Managed ownership vs. Fractional
#1
Gets Weekends Off
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Joined APC: Jul 2008
Position: CFII
Posts: 139
Managed ownership vs. Fractional
Perhaps this should be posted under a different forum but.....
what, if any, is the difference between part 91 fractional ownership (all the language dedicated to fractional ownership under part 91) and simply shared owner ship.
If 30 rich people buy a plane together and work out amongst themselves how to maintain and schedule it, do they fall under fractional ownership under part 91?
I would assume that when a second party starts to manage, organize maintain, schedule, and charges for the managment fee, that is what the regulations are in place to regulate.
The 30 rich people in on a plane together is not regulated by fractional ownership under part 91? Correct?
what, if any, is the difference between part 91 fractional ownership (all the language dedicated to fractional ownership under part 91) and simply shared owner ship.
If 30 rich people buy a plane together and work out amongst themselves how to maintain and schedule it, do they fall under fractional ownership under part 91?
I would assume that when a second party starts to manage, organize maintain, schedule, and charges for the managment fee, that is what the regulations are in place to regulate.
The 30 rich people in on a plane together is not regulated by fractional ownership under part 91? Correct?
#2
Originally Posted by sellener
If 30 rich people buy a plane together and work out amongst themselves how to maintain and schedule it, do they fall under fractional ownership under part 91?
If 30 rich people are all partners in Big Jet, LLC which owns the airplane and each of the rich folks have their own hired flight crew, then it can be rather simple; if there is a single crew (or set of crews) flying for them all then its a matter of how the whole shooting match is arranged legally...and even if its kosher with FARs it might not be with the tax man.
91.501 is a place to start...
#3
Gets Weekends Off
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Joined APC: Jul 2008
Position: CFII
Posts: 139
ok, I have read 501, and admit, "it depends" is a good answer. I will continue to research.
On a slightly different note, that would help in some way to enlighten me, why is a typical flying club ( 1000 dollar initiation fee, annual insurance fee, monthly fee, and rate wet for aircraft/s, along with an intrest in the aircraft if it is sold or liquidated) not a fractional ownership type of operation? Usually you have Bob and Tom who manage the maintenence/logbooks/coffee pt in office, who are getting compensated by the club itself.
Im assuming the club is not fractional.....I just never thought about fractional operations much, and now Im curious.
Just curious why it is not fractional under the regulations.
On a slightly different note, that would help in some way to enlighten me, why is a typical flying club ( 1000 dollar initiation fee, annual insurance fee, monthly fee, and rate wet for aircraft/s, along with an intrest in the aircraft if it is sold or liquidated) not a fractional ownership type of operation? Usually you have Bob and Tom who manage the maintenence/logbooks/coffee pt in office, who are getting compensated by the club itself.
Im assuming the club is not fractional.....I just never thought about fractional operations much, and now Im curious.
Just curious why it is not fractional under the regulations.
#4
Gets Weekends Off
Joined APC: Jun 2008
Position: Rebuilding the career
Posts: 169
I think the big kicker is whether or not the owners are always riding on their own plane or not - the actual airplane they own a piece of. With many large fractional set ups, an owner may own a piece of "a" Citation (example, N123AB) - but may never ride on THAT particular Citation (N123AB), just an identical one that the fractional company operates - they operate a bunch of them and you just get which ever one is closest/convienent. This set-up pushes the whole operation firmly under 91k (fractional).
I know of a bunch of multiple-owner airplanes (2, 3, or 4 owners) in which a single crew flies the airplane for all of the owners - operated under 91 - but the owners in this case are always riding on their own airplane. Don't know of any planes with 30 different owners, though.
Boiler brings up a good point about making sure the tax-man is happy with the arrangement.
I know of a bunch of multiple-owner airplanes (2, 3, or 4 owners) in which a single crew flies the airplane for all of the owners - operated under 91 - but the owners in this case are always riding on their own airplane. Don't know of any planes with 30 different owners, though.
Boiler brings up a good point about making sure the tax-man is happy with the arrangement.
Last edited by Likeabat; 08-14-2010 at 07:40 PM.
#5
ok, I have read 501, and admit, "it depends" is a good answer. I will continue to research.
On a slightly different note, that would help in some way to enlighten me, why is a typical flying club ( 1000 dollar initiation fee, annual insurance fee, monthly fee, and rate wet for aircraft/s, along with an intrest in the aircraft if it is sold or liquidated) not a fractional ownership type of operation? Usually you have Bob and Tom who manage the maintenence/logbooks/coffee pt in office, who are getting compensated by the club itself.
Im assuming the club is not fractional.....I just never thought about fractional operations much, and now Im curious.
Just curious why it is not fractional under the regulations.
On a slightly different note, that would help in some way to enlighten me, why is a typical flying club ( 1000 dollar initiation fee, annual insurance fee, monthly fee, and rate wet for aircraft/s, along with an intrest in the aircraft if it is sold or liquidated) not a fractional ownership type of operation? Usually you have Bob and Tom who manage the maintenence/logbooks/coffee pt in office, who are getting compensated by the club itself.
Im assuming the club is not fractional.....I just never thought about fractional operations much, and now Im curious.
Just curious why it is not fractional under the regulations.
Joe
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