The terms “equity group” and “non-equity group” are used in connection with aircraft owner groups. What do they mean?
It refers to the legal company construction of the aircraft owners group. You may enter an owners group purchasing only the right to use the aircraft (non-equity) or become owner of aircraft shares (equity).
So in an non-equity group, the group is a legal person that owns the aircraft?
Non-Equity Group could have an individual person as the owner, or a Company.
It all depends on the legal agreement, having seen some called “equity group” but the wording actually look like a “rental”…
I heard many set-ups:
- A person/company own the aircraft and rent it to non share members (don’t own the aircraft). If it is a fixed number of named users who own the right to use it: I would call it a non-equity group otherwise I don’t see how this is different from a vanilla rental?
- A company that owns the aircraft and issue shares that give the right to use it. Equal shares: you may call it equity, non-equal shares: say one shareholder has majority and others 1$, it is a bit black and white: while you may call it equity some would call it non-equity/rental, I think “equity with non-voting right” is more appropriate?
- A group of persons who own an aircraft and have a tailored agreement on how to use it: I don’t think a lawyer would call this “equity in the legal sense” unless he looks at agreement specs: if one guy have all finacial/legal responsiblity, I doubt it is an “equity group”…
A “non equity group” is indeed a vague concept.
It can be anything from
and anything in between.
I used to run one many years ago, which was initially pure rental (expensive insurance!) but later had the named pilots on the insurance policy. I used to bill the fuel at cost, separately, so it was “dry” rental. Also not having actual shares in the plane potentially enables the UK “benefit in kind” tax attack – much posted on that previously.
Don’t make it too difficult
Equity Group: You own a part of the plane. Pay for the stake, pay monthlies and pay for flying
Non-Equity Group: You do not own the plane but pay for access. Pay monthlies and pay for flying
Renting: You pay for flying only
What if the thing you own is an hour block entitlement?
Ultimately, nothing shields you from unexpected costs. The sum total of the users have to fund the sum total of the expenses. The differences are only in “details” like whether you can walk away and leave the owner holding the baby to pay for a new engine / new plane – like a pure renter can do. But still then the renter loses the use of that plane.