Can I let someone fly my airplane for expenses?

hish747

hish747

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Hish747
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I have a friend who wants to fly my 172. Can I legally allow him to fly it as long as he covers all the actual operating expenses? Not just oil and gas as in the pro rata sharing provisions, but all that would normally be estimated in operating expense? Engine reserve, tie down, maintenance and insurance etc.
 
You can dry lease your airplane to your friend at whatever rate you both agree is fair. Make sure your insurance is aware and ok with it.

Edit: the FAA legality key here is that you are renting just the airplane with no pilot so that it doesn’t turn into an illegal charter type operation.
 
Good question about insurance. What if I sit in the airplane to satisfy insurance but not act as PIC or pilot for that matter?
 
hish747 said:
Good question about insurance. What if I sit in the airplane to satisfy insurance but not act as PIC or pilot for that matter?
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That changes the math completely
 
Why even go there? If you're OK with letting him fly your plane, just let him. If he tops the fuel off after the flight, great. Or maybe he takes you and your significant other to lunch or dinner for no particular reason. Once you start charging him you're going to open Pandora's box. Is it really worth it?
 
When I asked my insurance agent about this, I understood her answer to be as long as the pilot met the open pilot clause of the insurance, and rental wasn’t a “primary use” of the aircraft it would be covered (under my policy, yours may be different), but if it was more than a one off thing, she suggested getting the pilot named. Her concern was not that “insurance won’t pay” as much as “the investigation/payment may take longer in a claim with an unnamed pilot.
 
If your insurance requires you to "sit in the airplane", they probably also require you to act as PIC. <-- I can't imagine an insurance company that would require a non-PIC (and non-CFI) to just hang out in there. (Anyone?)
In that case, it means that the operation is yours as PIC. Your friend is your passenger in the eyes of the FAA. And the pro-rata rules will kick in.
 
hish747 said:
Good question about insurance. What if I sit in the airplane to satisfy insurance but not act as PIC or pilot for that matter?
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Only your insurance company can answer that for you but if your friend is listed as a covered pilot on the policy, it should make no difference which of you is in the plane if/when a covered event happens.

To more directly answer your original question, many years ago a friend had his first plane and found he had gotten in a bit over his head expense wise so he wanted me to buy half. I would have loved to, but I didn't have that kind of cash laying around and he had bought the plane using creative financing through his families businesses so he didn't want to go to a bank to refinance. So instead we just did a non-equity partnership. He retained 100% ownership of the plane, but all other fixed costs (hangar, insurance, MX) were split 50/50 and we each paid a few bucks into the engine/prop reserve for hours flown and we each bought our own fuel. I was added to the policy as an insured pilot which raised the policy rate a bit, but not much and as I said we were splitting the bill anyway so his costs still went down. Easy peasy and worked out great. He got his expenses cut and got his plane flying more often (something he was looking for) and I got use of a very nice plane whenever I wanted.

Now I understand that you might not want to do a full non-equity partner type deal with situation. My point is if we were able to do that, you can certainly add your friend to your insurance and mutually settle on an hourly number that works for both of you and call it good if that's what you're looking to do.
 
How does this generally effect the ins. rates? Say as if the friend was similarly qualified and experienced.
 
At what point does something like this start to smell like airplane rental to the FAA?
 
People that fly my plane have done so on a hand shake and meet the open pilot requirements......If you have to sign a lease I'd probably not do it.
 
Many owners do not know the true hourly cost for their plane and rent it to inexpensively.
 
Clip4 said:
Many owners do not know the true hourly cost for their plane and rent it to inexpensively.
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Very true. On the other hand, as long as there’s no damage done, a few hours here and there doesn’t really cost that much additional other than fuel.
 
hish747 said:
I have a friend who wants to fly my 172. Can I legally allow him to fly it as long as he covers all the actual operating expenses? Not just oil and gas as in the pro rata sharing provisions, but all that would normally be estimated in operating expense? Engine reserve, tie down, maintenance and insurance etc.
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You can add them to the insurance as a named insured. For a 172 it shouldn’t even change your premium.
I do it all the time. Usually something like $2,000 up front and $100 per hour dry for people I don’t know well and just $50/hour for friends.
 
How much time are we talking about?

If 10 hours a year, just ask that he leaves it with full fuel and pay the extra to have him on the insurance. Good friends are more important than trying to recover $1000 or so.

That said, you don't want to set up a situation where it would damage your friendship. Keep this simple. Be clear up front - expected 10 hours, let you know if he/she's taking the plane, keep plane clean, leave with full fuel, etc. (Given he'll be leaving it with more fuel than when he picked it up, you should be covered for costs).

I like JScarry's take - if it's an acquaintance, $100 per tach time dry. Leave it with full fuel.

If it's 50 hours a year, then you need scheduling, agreement on who can take the plane when, etc.. I assume you bought the plane to be able to go fly whenever you wanted to, which will be compromised a bit with essentially a partner.
 
Salty said:
That changes the math completely
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Assume the worst. Now tell me how you are going to convince the Insurance Co (or potentially a court of law) that Yes, it is my Plane. And yes, I was aboard the plane when the accident happened. But I was not the PIC! That's a tough arguement.

-Skip
 
hish747 said:
Good question about insurance. What if I sit in the airplane to satisfy insurance but not act as PIC or pilot for that matter?
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If something happens, who is covered?

If they aren’t covered by your policy, then you would have to ‘claim’ that you were PIC. And then (assuming they buy your story) the accident is on your record.

Like others have suggested, the best way to do what you are suggesting is have the other pilot named on your policy. It will cost you more, but they can reimburse you along with other expenses.
 
