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Non-commercial operators can offer aircraft to third parties through non-exclusive dry leasing, but tax, insurance and other considerations are complex.
Aircraft Dry Lease
There are many instances in which an operator wishes to provide an aircraft to a third party. Typically, this is done through non-exclusive dry leasing.
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A lease is the transfer of ownership of an aircraft without the transfer of ownership. A dry lease provides the aircraft, but the lessee does not provide the crew. (Leases involving crew members are referred to as "full leases" and require an FAA Commercial Certificate unless specifically authorized under FAR 91.501 or FAR 91.321.)
In a non-exclusive lease, the lessee may provide the aircraft to more than one lessee during the same lease term, and operational control is lease-specific between the lessee and each lessee. Dry leases and rates paid by the lessee can also be defined on a monthly, daily or hourly basis. The rule of thumb for determining the monthly rate is 1% of the aircraft value. Hourly rates are often set based on the cost of the flight. "A typical contract is to lease an aircraft to a company for Part 91 operations and to a Part 135 operator for charter flights," said Jeff Wiand, senior vice president and general counsel at Boston JetSearch. "Both are non-exclusive dry leases."
It is important that lessors do not offer or arrange for aircraft lessors to hire pilots to avoid illegal “fake dry leases” between the parties. The FAA has determined that when a lessor (or related entity) hires a pilot hired by the lessee, it is effectively a full lease.
There is no limit to the number of parties that can rent an aircraft, but there are considerations.
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"It's a red flag to see multiple lessees who don't know each other and who don't know the owners, all exclusively leasing the same aircraft and flying it with the same pilot," says Joanne Barbera, airline founding partner. Law firm Barbera & Watkins, LLC. “From a safety standpoint, the FAA must ensure that each lessee has operational control of the aircraft while operating it and understands the risks, responsibilities and liabilities entailed by the aircraft.”
The FAA's truth rental requirements stem from these safety concerns. For large aircraft, lessees must send a copy to the FAA's Aircraft Register within 24 hours of execution of the lease and notify the Flight Standards Regional Office prior to first use of the aircraft by the lessee.
If the operator leases the aircraft it intends to provide from a financial institution or unrelated party, the operator will need a “headless” permit.
Non-commercial operators can offer aircraft to third parties through non-exclusive dry leasing, but FAA compliance, tax, insurance and operational considerations are complex.
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We offer several resources on dry leasing, including the Operating & Leasing Guide and State Aviation Tax Report.
This article originally appeared in the November/December 2017 issue of Business Aviation Insider. Download the Magazine app for iOS and Android tablets and smartphones.
Tax and legal experts will share cost-sharing and reimbursement options and restrictions for aircraft operating under parts 91 and 135 at a Business Air Tax Seminar on June 21 in White Plains, New York.
WebOPSS, the FAA's program for handling Letter of Authorization (LOA) requests, runs only in Microsoft Internet Explorer (IE11) and will be replaced by Microsoft Edge on June 15, 2022.
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Members of the National Steering Committee are currently looking for a replacement for WebOPSS that only works with Internet Explorer on Windows 10 PCs.
FAA Small Aircraft Exemption Number, without change to conditions and restrictions. 7897L has been extended through March 31, 2024. To receive the exemption, members operating small piston-powered aircraft or rotary wing aircraft weighing 12,500 pounds or less must obtain a FAA exemption number. 7897L submits notice of joining. We reserve the right to limit requests that originate from automated means without notice in order to grant equal access to all users. Your request has been identified as part of a network of automation tools that are out of acceptable policies and will be processed until action is taken to declare your traffic.
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Visit /developer for best practices for efficiently downloading information, including the latest EDGAR documentation. You can sign up for email updates from the Open Data Program, including best practices that make data downloads more efficient and enhancements that leverage scripted download processes. Contact opendata@ for more information.
For more information, please see the privacy and security policy of the website. Us. Thank you for your interest in the Urities and Exchange Commission.
 "Aircraft Dry Lease")
By using this site, you agree to be monitored and audited by Urity. For utility purposes and to enable users to use public services, these government computer systems use programs to monitor network traffic to detect or compromise unauthorized attempts to upload or alter information, including attempts to deny service to users.
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Any unauthorized attempt to upload and/or alter information on any part of this site is strictly prohibited under the Computer Fraud and Abuse Act of 1986 and the National Information Infrastructure Protection Act of 1996 (see Title 18 U.S.C. §§ 10). 1030).
To ensure that our website works well for all users, we monitor the frequency of requests for content to ensure that automated searches do not affect others' ability to access the content. We reserve the right to block IP addresses that submit excessive requests. Current guidelines limit users to no more than 10 total requests, regardless of the number of systems used to submit requests.
If a user or application submits more than 10 requests per session, subsequent requests from the IP address may be throttled for a short period of time. When the request rate falls below the threshold for 10 minutes, users can access the content again. This practice is designed to limit excessive automated searches and is not expected to affect or affect individuals browsing the website.
This policy may be changed to ensure that the website functions efficiently and is accessible to all users.
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