FAA Crackdown

[grantracy]

This has nothing to do with coaches, however another POG member I was speaking to encouraged me to post it for the aviators among us, I will try to keep it short. As a result of the Challenger 600 that overran the runway in Teterboro a couple years ago the FAA is investigating the operation and ownership of planes in single purpose entities and who has "Operational Control”. Apparently they had difficulty in ascertaining that info in this incident . Anyway I recently chartered an aircraft for a demo flight. When I arrived and began to load baggage the FAA poured out of the FBO (5 agents)took me aside and interrogated me about the nature of the flight whether " any money changed hands" and if I was certificated ( apparently they knew I owned and flew an aircraft) The agent went on to tell me that ”what I said could affect my ticket”, I pointed out I was merely a passenger. He advised that if it is not part 135 and it is determined not to be a demo flight under part 91, I could be construed as the operator (presuming a lease arrangement or I was paying more than my pro rata).As such I have operational control and any sanctions could include me whether I was PIC or not. The interrogation went on for around 20 minutes and included some more veiled threats and then they wanted me to sign a statement (which I refused) I went online and did some digging and found an AOPA article from August 2007( Pilots Counsel) which describes this scenario. Because of the scrutiny at our local airfield I was asked to sign a dry lease for another aircraft I occasionally use. For liability reasons I asked an aviation attorney to set up a single purpose entity to be the Lessee.
She told me under part 91 it is illegal to own or lease a plane in a single purpose entity (which many of us do for liability reasons) solely for the purpose of owning the plane for personal use. It can however be held in an entity where it can be shown that the aircraft use is incidental to the primary business of that entity. Or the ownership entity can lease the plane to an entity that meets the same criteria (a dry lease) Of course if the plane is in an individuals name it is ok. This is one opinion which I am trying to confirm independently. I am told these ramp checks are going to become more commonplace and will include questions concerning ownership. Thought I should pass this along.

[Jon Wehrenberg]

It is starting to be less fun owning and flying an aircraft. For all practical purposes FSS is in the toilet, TFRs are a major concern, places like the Washington ADIZ seem more to harass pilots than to provide security, insurance costs keep going through the roof, and now the FAA is worrying about who is getting a plane ride?

When they start charging user fees I am outa there, not because of the fees, but because we will create another layer of government to collect them.

It is a very short distance from that kind of scrutiny to the same being applied to Montana LLcs (despite what the LLC owners may think or say).

[Darl-Wilson]

Hey Granvil, thanks for the info. I'm with Jon about all the Fed interference with our right to fly. I'm not current but just received my new license to replace the paper one I have had for 40 years. I was going to get my physical and take a check ride this month but there are lots of hoops to jump through now. I might just reconsider. I'll be 69 soon and really don't want to fly without a 'pinch hitter' anyway. I might not make it on the physical with my DVT either. I don't lease aircraft and don't have my own anymore so a rental would be my only alternative. I am guessing that we will be under scrutiny for that as well. Not a bad thing considering the evil folks out there trying to kill us, just maybe more than I want to deal with. Thanks for your input and we do have several pilots in POG

[grantracy]

Spoke with the general counsel from a fractional operator today.He advised the focus now is primarily on part 135 operators(in regard to the ownership/entity issue)and they historically have chosen to look the other way with the part 91 guys. He told me to be perfectly legal,if the aircraft is owned in an entity and operated privately by the owner there should be a lessee/lessor relationship(yes with yourself) really only matters if your insurance has an exclusion for coverage if you violate an FAR. I probably encountered a little overzealous Fed.

[Jon Wehrenberg]

FWIW I had an annual in which the mechanics were convinced I had a lightning strike. There were marks on the prop tips and a pair of blackened rivets in the tail. I presume it was a static discharge from flying in dry snow, but regardless the insurance company paid for the teardowns necessary to insure there was no hidden internal damage. The plane is registered in a Corp. and there was no question about a lease or the type of operation.

Up until a few years ago the plane was almost exclusively used for business purposes, but nobody has ever even questioned its use. It is Part 91.

[grantracy]

sounds like you have a good insurer,the way it should be. I dont have a whole lot of confience in insurance companies anymore so am on the look out for coverage exceptions.As I said this could be much ado about nothing,but knowing that most aircraft owners register their a/c this way thought it was worth repeating. I will probably go through the waltz of creating the paper relationships just to avoid a hassle if it ever comes up.

[BrianE]

Granvil,

Before going through a huge hassle, would suggest you get to the bottom of your "incident". An explanation from the controlling FSDO? might go a long way towards explaining whether you were accosted by a "study group" or if FAA policy was actually being exercised. You might even fish for an apology (unlikely). In any event, it would seem that appealing to the source of the problem might be a good start.

[grantracy]

After more digging, it seems the requirement for the dry lease relationship is only necessary when money "changes hands"( for instance reimbursing from your company to the a/c ownership entity)as far as FAA goes I think the adage about sleeping dogs applys here.Didnt mean to belabor all this but it seems we are coming into a time of greater enforcement.