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Take the Quiz: Do You Understand Dry Leasing?

“Dry leasing” a charter aircraft means contracting with a Part 91, or “non-commercial” aircraft operator as your air carrier instead of legally using a Part 121/135 charter aircraft company. For a dry lease, a long-term lease document is altered for short-term use.

While most folks who do this believe they are making a wise, economical choice with no risk, they are actually misinformed. Everyone needs to know what EXACTLY is happening in a dry lease situation.

How much do you know? Take our true of false test.

  1. It is perfectly legal to lease with a Part 91 carrier for a charter flight.

False!

Part 91 operators are not legally allowed to transport passengers. If they were, there would be no need for any other carriers, such as Part 135 or 121!

  1. Flying with a Part 91 carrier is safe because they are held to the same standards as the Part 121/135 carrier.

False!

As designated charter passenger carriers, Part 121/135 carriers are held to the strictest FAA safety, maintenance and operational guidelines. Part 91 are not. For example, Part 91 pilots do not have day requirements while pilots of Part 121/135 carriers are required to have 10 consecutive hours of rest within any 24-hour period. Part 91 pilots have no air carrier training requirements, but Part 121/135 carrier pilots have FAA training requirements to ensure they are at the top of their game, including intense, approved training programs and annual and six-month competency check rides and oral tests.

  1. My Part 91 pilot is in charge of the flight. I don’t have to worry about a thing.

False!

This is the biggest misconception in the dry leasing game. According to the National Business Aviation Association (NBAA), the passenger assuming a dry lease is considered the operator and must assume all “Operational Control” of the aircraft. This means the lessee becomes the “operator” and the one responsible for ALL aspects of the flight, including the pilot, aircraft maintenance and FAA compliance. If the dry leasing passenger does NOT take on these responsibilities, they are breaking federal laws that may bring fines and void insurance policies.

NBAA best practices clearly state that subcontracting services does not relieve an “operator” of his responsibilities.While the operator is allowed to delegate functions to qualified employees and agents, they are still accountable for safety and all other aspects of the aircraft operation.” The operator (dry leasing passenger) must have full knowledge of flight operations including airworthiness, eligibility of flight crew, and identity of passengers.

In other words, you must be willing and able to assume responsibility for everything a Part 121/135 Air Carrier would to properly assure Operational Control. It’s an extensive list of responsibilities such as:

PERSONNEL ISSUES, including the training of the crew, the approved aircraft and inspection program, alcohol and drug testing (not required for Part 91 operations, as opposed to Part 121/135), and an assigned FAA inspection team. For example, as a dry leasing passenger, do you know if your pilot will be wakeful enough to fly? Is his/her pilot’s license current?

FAA logoREGULATORY ISSUES, including FAA oversight and enforcement, maintenance activities and compliance assurance and approved operational activities, from proper navigation to washing the airplane. For example, can you and your contracted pilot match the high standards of safety, FAA-approved procedures, and resources of a certified air carrier? Do you know enough about Code of Federal Regulation Chapter 14 Parts 91, 119, 121, and 135 to safely and responsibly operate the aircraft? You can be held responsible for maintenance or operations failures on the flight or even when the “next operator” has control of this aircraft.

LIABILITY, including legal liability should an accident or incident occur and assurance that the flight crew and the aircraft itself is operated and maintained in a manner consistent with the terms, limitations and conditions of your insurance policy.

It is a lot of responsibility to assume for a dry leasing passenger! Certainly if you remove all of these highly trained personnel and detailed procedures from a flight, then nonchalantly pass operational control of the aircraft back and forth between dry leasing passengers who do not know how to properly operate an aircraft or comply with Federal Safety Laws, it will increase the risk of the flight!

  1. If an aviation lawyer reviews and approves my dry lease, I cannot get into trouble.

False!

While a dry lease may be reviewed by a lawyer, aviation lawyers make mistakes. Also, discrepancies from the “Lawyer Approved Document” and what really happens during the flight(s), often renders the pilots, the owner, and the dry leasing passenger in violation of many federal regulations, such as flying without proper insurance coverage or without knowledge of the crew’s qualifications. And yes, if the FAA can show that the aircraft operated in violation of regulations, the Dry Leasing Passenger is responsible for all parties. The insurance companies may even void policies for the illegally operated aircraft.

  1. Your Part 91 carrier can receive a hefty fine from the FAA for operating as a Part 121/135 carrier without a FAA-approved certificate.

True!

If you choose to dry lease without proper understanding or fulfillment of your regulatory and liability requirements, you are involved in an illegal and fraudulent air carrier operation and your Part 91 carrier can be subject to a fine.

An article entitled Putting a Stop to part 134-1/2 Charter Activity by Lindsey C. McFarren, highlights two classic cases of these fines. Nix Flying Service received a 120-day suspension of commercial pilot certificate after they provided an aircraft and pilot to a client using separate entities, but the Dry Leasing Passenger had virtually no involvement in the actual flight. The FAA found Nix to be operating as a Parts 135 operator (assuming too much operational control) without air carrier authority/certification or proper air carrier pilot training as designated in Parts 135.293(a) and (b) and 135.299 (a).

Don Besette Aviation, Inc. received a civil penalty of $3,000 for operating flights under Part 135 illegally. Although they possessed an air charter certificate, the terms of the lease forced certain pilots to be used on the flight through a different company. The company did not properly report the pilot arrangement on their Op Specs and violated FAR 119.49 and pilot training requirements under 135.293 and 135.299.

  1. You can be sure you’ll save the 7.5% excise tax when you dry lease with a Part 91 operator.

False!

Dry leasing passengers expect to save the 7.5% Federal Excise Tax typically charged by Part 135 carriers. However, the IRS is not confined to the definitions that the FAA uses as to what is taxable. Although you may save the excise tax initially, the IRS can decide the owner or someone other than the Dry Leasing Passenger has too much control of the aircraft, and thus enforce back taxes.

  1. It is not necessary to use a Part 121/135 operator for your flights.

False!

Prudent passengers choose Part 121/135 operators because the operators willingly assume full operational control for their flights and remove the burden of liability from the passenger. They take great time, effort, and money to train the crew, certify and rest their pilots and maintain the aircraft meticulously to FAA inspection standards. Passengers do not have concerns of liability and risk. You fly with peace of mind, relieved of any operational responsibility.

So before signing that dry lease, consider whether risking FAA fines, civil liabilities and possible safety issues are worth it. Part 121/135 approved carriers are already fully equipped and standing by to take the burden of operational control from your shoulders and replace it with a peaceful, safe and pleasant flight.

If you are considering a charter flight, contact RAI Jets, LLC, a certified Part 135 charter aircraft company at 1.800. 247.2834.