I can’t give advice that will keep people out of court and I sure can’t defend them once they are there. So this is NOT legal advice.

1. Make sure the Lessee has operational control.
2. Make sure the pilot in command works for the Lessee with no direct input regarding the flight from the Lessor.
3. Make sure you have a legal dry lease agreement drafted by an attorney for each lease AND have them involved in each lease, don’t just copy and paste.
4. Have a copy on board and MAKE SURE THAT EVERY PASSENGER UNDERSTANDS THEY ARE LEASING THE AIRCRAFT.

If you get ramp checked and a passenger gets asked “is this your airplane?” And their response is “no, it’s a charter” you are going to have fun putting that genie back in the bottle.

5. A “dry lease” does not refer to fuel, it refers to the water bags flying the airplane. Remember that and you are less likely to get in trouble.
6. If you are the pilot, remember the FAA will be just as happy nailing you as the owner. If the Lessee calls you for a trip and you call the aircraft owner to book the airplane, you’re on thin ice. I strongly recommend they book with the owner (Lessor) directly.
7. Fax a copy of the dry lease to the local FSDO. No it isn’t required, but it is recorded and you are showing you have zero intent to do something wrong.

There may be more. I share this info with all of my clients, and have never put it in writing before because I don’t want someone saying “you said this and I still got in trouble” so again, I am NOT an attorney and following this advice will help you not get in trouble, but these dry lease rules are very subjective. If you choose to dry lease, you do so at your own risk.

In my experience the government generally does not care if you had any intent to do anything wrong. If they decide to come after you, they will, and that won't be the reason.

Guilty until proven innocent.

I wish that was in green.

We have an internal process for this - we call it "qualifying the Lessee."

And we ask them very specific questions.

Most folks who go down this path do not intend upon violating the FARs, they just don't understand them.

And to be fair, the FAA has made this process so very convoluted that it can be very easy to run afoul of the rules.

Yep. Illegal charter has been an enforcement focus for several years not. I've been involved in FAASTeam webinars for a few years. The powerpoints are created buy the illegal charter team and, last I heard there was a requirement the topic be covered.

Strictly personal opinion - its an outgrowth of the pandemic: a combination of business aircraft flying less and well-to-do passengers not wanting to get on airlines for the trip they did take. But while the main target has been high end 134.5 "sham" leasing, there has been spill over into other areas.

Robert, I'm retired form active practice now. What are you seeing on the front lines?

134.5 has been around since 135 was introduced, and probably will be forever.

The FAA making the rules so "convoluted", as Mr. Schulte put it, is no boon for the folks trying to do it legally, either.

Case in point, Tulsair, about two years before shuttering all ops, surrendered their decades old charter certificate, due to onerous hoop-jumping. And the hoops seemed to change with each new POI we would get. When you have to change your opspecs every time you turn around, at some point, you call "UNCLE"!!!!

Edit: To be transparent, our charter ops weren't used as a big profit center. It was mainly a "intro to ownership" program. Kind of like, "the first hit is free", without it really being free! LOL. Many of our charter customers became owners over the years.

i will say that pilots often suffer significantly as they can get their license suspended or worse. There are no 134.5 certificates so nothing to revoke there for the FAA. Pilots are sitting ducks.

Creating fines will sting but the loss of flight privileges are devastating. This puts pilots on the unenviable position of having to do due diligence that might not make owners happy.

Yeah.

I've been peeing into the wind for years over this "because I said so" manner of governance.

I believe we fought a war over that.

The first one.

In 1776.

Since the statue of limitations has long passed, and also since I'm lately reaching a point where I wouldn't mind the fight anyways, I will tell this story.

In my early pilot days, I was asked to donate a flight to a charity auction. Without giving it much thought, I agreed, and flew the winner and her two small children for about 30 minutes on a local scenic flight. The kids were thrilled and inspired to be involved in aviation. It felt good. I received no money and paid for all of the fuel and costs of the flight. Any money they paid went to a good cause aimed at supporting mothers and newborn babies. I'm not sure what the winning bid was or how much they paid. I did not claim a tax write-off.

I've since learned that the FAA would likely argue that flight was "for compensation" and illegal because someone exchanged money for the flight and because I received a partial flight hour. I haven't done another one.

Well, they do have a clause that allows this kind of flight, 91.146. But it requires communicating with the FSDO before the event.
https://www.law.cornell.edu/cfr/text/14/91.146

Just as a heads up, it IS required to notify the FSDO if the leased plane in question is over 12,500lbs.

See 91.23 - "Truth in Leasing".

Robert

Just as a heads up, it IS required to notify the FSDO if the leased plane in question is over 12,500lbs.

See 91.23 - "Truth in Leasing".

Robert

Is it the FAA taking a wide view or the attorneys writing clickbait taking the view? - real question here.

I’ve not found any real cases where the FAA blatantly used a wide definition of compensation when there wasn’t some obvious fishy business going on.

The broad take on "compensation" (including flight time, goodwill, etc.) gets thrown around, but tied to sketchy setups - not innocent time-building or flying friends.

Examples I have found where FAA used a wider scope of compensation:

- **Blakey v. Murray (NTSB Order EA-5061, 2003)**: Private pilot flew multiple strangers to a Super Bowl party at his friend's bar after real charters fell through. Passengers paid the bar a fee covering transport, FAA warned him ahead of time it was illegal, he ignored it. 270-day suspension. Not random goodwill; clear indirect benefit and prior notice.

- **Flytenow v. FAA (D.C. Circuit, 2015)**: App-based platform for posting flights and finding expense-sharing passengers from the public. Court upheld FAA: that's "holding out" to anyone, turning it into compensation requiring commercial certs. Not private friends; effectively running an unlicensed charter service.

In practice, it seems flights with friends and known pax seem to go on without drama if the passengers are paying their prorated share and there's no public offering.

I’d like to see some real cases the FAA has used an expansive definition of compensation if it's truly clean (known passengers) and all with no fishy elements.

Exactly.
No one with the bank to be chartering airplanes is so unsophisticated they think a friend of a friend with a Bonanza is operating at the same level of safety as a commercial carrier.
The FAA should drop all the holding out, for hire etc rules for SE pistons and only worry about two things: Pilot holds Commercial certificate and the flights are made within the ordinary rules of flight.

It’s not hard to do dry leases legally. So I doubt there are many doing it wrong.

That said there is some gray area around the pilots. For a jet you need a pilot on insurance and checked out on the plane. So as a plane owner I am involved in approving pilots. The trick is you have to make it clear the lessee is hiring and is the pilots boss.

I have a dry lease and the pilot sometimes calls me to ask questions about a trip or plane issue. All I can do is point to regulations and make sure the pilot talks to the guy in charge of the flight, his boss for the day the lessee.

I will admit I forget to remind the lessee to let his passengers know he owns the plane that day and it’s not a charter in any way. So that’s a good reminder.

I think the point of dry lease in 91 is to protect the lessee and its passengers from someone that puts them in harms way without them knowing. There is a level of trust with a 135 that the person paying thinks they are paying to be part of a safe system. With 91 they are in charge of process to be safe. That’s the big difference.

Mike