Don’t Put Your Client’s Shiny New Corporate Jet Into A Sole-Asset LLC (Unless You Really Want to Create an Airline)

One area of concern arises from large or multi-engine jet aircraft owners and operators — or their counsel — who focus solely on the potential civil liability risks. These parties often seek to minimize potential civil liability by creating a sole-asset company to own and operate the aircraft, which is in turn owned by the individual or the operating company that is the “real” aircraft operator. The consequence is that such a structure may well place the real operator in the worst liability position and it’s illegal under commercial aircraft aviation regulations.

This article explains the general compensation rules that apply to aviation in the United States and how and why these rules lead to potential regulatory and related civil risk issues, particularly with sole-asset companies.