Looking for some info on OCs.

[helinas]

I am having a dilemma and I have posted this question but in a different way before on this site.

I would like to know where I can go and ask for the answer to this dilemma.

As an example I go out to a radio station and muster up some business and tell them that I can provide air traffic reporting over the city for a sum of money. I Incorporated my business but I do not have an operating certificate to operate light twins for the job.

But my good high school friend does have an operating certificate. I find somebody that owns a light twin and me and him sign a lease agreement that I will lease the airplane from him for a period of time. I turn around and sub-lease the same airplane to my good high school friend that has the operating certificate and lease the airplane to him so he can perform the traffic reporting business for me.
And on top of this my good high school friend registers this light twin airplane that he sub-leased on to his company and operating certificate.

My question is who pays for the expenses for the airplane such as insurance, maintenance, pilots, etc and who gets the revenue from the radio station myself that got the contract but does not operate the airplane or my good high school buddy that leased it and registered the airplane under his OC.

I have made some attempts at T C but no luck in getting anybody to call me back.

Can somebody shed some light on this.

thanks for the time.

[Norskman]

...I would like to know where I can go and ask for the answer to this dilemma...
My question is who pays for the expenses for the airplane such as insurance, maintenance, pilots, etc and who gets the revenue from the radio station myself that got the contract but does not operate the airplane or my good high school buddy that leased it and registered the airplane under his OC.

Short answer: You go to business school.

Long answer:
A good read to start with is CARs Part II, Subpart 3, and Standard 223.
http://www.tc.gc.ca/CivilAviation/Regse ... 2/menu.htm

Highlights:
- the aircraft will be in the legal custody and control of the lessee
- the aircraft will not be made the subject of another lease during the term of the lease authorized by the Minister for that aircraft; (Does this mean no sub-leasing??)
- the lessor and the lessee of the aircraft each hold a Canadian operator certificate
- the lessee is responsible for the maintenance of the aircraft

OK. So, after crossing my eyes, and pulling my head from my rear after reading pages of CARs, my opinion is:

The friend should lease from owner directly(if no sub-lease permitted).

The friend acts as sub-contractor
- The plane is now temporarily legally his airplane
- He takes care of all maintenance
- He pays for fuel
- He pays for pilots
- He pays, pays, pays
- He does a lot of paperwork
- Then he bills you for services rendered plus including his cut

You act as contractor
- You bill customer for services rendered including your cut
- You take customer's money
- You pay your friend what you owe him
- You make sure customer is happy with service that "you" provide.
- You do very little paperwork
- Technically you are not providing an aviation service, and you should be completely free from all CARs and aviation rules. You are finding your friend work, and getting an ongoing finders fee. You may be able to work for your friend, under his Op Cert, but he pays your wage, as an employee of his company.

OR

Get him to lease the a/c directly from owner, give him the contract, and then just work for him, but you then take the risk of him screwing you over without a good legal contract.

[desksgo]

I would like to know where I can go and ask for the answer to this dilemma.

Are you getting any poon, boy?

[helinas]

so basically the operator that registered the airplane under their operating certificate reaps all the rewards and the person that found the contract but couldn't fly it because they did not have the OC must work out a deal with the high school buddy.

So, the high school buddy must have made all the money after expenses.

[Dust Devil]

so basically the operator that registered the airplane under their operating certificate reaps all the rewards and the person that found the contract but couldn't fly it because they did not have the OC must work out a deal with the high school buddy.

So, the high school buddy must have made all the money after expenses.

Your not going to make money unless you take a risk. As far as I see your not risking shit in this scheme.

[Norskman]

Takes money to make money, or in this case it takes airplanes to make money.

Dust Devil has it right.

[goldeneagle]

Your not going to make money unless you take a risk. As far as I see your not risking shit in this scheme.

Yep, just another scheme. World is full of them, mostly dreamed up by folks that do not understand the concept of risk/reward, or, are to risk adverse to actually step up to the plate, and swing at a pitch.

If you want to make money, you gotta take your own, and put it on the line. That is a simple fact, and you can dress it up in any number of a thousand different colors, the facts will not hide. If you want to make money, pay the admission fee, step up to the plate, and swing at a pitch, end of story.

But dusty, you must admit, eventually it gets entertaining reading all of the hair brained schemes to gather up some free mpic that come out of one individual. Ultimately tho, that individual will never pay the admission fee, and step up to the plate. He's looking for somebody else to take him to the ball game, on thier nickel. This one is close to topping them all, using a twin for traffic reporting ??? I guess if you can sell it, there's a sucker born every minute they say. Around here, traffic with a 172 is actually a good little business, cant imagine anybody would actually want to pay for that second engine to get traffic reports on the radio. File it, yet another hair brained scheme...

[Norskman]

I don't think its that far fetched compared to using heli's for traffic. Twins can be cheaper to operate.

[helinas]

To be totally honest with everybody that has responded to this dilemma, this really is a true story and did happen back in 1990 and 1991 down at the island airport. I was involved but was never told that this really happend by my ex business partner and family member which in this story was the high school buddy character that had the OC which I helped him get because we both owned the corporation.

