Sal's Law
N.C.@ 44N: Two friends and I are going to partner in a used aircraft and we are discussing the various types of ownership methods, LLC, Corporation and nothing at all. What are the advantages to each and does one work better in the aviation field.
Sal’s Law: Congratulations on the new bird. As with most questions in law the answer really depends on what you are going to do with the aircraft. Each ownership vehicle will help limit your legal liability in the event of a problem. None of them will protect you from liability for your own negligence. What they can offer you is protection from some of the negligence of your partners, employees or from unpaid debt in the venture.
The most often-used ownership method is a Limited Liability Company. It has most of the advantages of a corporation, in that the venture is treated as a separate and distinct “person”. Another heavily used ownership vehicle is the subchapter “S” corporation. Tax issues will usually drive the decision between the two. Consult with an aviation attorney and an accountant who understands the world of aircraft ownership.
To put it simply, whichever method you choose, the ownership of the aircraft will be placed in the name of the entity. The individual owners will be insulated from liability for the actions or inactions of the other owners. This limits the liability of the non-operating member to the value of the entity. However you as a person who causes the negligent act, remain personally liable for your own actions, and therefore sufficient insurance coverage is critical.
R.H. @ RDG I am a military pilot and flight instructor for the past four years and I am about to enter civilian life. I have contacted the local FSDO who advised me that there is no automatic transfer of my instructor’s certification to that of a civilian CFI. What reason could the FAA possibly provide for this kind of treatment?
Sal’s Law: R.H., first and foremost, thank you for your service to our country. Of course it’s good to have you back in the civilian arena; the food is much better here. Unfortunately, with regard to military instructors, the FSDO is correct. FAR 61.73 does not provide for any transfer of your talent and abilities to the civilian CFI license. Certainly there is no doubt that you are qualified to fly teach and even shoot things while flying and teaching, and that should be the end of the story. However, you have to understand that the FAA is taking on the responsibility for an instructor who did not learn from the FAA’s own curriculum. Therefore they want to be sure to have some say in your training background. Since they do not set military standards, they will not allow the transfer without additional work on the civilian side of the fence. And – they don’t allow missiles either.
J.H. @ RDG I was recently reminded of the requirements of a Class “C” area by a rather irate controller, after I flew into the Charlie airspace without being identified. I thought it would be a good topic for one of your columns.
Sal’s Law: Thanks JH, for the opportunity to review some of the requirements of flying in busy airspace such as that in the northeast. Remember that in airspace marked Class “C”, you need to be specifically identified by the controller. If you call “Boston Center this is Cirrus 12345” and they answer, “Stand by”; you have not been identified and cannot enter. However, if their answer was “stand by 12345”, you have been specifically identified and can enter the airspace, subject to any restrictions set by the controller.
While we’re talking Class Charlie, be sure to note that if you plan on over flying the class Charlie airspace, above the charted altitude, you still have a responsibility of operating with a working Mode C Transponder. This is sometimes deceiving since we normally thing of flying above the top of an airspace area as being safe haven from most regulations. In Class “C” this is not the case. Remember the controllers are vectoring large aircraft into and out of the protected airspace and it is important to be seen!
Memo: We received quite a few letters concerning my comments in December that a safety pilot does not necessarily have to possess a current medical to be legal. I appreciate the many well thought out operating points that the readers volunteered.
The debate comes in the form of two inconsistent FAA memos. One defines a safety pilot as to not necessarily require a valid medical, and another that calls the safety pilot a “required crewmember” – and therefore we would surmise that a valid medical would be necessary.
A check with AOPA, EAA and a few other aviation legal colleagues agrees with my take on the subject, but caution should always be advised. The good news, we hope, is that the FAA is currently in the process of re-defining the safety pilot requirements, and they most likely will have a new rule making with regard to this some time in the fall. Stay tuned!
Blue Skies to all!
Sal A. Lagonia Es