Group Flying - 20 member limit
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Group Flying - 20 member limit
Does anyone know what the rules are for group ownership of a PT CofA SEL and whether these change when the new non-expiring CofA regime comes in?
The old rules were an exception to the-no hiring rule for private cat aircraft that allowed someone to pay the group to use the aircraft provided they owned a minimum 5% share (hence max 20 in the group) , were natural persons (not corporations) and I think British. What I've never been too sure of are what the ownership rules are for aircraft on a Public Transport CofA and whether the same restrictions apply.
I've always understood that the purpose of the 5% rule and the requirement to inform the CAA immediately of any change of ownership was to prevent someone from hiring out a private cat aircraft under the smokescreen of nominal ownership (e.g. selling the renter a tiny share of the aircraft for £5 and buying it back at the end of their flight) so that wouldn't apply to PT CofA aircraft but are there any restriction on the number of part owners that such an aircraft can have?
The old rules were an exception to the-no hiring rule for private cat aircraft that allowed someone to pay the group to use the aircraft provided they owned a minimum 5% share (hence max 20 in the group) , were natural persons (not corporations) and I think British. What I've never been too sure of are what the ownership rules are for aircraft on a Public Transport CofA and whether the same restrictions apply.
I've always understood that the purpose of the 5% rule and the requirement to inform the CAA immediately of any change of ownership was to prevent someone from hiring out a private cat aircraft under the smokescreen of nominal ownership (e.g. selling the renter a tiny share of the aircraft for £5 and buying it back at the end of their flight) so that wouldn't apply to PT CofA aircraft but are there any restriction on the number of part owners that such an aircraft can have?
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Well, it would help if you started from the premise that there is no such animal as a PT C of A any more.
Art 157 (3)(c) of the ANO deals with hiring of aircraft
Art 162 of the ANO contains the exemptions for group owned aircraft.
ergo:- Renting an a/c out is classed as PT unless it falls within any of the exemptions so if your aircraft fulfils the maintenance requirements for PT you can rent it out without relying on any of the exemptions. Art 14 (1) (b) requires a certificate of maintenance review to be valid if the a/c is to be used for PT.
Art 157 (3)(c) of the ANO deals with hiring of aircraft
(3) Subject to the provisions of this article and articles 158 to 163, an aircraft in flight shall for the purposes of this Order be deemed to fly for the purposes of public transport:.............
(c) for the purposes of Part 3 of this Order (other than articles 19(2) and 20(2)), if valuable consideration is given or promised for the primary purpose of conferring on a particular person the right to fly the aircraft on that flight (not being a singleseat aircraft of which the maximum weight authorised does not exceed 910 kg) otherwise than under a hire-purchase or conditional sale agreement.
(c) for the purposes of Part 3 of this Order (other than articles 19(2) and 20(2)), if valuable consideration is given or promised for the primary purpose of conferring on a particular person the right to fly the aircraft on that flight (not being a singleseat aircraft of which the maximum weight authorised does not exceed 910 kg) otherwise than under a hire-purchase or conditional sale agreement.
ergo:- Renting an a/c out is classed as PT unless it falls within any of the exemptions so if your aircraft fulfils the maintenance requirements for PT you can rent it out without relying on any of the exemptions. Art 14 (1) (b) requires a certificate of maintenance review to be valid if the a/c is to be used for PT.
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Ok I was using PT CofA as a familiar shorthand and yes it would be more precise to say an aircraft maintained to PT requirements.
I have read the ANO and I'm still not entirely clear about whether the max 20 owners with a minimum 5% share only applies to the exemption that allows flying groups to use aircraft not maintained to PT - and more particularly to permit aircraft - or whether this reflects a more general restriction on joint ownership irrespective of the maintenance regime or how the aircraft is used.
David
I have read the ANO and I'm still not entirely clear about whether the max 20 owners with a minimum 5% share only applies to the exemption that allows flying groups to use aircraft not maintained to PT - and more particularly to permit aircraft - or whether this reflects a more general restriction on joint ownership irrespective of the maintenance regime or how the aircraft is used.
David
I have read the ANO and I'm still not entirely clear about whether the max 20 owners with a minimum 5% share only applies to the exemption that allows flying groups to use aircraft not maintained to PT - and more particularly to permit aircraft - or whether this reflects a more general restriction on joint ownership irrespective of the maintenance regime or how the aircraft is used.
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bookworm beat me to it (as always
)
The general rule is that if you rent it out it must be maintained to PT standards.
However if it meets the requirements of Art 162 (up to 20 owners each owning at least 5%) then you can rent it out to the group members without it having to be maintained to PT standards, hence I can pay the group for my use of our Permit aircraft.
Your original question specified a PT C of A, which I took to mean that it was maintained to PT standards. If that's the case then you can rent it out irrespective of the number of owners. The 20 member rule is simply to prevent the rules being fiddled. The idea is that if it's group owned then the owners as a group are responsible for its airworthiness, which is fine if there is a relatively small group.
