Renting out your airplane

[Dutchpilotguy]

Hi all:
Looking for some input. I have spoken with Transport about this three times now, and have heard two different responses.

Has anyone here had experience renting out their airplane which is privately registered (not falling under Part VI subpart 4)? If so, what costs were you able to recover?

In my first two conversations with Transport Canada, I was told that only direct costs relating to the flight (fuel, oil, maintenance, insurance, and landing fees/airport fees) could be recovered. Now I am hearing that hangar/tie-down fees, equipment, etc... can all be included, which as the airplane is in a hangar, changes the hourly costs dramatically from the original answer of fuel, oil, maint, insurance...

The official response I am receiving in writing by mail/email from TC is to refer to CAR 401.28 (4) which I thought was for PPL reimbursement... If those same rules apply, I'm finding myself a little confused as to why some aircraft owners would need an AOC if all they are doing is taking people for rides (which, incidentally is what this airplane is technically being used for...)

Any insight and experience would be great.

Many thanks,
Dutch

[photofly]

Are you asking about hiring out your airplane for other people to fly, or about giving rides for a fee?

[Bede]

You cannot give rides to people. You can rent your airplane out to another pilot for whatever price you set. This is done by many flying clubs and individuals across the country.

[ahramin]

You can rent your airplane out to other pilots for whatever it's worth to them. That TC would point you to 401.28, which doesn't apply to renting an aircraft, adequately demonstrates that there is no CAR about renting private aircraft between pilots.

[Big Pistons Forever]

There are insurance implications with renting out your airplane. I highly recommend you talk to your insurance company before proceeding.

[Dutchpilotguy]

Thanks everyone, for the replies.

To clarify: This aircraft is owned by a non profit organization (I am one of the pilots) and the aircraft is being rented out and will be rented out to other non profit groups. I just recently learned about this and how it was being done, hence some of my stress. The trouble I am having is that Transport has given me this 401.28 as a reference, and yet has previously told me that this was not legal. I know that people rent out their airplanes, my question is to what extent can an owner recover costs. Again, TC has given me two answers to that question on three occasions. Two saying you can only recover fuel, oil, insurance, etc... and one saying those items plus hangar, etc.. etc... essentially meaning that I could own an airplane, and have a fixed cost per year of say, $20,000... and if my variable operating costs on the a/c are $70/hr, and the airplane only puts on 100hrs/yr, that I could bill at a rate of $270/hr! That astounds me... seems to me I would be running a business of sorts with my airplane.

This airplane is used to provide discovery flights as part of the non profit organizations mandate for the airplane, and so I am having a harder and harder time being comfortable with how this is going, particularly where insurance is coming in. With response to the aspects of insurance; I have already spoken with COPA/Magnes (the owner is changing insurance companies) and it is pretty clear that they are not going to cover if the aircraft is being rented out. In order to be covered, commercial use insurance is needed, but apparently there is a disconnect between what TC sees as commercial use, and what insurance companies see as commercial use.

I know this sort of answers my question if I was asking: "Should we be flying?", but I still want to know what experiences people have with renting out their aircraft in so far as what costs they are able to recover...

Thanks again

[Big Pistons Forever]

Thanks everyone, for the replies.

To clarify: This aircraft is owned by a non profit organization (I am one of the pilots) and the aircraft is being rented out and will be rented out to other non profit groups. I just recently learned about this and how it was being done, hence some of my stress. The trouble I am having is that Transport has given me this 401.28 as a reference, and yet has previously told me that this was not legal. I know that people rent out their airplanes, my question is to what extent can an owner recover costs. Again, TC has given me two answers to that question on three occasions. Two saying you can only recover fuel, oil, insurance, etc... and one saying those items plus hangar, etc.. etc... essentially meaning that I could own an airplane, and have a fixed cost per year of say, $20,000... and if my variable operating costs on the a/c are $70/hr, and the airplane only puts on 100hrs/yr, that I could bill at a rate of $270/hr! That astounds me... seems to me I would be running a business of sorts with my airplane.

This airplane is used to provide discovery flights as part of the non profit organizations mandate for the airplane, and so I am having a harder and harder time being comfortable with how this is going, particularly where insurance is coming in. With response to the aspects of insurance; I have already spoken with COPA/Magnes (the owner is changing insurance companies) and it is pretty clear that they are not going to cover if the aircraft is being rented out. In order to be covered, commercial use insurance is needed, but apparently there is a disconnect between what TC sees as commercial use, and what insurance companies see as commercial use.

I know this sort of answers my question if I was asking: "Should we be flying?", but I still want to know what experiences people have with renting out their aircraft in so far as what costs they are able to recover...

