Do pilots have to be smart?

FAA Regulation Makes Aircraft Ownership Through a Closely Held Corporation or LLC a Dangerous Trap for Pilots (Part 1 of 3)

Consider the person who contacts our office for help in purchasing a private aircraft. Let’s call him Joe Pilot. Joe is a private pilot who intends to operate his aircraft under Part 91 of the FARs. He may or may not be instrument rated. He is invariably excited at the prospect of owning an airplane for personal and perhaps some business use. Joe can’t wait to take his family and friends up for the mythical $100 hamburger. A smart and careful person by nature, Joe has done some homework and thinks he knows the best way to own the aircraft: through a corporation. (Often he says “Delaware corporation,” which may or may not make sense, but that’s a topic for another day.) He even has a cool name picked out: My Cool Plane Inc. (We’re going to refer to corporations to keep things simple, but the same principles apply to limited liability companies (LLCs)). Both shield you from liability, which must be a good thing when we’re talking about aviation. Right? Joe read in a magazine that owning an airplane through a corporation or LLC is a smart thing to do. Besides, lots of personal aircraft are already registered this way, but it’s not a good reason for Joe to follow the pack and own his airplane the same way.

As a general principle corporations and LLCs can shield owners from some liability. But what if corporate ownership creates other problems that Joe Pilot doesn’t recognize? This is exactly the situation many aircraft owners are in, and they don’t even know it, either. FAA regulation can make aircraft ownership through a corporation or LLC a dangerous trap for the unwary pilot. Why? Recently the FAA has begun to crack down on “illegal charters,” flights for compensation or hire that are conducted under Part 91 when they should be subject to the more stringent standards of Parts 119 (commercial operations) or 135 (air carriers).

Joe is a private pilot and so cannot fly for compensation or hire. He plans to his aircraft through an LLC. Owning the aircraft will be the only purpose for having the LLC. He will be the only pilot, operating as PIC mostly for pleasure and personal travel, occasionally with family and friends as passengers. Joe will pay for the gas and other operating expenses himself. No money will change hands so he is not flying for compensation or hire, which would require a commercial pilot certificate. No one uses the plane but him. Although the plane will be owned by a closely held company, he thinks of it as «his» airplane. So what’s the problem?

The problem is that the FAA sees things differently.

Joe will be astounded to learn that, by regulation, the FAA considers his LLC to be a «flight department company.» And flight department companies must comply with more stringent and complex regulations that most of us typically think apply only to air carriers and charter companies. In short, although Joe does not yet realize it, if he proceeds with his plan to form an LLC and have it own the airplane, he could need a commercial operator certificate issued under Part 119 or an air carrier certificate issued under Part 135. That’s what the regulations say and the FAA is getting serious about enforcing them.

If Joe were to own the aircraft in his own name, and not through a separate company, he would avoid this problem. If he owned the aircraft through a corporation that engaged in another business for which the aircraft is a tool, he probably would not have this problem. But because Joe has chosen to create a company for the sole purpose of owning his aircraft, he has created a potentially big problem for himself.

The reason is that the FAA focuses on the legal form of ownership. Joe Pilot is a legal person. My Cool Plane Inc. is a separate legal person, even though Joe will be the sole owner the company and control the operation of the aircraft. The FAA does not look at the underlying intent of this form of ownership. It looks only at the legal structure. And because under Joe’s chosen structure My Cool Plane Inc. owns the aircraft, the FAA considers My Cool Plane Inc. to be a flight department company. That means flight department rules must be adhered to, and that means certification under Parts 119 or 135.

Failure to comply with puts the owner-operator at risk of sanctions including substantial monetary penalties and FAA enforcement action.

In our next post, we will consider those risks in more detail. In a third, we will suggest a possible answer to the question whether My Cool Plane Inc. can legally own Joe’s new dream bird without getting involved with the cost and complexities of functioning under commercial standards.

Committed to helping clients with employment litigation, business litigation, and aviation law throughout NJ.

