The rental rate published is “dry”. How is fuel handled?

When fueling locally at Prescott Regional Airport, Leighnor Aircraft LLC has an account with Cutter Aviation. Cutter will just refuel the airplane and charge the fuel purchase to our account.

If you purchase fuel away from Prescott, you will need to pay the cost of the fuel yourself, then this amount is deducted from your rental charges. Submit a fuel reimbursement form located on our website at this link:

If this form is submitted directly after your flight, the fuel purchase will be credited directly against the flight charges. If the reimbursement form is submitted other than directly after your flight, the fuel purchase charge will appear as a credit in your Flight Schedule Pro account.

Other airport charges such as landing fees are not reimbursed.

Aircraft rental rates are dry – what “dry” means is that fuel and other consumable costs are not included in the direct rental rate of the aircraft. These costs were separated out for two reasons: 1.) The costs have become highly variable in the current economy and require frequent change; 2.) Due to Arizona law, the state is requiring Leighnor Aircraft to double-tax on fuel and consumables costs.

When a cost such as fuel is included in a product or service, Arizona law requires that Transaction Privilege Tax (sales tax) be taken on the cost of that product or service – in Leighnor Aircraft’s case, aircraft rental. However, if the charge is separated out from the product or service and all taxes have been paid on that item, then no TPT tax is necessary. As all fuel purchases and consumable items are purchased with tax paid, there is no requirement to collect TPT tax for any consumable item such as fuel and oil.

Customers still pay for fuel and other consumables, it’s just a separate line item on the flight invoice instead of included in the rental rate. For each hour of flight, a line item will be added for the equivalent amount of flight consumables. If the flight was one hour, the customer is billed one hour of flight consumables. Likewise, if the flight was one and a half hours, then one and half hours of flight consumables will be billed.

This method of billing actually saves the customer and Leighnor Aircraft money. The customer saves by not paying tax on the flight consumables. For example, flight consumables charges for a 172S is currently $70.90 per hour. The TPT tax amount on this charge is $5.92 per hour which the customer is no longer paying. Leighnor Aircraft benefits by paying less money to the state of Arizona for TPT tax and the city of Prescott for airport use fees, which are calculated off of taxable sales.

Category: Rates and Financial