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Aircraft Timeshare Agreement

The option that aircraft owners have overlooked or, at the very least, undervalued in the past is considering the possibility of chartering aircraft. Although the variables are numerous, some advantages can be: these agreements allow an individual or a company to buy and own a fraction of an aircraft, usually no less than a 16th share. The size of the aircraft fraction purchased represents a fixed number of flying hours per year. The purchase of a 16th action can vary between 50 and 100 flying hours depending on the program of aircraft parts sold. The Federal Aviation Administration (FAA) recently proposed a $3.3 million civil sentence against The Hinman Co. (Portage, Michigan) for violation of the FAR. The FAA accuses a subsidiary of the company, Hincojet, LLC, of having entered into a series of time-sharing agreements for the aircraft and of having carried out operations that were not carried out in accordance with FAR Part 91. By charging customers more than the amount authorized by Part 91, the FAA stated that Hinman did perform these flights as commercial flights under FAR Part 135. Hinman was not authorized to perform Part 135 operations, nor were its pilots (who could face individual enforcement actions). The company will have the opportunity to formally respond to the FAA`s charges before a final sentence is handed down. An analysis of the occupancy rate helps determine whether full possession is the right option. Underutilization of aircraft significantly increases the cost of using and owning an aircraft. As a general rule, the rate of aircraft use should be between 200 and 300 flying hours per year to justify full ownership.

That said, some may justify full ownership at lower utilization rates, only because of the flexibility required for exploitation. Access is guaranteed especially for this type of aircraft. Costs are generally related to the purchase of aircraft shares in advance, monthly administration fees and a fixed rate per flight time, used during the occupancy of the aircraft. There must be confidence in the management company to work full time as a flight service, to ensure that the aircraft tool works effectively for you part-time. Another option is to share ownership of the aircraft with other individuals or businesses in order to allocate expenses and increase the utilization rate. This is called aircraft co-ownership. Each co-owner is responsible for making a crew available and paying their share of the costs. Condominiums also reduce the amount of capital investment. As long as the owners retain ownership, command and control of the aircraft, there is no federal excise tax (FET). While individual costs are reduced under the co-owners, the flexibility of the calendar can also be reduced in proportion to the number of co-owners.

As part of an agreement on the allocation of aircraft time, an aircraft operator may lease its crewed aircraft to a third party and only request a refund for the costs listed in FAR 91.501 (d). These fees are limited to crew travel, hangar and engagement costs, aeronautical insurance, landing fees and airport taxes, on-board catering, air travel, flight planning and an amount equivalent to double the cost of fuel, oil, lubricants and other additives. Any royalty that goes beyond the fees authorized under FAR 91.501 (d) is likely to be the subject of a FaA decision, which is commercial in nature and is therefore subject to the requirements of Part 135. Choosing the right aircraft, which matches your flight profile, is a different matter because of the many factors considered when deciding the type of aircraft. That`s why it`s extremely important to choose the right professional aviation management company. The entire management company will provide valuable insights into this important process. Direct costs are defined as the costs associated with operating the aircraft. Fixed or indirect costs are defined as the costs of commissioning the aircraft or not.