If you’re utilizing your plane less often now compared to when you first purchased it, you might be looking at ways to help reduce your ownership costs. If you have a solid management arrangement, either with the Chief Pilot/Director of Operations of your flight department or with a highly regarded management company, you likely have your expenditures already reduced to the minimum costs possible without affecting the essential safety of the operation. So what else can you do? A smart option could be to use your jet to generate income while it sits idle.
There are many ways it is possible to earn income with your plane. Quite a few aircraft owners will first consider letting their associates operate the plane in exchange for payment. At first glance this is a quick and easy way to bring in income to counterbalance fixed expenses – but be cautious. Federal Aviation Administration (FAA) and Internal Revenue Service rules and regulations bar offering a plane with pilots to a third party for compensation unless you have your own personal air carrier certificate. A large number of non-aviation tax and law experts don’t appreciate the nuances of aviation regulations, so it is a good idea for you to check with a tax and legal professional that specializes in aviation to keep from unintentionally violating regulations.
One way you can legally generate income with your jet is through supplying your plane to a third party, with no fuel or crew, as a dry lease arrangement. As a result of FAA commercial rules, you are able to only take payment for the use of the aircraft, and can’t provide a flight crew or fuel together with the aircraft. You’ll have to have a written dry lease agreement in place and there could be negative tax consequences, so it is a good idea to check with aviation-specific tax and legal experts before you go forward.
Be sure your aircraft manager submits the lease agreement to the FAA for acceptance and notifies your insurance provider. Dry leasing your aircraft then puts “operational control” in the hands of your lessor when your aircraft is being operated by the third party, who must additionally give consideration to the liability issues involved.
The vast majority of aircraft owners have a preference for the easiest method of generating revenue with their aircraft – placing their aircraft onto a charter firm’s Part 135 air carrier certificate. In contrast to what you might have heard, operating your aircraft on a charter certificate is essentially quite straightforward and inexpensive. Although there are a few “super-sized” management companies with inflated month-to-month and conformity fees, most charter operators are concerned with developing a fair structure that creates value for the aircraft owner and a shared business benefit.
Permitting a charter company to make use of your aircraft makes it possible for you to legitimately generate charter income and minimize your own personal liability in the operation of the aircraft. Most importantly, the charter revenue earned might offset a considerable portion, if not all, of your operating expenses.
Chartering can be the most practical way for you as an aircraft owner to legitimately produce income simply because you could set the terms on just how much charter income you need, and when you would like the aircraft accessible for charter operations. The majority of dry lessors will expect to have the aircraft readily available at their convenience, even while charter operators are more concerned with meeting the aircraft owner’s desires first. Chartering will enable you to maintain use of your aircraft even while capitalizing on the utilization of revenue-earning flights with your aircraft.
Desert Jet is a full-service aviation management company that provides clients with expertise in acquiring and operating private jet aircraft, and offers on-demand charters in its fleet of jet aircraft. Desert Jet was one of the first jet charter providers in the world to become IS-BAO certified, exceeding a global industry safety standard.