Structuring General Aviation Dry Leases: Avoiding Illegal Charter Operations
Relevant FARs, Types of Dry Lease Arrangements, Insurability, Remedies for Illegal Charter Operations

Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
Intermediate
- work Practice Area
Commercial Law
- event Date
Tuesday, December 3, 2024
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
-
This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE webinar will discuss aircraft dry leasing, a legally effective but complex way to transfer the possession and control of an aircraft and to defray expenses. The panel will address when to use aviation dry leases, how to properly structure them, how to fix those that are not, and what to do if an “illegal” charter operation exists. The panel will discuss the concept of operational control, exclusive and non-exclusive dry leases, insurance and insurability, and how to avoid pitfalls in this complex area.
Faculty

Mr. Norton is a partner and head of the aviation practice at the law firm of Shackelford, McKinley & Norton, LLP in Dallas, Texas. He is Board Certified, Aviation Law – Texas Board of Legal Specialization, and has an internationally recognized practice that encompasses a broad range of business aviation industry regulatory, transactional, tax, commercial dispute resolution and general risk management issues. Mr. Norton's clients include fortune 50 businesses and high-net-worth individuals operating complex jet aircraft to all kinds of aviation support businesses and individual pilots flying small aircraft, and everything in between. He is a frequent industry speaking at various business aviation conferences addressing current hot-topics in the industry, and actively participates in many business aviation industry-related committees and groups.

Mr. Reigel has more than two decades of experience working with airlines, charter companies, fixed base operators, airports, repair stations, pilots, mechanics, and other aviation businesses in aircraft purchase and sale transactions, regulatory compliance including hazmat and drug and alcohol testing, contract negotiation, airport grant assurances, airport leasing, aircraft related agreements, wet leasing, dry leasing, FAA certificate and civil penalty actions and general aviation and business law matters. He routinely represents and counsels both U.S. and international aviation industry clients on complex FAA, DOT, and TSA, regulatory compliance and enforcement issues. Mr. Reigel's clients include a diversity of lenders, buyers, sellers, lessors and lessees who he helps implement legal strategies and transaction structures with the goal of securing and optimizing their legal and financial interests. He also assists aviation clients in resolving disputes arising from their aviation activities including litigation, alternate dispute resolution and representation before local, state and federal agencies and legislative bodies.

Ms. Hinckley is board certified in Texas as an aviation law specialist. She advises clients on corporate matters and transactions, with a particular focus on airline enterprise risk assessment and management, as well as emergency response and preparedness. Ms. Hinckley's clients include airlines and high-net-worth individuals who own or operate personal aircraft, as well as charter operators, transportation management companies and flight departments of national and international companies. She also advises aviation repair and maintenance companies and businesses that require transportation regulatory oversight.
Description
Operating an aircraft pursuant to Part 91 is expensive, so it is no wonder that aircraft owners would like to recoup some of that cost if possible. Although dry leasing the aircraft to third parties might seem like a good idea, those arrangements can turn out to be illegal charters that lead to serious trouble with insurance coverage, the FAA, the IRS, and the TSA. Furthermore, insurance underwriters may refuse to write policies for aircraft with a suspicious number of dry leases and insurers may deny coverage for illegal charter operators.
Dry leases have their proper uses and can be either exclusive or non-exclusive. Structuring non-exclusive dry leases correctly is particularly challenging, and multiple dry leases will frequently draw the attention of the FAA.
The situation is further complicated when the aircraft is owned by a sole purpose limited liability company. Although that arrangement can have financial or tax benefits, the structure of the ownership and operation of the aircraft must comply with relevant FARs.
Listen as the panel of experts reviews and describes the proper uses of dry leases, why they are on the FAA’s radar, and how to avoid the perils and pitfalls.
Outline
- Wet vs. dry leases and concept of operational control
- Proper use of aviation dry leases
- How to properly structure dry leases
- FARs
- Exclusive and non-exclusive leases
- Truth in leasing
- The LLC problem
- Documentation
- Insurance and Insurability
- Illegal charters
- Common fact patterns
- Consequences of being deemed an illegal charter operator
- What to do if an illegal charter operation exists
- Before FAA involvement
- Resolving FAA investigations
- Defending FAA enforcement action
Benefits
The panel will review these and other key issues:
- Will insurance be vitiated if there is an illegal charter?
- Why are dry leases on the FAA's radar?
- What happens if documentation and/or operations are faulty?
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