Limited Liability Companies May Protect Aircraft Owners
It’s not uncommon for three or four pilots to share ownership of an aircraft. For years, owning an aircraft as “partners” was the norm. That form of ownership, however, carries with it some liability considerations.
- “Partners” can generally be held individually liable for one another’s debts, including debts arising from one another’s negligence. In other words, if one partner ’s piloting mistake kills or injures a passenger, the other partners may in some cases be held accountable to the victim or the victim’s family.
- Aircraft owners are responsible for maintaining their aircraft properly. If one of the partnership’s maintenance decisions – such as an ill-considered decision to run past TBO – leads to an accident, each partner could be held responsible for that as well.
- Even assuming the partnership made all the right maintenance decisions, the partnership may still be held responsible for the negligence of the mechanic. More on that here. If the partnership is liable, each of the individual partners may be liable as well.
Many pilots seeking to share an airplane now form a limited liability corporation. They arrange it so that the corporation, and not the individual pilots, own the aircraft. The pilots own shares in the corporation only. Because the pilots do not themselves own the aircraft, they avoid some of the liability that comes with aircraft ownership generally and with the partnership relationship in particular.
But here’s where people often get confused: no form of ownership allows the pilot who is flying the aircraft to avoid responsibility for his own negligence. If a pilot error kills or injures someone, that pilot may be held accountable to the victim or his family regardless of whether the aircraft is owned by his partnership or by his limited liability corporation.
It is hard to trust the veracity of this article, when they can't even understand what an LLC is. It is NOT a limited liability CORPORATION. It is a Limited Liability COMPANY. The LLC's sole reason to exist is to replace the Limited Partnership that made all the same promise. But why aren't they being promoted anymore? They didn't keep their promises. They failed to limit liability. And now the LLC is making the same promises, with even less credibility.
Quentin-
You're right. Though sometimes called a Limited Liability "Corporation," LLC stands for "Limited Liability Company." Thanks for pointing that out.
But my intent was not to promote one particular form of ownership over another, or to talk about what an LLC can do to help a pilot avoid liability. My point was to correct a common misunderstanding. *No* form of ownership -- be it an LLC, a corporation, or the "limited partnership" you mention -- can insulate someone from responsibility for his own errors in piloting an aircraft.
Mike