Thanks again

Based on what you have said it appears you are operating a de facto commercial air service. The key concept to sharing the costs of a flight is the fact that the passengers were incidental to the flight. In other words you would have gone flying regardless of whether you had passengers and that the route of flight was chosen by you and not pre-planned for the passengers. If the purpose of a flight is to give "discovery flights" to anybody who shows up or is sent your way by the non profit organization, it doesn't matter whether you are non profit or not, "passengers" are being carried and TC wants those passengers to have the supposed extra benefits that a commercial operator is required to have(CPL licenses, commercially registered aircraft, AMO maintenance, OFP, etc etc).

Furthermore "discovery flight" is IMO most commonly understood as flight instruction. If anyone is promising people that when go on their supposed "discovery flight" that they get to actually fly the airplane then you are in direct violation of the requirements of Part 4 of the CAR's.

From what I can see the only way you can give a ride to somebody as part of a nonprofits initiative, legally, is if it is free. That is you receive no benefit from the flight and they do not touch the controls.

Personally I would run, not walk away from this operation.

[photofly]

In order to be covered, commercial use insurance is needed, but apparently there is a disconnect between what TC sees as commercial use, and what insurance companies see as commercial use.

There's no disconnect as there's no reason for there to be a connection. TC is concerned with whether you're operating a Commericial Air Service, a term defined in the CARs. Your insurance company is concerned with whether you're trying to make money with the airplane, which is a totally different question.

[Bede]

BPF,

I disagree. If the owner of the aircraft (A) rents the aircraft to organization B, A may charge B whatever they agree upon. If B is offering discovery flights, B can neither charge money for the service nor split the cost with the passenger.

This arrangement is very common (Air Cadets, CASARA). Despite what a TC inspector may say, there is no CAR that addresses this arrangement. Despite this arrangement's ubiquity, you will not find a single TATC ruling where this type of "contravention" is even tried before the tribunal.

[Dutchpilotguy]

There's no disconnect as there's no reason for there to be a connection. TC is concerned with whether you're operating a Commericial Air Service, a term defined in the CARs. Your insurance company is concerned with whether you're trying to make money with the airplane, which is a totally different question.

Photofly:
I see what you're saying, but I must disagree with you here. Behind a Commercial Air Service as defined by the CARs is someone running a business... which makes money... which in this case an insurance company is concerned with... so therefore, I see a connection. What I am saying is that for an insurance company to use a term like "commercial use" when you're renting out your airplane, and for TC to not see it as the same, that is where I see a disconnect.

TC is very concerned with people making money, otherwise 401.28 wouldn't have to exist in the first place, so your response confuses me.

That being said, get caught by TC not having insurance (or flying with improper insurance), and I bet you'll find a connection between the two pretty quick!

BPF:
I've been hearing that a lot and I've been saying it to myself a lot...

I'm just finding it difficult to see that as in Bede's post, that I could charge basically whatever I want, as long as the other party agrees. That seems like business to me. Taking people flying as a part of the arrangement seems like it falls into the "Hire and Reward" discussion. Which to me means that if this is all ok with TC, then there should be no need AOC's! Because apparently we can rent out our airplanes and everybody is happy! I obviously don't believe in that, and as Bede has pointed out, the air cadets and CASARA have arrangements. The difference here is that typically the air cadets are renting from FTU's/Clubs, etc..., and so with them being commercial operators, it is a completely different story. But anyways, with CASARA and other rentals, there is a maximum associated to that... back to my original point: I want to know what that maximum is.

[Big Pistons Forever]

BPF,

I disagree. If the owner of the aircraft (A) rents the aircraft to organization B, A may charge B whatever they agree upon. If B is offering discovery flights, B can neither charge money for the service nor split the cost with the passenger.

This arrangement is very common (Air Cadets, CASARA). Despite what a TC inspector may say, there is no CAR that addresses this arrangement. Despite this arrangement's ubiquity, you will not find a single TATC ruling where this type of "contravention" is even tried before the tribunal.

Yes but the way I read it in the case of the OP He is the one who wants to recover costs as one of the owners (ie Party A) while doing the flights for someone else (ie Party B). I don't see how that is legal ?

My understanding is that CASARA and AirCadets payment to the pilot reimburses him/her for only a portion of the total costs and therefore conforms to 401.28 (4). I admit the "incidental" nature of these flights is more questionable.

[Dutchpilotguy]

BPF:
I'm not personally collecting any payment - never have, and never will. There is an agreement in place between A and B... I just do the flying. My original post was merely to find out what you can collect as an aircraft owner... I still don't know what that is

[photofly]

TC is very concerned with people making money, otherwise 401.28 wouldn't have to exist in the first place, so your response confuses me.

