Flight School “Leaseback”

Many aircraft owners look to “leaseback” agreements with a flight school to maximize revenue for their aircraft (or at least minimize their losses).  Trouble is, most enter into the flight school’s “boilerplate” agreements, and in doing so, severely jeopardize their contractual rights and ability to deduct depreciation and other expenses under IRS regulations.  In sum, every aircraft owner needs effective legal representation before entering into an agreement to leaseback their aircraft to a flight school.  For example, what happens when a flight instructor (whom the flight school designates as an “independent contractor”) damages your airplane?  Are your remedies for recovery (insurance deductible, lost rental income, etc.) limited to the flight instructor (who likely lacks sufficient funds), or can you recover directly against the flight school?  The answers depend on the language of your agreement.  Rather than guess at what might happen someday, you need experienced aviation counsel to represent your position as an aircraft owner.

If you are a flight school, multiple legal issues are likely to develop during your business operations.  Is your business liable for the actions of your flight instructors?  Maybe, but it depends on your relationship (employee or independent contractor). On that note, do you have your flight instructors misclassified as independent contractors?  If so, your business could be subjected to significant fines and penalties (see also our section on Employment – HR).  The key to protecting your flight school is a review by experienced aviation legal counsel… when was yours done last?

Please visit any of our drop-down menu pages to the right for more specific information on your topic of interest.