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NBAA CAM > Business Management > Flashcards

Business Management Flashcards

1
Q

In a synthetic lease, who retains the title to the aircraft?

(Reference: Purchase vs. Lease Considerations in Acquiring an Aircraft Used in Business
Content Area: BM2)

  • The lessor
  • The aircraft operator
  • The FAA
  • The aircraft owner
A

The Lessor

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2
Q

When payments are made by political candidates for air transportation, what taxes are applicable?

A. None political travel is considered nonprofit
B. Federal Air Transportation Excise Taxes
C. Federal IRS Use Tax
D. State and Local Sales Tax

A

Federal Air Transportation Excise Taxes

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3
Q

Direct operating costs include which of the following:

A. Aircraft refurbishment and training
B. Overhauls and restoration allowance
C. Flight expenses and training
D. Catering and insurance

A

Overhauls and restoration allowance

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4
Q

Aviation entities run most effectively when following the template of management guidelines set forth by

A

NBAA

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5
Q

The degree to which an organization achieves a stated goal

A

Effectiveness

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6
Q

Fractional ownership requires companies to have on file

A. Dry lease purchase agreement
B. LOA RVSM certification
C. 91K approval POI approval
D. Wet lease interchange agreement

A

Dry lease purchase agreement

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7
Q

Within a corporate aviation department, who should possess a knowledge and appreciation of company business in terms of cost-effectiveness, operational control and planning for future requirements?

(Reference: NBAA Management Guide
Content Area: BM2)

A

All aviation department personnel

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8
Q

A company’s wholly-owned subsidiary owns an aircraft. Another subsidiary provides aircrews, scheduling and maintenance for the aircraft, and all subsidiaries participate in paying the operational costs. Under these circumstances, what entity is BEST suited to provide regulatory interpretation regarding operational control of the aircraft?

(Reference: NBAA Management Guide
Content Area: BM2)

  • Department of Commerce
  • Local FAA FSDO
  • IRS business services
  • Corporate general counsel
A

Local FAA FSDO

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9
Q

Under Part 91 regulations, when reducing liability to the parent company by placing the aircraft in a separate company, one requirement is that:

(Content Area: BM2)

A. the operation of the aircraft is incidental to the business of the newly formed company.
B. one CEO is directly responsible for both companies.
C. the flight crew is employed by the newly formed company.
D. the placement of the aircraft is evidenced by a written purchase agreement and signed by the parent company.

A

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

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10
Q

What is an example of a Direct Operating Cost?

A. Annual insurance premium
B. Hour limited parts replacements
C. Hangar expenses
D. Depreciation

A

Hour limited parts replacements

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11
Q

An aviation department manager is in the process of deciding which of two similar aircraft to purchase. Included in the data are costs for the flight crew (same for both), airplane acquisition costs, fuel consumption per hour per airplane, maintenance costs expected for each airplane and parking/landing fees. The cost considerations relevant to the decision are:

( Reference: Practical Applications in Business Aviation Management
Content Area: BM6 )

  • all costs (e.g., taxes and delivery) that are included to determine total acquisition cost for each aircraft.
  • all costs related to the purchase and future use of the aircraft.
  • the costs that vary between alternatives.
  • any costs that do not vary among alternatives, if they are critical to the future operation of aircraft.
A

the costs that vary between alternatives.

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12
Q

Which of the following should be considered in order to determine a company’s need for business aircraft?

( Reference: Practical Applications in Business Aviation Management
Content Area: BM2 )

  • Acceptance of aircraft ownership by the company’s employees
  • Acceptance of aircraft ownership by the company’s stakeholders
  • Confidentiality, control and comparative analysis for potential use of business aircraft
  • Consideration, cost and comparative analysis for potential use of business aircraft
A

Consideration, cost and comparative analysis for potential use of business aircraft

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13
Q

After six months of flying in the company’s new aircraft, the CEO begins flying with key corporate management team members and board members. How should the aviation department manager assess the risk potential?

( Reference: Aircraft Insurance Fundamentals
Content Area: BM2 )

  • obtain recent accident reports and identify similar equipment comparisons.
  • obtain recent aviation statistics and work with an aviation attorney.
  • evaluate the magnitude of loss, possible improvements for maintenance reliability of equipment and flight standards within the department.
  • analyze the frequency of activity, the severity of the loss, the variation of future loss and the impact of loss to the corporation.
A

analyze the frequency of activity, the severity of the loss, the variation of future loss and the impact of loss to the corporation.