You're confused because you're conflating two different sets of regulations. Payment to and reimbursement of private pilots is entirely separate to operating a Commercial Air Service. One is regulated under Part IV and one under Part VII.

TC doesn't care if you make money; they care what service the aircraft is used to provide.

[CpnCrunch]

I think this clears up some of the confusion:

http://www.tc.gc.ca/eng/civilaviation/s ... 0-1755.htm

Some key points:

- renting a plane is a commercial air service, but you don't need an AOC
- an AOC is only need for an air transport service, which is a commercial air service that transports people or cargo between two points (or for anything defined as "aerial work")
- you can charge $1000/hr for block time on your 150 and make a huge profit if you can find willing customers (and your insurer is happy)

As long as the passengers on the discovery flight don't pay anything, and as long as you land at the same airport you took off from, I don't think there should be any issue. If your insurance company doesn't like the arrangement, just change insurers. AON tend to be cheaper and more flexible than others.

Anyway, it sounds like TC maybe just got a bit confused. Perhaps you should send another letter, but detail why you think the scheme is perfectly legal and just ask them to confirm.

[Dutchpilotguy]

CpnCrunch:
Thanks, that's helpful. I think there will be a few more discussions with TC on this anyways.
All of the best

[Colonel Sanders]

I had an experience similar to this, at the Tribunal.

Entity A owned an aircraft, and dry leased it to Entity B.
Distinct corporations under the law.

TC Enforcement maintained that Entity B was being
bad, and needed an AOC, but didn't have one.

But Entity B had no assets, so TC slapped a huge
fine on Entity A - the value of the aircraft, actually.

I personally thought this was insane - why on earth
was Entity A guilty of something they didn't do?

TC argued ferociously that Entity A should be punished
for the dastardly deeds of Entity B, and of course the
Tribunal agreed.

I'm pretty certain this nonsense could have been
reversed on appeal, but there are only so many hours
in the day, to do battle with batty bureaucrats with
unlimited taxpayer funding.

This was a campaign run by the famously alliterative
Transport Inspector of the Atlantic Region, whom incredibly
phoned me up cold one day, and threatened me that if
I ever flew in Atlantic Region, she would figure out something
to charge me with.

Deal. I never, ever fly in Atlantic Region and never, ever
will.

[ReturningPPL]

CapnCrunch mentioned you can rent out your airplane assuming your insurance company likes it and you are set up as a commercial operation. I wonder what is involved if you were to set up a one airplane rental business and how much insurance companies would charge you for having the most poorly skilled pilots to the advanced pilots? I would think you'll need someone to give checkrides too?

I wonder if you want to recover some cost of buying an airplane if it would be more worth while to just to get a commercial operation set up and do stuff that does not involve annoying passengers or renting out to pilots who might have "questionable skills. Would it not be cheaper to start up something like aerial photography or find something really niche like searching for mineral deposits etc if you can find paying customers?

[photofly]

I wonder if you want to recover some cost of buying an airplane if it would be more worth while to just to get a commercial operation set up

Have you made any enquiries about the process for getting an OC? You might feel differently afterwards.

[CpnCrunch]

CapnCrunch mentioned you can rent out your airplane assuming your insurance company likes it and you are set up as a commercial operation. I wonder what is involved if you were to set up a one airplane rental business and how much insurance companies would charge you for having the most poorly skilled pilots to the advanced pilots? I would think you'll need someone to give checkrides too?

No, you don't need to set up a "commercial operation" to rent your plane out. TC just defines it as a "commercial air service".

If you want to rent out your plane to a few pilots, it's very simple. All you need to do is phone the insurance company and get them put on the insurance (which probably won't cost anything if it's a simple plane), and then take their money. It would only be a bit more difficult if you wanted to rent to ANY pilot. Then the insurance will probably cost more, and you'll likely have a list of requirements from the insurance company.

[ScottS]

CapnCrunch mentioned you can rent out your airplane assuming your insurance company likes it and you are set up as a commercial operation. I wonder what is involved if you were to set up a one airplane rental business and how much insurance companies would charge you for having the most poorly skilled pilots to the advanced pilots? I would think you'll need someone to give checkrides too?

No, you don't need to set up a "commercial operation" to rent your plane out. TC just defines it as a "commercial air service".

If you want to rent out your plane to a few pilots, it's very simple. All you need to do is phone the insurance company and get them put on the insurance (which probably won't cost anything if it's a simple plane), and then take their money. It would only be a bit more difficult if you wanted to rent to ANY pilot. Then the insurance will probably cost more, and you'll likely have a list of requirements from the insurance company.

It cost my buddy $15/year extra to get me added. Almost broke us!