Charity

[O-Line]

The boss wants to auction off two hours in the company jet, for a Red Cross fundraiser. We're strictly a 91 operation, is this legal? References please.

 

[pilotyip]

Legal check 91.501 b. 8 for details

 

[avbug]

Ah...better read 91.501(b) a little more closely.

Some of the highlights...

(b) Operations that may be conducted under the rules in this subpart instead of those in parts 121, 129, 135, and 137 of this chapter when common carriage is not involved, include -

(5) Carriage of officials, employees, guests, and property of a company on an airplane operated by that company, or the parent or a subsidiary of the company or a subsidiary of the parent, when the carriage is within the scope of, and incidental to, the business of the company (other than transportation by air) and no charge, assessment or fee is made for the carriage in excess of the cost of owning, operating, and maintaining the airplane, except that no charge of any kind may be made for the carriage of a guest of a company, when the carriage is not within the scope of, and incidental to, the business of that company;

(8) The carriage on an airplane of an athletic team, sports group, choral group, or similar group having a common purpose or objective when there is no charge, assessment, or fee of any kind made by any person for that carriage; and

Skip down to Part D of that paragraph, and read:

(d) The following may be charged, as expenses of a specific flight, for transportation as authorized by paragraphs (b)(3) and (7) and (c)(1) of this section:
(1) Fuel, oil, lubricants, and other additives.
(2) Travel expenses of the crew, including food, lodging, and ground transportation.
(3) Hangar and tie-down costs away from the aircraft's base of operation.
(4) Insurance obtained for the specific flight.
(5) Landing fees, airport taxes, and similar assessments.
(6) Customs, foreign permit, and similar fees directly related to the flight.
(7) In flight food and beverages.
(8) Passenger ground transportation.
(9) Flight planning and weather contract services.
(10) An additional charge equal to 100 percent of the expenses listed in paragraph (d)(1) of this section.

Even those charges are only applicable to demonstration flights to prospective customers (when no charge is made, except those charges), and the carriage of property in furtherance of a business (again, when no charge is made except those charges outlined above).

The question here is w(h)eather a private operator may auction off time in a jet, for charity. The person donating the money to charity pays the charity, and the owner doesn't take the money. The operator then attempts to claim that as he or she received no benifits from the flight, then no charge was made, and therefore the flight is legal.

However, the customer has paid for the privilege of making the flight, regardless of the entity to whom the money was paid.

Not enough information has been provided to answer the question. A key issue is where the flight is going. Is it returning to the same point of departure, or is it making transit between two points, and thus transporting persons or property from one point to another? Sounds dangerously like an illegal part 135 operation, if that's the case.

 

[avbug]

While the codification (numbering process) of the regulations cited here has changed, the position of the Administrator has not:

July 2, 1987
Arthur W. Brock
Dear Mr. Brock:

Re: Letters, May 12, 1987 and June 3, 1987

This letter is in reply to your letter dated June 3, 1987. This letter [illegible] interpretation as to the use of a Beechcraft Bonanza, owned by yourself and your wife in partnership (Dream Kraft) to carry the winners of a raffle to certain locations in Southern California. We have previously expressed an opinion that the carriage of the winners of the raffle constituted an operation for compensation or hire, and, although it may not be common carriage because of the limited solicitation to the public, Part [illegible] of the Federal Aviation Regulations applied (Letter, dated May 26, 1987).

Your letter of June 3, 1987, emphasizes that the far greater portion of the [illegible] of the aircraft are borne by you as the operator. The proceeds of the raffle are set off only against the fuel's costs. If [illegible] are [illegible] through the raffle, that portion goes to [illegible] which is the sole purpose of the raffle. Also, [illegible] itself and the partnership/company, is, at [illegible], probably incidental. The flight does not further any business purpose of your company. The company does not represent to the prospective raffle [illegible] that the flight is officially sponsored by the company. Finally, based on informal discussion with Mr. Wittry of this office, the flight is a "one-shot" operation, that is, limited to the Christmas employee charity project, rather than an ongoing sequence of raffles, with numerous flights throughout the year. It is therefore unrealistic to describe the operation as a commercial flight to which Part 135 would apply. Finally, as a general aviation flight under Part 91 of the regulations, Section 61.118(b) applies.

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.

The opinions expressed in our letter of May 26, 1987, are reaffirmed.

Sincerely,

DeWITTE T. LAWSON, JR.
Regional Counsel
AGC-220 (with prior correspondence)


Here,the FAA Regional Counsel has responded with a legal interpretation regarding the position on a charity flight. In this case, it relates to private pilots, but the position that the flight operation described still represents compensation or hire is relevant.