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14
Q

The _________ is an association representing business aviation associations around the world.

A

IBAC

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15
Q

If a particular flight is subject to federal excise tax, who is responsible for the tax?

( Reference: NBAA Federal Excise Tax Handbook
Content Area: BM2 )

  • The entity that owns the aircraft is responsible for collecting and remitting the tax
  • The entity billing the end-user customer is responsible for collecting and remitting the tax
  • The entity billing the end-user customer is responsible for collecting the tax and the entity that owns the aircraft is responsible for remitting the tax
  • The entity that is the end-user customer is responsible for collecting and remitting the tax
A

The entity billing the end-user customer is responsible for collecting and remitting the tax

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16
Q

According to ICAO Annex 6 Part II, when an aircraft is leased, the ______ is responsible for recording keeping of the aircraft.

A

Lessee

17
Q

In preparing an aviation department budget for the next fiscal year, the aviation department manager is looking at implementing a chargeback system. A chargeback rate that incorporates only direct aircraft operating costs (DOC):

( Reference: NBAA Management Guide
Content Area: BM3 )

  • will tend to encourage overall use at all levels of the company unless limited by policy.
  • is the only practical method since direct operating cost is readily measurable.
  • is prohibitive for turbojet aircraft due to high fuel consumption costs.
  • will be hard to sell to company officials since it ignores the greatest portion of aircraft costs.
A

will tend to encourage overall use at all levels of the company unless limited by policy.

18
Q

Industry best practices recommend that Noise Abatement Programs should:

(Reference: NBAA Management Guide
Content Area: BM7)

  • not apply to non-turbine aircraft.
  • supersede the manufacturer’s recommended procedures.
  • only apply to older turbojet aircraft manufactured prior to 1980.
  • include procedures that provide for safety and standardization.
A

include procedures that provide for safety and standardization.

19
Q

Which training should be part of each aviation department member’s career development plan?

A. Basic Management
B. International Operations
C. Scheduling
D. Taxation

A

Basic Management

20
Q

IS-BAO (International Standard for Business Aircraft Operations) is designed for corporate flight departments to achieve _____:

A

Highest level of safety and professionalism

21
Q

Relating to aircraft fixed cost, which of the following BEST describes book depreciation?

( Reference: NBAA Management Guide
Content Area: BM3 )

  • For equal time horizons, book depreciation must be the same as tax depreciation
  • For equal time horizons, book depreciation will usually be less than tax depreciation
  • Depreciation requires inclusion of a 25 percent residual value
  • Depreciation is considered to be a major nonrecurring expense
A

For equal time horizons, book depreciation will usually be less than tax depreciation

22
Q

Where in the corporate structure should the aviation department be placed?

( Reference: Practical Applications in Business Aviation Management
Content Area: BM1 )

  • Under the vice president of operations
  • In the logistics/transportation area
  • Under human resources
  • As high as possible in the corporate structure
A

As high as possible in the corporate structure

23
Q

According to IRS regulations, which party is responsible for payment of employment tax when a third-party firm provides the services?

A. Contract employee
B. Thirdparty firm
C. Tax exempt
D. Aircraft owner

A

Thirdparty firm

24
Q

The biggest difference between an annual operational budget and a capital budget is:

A

capital items need more justification

25
Q

The principal advantage of operating a corporate aircraft under an FAA Part 135 certificate is to permit the aircraft operator to:

( Reference: NBAA Management Guide
Content Area: BM2 )

  • avoid the applicability of the truth-in-leasing clause requirement of FAR 91.23.
  • wet lease the aircraft under a time-sharing agreement.
  • lease the aircraft to earn a return on the aircraft investment.
  • utilize large and turbine-powered multi-engine aircraft.
A

lease the aircraft to earn a return on the aircraft investment.

26
Q

Which of the following is a fixed cost?

Shop equipment expenses
Repair parts
Engine overhaul
Inspections

Reference: NBAA Management Guide
Content Area: BM3 )

A

Shop equipment expenses

27
Q

When discussing aircraft resource options, which category provides the maximum control over safety options?

