Transcript:

Aircraft are commonly leased between companies or individuals in order to comply with FAA regulations. Increasingly, states have been taking a look at whether or not what’s being charged for the aircraft lease is a “fair market value” lease. Fair market value for aircraft leasing is just like any other good or service that as you look at what’s actually being rented to the party and whether or not they’re paying a rate that would be consistent with the third party rate. It can be a little bit tricky with aircraft because generally they’re being leased by the flight hour which is the industry standard and they’re being leased dry. The operator is in charge for paying all the operational expenses of an aircraft. A fair market value lease rate for an aircraft maybe less than $100 per flight hour which would seem really low to someone who is not familiar with aircraft leasing but very well, maybe the fair market value rate if the operator is assuming operational cost for their flights.