I guess my other question will be whether today's Transport Canada guidelines in regards of leases and the other info that Norskman gave me which I appreciate it very much Norskman applied back in 1989 through 1991.

I am trying to see how these two characters pulled this one off the one being the person that got the contract and my ex business partner.

So did these same rules that Norskman directed to me and again thank y ou applied back in 1989 through 1991?

I am not involved in this law breaking schemes just trying to find out answers.

thank you once again

[Dust Devil]

I think you would be wizzin by the traffic faster then you could report it.

[Norskman]

IIIIIIIIiiiiiiiiiiiiiiiii95 looked good.

So did these same rules that Norskman directed to me and again thank y ou applied back in 1989 through 1991?

http://www.tc.gc.ca/civilaviation/regse ... /about.htm
That might answer your question. There is also an 800# for the CARs hotline that you might get info from.

[helinas]

thank you very much Norskam for the 800 number, I will call it tommorow.

helinas

[A Regulator]

You mentioned that you called your local TC office and I would suggest that you specifically call the CBA office and ask for someone in the certification branch. Explain to them what you want to do. If you can not find the CBA office phone number, pm me and let me know what region or city you are in and I will try and give you a phone number and perhaps a contact name.

[helinas]

I found the old regs at a commercial operator that still had them and I hope they refer to what I am looking for so here goes, they are from February of 1989:

208.2 (1)

Subject to subsection 3, where the ownership of an aircraft registered pursuant to this part as a commercial aircraft is changed by reason of a lease of the aircraft by the air carrier that is the registered owner of the aircraft to another air carrier, the certificate of registration of the aircraft is valid during the shortest period calculated pursuant to subsection 2 where:

(a) the lessor has at the time of the lease the ownership of the aircraft;

(b) the aircraft weight does not exceed 12, 500 lbs maximum permissible takeoff weight;

(c) the lesse is qualified under section 205 to be the registered owner of a canadian aircraft; (section 205 is the qualifications like citizen of canada)

(d) the lessee holds a valid and subsisting certificate referred to in section 700 (commercial operations OC) in respect of the aircraft;
ISN'T (d) TELLING ME THAT THE LESSOR AND LESSE HAVE TO HAVE AN OC, MY STORY ABOVE SAIS AND I KNOW THAT BOTH LESSOR AND LESSEE DID NOT HAVE AN OC JUST THE SUBLESSEE WHICH WAS THE HIGH SCHOOL BUDDY.


So again my comment is I do not see anything in the old air regs that show that you can have a lessor and lessee and then a lessee to a sub-lessee unless the minister approves it but again it does not say anything about sub-lesseing aircraft.

So if the lessor in my story did not have an air carrier certificate and the lessee also did not have an air carrier certificate but the sub-lessee had one who was rewarded for hire here from the contract?

Boy these air regs are so worded that you need a lawyer to explain it to you,

any more comments on the above please do.

As well what does "bona fide lease" , "agreement of hire" and "valid subsisting certificate" mean?

thank you and if you can shed some more light please do

helinas

[tired of the ground]

As I understand from what you are saying.

Company A owned the aircraft. Company B leesed the aircraft from A. Company C Subleased the aircraft From B.

Well this sounds totally legal. There is nothing saying that you can't be silly about how you go about getting an aircraft. You are just paying way too much for the aircraft going through a sublease like that or someone isn't making any money.

What the regs don't allow is some numbnuts leasing an aircraft from a company with an OC and running amuck without an OC or under the ospices of the Leased A/C Companies OC.

Whos on first?

[Edo]

As for today's rules - This summer TC reviewed a lease and had to have this inserted - "this is a dry lease" or words to that effect.

There was also a clause that the lessor cannot fly the aircraft for the lessee. To do this the lessee would have to hire the lessor as a pilot and follow the training program in the ops manual.

The lessee has legal custody and control of the aircraft but the lessor retains title.

My interpretation:
In short the guy with the OC must operate the aircraft, pay the fuel hire the pilots.
Maintenance, I guess either party could pay the bills. Most likely components and engines to the owner and the operator would pay the routine costs.

[helinas]

Ok I guess I can add some more info to my question in dilemma.

As mentioned above:


--Person A has title to the twin engine aircraft.

--Corporation B incorporates his business to reflect Training seminars on the ground and does not include flight training in the time period I am questioning.

--Corporation C which is also an Air Carrier is very close friends with Corporation B which does not have an Air Carrier Operating Certificate and neither does Person A not have an Air Carrier operating certificate.

--Corporation B successfully is awarded an Air Traffic Reporting contract with a radio station.

--Corporation B meets with Corporation C which is an Air Carrier and agree to work "together"

--Person A signs lease agreement with Corporation B which does not have an Air Carrier Operating certificate to lease the twin engine aircraft to Corporation B.

--Person A is the lessor and Corporation B is the lessee.

--The lease is a dry lease

--Corporation B agrees to be the lessee and Corporation C with the Operating certificate agrees to be the sub-lessee and again this is a dry lease between these two corporations.

