The Hokey Schemes Are Back!

By: Stewart Lapayowker

October 9, 2020

It seems like every time there are new entrants to the aviation market (in this case driven by the correct perception that private aircraft are safer than airlines when it comes to exposure to COVID-19), the old shenanigans raise their ugly heads. These new seekers of safe flying  are not experienced in business aviation, including the regulatory requirements and limitations of Part 91 operations, the true cost of owning, operating and chartering aircraft, and what it really takes to operate safely.

Remember the days of ten sham dry leases and coincidentally one crew? Or the “home-made fractional” programs? Or the “block hour” arrangements for a Part 91 aircraft? Or the non-transparent aircraft managers or management companies who don’t (or can’t) produce backup for expenses or legible expense reports?

 The thing is that, to a novice in business aviation who is applying his or her own business experience, these arrangements seem perfectly reasonable and it’s reasonable to rely on people who seem to be confident in their knowledge because they’ve “done it like that forever.”

 We hear, “It’s really a good deal if you look at the numbers.” But that sentence shouldn’t have a period at the end of it. It should continue “…except you’re not getting the tax deduction you thought you would get, the aircraft won’t be worth what they say in 3 or 5 years, you’re responsible for scheduled and unscheduled (read that as “when it breaks”) maintenance so you don’t really know the “cost”, there’s no guaranty of charter hours, you have no idea of what the current condition of the aircraft is, you’re in operational control and, oh, by the way, … it’s pretty likely that it’s illegal.”

 How many know, for example, that a single purpose entity is not eligible to operate an aircraft to carry passengers unless it has an air carrier certificate? Yeah, I thought so.

It is important that new entrants to the private aircraft market, whether as users or buyers, have a good first experience so they stay private aircraft owners or passengers for many years. This benefits the customer and grows the industry. But if they sour on it on the first attempt, the industry loses that customer (and probably anyone that they speak with about their experience) forever.

 This is not the time to make a fast buck. This is the time to educate and welcome these new entrants into what could be many years of contribution to the business aviation industry.