If you had no limits you could have a flying club with 800 members operating a fleet of aircraft not maintained to PT standards (including permit aircraft & special cat C's of A). If your membership bought you a share in the business you'd own one eight-hundreth of each a/c. I think you'll acknowledge that situation would be against the spirit of the rule, which is there to ensure that when you hire an aircraft from somewhere you get greater protection than if you were flying your own machine.
)The general rule is that if you rent it out it must be maintained to PT standards.
However if it meets the requirements of Art 162 (up to 20 owners each owning at least 5%) then you can rent it out to the group members without it having to be maintained to PT standards, hence I can pay the group for my use of our Permit aircraft.
Your original question specified a PT C of A, which I took to mean that it was maintained to PT standards. If that's the case then you can rent it out irrespective of the number of owners. The 20 member rule is simply to prevent the rules being fiddled. The idea is that if it's group owned then the owners as a group are responsible for its airworthiness, which is fine if there is a relatively small group.
If you had no limits you could have a flying club with 800 members operating a fleet of aircraft not maintained to PT standards (including permit aircraft & special cat C's of A). If your membership bought you a share in the business you'd own one eight-hundreth of each a/c. I think you'll acknowledge that situation would be against the spirit of the rule, which is there to ensure that when you hire an aircraft from somewhere you get greater protection than if you were flying your own machine.
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Thanks to both of you for clarifying this. In fact my own group has 12 members and keeps the aircraft maintained to PT and though we generally only fly it ourselves this does enable prospective and pending members to fly it with instructors etc.
I agree that the exemption makes good sense (so someone must have done some effective lobbying in the distant past) as it enables genuine group ownership while generally preventing commercial operators from using it as a loophole to get round the PT requirements. I had though wondered whether apart from the exemption there were any other restrictions on how many separate people could jointly own an aircraft without having to be a corporation. I also wondered how the figure of 20 was arrived at though ISTR that was the traditional number of shares in a ship before limited liability companies were invented.
David
I agree that the exemption makes good sense (so someone must have done some effective lobbying in the distant past) as it enables genuine group ownership while generally preventing commercial operators from using it as a loophole to get round the PT requirements. I had though wondered whether apart from the exemption there were any other restrictions on how many separate people could jointly own an aircraft without having to be a corporation. I also wondered how the figure of 20 was arrived at though ISTR that was the traditional number of shares in a ship before limited liability companies were invented.
David
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Not sure where the numeric limitation originated but it seems a sensible number. Bear in mind that the limitation is 5% rather than 20 members. This is to stop for example me owning an aircraft and dividing it up into 10,000 shares. I sell one share each to 19 punters who want to fly it and keep the remaining 9,981 shares for myself, retaining effective control. If it's worth 50k I charge a fiver a share and buy it back when the punter no longer wants to fly it so I can flog it on to someone else.
They're not daft in the CAA Legal Department you know!
They're not daft in the CAA Legal Department you know!
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However if it meets the requirements of Art 162 (up to 20 owners each owning at least 5%) then you can rent it out to the group members
If each pilot is a shareholder, then he isn't going to be "renting" it - unless you call the normal syndicate hourly contribution "rent".
The 5% requirement was clearly done to stop flying school operating G-reg planes on the Private CofA, which has slightly cheaper maintenance requirements.
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OK, to be pedantic, the requirement for PT standards arises if
and the exemption allows
and rent is a colloquiolism for payment for the right to fly it. Is that better? I don't see anything wrong with the idea that when I pay to fly our a/c I am paying "rent" to the partnership that owns it and of which I am a member.
valuable consideration is given or promised for the primary purpose of conferring on a particular person the right to fly the aircraft on that flight
(3) Valuable consideration falls within this paragraph if it is either:
(a) in respect of and is no greater than the direct costs of the flight and is given or promised by one or more of the joint owners of the aircraft or registered
shareholders of the company which owns the aircraft; or
(b) in respect of the annual costs and given by one or more of such joint owners or shareholders (as aforesaid);
or falls within both sub-paragraphs (a) and (b).
(a) in respect of and is no greater than the direct costs of the flight and is given or promised by one or more of the joint owners of the aircraft or registered
shareholders of the company which owns the aircraft; or
(b) in respect of the annual costs and given by one or more of such joint owners or shareholders (as aforesaid);
or falls within both sub-paragraphs (a) and (b).
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Not sure where the numeric limitation originated but it seems a sensible number. Bear in mind that the limitation is 5% rather than 20 members. This is to stop for example me owning an aircraft and dividing it up into 10,000 shares. I sell one share each to 19 punters who want to fly it and keep the remaining 9,981 shares for myself, retaining effective control.
I'd advise anyone thinking of joining a group to look at several and see how they work (or don't!) and also read the advice on the LAA website.
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The CAA aren't interested in the commercial arrangement between group owners. What they are interested in is who has responsibility for the safety of the aircraft. In the case of a group, all of the owners are equally responsible regardless of what proportion of the costs they pay. If I were a group owner in a group where one member held more than 50% of the shares I would insist in having an equal control over the aircraft because I have equal responsibility for it.