--Corporation C with the operating certificate "registers" the twin engine aircraft under it's corporation name with Transport Canada meaning that Corporation C has legal custody and control of this airplane.

--In the lease agreement between Corporation B and Corporation C they both agree that Corporation C will be "operating and running" the air traffic contract simply because Corporation C has the Air Carrier certification to do so.

--In the lease between Corporation B which you can call the contractor and Corporation C which you can call the sub-contractor they both agree and it is stated in black and white that Corporation C will be paying "all the expenses" regarding this operation when it comes to fuel, oil, maintenace, pilot hiring, etc.

--This contract is worth in the six figure income annually and this lease betwen Corporation B and C went on for 18 months when eventually Corporation B ended up getting their own Air Carrier Certification where it did not need Corporation C anymore.

--Person A was asked as well whether he knew that his aircraft was sub-leased to Corporation C and he was shocked and surprised to see that it was.

Now for my comments:

I used to be a shareholder of Corporation C and the Director of Corporation C never told me of these extra curricular activities which happend more than ten years ago until I found out recently what really happend.

I asked Corporation B who received the revenue from the air traffic reporting contract and Corporation B said that Corporation C did not receive one cent from the operation and that Corporation B was paid directly from the Radio Station.

How can an Air Carrier provide these services and not get paid? Because these two guys were buddies they played the game. I also asked Corporation C's director vie e-mail because Corporation B and Corporation C do not want to meet with me or see me to answer my questions, but going back to asking Corporation C's director who got paid he said Corporation B.

The old air regs do not mention anything about aircraft being sub-leased and if an Air Carrier provides this work the air carrier must be hired for a reward of some sort.

If you were me as the former shareholder of Corporation C what would you do and what do you think of the above situation? I am waiting for the old air regulations from the Library of Archives in Ottawa to arrive as I told them that I am looking for the Aircraft Leased Registration regulations from 1990 circa.

thank you for reading

helinas

[Edo]

The old air regs do not mention anything about aircraft being sub-leased and if an Air Carrier provides this work the air carrier must be hired for a reward of some sort.

the current rules use the phrase "Hire or Reward" not sure if the old air regs did.

"reward" The director of corporation C was rewarded in some way off the books. pretty hard to prove.

In that 18 month period did corporation B ever pay corporation C any sum?

If yes - than the fees charged by Corp C were too low to have a profit left - could be a explained by a bad business decision, unforeseen maintenance issues etc.

If no - Than there was no expectation of a profit, rather a loss as Cor C would pay all the expenses and get nothing.

Assuming no, You may be on to something. If you can prove it. Also is there a statute of limitations on this? How far back can you go?

If you were me as the former shareholder of Corporation C what would you do and what do you think of the above situation?

I would have to see what my divided would have been if a profit was realized. 6 figures over 18 months, sounds good, but that's a gross number, what was the net gain, what would I have seen from it? If the return is low it wouldn't even be worth the legal fees if you sue and lose (plus you may be open to a counter suit and end up paying his legal costs)

[helinas]

"hire or reward" is in the old regulations.

And why would the director of Corporation C keep this a secret from me being the other shareholder of Corporation C and 50% owner of corporation C? Maybe hide something.

This twin engine flew 1000 hours a year and made $350,000 gross for the first 12 months.

Why keep it a secret from your other half (business partner) which happend to be me? I was a young pilot that would have had the chance to fly this other twin engine airplane so I could have logged some time right in my own backyard.

the director of Corporation will be charged for fiduciary duty which means he did not work for the best of the corporation and there is fraud involved as there is evidence which no time limitation applies.

Helinas

[Norskman]

Sounds like a nice screwed up situation. Hire a lawyer. Expensive, but if you have 50% of profits coming to you, then could be worth it eh..?

[Edo]

well 350 grand would be enough to justify court costs.

Are you saying no money went to corp C at all. I'm just think your partner could say i bid $x.xx and it wasn't enough, the company lost money and I was locked into a contract.

I would suspect you are right and that this is not the case rather blatant fraud. The fact that you did not know the contract even existed shows something strange was going on?

I just hope for your sake your ex-partner cant come up with enough expenses to show a net loss on the contract.

[Norskman]

I was just thinking.. wouldn't you need a lot of capital to operate a plane for over a year without taking ANY payments?

[helinas]

One more thing about OC,

When somebody piggybacks on somebody elses OC as in this case Corporation B piggybacked on Corporation's C OC to do the work and let's say Corporation B set up shop in Ottawa, ON and Corporation C was already established in KIngston, Ontario for example does Corporation C have to move their entire operation out of Kingston, ONtario and move it to Ottawa, On or can they just stay where they are?

The reason for this is that Corporation C ended up moving into the same office as Corporation B and the same airport.

Any comments again on something like this would be greatly appreciated.

helinas

[helinas]

So if Corporation B sais that it got paid 100% from the contract and corporation C did not get paid at all even though it registered the airplane under Corporation C and subleased the aircraft from Corporation B should't Corporation C at lease notify it's accountants so Corporation's C accounants at least know that it paid all the expenses concering the contract that C did where B could not do because B did not have the OC and C did.