If the reply to the operation in question in this thread, involving a chartity donation flight in the corporate jet is that the jet will be donated with no expectation of reimbursement of any kind, the question then remains w(h)eather the receipt of money or compensation by the benefactor of the charity auction constitutes part of the hire process. Indeed, w(h)eather or not the company sees any of the money or not is not particularly relevant; the passenger or person donating the money has paid the money with expectation of receiving the flight; to whom that person paid the money isn't particularly relevant in respect of considering it compensatory or a for-hire operation. It may not be common carriage in the general sense, but the operator is still carrying a paying passenger.

To put that in perspective, imagine a private pilot who solicits a passenger, and then says, "I'll fly you for free, just give your money to your favorite charity."

Is your company involved in a drug screening program?

Does the auction account for any compensation for fuel?

Will tax exemption be claimed on the donated flight hours?

Is the flight landing at a point other than the point of departure?

 

[avbug]

December 7, 1990 (#1)

INFORMATION: FAR Section 61.118(d) Charitable Organization Exception
Manager, Certification Law Branch, AGC-240
Assistant Chief Counsel, ANM-7
THRU: Deputy Assistant Chief Counsel, ANM-7A

This is in reference to your telephone conversation with James Stein, Staff Attorney, AGC-240, in which you requested an interpretation concerning the "charitable organization" exception of FAR Section 61.118(d).

The facts as you outlined them in your conversation are as follows. A charitable organization in Oregon has contacted the Portland FSDO with a proposal to offer, as part of a fly-in airshow, flights to the public. The private pilots involved would donate their time, and it is your understanding that they would also donate the use of their aircrafts. (As noted below, it would be permissible for the charitable organization to pay for or supply the fuel and oil consumed during the flight.) The charity would charge the public (say, $10.00) for the flights and would retain the proceeds for its charitable purposes. You asked whether such an operation would be acceptable under FAR Section 61.118, in particular the exception in Section 61.118(d), which provides that a private pilot may act as pilot in command of an aircraft used in a passenger carrying airlift sponsored by a charitable organization, and for which the passengers make a donation to the organization, if certain specified conditions are satisfied.

In our view such an operation, which would otherwise be beyond the privileges of a private pilot certificate, would be permissible under Section 61.118(d) provided that the airlift is conducted in compliance with all of Section 61.118(d)'s requirements.

The exception found at 61.118(d) was first published in 26 FR 7123, (August 9, 1961) as CAR Section 43.60(c) (enclosed). The preamble indicates that this rule was intended to codify a past practice that had been allowed by exemption, and to standardize the conditions that should apply to permissible charity airlifts.

In the preamble the FAA noted:

"For many years charitable organizations used the "Charity Airlift" as a means of raising funds. In such an airlift, the charitable organization offered an airplane ride in exchange for a personal donation. Many of the rides were given in aircraft furnished and operated by private pilots who provided their services without compensation. The money donated by the passengers was retained by the charitable organization, and no payment for the service rendered was made to the pilot or aircraft owner; however, in some cases the organization paid for or supplied the fuel and oil consumed during the flights."

This description sounds similar to the airlift you described in your phone conversation. The preamble indicates that the FAA intended to permit private pilots to participate in such operations, provided all the conditions of Section 61.118(d) were satisfied. Provided that they are met in the airlift under consideration by the Portland FSDO, there would be no violation of Section 61.118.

(In drafting this interpretation, we have assumed that the airlift does not involved point-to-point transportation of persons or property, and thus does not implicate the requirements of Part 135 of the FAR.)

Michael E. Chase

 

[avbug]

May 26, 1987

Arthur W. Brock
Dear Mr. Brock:
Re: Letter, May 12, 1987

This letter is in reply to your letter dated May 12, 1987, You describe a proposed flight as a raffle prize for a charitable endeavor. The aircraft is a Beechcraft Bonanza owned by a partnership. The partnership consists of your wife and yourself. The aircraft is properly maintained. You are the exclusive pilot of the aircraft, but your class 2 medical certificate privileges have lapsed. The certificate, class 3 medical privileges, remain current.

Your company raises money by various raffles, bake sales and donations for a needy family at Christmas time. The company is not itself a charitable organization. The fundraising is entirely voluntary and the activity is not officially sponsored by the company.

The flight is to be a prize from a raffle. It will consist of a day or half a day's outing, probably including lunch at Big Bear Airport or Santa Barbara and return to Torrance Airport. There will be no compensation for the flight except that the fuel and the luncheons will be paid from the collected funds. You will donate all other expenses of operating the airplane and your time. All other raffle costs in excess of fuel and luncheon costs will be donated to the needy family.

The raffle organization will, of course, represent to the prospective ticket purchasers that the flight is the prize, or one of the prizes for the winner.
Section 61.118(a) of the Federal Aviation Regulations provides:

(a) A private pilot may, for compensation or hire, act as pilot in command of an aircraft in connection with any business or employment if the flight is only incidental to that business or employment and the aircraft does not carry passengers or property for compensation or hire.

