FAA allows GA pilots to “share expenses”
Standard explicated in new AC
Both Court of Appeals and GAO affirm criteria in law and policy
The Government Accountability Organization was asked by Congress ( FAA Reauthorization Act of 2018) to review FAA’s policies on expense sharing under 14 CFR §61.113,Private pilot privileges and limitations: Pilot in command. This section is the exception to the prohibition on GA pilots operating for “compensation or hire”, further defined by the term “holding out”. These regulations and more precisely their interpretations have been a subject of debate and criticism. The volume on this controversy was raised significantly when the internet became a tool for Part 91 pilots started to use the internet to find “passengers” to “share expenses.”
These entrepreneurs were challenged by the FAA and new age ride sharers sought a Court of Appeals to attack the FAA’s interpretations. The U.S. Court of Appeals for the District of Columbia Circuit affirmed this interpretation and recognized the FAA’s “common purpose test” as a limitation on the expense-sharing provision of § 61.113(c). The policy was upheld in this case:
The FAA is a safety regulatory agency; it’s mission is to protect the public from aviation risks. In that role, its staff defines various categories of pilots, operators, manufacturers, mechanics, etc. and issues certificates in recognition that certain minimum standards are exceeded. These are technical criteria, and the FAA inspectors are experienced in assessing initial and continuing compliance.
The distinctions of § 61.113(c) involve evidence of economic transgressions. “Holding out” is a standard which is found in less precise terms than the ordinary FAA metrics. Determining relevant allowable costs is an even more nebulous analysis than calculating maximum stress on a wing spar in a TC review. However, in order to protect the general public from operations which do not meet 14 CFR Parts 121 and/or 135, there is a need for a delimiter and the information found in Advisory Circular 61-142 provides such guidance.
As requested by Congress, the analysis by the GAO,which is less invested in the legal considerations and more focused on the soundness of the policy, found that § 61.113(c) and its set of advisory materials were comprehensible and had good safety foundations.
February 25, 2021
By Dan Namowitz
The Government Accountability Office released a report to Congress on the FAA’s regulation of flight sharing—a practice that allows private pilots to share aircraft operating costs with passengers provided the pilots do not run afoul of prohibitions on engaging in “common carriage” for compensation.
The GAO—the auditing and investigative arm of Congress—interviewed AOPA and 14 other private-sector stakeholders for the report, which was mandated by the FAA Reauthorization Act of 2018.
Another mandate of the law was for the FAA to publish advisory guidance clarifying how pilots may share expenses, which resulted in the FAA publishing Advisory Circular 61-142.
Pilots have found the advisory circular “clear and useful” as a guide to staying within the regulatory guardrails for flight sharing, the GAO report said.
AOPA has long maintained that “safety first” must be the basis for flight sharing operations. When reporting on the new advisory circular in March 2020, we noted that the 12-page document presents scenarios that help pilots interpret key regulatory terms such as “sharing expenses” and “compensation,” and avoid the peril of “holding out” an offer of air transportation. (The FAA said it has “no specific rule or criteria” to determine what constitutes holding out but noted actions it would consider indications of the practice.)
The GAO report also provided examples of actions the FAA permits as expense sharing and those that it forbids as “holding out” an offer of air transportation. It also listed actions the FAA could take against pilots who violate expense sharing regulations.
An emerging concern for the FAA in recent years, the report said, has been the safety implications of proliferating internet-based sites offering to match up pilots and prospective passengers. Some of those startups have provoked enforcement letters and litigation from the regulatory agency.
“According to FAA, the public expects a higher level of safety when they have provided money or other compensation in exchange for transportation, and therefore, FAA regulates air carriers to higher levels of safety than general aviation,” the report noted. “FAA officials told us that members of the public who participate in internet-based expense-sharing flights may expect the pilots who operate these flights to meet the same safety standards as air carriers. Data we reviewed from the National Transportation Safety Board showed that while general aviation safety has improved over the past 10 years, it continues to have a significantly higher fatal accident rate than commercial aviation. For example, in 2018 general aviation flights had a fatal accident rate of about 1.02 fatal accidents per 100,000 flight hours, compared with 0.03 for commercial aviation.”
The report added that the FAA recognizes that “private pilots flying in general aviation environments cannot meet the higher levels of safety required of air carriers,” so the agency “set policies that generally limit pilots to seeking expense sharing passengers from among the group of people with whom the pilot has a pre-existing relationship.”
Until the advisory circular was published, the lack of a single source of information on FAA policies “made it difficult for pilots to develop a comprehensive understanding of the ways pilots are allowed to share expenses with passengers,” it said.
The report also summarized the positions of the 15 stakeholders interviewed on big-picture aspects of flight sharing.
Twelve of the 15 stakeholders said expense sharing allows pilots to fly more, with nine noting reductions of significant costs of aircraft ownership and operation, and seven noting increased flying opportunities that “could help attract more people to the general aviation industry.”
Although most stakeholders said the advisory circular was “clear and useful,” seven of 15—including four from expense sharing companies interviewed—disagreed that expense sharing constituted compensation.
Eight stakeholders expressed the view that pilots should not be permitted to use the internet to find expense sharing passengers; seven supported internet use.
Nine stakeholders noted concern that passenger expectations could pressure private pilots. “For example, these stakeholders said members of the public who respond to an internet solicitation for an expense sharing flight may not understand the differences between general aviation and commercial aviation. Therefore, they might not understand that the pilots of an expense-sharing flight may cancel for any reason, including that their purpose for making the flight no longer exists or the weather is worse than their comfort level—even though the weather may be good enough for the flight to be legally permissible,” the report said.
 Inspire A New Way To Fly; Best Policy Development For Plane Sharing?; Early Request For An FAA Legal Opinion About Planesharing Is Sagacious;What Can Be Learned From The Supreme Court’s Denial Of The FlyteNow V. FAA Writ Of Certiorari?; FlyteNow’s Equity Complaints Will Not Prevail Over The FAA’s Reliance On Statute And Precedent;More And More On HOLDING OUT Part 91 And Part 135
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