In what way are they illegal?

Mike C.

This came up in another thread so instead of hijacking it, I moved it here.

I have witnessed many dry leases that are actually illegal because the owner of the aircraft continued to maintain operation control of the aircraft, often with his preferred pilot providing flight services to the lessee.

I’m not saying the owner’s preferred pilot can’t do the flight, just that he better be contacted, scheduled and paid directly by the lessee. (Operational control)

In my tenure in the industry, I believe that this is more often than not the case. While in the real world it is the “norm” mostly due to due to insurance issues and convenience, that is not the way the FAA defined a dry lease and expects it to work.

Brad

I knew a guy that had a Saratoga that he owned, and had a ton of dry leases on it. It was a full blown 134.5, and no one cared.

That is an interesting point, as long as you’re not messing with a 135 operator on the same field, it doesn’t seem to be an issue the FAA pursues. It’s when you start to “compete” with a guy who is jumping through 135 hoops that you are likely to have a visitor.

Part of the reason I started this thread is to educate people who are doing it wrong, it’s not that hard to do it right. You just have to follow some basic guidelines.

That is an interesting point, as long as you’re not messing with a 135 operator on the same field, it doesn’t seem to be an issue the FAA pursues. It’s when you start to “compete” with a guy who is jumping through 135 hoops that you are likely to have a visitor.

Part of the reason I started this thread is to educate people who are doing it wrong, it’s not that hard to do it right. You just have to follow some basic guidelines.

I’d guess the majority are not illegal. I’d say that in part because I’ve seen some proper arrangements in the Part 91 world, but also in part of the fact that many if not most Part 121 and 135 aircraft are dry leased.

(I’m leaving out that most rental aircraft seem to be subject to two dry leasing arrangements. The leaseback with the owner and the rental agreement with the renter.)

That is the majority of the cases I see, so I don't run in circles where things are mostly illegal like you seem to.

If I were to offer a dry lease, the user would pay by the flight hour some fee and they would have to find their own pilot and get them listed on the insurance. That makes it all legal and covered.

I don't do this because I don't need to and I don't want to void my LUMP inspection program with too many hours (which basically would negate the lease benefits to me). There are also risks to the plane I'd rather not take, like a bad pilot causing engine damage.

Technically, I am already in a lease. Ciholas Aviation LLC (owner) leases the plane to Ciholas, Inc (operator), and Ciholas Inc provides the pilot (me, or I can hire someone). This was for sales tax dodge. If I was doing it over again, I'd probably not set it up like that as the benefits don't really outweigh the effort, and it causes annoying overhead to maintain. If I keep the plane for long enough, I'll actually spend more under the lease in sales taxes than if I had paid the sales tax up front.

Mike C.