Be aware that there's a difference between Named Pilot and Covered Pilot. In the first case, you are covered as policy holder but the Named Pilot is not. In the event of an accident, the insurance company may try to recover their loss from the Named Pilot. That's called subrogation and a Waiver of Subrogation from the insurance company is needed if the other party isn't a Covered Pilot. NB: I am not a lawyer.
 
Bill said:
At what point does something like this start to smell like airplane rental to the FAA?
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At no point. The FAA does not and will not care. You insurance company may care but probably won't (other than adjusting the rate a bit) if its only one other person you're adding as named insured. Even if its two or three they probably won't care (other than rate adjust) if its three or four people. More than that and they might want to talk to you about a flying club policy.
 
The other risk is the other pilot (even if listed) does something excluded on the policy. For instance, he gives flight instruction in it or some commercial use when the policy doesn't permit it. You then can end up with no plane and possibly a liability claim against you and no insurance. There's good reason why those renting aircraft get policies with different terms (notably breach of warranty coverage that protects the owner/lessor even if the lessee breaks the rules provided we didn't know about it).
 
Robert Gee said:
How does this generally effect the ins. rates? Say as if the friend was similarly qualified and experienced.
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Lowest time pilot drives the rates. So similarly qualified and experienced should not have much of an effect.
 
I do this and have the pilots sign an agreement so there is no question on what the expectation is. From the agreement:


"Owner and User agree that the User will operation the Aircraft at the dry rate of $60.00 per flight hour as recorded by the tachometer in XXXXX. Both parties agree that this cost would normally apply to any operation of the aircraft by User and that this rate is to offset operational or maintenance costs and does not constitute the rental of XXXXX.
 
You can write that but it won't change the character of the rental as a rental.
 
JScarry said:
The FAA doesn’t care if you rent out your airplane. 100 hour inspection rule doesn’t apply and there are no other FARs that are remotely applicable until you get into the turbine world.
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Juliet Hotel said:
At no point. The FAA does not and will not care. You insurance company may care but probably won't (other than adjusting the rate a bit) if its only one other person you're adding as named insured. Even if its two or three they probably won't care (other than rate adjust) if its three or four people. More than that and they might want to talk to you about a flying club policy.
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Help me understand this. What triggers the 100 hour inspection policy? These comments have me very confused.
 
100 hour is only required if you are carrying passengers for hire OR you an instructor is instructing for hire in a plane he provides. Rental alone doesn't require a 100hour (i.e., it has to come with a pilot or instruction).
 
flyingron said:
100 hour is only required if you are carrying passengers for hire OR you an instructor is instructing for hire in a plane he provides. Rental alone doesn't require a 100hour (i.e., it has to come with a pilot or instruction).
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So when you do this, how do you "checkout" a prospective pilot?
 
azpilot said:
So when you do this, how do you "checkout" a prospective pilot?
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If you're doing it as instruction, with one of the renter's staff as an instructor, you need a 100 hour. This is why people get confused I suspect. But we used to have an operation that would just check you out in a bird with ah 100 hour and let you fly the rental birds for non-instruction purposes.
 
Bill said:
At what point does something like this start to smell like airplane rental to the FAA?
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as soon as they give you money in exchange for using the plane. Not against the law to rent your plane so the FAA doesn't care.
 
My rental policy let me have 5 named insureds with no right of subrogation and unlimited renters. I rented to a lot of the local 135 jet jockeys and didn’t bother with checkouts-just a quick overview of the quirks of that particular Cherokee. Two of the named insureds were CFIs and students could use them or use their own instructor. The CFIs had been around for a while so they found their own students and I wasn’t providing a CFI. No 100 hour since I just rented the plane.

For the last few years I have operated more like a club where a few of us are named insureds. Still no 100 hour required since I don’t provide the pilot. Right now one of the pilots is a student so insurance is about $500 more than normal-it’s hard to tell since I doubled the hull value from previous years.
 
azpilot said:
What triggers the 100 hour inspection policy? These comments have me very confused.
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The thing that triggers the need for 100-hr inspections is who supplies the airplane and the CFI. Think of your typical flight school. You go there to get some dual. They supply you with a CFI and they supply you with an airplane to rent. That airplane would need 100-hr inspections because the company is renting it for the purpose of instruction. Same if you go to a CFI who has his/her own airplane which they use for instruction. They are essentially a 'flight school of one' at that point and they are supplying you with both the instructor and the plane to rent.

OTOH, if you own your own airplane and you hire a CFI to give you some dual in it, no 100-hr is required because you are supplying the airplane in that deal. Same applies if you rent an airplane owned by a friend and hire a CFI to give you instruction in it because you are the party supplying the airplane in that deal.
 
Salty said:
Very true. On the other hand, as long as there’s no damage done, a few hours here and there doesn’t really cost that much additional other than fuel.
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I fly a number of airplanes under the please go fly my plane handshake.
Some owners just feel better having someone else preflight and fly their plane once in a while. Sometimes I find something they havent' noticed.
Other just feel they don't fly the plane enough so want someone fly it to help keep it flown regularly.
Some just want me current in their airplane, I have had the call hey, could you come get me at...?
Most send me an insurance form to fill out every year so I am named on the insurance. My understanding as the owner you don't care if the person flying your airplane is named or flying under the open pilot policy as your insurance will cover you in the event of a loss as long as the pilot flying meets the requirement. The advantage of being named is for the pilot flying, If that weird gust of wind hits me on landing and I have a loss of control incident/accident that could be deemed as pilot error (I shouldn't have been flying in that wind). The Insurance company might come after me as the pilot for to recover their losses for paying for repairs (subrogation), because the insurance was protecting the owner, not the pilot flying. This is also where renters insurance can be useful.

Brian
CFIIG/ASEL
 
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