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In determining what is considered compensation it has been the FAA's long–standing policy to define compensation in very broad terms. For example, any reimbursement of expenses (fuel, oil, transportation, lodging, meals, etc.), if conditioned upon the pilot operating the aircraft, would constitute compensation. In addition, the building up of flight time may be compensatory in nature if the pilot does not have to pay the costs of operating the aircraft. While it could be argued that the accumulation of flight time is not always of value to the pilot involved, the FAA does not consider it appropriate to enter into a case–by–case analysis to determine whether the logging of time is of value to a particular pilot, or what the pilot's motives or intentions are on each flight.
Compensation as used in the Federal Aviation Regulations involves not only monetary payments, but also, the transfer of other items of value such as logging of flight time, etc. In the instant situation, it is clear that a monetary fee would be paid in connection with the flight. What is unique is that the fee would be paid to your service as opposed to being paid directly to the operator of the aircraft. In a case involving facts very similar to your situation, the FAA recently issued an opinion ruling that the fact that the monetary fee is paid to a third party who arranges the flight does not alter the conclusion that the flights are for compensation. The FAA, therefore, conclude that the service charge to be paid was sufficient to make flights fall within the purview of Part 121and 135 of the Federal Aviation Regulations.
Under the Federal Aviation Regulations, no person may operate an aircraft for compensation or hire unless that person holds an operating certificate issued in accordance with either Part 121, 123, 129, 135, or 137, as appropriate. Any charge, no matter how slight, is considered to be compensation. However Part 91 allows the recovery of certain expenses for the use of large aircraft (defined in Section 1.1 as weighing over 12,500 pounds) and turbojet–powered aircraft in certain specified operations, when those operations are conducted in accordance with the operating rules of Subpart D of Part 91. One of those operations is ”the carriage of company officials, employees, and guests of the company on an airplane operated under a time sharing agreement.” A time sharing agreement is defined as an arrangement whereby a person leases his airplane with flight crew to another person, and no charge is made for the flights conducted under the arrangement other than those specified in Part 91.
The Federal Aviation Administration has taken the position that the solicitation described results in an expense, which would otherwise be borne by the private pilot operator under a true ”share the expense” flight under FAR 61.118(b). The result is a flight for compensation or hire. The prohibition of FAR 61.118(a) applies
It is our coffee clubs opinion that the kind of flight you are proposing would constitute one for compensation or hire. Second I or the (coffee club) cannot make any legal opinions for the FAA. This is only one mans opinion and any legal opinon should be sent to the FAA legal office in the region you reside in. While every effort is made to ensure accuracy, Denny of Oakland makes no representation as to the accuracy of, and cannot accept any legal responsibility for any errors, omissions, miss-statements or mistakes within these writing (CYA).
Denny of Oakland
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