Leasing time in aircraft to a non-pilot

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Gordon Freeman

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I'm curious to see what the regs say about a pilot and aircraft owner (myself), potentially leasing time in my aircraft (dry lease) to a non-pilot (i.e. a business owner who needs access to aircraft for regional business travel). That party would sign a dry-lease agreement to lease my aircraft only (C182) - no crew. Similar to renting a piece of property. I would separately make myself available to them as a pilot. This would fall under Part 91, correct?

I have my CPL/IR and 2nd class medical, so I should be all-clear on that front. As for the aircraft, no 100-hr inspection required since the party that operates the aircraft (in this case the aforementioned business owner) would maintain operational control (thus, aircraft isn't being used for hire/rental or flight instruction).

My only head-scratcher here is the insurance part. Would this qualify as commercial operation to the underwriter? In the event of a incident, would they be in the right to deny coverage if they determined I was being paid (as a pilot) during that flight? I could ask them if they'd be willing to add a non-pilot to the policy.

If anyone here has undertaken a similar thought experiment, I'd love to hear your feedback.
 
You’re providing the aircraft and you’re the pilot? That’s a textbook example of a commercial operation that would require a 135 cert. You cannot do this legally without one, even in the example that you’re describing.
 
RyanB said:
You’re providing the aircraft and you’re the pilot? That’s a textbook example of a commercial operation that would require a 135 cert. You cannot do this legally without one, even in the example that you’re describing.
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OK I am asking for a friend.
What about someone (Mr. A)gets an aircraft leased from someone else(Mr. B). Mr. B provide the lessee a list of pilots who can be hired for flying the plane. Would that be still grey area of legal for the pilot and whoever leases the plane out?
 
Done all the time. Passenger hires a pilot and then a plane from someone else and off they go. Plane and pilot separate payments and both are commercial operations.
 
ahmad said:
OK I am asking for a friend.
What about someone (Mr. A)gets an aircraft leased from someone else(Mr. B). Mr. B provide the lessee a list of pilots who can be hired for flying the plane. Would that be still grey area of legal for the pilot and whoever leases the plane out?
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First of all, non-pilots lease aircraft all the time. Usually they are companies, but it could conceivably happen with an individual. Getting into the weeds a bit, the FAA distinguishes between a "wet" and a "dry" lease. "Wet" doesn't mean "with fuel" like an FBO rental. It means "with pilot and flight crew." "Dry," on the other hand, involves a transfer of full operational control to the lessee. In the purest sense, the lessee has complete choice of pilots subject only to such things as certificates, rating, and meeting insurance requirements..

Here's the grey: If it has a reason to look, the FAA will look at what the real relationship is, not just was the paperwork says. The paperwork can say all it wants about the businessman who knows nothing about flying having the choice of any qualified pilot, but the FAA will look at what's really going on. You dry leasing your airplane to someone and coincidentally being the pilot they choose? I'd expect that to be closely looked at

This is actually a big deal and it has been an FAA enforcement priority since COVID. I've been involved in two presentations on the subject, one as panelist and one as main speaker.

So, aside from the usual, "only if I get caught," there are ways to do it properly and ways to do it improperly,
 
ahmad said:
OK I am asking for a friend.
What about someone (Mr. A)gets an aircraft leased from someone else(Mr. B). Mr. B provide the lessee a list of pilots who can be hired for flying the plane. Would that be still grey area of legal for the pilot and whoever leases the plane out?
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If Mr. B provides a list of approved pilots, he is in effect providing both the airplane and the pilot.
 
I wish they'd get rid of the "holding out" crap. Apparently using your plane commercially is under every circumstance "holding out", so why bother with the distinction?
 
MauleSkinner said:
If Mr. B provides a list of approved pilots, he is in effect providing both the airplane and the pilot.
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That's what I think too. I am trying to wrap my head around how this can be done legally. I keep reading on the matter and keep getting confused on how part 91 guys do this legally.
 
ahmad said:
That's what I think too. I am trying to wrap my head around how this can be done legally. I keep reading on the matter and keep getting confused on how part 91 guys do this legally.
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Generally speaking, they don’t.

What makes Part 91 leases legal is basically full operational control by the entity leasing the airplane, including selection of pilots. If they want to select the airplane owner as the pilot, that can be done, but if the FAA decides to look at the operation, it’s going to be suspect.
 
I understand why the FAA is strict on the matter. The issue I have with it is getting the comm rating is very limited on what you can for hire unless you go to part 135 and 121. For part 91 the certification is almost useless.
 
ahmad said:
I understand why the FAA is strict on the matter. The issue I have with it is getting the comm rating is very limited on what you can for hire unless you go to part 135 and 121. For part 91 the certification is almost useless.
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You can ferry planes and do discovery and local tourist flights.
 
manac said:
Done all the time. Passenger hires a pilot and then a plane from someone else and off they go. Plane and pilot separate payments and both are commercial operations.
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Thank you. This is exactly what I'm thinking. The airplane is own by an LLC, and the client would be leasing the airplane as nothing more than a piece of property. They would have full operational control. Hiring me as the pilot to fly their plan is no different than a company that owns a company truck, and I'm the hired driver. I don't think this is anywhere in the realm of 135 operation, where I would be exercising operational control and providing the airplane and the crew.
 