Join The Conversation
F. Fong 02/15/2022 04:16 PM

This concept of “flight department company” is so novel; it is as intriguing as it is probably unfamiliar to most private aircraft owners who have their airplanes owned by a legal person. Honestly, the subject of embedding a dry-lease has never crossed our path until now. Thank you, Frank. I appreciate the courtesy in your immediate response; your feedback was concise and helpful. I will be working with my local teams accordingly with this valuable update. Keep up the good work!

In-Flight Calculations and More: What Kind of Math Skills Do I Need to Become a Pilot?

Becoming a Pilot Requires a significant amount of knowledge and skill that you’ll receive throughout your flight training. You’ll learn everything from science and weather to even principles of physics. The job as well as the training also requires a signficant amount of math. Some may see the words math, science and physics and get intimidated. Especially, if these weren’t your greatest subjects in school, you may take one glance and say, “I’m out!”, but in reality, there’s nothing to be afraid of. Let’s take a look at the type of math skills you do need and will use as a pilot.

What Types of Math Skills do Pilots Use?

There are several types of math that pilots use in their career and throughout their training including basic arithmetic, algebra, geometry, mental math and more. We know what you’re thinking, “I thought this wasn’t supposed to be intimidating?”, right? Don’t worry. What math and physics are important subjects that pilots must be competent in, it’s not nearly as complex as you think, or you will have the tools available to make it simple. Throughout your flight training you’ll understand the concepts behind the equations you need to solve, simply choose the correct formula, and plug and play. The actual math itself is not so challenging.

Basic Arithmetic

Basic arithmetic is what you learned in grade school. These are the basics: addition, subtraction, multiplication, and division. This math generally comes easy to most of us. And while the others may have longer and fancier names, if you think about it, all math is just utilizing these basic arithmetic skills in different ways. So as long as you have this down, you’ll be just fine as a pilot.

A typical example of this for a pilot may be magnetic compass deviation and variation (how to calculate magnetic compass deviation and variation), so adjusting a compass for deviation may be as simple as adding 7 degrees to a heading of 172. 172 + 7 = 179. Easy!

Other typical calculations may be simple division and multiplication. For example, aviation gas weights 6lbs per gallon. If you have a fuel tank of 15 gallons, when full how much weight are you carrying? 6 x 15 = 90lbs, now we’re getting somewhere!

Algebra

You may remember this from high school, and you’ll have to use this from time to time as a pilot but again, there are formulas, calculators and even software to help you. This is when you need to solve for some unknown variable “x” based on other relationships and factors in your data that you already know and have.

For a pilot, this might be a simple formula like if you are travelling at 60 miles per hour, and your destination is 90 miles away, how long will it take you to get there? Simple – an hour and a half!

Pilots will follow other similar formulas to calculate their planes weight and balance, or by using a tool called an E6B flight computer. With this, pilots can do more complicated calculations to work out things like ground speed and time en route, or true and magnetic headings, factoring in wind speed and direction – but with all the heavy math done for you!

Geometry

Everyone who took this in high school remembers this as the “shapes” math. Geometry also focuses on spatial relationships between objects. In aviation you actually won’t use geometry must as a pilot – again all the heavy mental lifting has already been done by the engineers designing the plane!

One area where geometry is used is in the “wind triangle” and again supported by the E6B flight computer. In this example, by knowing your own speed and direction, you can use the E6B to work out the wind direction and speed that you’re experiencing.

Mental Math

Most of the time, you’ll have calculators and software to do much of the needed math for you, however, there will be times where you’ll need to depend on your mental math skills to perform quick and accurate math in your head. This is a skill that can only be learned with practice and repetition so if you’ve depended on a calculator for even the basic of math problems for a while, you may want to pick up a book on mental math for pilots and start sharpening this skill.

Can I Be a Good Pilot Even Though I’m Not Great at Math?

In summary, the answer is yes. you don’t need to be a math genius to be a great pilot. Pilot math can sometimes be intimidating but if being a pilot is your dream, don’t let it scare you away. Throughout your training you will spend lots of time learning and understanding the purpose and theory behind the math that you’re doing. Once you understand the concepts, the calculations themselves aren’t difficult. All you really need is a thorough understanding of the basics: addition, subtraction, multiplication, and division as well as a little mental math practice. After a while, it all becomes second nature to you and you won’t even realize you’re doing geometry and trigonometry, you’ll just be flying a plane.