The planning process
would be a lot easier if everyone needed a whole
aircraft. However, in many cases, the aircraft is
bought with the expectation that the aircraft
will be shared by several users. In other cases,
the owner would like to defray the fixed costs of
ownership by leasing the aircraft to an air
charter operator. Regardless of how this is done,
the overriding objectives are generally to
minimize tax cost, to comply with the FAA Part 91
rules and to insure adequate insurance coverage.
alternative is for the same company to lease both
aircraft and crew to the other users (a "wet
lease") and may generate sales tax benefits.
However, this alternative also involves the FAA
risk of being considered a Part 135 "air
charter" operation and is potentially
subject to the federal transportation tax. Where
the user is a related party, such as the
"affiliated group" exemption. Where the
user is an unrelated party, a
"time-share" or "interchange"
agreement may be used to avoid the FAA problems,
but not the transportation tax. However, care
must be taken to avoid The
Sole Purpose Company Trap.
The aircraft can be
purchased by a company and leased to other users
without crew (a "dry lease"). A dry
lease is allowed under Part 91, as long as
certain disclosure requirements are followed. The
tax advantages and disadvantages of using an
aircraft leasing company are discussed in Aircraft Leasing Companies.
is for the different users to become co-owners
of the aircraft. This kind of operation is
generally permitted under Part 91, is not subject
to income tax limitations or to the
transportation tax. The greatest challenge is to
draft an agreement which is fair to everyone.