Salty said:
You can ferry planes and do discovery and local tourist flights.
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I had considered this as means of offsetting some of my fixed costs. Unfortunately, discovery/sightseeing flights now require letter of authorization from your local FSDO. Plus I'd have to do a 100-hr inspection, which adds considerably to my annual expenses. The last bit is insurance. My personal use aircraft insurance will not cover any for-compensation flight (being paid for sightseeing/discovery flights would certainly qualify as commercial). Sadly, commercial insurance is more than 4x the cost of my current personal use policy.
 
ahmad said:
That's what I think too. I am trying to wrap my head around how this can be done legally. I keep reading on the matter and keep getting confused on how part 91 guys do this legally.
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Part 91 generally or this specific situation?

If generally it can definitely be done legitimately. I've even written the leases.

What you may be missing is that there are various types of relationships that involve leases. You know how you lease a car? You take the keys, you take care of the maintenance, you are in charge, subject to lease terms and conditions. Some people lease aircraft the same way. For another example, for various reasons, some aircraft loans are written as leases. The bank holds the title to the airplane. The company operating it is technically the lessee. Do you rent airplanes from an FBO or flight school? You are the lessee of a dry lease relationship.

This specific arrangement? Well, as we all know the very best was to get advice on a business relationship in a problematic area where the FAA is focusing its enforcement efforts is an online group.
 
ahmad said:
I understand why the FAA is strict on the matter. The issue I have with it is getting the comm rating is very limited on what you can for hire unless you go to part 135 and 121. For part 91 the certification is almost useless.
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It’s only almost useless if you limit yourself to carrying passengers or cargo for hire.

Under Part 91, for pay, you can:
Fly a corporate airplane
Tow banners
Tow gliders
Fly jumpers
Fly ag (moving into Part 137)
Do Aerial surveys
Ferry airplanes
Deliver airplanes to/from maintenance
test fly airplanes post-maintenance
Act as a safety pilot

Granted, some of these do require additional certifications/licensing/waivers, but they are for-pay options outside of Parts 121 & 135.
 
MauleSkinner said:
It’s only almost useless if you limit yourself to carrying passengers or cargo for hire.

Under Part 91, for pay, you can:
Fly a corporate airplane
Tow banners
Tow gliders
Fly jumpers
Fly ag (moving into Part 137)
Do Aerial surveys
Ferry airplanes
Deliver airplanes to/from maintenance
test fly airplanes post-maintenance
Act as a safety pilot

Granted, some of these do require additional certifications/licensing/waivers, but they are for-pay options outside of Parts 121 & 135.
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Several of those can be done with a private.
 
MauleSkinner said:
If Mr. B provides a list of approved pilots, he is in effect providing both the airplane and the pilot.
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What if Mr. B's insurance provides a list of pilots rather than Mr B himself?
 
EdFred said:
What if Mr. B's insurance provides a list of pilots rather than Mr B himself?
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Misread that earlier, so deleted that post.

If the insurer was inclined to do so (see @midlifeflyer ‘s post above), that would be acceptable. Ultimately, the pilot(s) would have to meet the insurance requirements, and I have seen a couple of instances where the insurer refused to allow a selected pilot.
 
ahmad said:
OK I am asking for a friend.
What about someone (Mr. A)gets an aircraft leased from someone else(Mr. B). Mr. B provide the lessee a list of pilots who can be hired for flying the plane. Would that be still grey area of legal for the pilot and whoever leases the plane out?
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My understanding is that if Mr. B says the pilot used has to come off that list then it would be illegal. However if Mr. B states that the pilots on the list have already met the insurance requirements but the lessee is welcome to use a different pilot as long as they meet the insurance requirements then it would be legal. Mr. B could not recommend or state a preference for any of the pilots on his list.
 
midlifeflyer said:
This is actually a big deal and it has been an FAA enforcement priority since COVID. I've been involved in two presentations on the subject, one as panelist and one as main speaker.
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I've heard this from a couple people.

I'm curious, what happened post COVID that made them want to focus on this?
Has their been an uptick in the number of cases with improperly certified individuals/aircraft offering on-demand transport, or more accidents or something?

I'm wondering if there's just more trainee pilots out there trying to get $/hours any way they can so they start offering services they aren't allowed to.
 
Salty said:
You can ferry planes and do discovery and local tourist flights.
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And transport political candidates. Which I find a bit odd. Political candidates are more "expendable"????

Back to original post. No, you can't. Any hint of holding out - per my review of material for commercial oral - is not allowed.

I keep thinking of that kid who wanted to build hours, and as a free service, delivered pizza to a remote area that people paid for. He didn't get paid, very careful not to take tips, etc. FAA said something about getting paid in good will? Others, please chime in here with more details.
 
midlifeflyer said:
I’m trying to picture an insurer taking that responsibility.
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I wouldn't see why not. I have an open pilot clause, non-commercial policy of course, but why wouldn't an insurer only have like 5-6 named pilots depending on the aircraft?
 
