Certified Aviation Manager (CAM) Practice Test

Under Part 91 regulations, what is one requirement for minimizing liability by placing an aircraft in a separate company?

1. The operation must be unrelated to the parent company's business

2. The placement of the aircraft must be certified by the FAA

3. The flight crew must be employed by the newly formed company

4. The operation of the aircraft is incidental to the business of the newly formed company

The correct answer is: The operation of the aircraft is incidental to the business of the newly formed company

The option stating that the operation of the aircraft is incidental to the business of the newly formed company is correct because it aligns with the regulatory intent under Part 91. When an aircraft is placed in a separate entity, one of the key requirements is that the aircraft operations should not be the primary purpose of the company. Rather, they should support the overall business activities, which typically reduces liability exposure by allowing the aircraft operation to be treated as a secondary function of the company. This can aid in clarifying the distinction between the parent company's activities and those of the aviation operation, thereby helping to limit liability issues that may arise from aviation-related operations. The other options present requirements that are not as central to minimizing liability in the context of regulatory compliance. For example, the operation unrelated to the parent company's business doesn't directly address how liability is minimized, as there are scenarios where related activities can effectively mitigate risk. Certification by the FAA and the requirement for the flight crew's employment by the new company, while important for operational compliance, do not specifically pertain to the core goal of liability limitation under these circumstances.