A. Coowned management company
B. Whole aircraft management company
C. Whole aircraft inhouse flight department
D. Fractional ownership

A

Whole aircraft in-house flight department

28
Q

An aviation department manager seeks to positively influence the use of state aviation fuel tax funds. Which of the following is the MOST effective mechanism for making a positive impact on the legislative process?

( Reference: Management, 12th edition
Content Area: BM7 )

  • Meet with legislators as a member of a regional business aviation group
  • Send a letter to staff members of state legislators
  • Send a white paper attached to an email message to state legislators
  • Post comments regarding the use of tax funds on a social networking site
A

—> Meet with legislators as a member of a regional business aviation group

29
Q

What are the two types of depreciation that an aviation department manager should understand?

( Reference: Business and Corporate Aviation Management, by John Sheehan. McGraw-Hill, 2013
Content Area: BM3 )

  • Residual and tax
  • Tax and book
  • Capital and residual
  • Book and capital
A

Tax and book

30
Q

Which of the following BEST defines the direct operating expenses that may be charged in a FAR 91.501 Timesharing Agreement?

( Reference: Business and Corporate Aviation Management, by John Sheehan. McGraw-Hill, 2013
Content Area: BM2 )

  • Fuel, additives, travel expenses, landing fees and an additional charge of 100 percent of the fuel used
  • Fuel, travel expenses, maintenance accrual, landing fees and an additional charge of 100 percent of maintenance
  • Fuel, travel expenses, catering, landing and customs fees, maintenance accrual and an additional charge of 100 percent of the fuel used
  • Fuel, insurance, catering, travel expenses, flight planning, maintenance accrual and an additional charge of 100 percent of the fuel used
A

—> Fuel, ADDITIVES, travel expenses, landing fees and an additional charge of 100 percent of the fuel used

X. Fuel, travel expenses, maintenance accrual, landing fees and an additional charge of 100 percent of maintenance
X. Fuel, travel expenses, catering, landing and customs fees, maintenance accrual and an additional charge of 100 percent of the fuel used
X. Fuel, insurance, catering, travel expenses, flight planning, maintenance accrual and an additional charge of 100 percent of the fuel used

31
Q

In order for a 14 CFR Part 91 operator to lease a U.S. registered large civil aircraft, the lessee MUST notify, by telephone or in person, the:

( Reference: FAR Part 91.23 - Truth in Leasing
Content Area: BM2 )

  • lessor prior to the first flight in the aircraft.
  • insurer of the aircraft prior to the first flight.
  • FAA FSDO nearest the airport where the flight will originate.
  • FAA ACDO nearest the airport where the flight will originate.
A

FAA FSDO nearest the airport where the flight will originate.

32
Q

Capital expenses cover two categories:

A

Purchasing a new item
OR
Addition to an existing capital item that increases the value or adds life to the item

33
Q

Book Depreciation is based either on:

  • a salvage value of ________ percent of the original purchase cost or;
  • on a reasonable estimate of the aircraft sales value after a ________depreciation cycle.
A
  • 70 to 80 percent

* six year

34
Q

Tax depreciation depreciates the aircraft to a net value of ______.

A

zero

35
Q

The Lessor is typically responsible to collect and/or remit which of the following taxes (Select all that apply)

(AC Operating and Leasing Guide p.7)

A. Federal Excise Tax
B. State and Local Sales/Use/Excise Taxes
C. Per Gallon Fuel Tax
D. Personal Property Taxes/Ad Valorem Taxes/State Aircraft Registration Fees

A

B & D

36
Q

True or False?

If the LESSOR is found by the IRS to have retained “possession, command and control” of the aircraft (i.e. a Wet Lease), the lease payments may be subject to FET

A

True

37
Q

“Truth in Leasing” clause requirements apply to:

A. Interchange agreements
B. Time Sharing agreements
C. Dry Lease
D. all of the above

A

D. all of the above

38
Q

Which of the following is not considered a commercial enterprise by the IRS:

A. Interchange agreements
B. Time Sharing agreements
C. Joint Ownership agreements
D. Demo flights

A

C. Joint Ownership agreements

NBAA CAM (6 decks)

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