SPECIAL REPORT ■ including hiring the crew, and ensuring that the aircraft operates in compliance with applicable regulations and OEM operating manuals. With a dry lease, when you are the lessor, you give up control of your asset, but still are responsible for all paperwork, and for filings with the FAA. 10 11 If using a charter broker, can they provide details on the specific aircraft and operator? Is your charter broker able and willing to provide the aircraft op- erator’s certificate number? Will your charter broker provide a copy of the operator’s DO85 aircraft specification (“spec”) sheet? This document lists every aircraft in the operator’s fleet that is approved for service by the FAA. A reputable broker will provide the tail number of your charter aircraft 24 hours in advance of your trip and it should be listed on the DO85. A few illegal operators have provided falsified docu- ments to their unsuspecting customers. Information on your charter operator is available via the Flight Standards District Of- fice (FSDO). Do your homework. Are you charging, or being charged, correctly? For that friend who wants to borrow your Part 91 air- craft, there is a legal – though stringent – means to do so. Under FAR Part 91.501, a time sharing arrangement, you are allowed to charge up to two times the cost of fuel consumed on the flight, as well as specific out-of-pocket expenses incurred for this particu- lar flight (crew hotel, meals, etc.). When you are the passenger, take a close look at the receipts, and make sure you’re being billed correctly. At the end of June, the FAA alleged that a Michigan company violated several FAA regulations while chartering its aircraft for more than 850 flights. Among them was double-bill- ing timeshare clients and failing to keep proper records. The com- pany faces a $3.3 million civil penalty. Be certain that your charges are correct to avoid penalties. 12 13 Does the aircraft you charter comply with Part 135 record-keeping requirements? Ask your properly certificated charter operator if their records and operations are regularly audited by one of three industry-accredited independent charter auditing firms (Argus, Wyvern, the Air Charter Safety Foundation), or by a recognized aviation consulting firm. Good recordkeeping provides evidence of proper maintenance and current crew training. Do you understand the terms of your contract? If you dry lease and have not stipulated otherwise, your passengers could be a hard-partying rock band. So long as you don’t violate the DOT’s anti-discrimination laws, you may specify who can fly aboard your aircraft; plus what substances or www.BizAvAdvisor.com The more stringent requirements and regulations of Part 135 are designed to protect the non- aviation-educated consumer. cargo you’ll allow, and where your aircraft can fly. When you’re the passenger, you have the right to add safety provisions: a third pilot for longer trips and/or a trained flight attendant. 14 15 Are the proper lease documents filed with the local FSDO? While lease documents are required to be filed with the local FSDO, illegal operators may neglect to do so, making it less likely that the FAA will know about the trip. If the lease isn’t filed, it isn’t a legal lease, and both the aircraft owner and the pas- senger can be fined for violating FAR 91.23. With a dry lease, Fed- eral “truth in leasing” regulations also apply. Who owes the Federal Excise Tax for your trip? It’s the charter purchaser – not the operator – who owes the tax. Whether you are the operator or the passenger, know that any flight that could be construed as having a profit motive – that is, more than just flight cost sharing, even if there’s an operating loss – must be reported to the IRS. Not doing so is a felony. When you are the passenger, what can you do if you know or suspect the charter trip you are offered may not be lawful? In 2008, The National Air Transportation Association (NATA) es- tablished a hotline to report suspected illegal charter activity (1- 888-759-3581). Currently administered by the Air Charter Safety Foundation (ACSF), the hotline can be used to report (anony- mously if preferred) any operator without a Part 135 certificate who may be accepting compensation for transportation in viola- tion of FAA and DOT regulations. When you make your own aircraft available for charter, don’t take any chances. Asking these fifteen questions and doing your own due diligence will help keep you flying safely and legally. BAA JOHN MCGRAW, NATA Director, Regulatory Affairs, was the FAA Deputy Director of Flight Standards Service. With more than 4,000 hours of flight time, his aeronautical expertise includes FAA rulemaking, aircraft certification, and flight system evaluation. As originally appeared in Business Aviation Advisor Special Report, August 2018. https://www.bizavadvisor.com/fifteen-shades-of-grey-aircraft-charter/ Aviation Business Journal | 3rd Quarter 2018 BUSINESS AVIATION ADVISOR • Special Report 49
