospective joint owners work and play well with others?
Professional advice from aircraft brokers, charter companies, aviation tax advisors and aviation legal advisors can be invaluable.
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.
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.
