-23-
Petitioners charged varying charter rates to different
customers. Petitioners charged third parties a rate per hour
consistent with the price to charter other, similar jets.
Petitioners charged CFI a slightly lower rate, which was the
market rate when a customer booked a large number of flight-hours
per year. These competitive rates were based on an assessment of
the rates others charged to charter similar jets.
Petitioners also entered into the arrangement with Ms.
Harrah to accommodate each other on their respective jets if
their own were unavailable. The arrangement with Ms. Harrah
enabled petitioners to provide services to their third-party
charter customers on a larger jet in the event the Falcon was
unavailable and also to use a different jet for personal travel
if the Falcon was reserved for paying customers. In the event
petitioners used the Falcon for personal travel, BHJ invoiced
petitioners for the travel and petitioners paid for it. These
sums were included in BHJ’s gross receipts.
Petitioners also made changes to the jet charter activity to
try to make it profitable. Petitioners realized that the initial
jet, the Mitsubishi, was not ideal for third-party charters. The
Mitsubishi was not able to fly across the country without
stopping to refuel and was uncomfortable for passengers.
Petitioners decided to trade in the Mitsubishi for the Falcon,
which did not have these drawbacks, in the hope that the Falcon
would be more attractive to customers and increase petitioners’
third-party charter business.
Page: Previous 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 NextLast modified: May 25, 2011