Photo: Adobe Stock
Photo: Adobe Stock

Finding a Home for Your Aircraft

Locating hangar space at airports like the New York area’s Teterboro and White Plains is becoming a serious challenge for jet owners. Hangars at desirable locations sell out even before they’re built. In some cases, you may have to reserve space in a hangar well before you even buy your aircraft, and worse, you may have to put up a non-refundable deposit or actually start paying the rent just to hold the space.

All in all, it’s a good time to be in the hangar business, for the immediate result of a dearth of space is easy to guess: the cost of hangaring a jet goes up. But even exorbitant rents are not enough at some places to satisfy lessors who have taken to requiring a minimum annual fuel “uplift” at their hangars to sweeten the deal further. If you don’t need that minimum fuel, you’ll have to pay for it anyway. 

The best chance of finding space at a crowded airport may be to have your aircraft managed by a company that owns or leases its own hangars or has guaranteed hangar space. All other things being equal, a company would much prefer filling its hangar with managed airplanes rather than non-managed ones.  

If space isn’t available where you want to be, your options are limited. If you’re replacing a jet, you may be able to substitute the new aircraft in the hangar for the old one. This leaves the old aircraft sitting outside until you sell it, unless you move it to another location that has room. And swapping the space won’t work at all if you’re trading up from, say, a Citation II to a Global 6000.

In some cases, you may be able to strike a deal on a “space available” basis with the hangar lessor, who essentially agrees to move your aircraft into the hangar when there’s room and to park it on the ramp when there isn’t. The agreement should include a commitment to provide regular guaranteed hangar space when it becomes available, which gets you on (and maybe at the top of) the waiting list.

An obvious disadvantage of a “space available” arrangement is that your aircraft spends a lot of time parked outside—a worrisome issue in wet, sandy, or otherwise inhospitable climes. The best that you can say for this plan is that it’s cheaper to keep your airplane outside than in the hangar. If the outdoors is unacceptable, the alternative is to hangar the aircraft at the closest airport that has room until space opens up. 

Hangar and fuel prices may well be cheaper at the distant interim airport, but there are drawbacks, too. Unless you plan to drive to that airport every time you want to fly, the aircraft will have to be delivered to your location, which involves expense and adds airframe and engine times and cycles. Basing the airplane in a different location, even temporarily, may also have state and local tax consequences that you must consider before you take the plunge; in the case of a newly acquired aircraft, it can actually be helpful for tax purposes to hangar somewhere else for a time.  

Government agencies or “airport authorities” generally own and operate airports. Space in a hangar will either be leased directly from the government agency or subleased from an FBO or other service provider that, in turn, leases the space from the government. In the latter case, the sublease may contain provisions regarding what happens if the head lease terminates. The lease will ordinarily also cover office space for the crew for an additional charge.

Assuming you and the hangar lessor have agreed on a term, a monthly rental fee, and the termination rights, the main issue in a hangar lease is: who is liable for what? From your perspective as the jet owner, the purpose of the lease is to retain a company that will safely to store your aircraft so you can sleep at night. You also want to hold the company responsible if it doesn’t do the job well, and the potential liability for a lessor in a large jet hangar is enormous. The collapse of hangars at Washington Dulles during the 2010 “snowmageddon” resulted in the total loss of three Globals, a Falcon 900EX, a Falcon 2000EX, a Hawker, and a Beechjet. Various other aircraft were seriously damaged. 

Who pays for losses like that? The hangar lessor’s idea, of course, is to make you responsible. The lessor will furnish the draft lease, which is likely to contain a catalog of proposed defaults by you, including the failure to comply with any term of the lease; it will also probably require that you indemnify the lessor for any damages or expenses arising from any of those defaults or its negligence or willful misconduct. 

On the other hand, the lease may be entirely silent regarding defaults by the lessor and contain instead a lengthy “disclaimer” of any lessor liability and/or a limitation of liability for incidental, consequential, and punitive damages designed chiefly for the lessor’s benefit. Lessors may also disclaim responsibility for the aircraft when it’s not on the ground, not on the premises, not in the hangar, and not under the care, custody, and control of the lessor. They may also adorn the lease with a long list of rules and regulations governing the behavior of lessees (with regard to storing equipment, blocking fire doors, and playing music in the hangar, for example). 

The hangar lessor’s concern is not entirely unwarranted. A business jet hangar is likely to be full of expensive airplanes and is not a good place to play tag, toss around a baseball, or barbecue steaks. A growing source of liability in recent years has been environmental pollution from fuel, oils, lubricants, solvents, and heavy metals; even a few drops of trichlorothylene in an Olympic swimming pool can trip federal standards. However, both the hangar lessor and the aircraft owner are potentially responsible for such pollution, and some hangars around the country have been empty for years, even decades, because no one wants to clean up the sites.

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One would hope that insurance would cover most liabilities. Here again, the lessor’s proposed hangar lease is likely to require you to carry liability, hull, automobile, and workers’ compensation coverage, often with minimum amounts, but none of them may cover environmental liability. To protect you, the lease should also require the hangar lessor to carry hangar keeper’s liability, workers’ compensation, and general liability coverage in appropriate amounts, and contractual indemnities and disclaimers should run both ways. 

Hangar leases are often presented as “contracts of adhesion” to which changes are strongly discouraged or “impossible,” often because the sublease from the hangar lessor supposedly must mirror its head lease with the airport authority. In truth, the leases are usually negotiable to some extent, though negotiating leverage may be at a minimum where hangar space is at a premium. Nevertheless, given the issues involved, you should ask your aviation attorneys to review any hangar lease carefully before entering into it.   

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