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Types of Sharing Business Aircraft

Private jet owners are the individuals who are mainly involved in business aviation and are most likely to enter into aircraft sharing arrangements. From occasional users to industry veterans, there are different types of sharing structures which are based broadly on certain issues like legal, regulatory, operational, economic, tax, liability, and disclosure perspectives. Some of these sharing structures are Time Sharing, Interchange, Joint Ownership, Dry Leasing and Fractional.

Time Sharing: This is specifically allowed under §91.501(c) (1) of FAA. Time Sharing is an arrangement whereby a person leases his airplane along with flight crew to another person and no other charges are collected, other than for any direct expenses incurred during with the flight, like for example twice the cost of fuel must be paid. This charging restriction is its main limitation. This leasing of the aircraft along with the crew is also sometimes known as “Wet Lease”. It is most useful for short-term arrangements where full cost-recovery is not essential.

Interchange: Specified under §91.501(c) (2) of FAA. Interchange is an arrangement mainly useful for two or more companies, where each of them owns an aircraft. They exchange aircrafts to swap time which is mutually convenient. The exchange must be hour-for-hour for similar aircrafts, that is one cannot trade two hours on a Citation for one hour on a Gulfstream. But an hourly charge can be levied for the differential operating costs. Interchange sometimes of include leasing where FAA permits “wet” interchanges, whereby each party provides its aircraft and crew to the other. “Dry” interchanges have are also permitted where each lessee uses its own crew. Normally “dry” leasing has always been more common in the private carriage camp than “wet” leasing.

Co-Ownership: This is an old practice since decades where companies mutually agree to share ownership of an aircraft. There is no prohibition on doing so as per the law. Each co-owner has the right to operate the aircraft independently or contract out individually or collectively for management services. These arrangements are viewed to be private from an FAA perspective and not subject to the Truth-in-Leasing provisions. The co-owners would be unable to charge each other for operating the aircraft.

Each method has its own sets of advantages and limitations and hence has to be chosen appropriately keeping in mind your annual flight hour requirements, the type of aircraft you wish to fly and both the location of your starting and destination places.

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Jason Uvios writes about on Types of Sharing Business Aircraft to visit :- private jet specifications, private airplanes and corporate jets

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