If the person you lease it to has true operational control of the airplane you will have no say in where it is located, where it goes, who flies it and who works on it. You might not get an airworthy airplane back and the end of the lease. They may not let you fly the plane at all during the lease. Unless you are knowledgeable in leasing aircraft and are doing it purely as a business, I don’t think you will be happy with the outcome.
 
ArrowFlyer86 said:
I've heard this from a couple people.

I'm curious, what happened post COVID that made them want to focus on this?
Has their been an uptick in the number of cases with improperly certified individuals/aircraft offering on-demand transport, or more accidents or something?

I'm wondering if there's just more trainee pilots out there trying to get $/hours any way they can so they start offering services they aren't allowed to.
Click to expand...

I think there have been a few things in recent years bringing this to the forefront.

1. Prior to COVID, there were quite a few people that could afford charter, but chose not to indulge themselves and rather flew the airlines. During COVID, those people chose their health and sanity rather than their money, and starting flying charter. Our local charter operator couldn't keep up with the sudden spike in demand. There were probably many operators that thought they could take advantage of the demand and make a quick buck while staying off the radar, plus a whole new clientele that didn't know the rules.

2. The recent surge of tech based companies like Lyft/Uber has led to many uninitiated entrepreneurs that thought they could out smart the FAA and be the next big thing. They all thought they could find the loophole to Part 135. There isn't one.

3. There have been several high profile accidents in the last few years of turboprop and jet operators. So yes the FAA is taking a closer look at the why. Despite the recent spate of media interest, Part 121 operators in the US have not had a fatal accident in many years. 135 and 91 operators are far from that.
 
Do what my organization did, contact your Flight Standards Office, see who is the inspector that will be assigned to your operation.
(Take all contact details including emails, cell# & don’t lose them; build a rapport with inspector ~ you are determined to be fully compliant and follow the letter of the law ~ politeness & respectfulness will pay off here.)
Run your proposed activity past this person and ask what you can do to be legal and make this happen.
 
Lindberg said:
Tow gliders. As far as the FAA is concerned. But insurance may think otherwise.
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You’d have to look at specific policies, but glider towing was added to the reg in part because insurance companies had been allowing it and pilots had been doing it.
 
soarohio said:
If the person you lease it to has true operational control of the airplane you will have no say in where it is located, where it goes, who flies it and who works on it. You might not get an airworthy airplane back and the end of the lease. They may not let you fly the plane at all during the lease. Unless you are knowledgeable in leasing aircraft and are doing it purely as a business, I don’t think you will be happy with the outcome.
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That's somewhat of a gross dramatization.

Dry leases can be non-exclusive. That is, more than one lessee has access to the aircraft. As for maintenance, that's not specifically part of "operational control". Operational control deals with who flies the aircraft, where, and how. MX can be stipulated in the dry lease agreement and the owner can retain all maintenance responsibility.

Same for return of the aircraft. Any misuse or neglect must be remedied by the lessee at their sole cost. This is all part of the written agreement.
 
Let'sgoflying! said:
Do what my organization did, contact your Flight Standards Office, see who is the inspector that will be assigned to your operation.
(Take all contact details including emails, cell# & don’t lose them; build a rapport with inspector ~ you are determined to be fully compliant and follow the letter of the law ~ politeness & respectfulness will pay off here.)
Run your proposed activity past this person and ask what you can do to be legal and make this happen.
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Fantastic reply. Thank you :)
 
Gordon Freeman said:
I'm curious to see what the regs say about a pilot and aircraft owner (myself), potentially leasing time in my aircraft (dry lease) to a non-pilot (i.e. a business owner who needs access to aircraft for regional business travel). That party would sign a dry-lease agreement to lease my aircraft only (C182) - no crew. Similar to renting a piece of property. I would separately make myself available to them as a pilot. This would fall under Part 91, correct?

I have my CPL/IR and 2nd class medical, so I should be all-clear on that front. As for the aircraft, no 100-hr inspection required since the party that operates the aircraft (in this case the aforementioned business owner) would maintain operational control (thus, aircraft isn't being used for hire/rental or flight instruction).

My only head-scratcher here is the insurance part. Would this qualify as commercial operation to the underwriter? In the event of a incident, would they be in the right to deny coverage if they determined I was being paid (as a pilot) during that flight? I could ask them if they'd be willing to add a non-pilot to the policy.

If anyone here has undertaken a similar thought experiment, I'd love to hear your feedback.
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Let them hire a different pilot. Make sure the lease is legitimate and there is clear tracking of who has operational control of the aircraft and when.

When they lease it it’s theirs. Not yours.

Keep the local fsdo in the loop.

You do this the way you’re describing and the fsdo finds out you’ll probably not like the outcome.
 
ahmad said:
I understand why the FAA is strict on the matter. The issue I have with it is getting the comm rating is very limited on what you can for hire unless you go to part 135 and 121. For part 91 the certification is almost useless.
Click to expand...
I can think of at least five friends off the top of my head who are full-time corporate jet pilots, and have been at it for over 20 years on commercial certificates. They are paid well, too.
 
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