An example is the attempt to “timesharen” the aircraft without understanding all the requirements and restrictions of the FAR. Aviation is a highly regulated industry and it is easy to comply with FAA and IRS rules, insurance requirements, liability issues and public taxes. Using a time allocation agreement, an aircraft operator can request a limited refund for a flight. Under this agreement, a company is authorized to lease its flight crewed aircraft to another person or company. In return, the aircraft operator may obtain a refund for a specific list of out-of-pocket flight costs, including an amount equal to twice the cost of fuel consumed on the flight. The following fees are authorized under FAR 91.501 (d): flights under a part-time use contract may be subject to a federal excise tax (FET). For information on this tax, members should access the NBAA web resource on IRS commercial transportation taxes for Part 91 flights. NOTE: An alleged dry lease could be a wet lease that is veiled. Information that may refer to a lease-financing by hedge funds is not limited to: 1) a provision of the lease or a separate oral or written agreement providing that the lessor provides for or makes the provision of at least one crew member, directly or indirectly; (2) supply of fuel by the renter; or (3) performing maintenance functions. Where the lease agreement provides specific accommodation for royalties other than those covered in the 91 subsections D or F, the operation of the aircraft may be subject to Part 91K or Part 121, 125, 129 or 135, depending on the type or size of the aircraft. The time allocation is defined as 14 CFR No. 91.501 (c) (1) of the Federal Aviation Regulations (FARs) as “an agreement by which a person leases his aircraft with a flight crew to another person and does not apply flights other than those referred to at point (d) of this section for flights conducted under this agreement.” The additional 100% of the expenses covered in paragraph (d) (1) (Article #10) is intended to cover all expenses not mentioned. Current expenses that are not mentioned are insurance premiums, occupancy costs and hourly maintenance costs.
The FAA recognized this when the regulations were passed in its publication of the federal registry. The transportation of public servants, employees, guests and property of a company in an aircraft operated under a time-sharing, exchange or co-ownership agreement. During the duration of the agreement, it will respect and comply with all laws, government and airport decrees that apply from time to time in any way with respect to the operation and use of the aircraft by a hobby lessor. The owner will provide a copy of this agreement to the Federal Aviation Administration, Technical Section, in Oklahoma City, Oklahoma, within 24 hours of its execution. In addition, the owner will notify the FAA District Office, which is located near its original base, and provide a copy of this agreement at least forty-eight (48) hours before take-off of a flight conducted in accordance with this agreement and will inform the FAA of the location of the departure airport; (ii) departure time; and (iii) the registration number of the aircraft concerned; 7. The owner is responsible for the physical and technical operation of the aircraft and the safety of all flights and retains full authority and control, including exclusive operational control, and possession of the aircraft for the duration of this agreement. The landlord employs, pays and provides the tenant with a qualified flight crew for each flight conducted under this agreement.