Month: September 2012

Hangar Rash: Who’s liable, and why?

The term “hangar rash” is commonly used in the aviation industry to refer to accidents or damage to an aircraft while hangared.  Hangar rash typically happens when planes are being towed or moved, however, fueling errors, falling parts, debris, and weather often play a part. While it may be easy to assess the physical damage done to your aircraft while hangared, assessing fault and determining liability can be much more difficult. This can cause a major headache, and cost you a lot of money if not handled properly.

The first person to assume responsibility in the case of an aircraft damaged by hangar rash is usually the FBO employee. Because they are working directly with moving and storing your aircraft, they will most likely bear the brunt of the liability. This is common enough that these workers are insured by the FBO, and in the case of an incident, an insurance claim should be filed immediately. Make sure you find out exactly who is insured at the FBO and how. Fueling truck employees, hangar attendants, and building maintenance workers may be insured differently, and it’s important to make the right type of claim.  In the case of contractors make sure in advance they carry their own liability insurance so you’re not the only one on the hook in the case of an accident.

Once the insurance claim is made with the right person at the FBO the case is passed to an adjuster. The insurance adjuster will assess the damage done to the aircraft, make a report on both the cost of repair, and evaluate the decline in value of the plane overall.

This is where you may face a “gotcha”.  When something breaks on a plane it’s not as easy to replace as a car part or a home appliance. Even minor damage can even reduce an aircraft’s overall value by as much as half. A part that costs you $5,000 to replace may end up costing you $50,000 in resale value. This is why it’s very important that you get your aircraft professionally appraised both immediately after an incident and when repairs are complete.

Of course, If you should find yourself in a bind regarding hangar rash liability, don’t hesitate to contact us. Properly assessing the damage done to your plane, no matter how minor it may seem, can save you a massive headache, and a lot of money.

Passenger Liability Waivers: Who’s responsible?

signing liability waiverOk, so you’ve purchased your aircraft and you’re ready to fly. You’ve got your insurance, received all the proper clearances from the FAA, and even planned on taking up some friends with you on your first flight in your new plane. But what happens if something goes wrong? What happens, God forbid, if one of your passengers is seriously injured, or even killed? Who is legally held responsible? The answer lies in liability waivers.

Liability waivers are an important part of covering yourself from potential legal action should something go wrong while taking people with you on a flight. Even if you’re flying with your best friend, the importance of having EVERY passenger sign a waiver before takeoff cannot be casually ignored. Should an accident happen while the aircraft is under your control, YOU may be responsible for any physical damage to your passengers, and in the case of death, liable to their estate. With a certified, signed, legal waiver, your passengers are agreeing to remove you from any liability involving injuries incurred by them, should something go wrong during the stated flight.

This waiver needs to be made in accordance with what type of aircraft you are flying and your flight certifications. It should detail, in writing, that in the case of accident or death you as the pilot and proprietor would not be held legally responsible. It is also important that you stipulate where you plan on flying, as different states have different laws regarding aircraft liability. Make sure that you specify that the passenger will also be signing on behalf of their estate. Without this their estate can still sue you even if they have signed off on liability as an individual. Lastly, remember to keep all signed waivers on the ground, not with you in the airplane.

A skilled aviation attorney should always handle these types of legal documentation for you. If you need one contact us for a simple yet thorough liability waiver for you at a reasonable cost. Covering your bases and staying out of legal trouble is a crucial part in safe flying. Paying attention to details makes all the difference in the world.

Government Use of Business Aircraft: Tax efficient, or not?

Business AircraftWe all have to pay taxes. It’s an inescapable fact of life. But how are our taxes used, and by whom? Taxes pay government salaries, fund projects, create infrastructure, and buy equipment. Taxes also pay for where government employees work, and for how they get around. When government workers travel by air on business, they travel in taxpayer-funded aircraft. The question is, is it tax efficient, and is it worth the cost?

In June 2012, the National Business Aviation Association (NBAA) hired NEXA, an aerospace advisory company, to do a study on the use of business aircraft by the government to find out whether it was truly tax efficient. In it, government officials claim that using business aircraft is essential to running an efficient government. It is a way to transport staff, move cargo, send emergency workers quickly to a site, and is even used by law enforcement. According to the NBAA report, “The aircraft provide taxpayer value by providing public safety and security, more effective government, protecting public health and welfare, facilitating economic growth, improving tax dollar efficiency, promoting good government relations, and improving compliance.”

The big issue at hand here is value. It’s important to look at the cost per person average when doing a value analysis between ground travel and air travel. While it’s cheaper for one person to travel by car, the cost drastically goes up for groups of four or more. Due to the sheer volume of workers that the federal and state governments employ, traveling in larger groups is very common way of doing business. The NBAA study shows that when 8 or more people travel together, going by business aircraft costs nearly half of what it would if traveling by car.

When analyzing the financial value to the taxpayer, it’s clear that the government’s regular use of business aircraft provides budget savings for travel, reduces turnover, increases overall productivity, and adds to local economic development. When your tax dollars help develop local economies through better forms of travel, they are adding to their overall “tax dollar efficiency”. Now, the same can’t be said when government officials use the same aircraft to go on vacations, or make talk show appearances, but nobobdy’s perfect, especially not the federal government. In any case, generally, this creates less wasted spending, which benefits both the taxpayer and the government.

The consensus of this report is that without such heavy government use of business aircraft, our taxes would be significantly higher. It would also greatly slow down, or in some cases, eliminate certain government services. The government is well aware of how beneficial using business aircraft is to their bottom line, but should also be aware of how beneficial this is to us, the common taxpayer. Much like a large corporation, the government is charged with delegating expenses to where they make the most sense. Is there still potential for misusing or wasting taxpayer funds on business aircraft use? Absolutely. But in almost all cases, it’s the most efficient way to travel. And being efficient with your tax dollars is good for all of us.

Feel free to share your thoughts in the comments section below.

Is buying always better? When leasing is a better option

Leasing vs. Buying – Have you been considering buying an aircraft recently? Are you unsure about taking on that type of financial commitment? Consider: buying isn’t your only option. Pilots are opting to dry lease their aircraft instead from owners looking to expand their business use of the plane.

When you lease an aircraft you are receiving a transfer of possession of the aircraft without receiving title. The lessor retains the title of the aircraft and therefore bares the burden of potential devaluation and the ongoing costs of ownership. The lessee remains liable for any negligent operation of the plane or damages to it unless the lease agreement provides otherwise.

It’s very important to check with your attorney and insurance provider on liability issues before you sign a lease agreement to make sure all of your bases are covered. If you are an owner-lessor, you can require your lessee to purchase trip insurance for his flight, or, if he’s a regular customer, add him as an additional insured to your policy.

A minefield to be aware of is the difference between “wet” and “dry” leases, and whether the owner can receive compensation. In broad terms Part 91 of the federal aviation regulations distinguishes a “wet lease” as including crew. So, if you offer to fly your customer from the left seat for any type of compensation you are engaged in commercial transportation for which you require certification under Part 135. The FAA’s view of “compensation” is very broad, and can include a range of benefits, some very noble, other than money. A third party “dry lease”, in contrast, is best suited to the pilot/lessee in planes that require no additional crew.

Issues related to wet and dry leases, as well as what constitutes “compensation” for a flight are critical. Getting it wrong can cost you your license. Contact us for guidance on these distinctions before leasing, either as an owner or a customer.