Business aircraft are expensive to own and operate. Under 14 CFR 91, there are opportunities for sharing aircraft expenses; however, these opportunities are very limited. One consideration is for the Part 91 operator to obtain a Part 135 certificate.

One benefit of obtaining a Part 135 certificate is the ability to receive compensation from anyone for use of a company aircraft. Rather than being limited to payment from corporate affiliates or sharply limited compensation, under Part 135 an aircraft operator can receive compensation limited only by the market and competition. Under Part 91 a corporate executive can only reimburse his company for certain limited direct expenses. Many executives choose to treat personal flights as a taxable fringe benefit. As a result, the IRS gets more taxes and the company gets nothing for the use of the airplane. However, if the company airplane is flown under Part 135, the executive is free to reimburse for the full cost of any personal flights.

Another benefit of operating under Part 135 is liability protection for company assets. To protect these assets, attorneys often recommend placing the company airplane(s) and associated personnel in a separate subsidiary corporate entity with no other business, such as ABC Jets, LLC. The Code of Federal Regulations (CFR) does not allow the subsidiary corporation to operate flights under Part 91 if it receives any compensation for those flights, even from the parent company. However, if the subsidiary holds a Part 135 certificate, the flights would be legal and the assets of the corporation protected.

Most states have some sales or use tax that applies to the purchase or use of an aircraft by a state resident. As a result, the purchase of an expensive jet may result in a significant tax bill from the state. On the other hand, many states provide an exemption from the tax for aircraft that operate under Part 135. The specifics regarding these tax exemptions vary from state to state and the conditions for meeting the exemption must be precisely followed to preserve the exemption. However, if an exemption is available, operating under Part 135 instead of Part 91 could mean significant tax savings.

Operating third party charters with the company airplane under Part 135 may also enhance the opportunity to deduct the aircraft ownership and operating expenses as a business expense. In addition, Part 135 may be "safer" than Part 91 because of the additional safety requirements imposed by regulations as well as the FAA oversight.

Despite the advantages of operating under Part 135, obtaining a Part 135 certificate does come at some expense. There is the time and expense required to obtain an FAA 135 certificate. Part of this certification process involves development of company operating, training, and maintenance manuals that will strictly govern your operations. Once certification is obtained there may be increased FAA scrutiny. Your operations will be subject to certain restrictions. Some airports you could use under Part 91 may no longer be available because of runway length restrictions. You may be limited to airports with on-field weather reporting. Your pilots will now have to adhere to limits on flight and duty time. Some may say these "disadvantages" will result in a safer operation. The company will have to balance the advantages of operating under Part 135 against the cost and restrictions involved.

One option for corporate operators to consider to avoid the time and expense associated with obtaining their own Part 135 certificate is to place their airplane and crew on another 135 certificate. Your airplane can then be operated under Part 135 when advantageous and under Part 91 at other times. However there are fees, costs and revenue sharing that you must take into account as well as ensuring operational control requirements are met, which may limit the benefits of placing your aircraft and crew on another Part 135 certificate. The decision to move to Part 135 is a significant one. To help corporate operators in this regard JDA developed 135 Pro™, which is designed to provide a simplified and low cost way to obtain a Part 135 certificate and be in full compliance with FAA requirements. 135 Pro™ includes:

• Streamlined 135 certification process.
• Manual(s) tailored to satisfy corporate flight departments and FAA requirements.
• Customized Web-based application and document manager that enables corporate operators to access all Part 135 requirements on line, including certificates and manuals.
• Full-time support from the JDA expert 135 team.
• Mentoring and training of company personnel and coordination and interface with the FAA. We will be there with you . . . every step of the way.

JDA Regulatory Affairs Training September 14-15, 2010

JDA has announced the dates and location for its next one-of-a-kind regulatory affairs training course! The course will be held September 14-15 at JDA's headquarters in Bethesda, MD. JDA's former career FAA Managers and Principal Inspectors will provide training on FAA Flight Standards processes and operating methods, investigating and responding to FAA inquiries and recommendations on how to implement procedures for interfacing with the FAA including:

1. FAA Flight Standards organization and function of different departments to Regulatory Affairs personnel.
2. FAA CMO organization, duties and responsibilities, positions, i.e. Principal Inspectors, Partial Program Managers, Assistant Managers, etc. Also explain the functions of these positions.
3. Inspection programs and inspector criteria; i.e. surveillance, investigation, complaints, incidents, etc.
4. Understand the variety of inspector methods and how to address them.
5. Inspector authority and limits.
6. Steps for establishing a new relationship with the FAA CMO:
• Procedures for checking in and out at your facilities
• Inspector in briefing and out briefing
• Inspector access to facilities, equipment, records and personnel
• Inspector badges
7. Actions and timeframe for implementing new operating procedures:
• Data to collect
• Standardized reports
• Other line stations and facilities
8. Introduction of new procedures to FAA CMO and anticipating FAA reaction.
9. Understand how FAA conducts investigations and what kind of response they expect from Company.
10. How to research FAA regulations, handbooks, policy letters, etc.
11. How to conduct an internal investigation (what to look for) as a result of an FAA Letter of Investigation (LOI) and how to respond to an FAA LOI using actual ongoing cases.
12. When and how to tell the FAA that you disagree with allegations and how to respond accordingly.
13. Procedure (when and how) for elevating an issue to higher authority.

One participant described the course as "One of the best training courses I ever attended. I learned more in two days about the FAA and the oversight process than I have during my seven years on the job. The course is jam packed with valuable information."

For detailed course and registration information, go to www.jdasolutions.aero/services/regulatory-training.php or contact Michael Kushner at 301-941-1460 ext.130 or via email at mkushner@jdasolutions.aero.