As outlined above, it is our opinion that compensation for the flight exists in two forms: (1) the direct reimbursement for fuel, and (2) the acquisition of pilot in command time, which can be used to demonstrate aeronautical experience eligibility for an airman certificate. With respect to the latter form of compensation, the agency has consistently held that a private pilot does not share the expenses of a flight with his passengers by "donating" his pilot services, so as to fall within FAR 61.118(b). Also, the charitable cause is not incidental to the business of the pilot, that is, yourself, as directly related to the business enterprise, as required by FAR 61.118(a).

Additionally, the flight, as the direct inducement for the raffle solicitation, is a charter type flight. The length of the flight removes it from the exception provided in the applicability statement at FAR 135.1(b)(2). Even if the solicitation is conceded to be of such limited scope as to not constitute a holding out to the public so as to constitute a flight in air transportation, that is, common carriage, a promise is made to the buyers of the raffle tickets to provide a service to the winners. The service has value. In short, the flight is a flight in air commerce of persons for compensation or hire as a commercial operator (not an air carrier) in a small aircraft. FAR 135.1(a)(3) applies. A Part 135 certificate is required.

Sincerely,
DeWITTE T. LAWSON, JR.
Regional Counsel

 

[midlifeflyer]

I agree with Avbug's analysis. The basic rule here is that if the passenger pays =anything= to =anyone= it's a commercial operation, unless there is a specific exemption for the activity. So, the passenger who buys the flight at auction is paying for it, although not necessarily to the pilot or operator of the aircraft.

Here's two "buts":

One exemption is the "charitable airlift" in 91.113(d).The language seems to apply to group activities, like those at an airport fly-in and does not seem to fit the auctioned flight. =But= I have heard of people (whose opinion I respect although I disagree with them) claiming that they have done auction flights following the 91.113 process.

Another is an argument that the joint desire to benefit the charity is a "common purpose" so that, to the extent that the auction winner is paying only his proportionate share of the flight it comes under 91.113(c). Problem is that FAA Legal has already opined that taking around a political candidate for a share of expenses is not a "common purpose" because the pilot is himself not running for office.

On the other hand, there is precedent for the FAA to make policy exemptions for charitable purposes. Angel Flight technically violates the commercial operation rules but the FAA permits it to operate under a "policy" exemption.

If your company operates a jet it can probably afford legal counsel to explore these options instead of relying on questionable advice on an online forum.

 

[O-Line]

Is your company involved in a drug screening program?

Does the auction account for any compensation for fuel?

Will tax exemption be claimed on the donated flight hours?

Is the flight landing at a point other than the point of departure?

1. Yes we are drug tested.
2. No compensation of any kind to the flight department.
3. Possibly, how the CFO handles that, I don't know, I'm only worried about the FAR's, the CFO handles the IRS issues.

To clarify, the CEO is on the local Red Cross Board, and they have an annual fundraiser, instead of having the company donate it's usual amount, he thought it might be better to auction off a round trip to New York for dinner.

I've seen some of these interpretations before, and it seems that most involve 61.118 (private pilot stuff). I don't believe most of these apply, since we're all ATP's.

If this kind of auction is illegal, how about the Corporate Angel Network, or the Citation Special Olympic Airlift?

 

[avbug]

Is corporate angel network auctioning off flights? Does the citation special olympic operation involve compensation or hire in any form, to transport persons or property from one point to another? I know nothing about those operations, but I suspect that they aren't auctioning off free rides, nor are they taking in compensation outside of what has already been discussed.

2. No compensation of any kind to the flight department.

Not relevant to the question at hand. W(h)eather or not your flight department receives compensation isn't material to the issue. The passenger is paying someone, and as noted in the last posted legal interpretation: "Even if the solicitation is conceded to be of such limited scope as to not constitute a holding out to the public so as to constitute a flight in air transportation, that is, common carriage, a promise is made to the buyers of the raffle tickets to provide a service to the winners. The service has value. In short, the flight is a flight in air commerce of persons for compensation or hire as a commercial operator (not an air carrier) in a small aircraft. FAR 135.1(a)(3) applies. A Part 135 certificate is required."

Note that the paragraph says nothing about private pilots. Yes, the legal interpretations posted above dealt with private pilot privileges, but the larger and more relevant issue is how flying a charity operation affects one's legal relationship to Part 135.

W(h)eather or not you hold an ATP certificate is irrelevant to the matter at hand.

One exemption is the "charitable airlift" in 91.113(d).

Right-of-way rules: except water operations?

3. Possibly, how the CFO handles that, I don't know, I'm only worried about the FAR's, the CFO handles the IRS issues.

How the CFO handles these issues affects how you handle the regulation too, doesn't it? After all, if the company is seeking tax benifits from this flight, is it not a form of compensation for transporting persons or property from one point to another, and therefore subject to 14 CFR 135? Think about it.

 

[Say Again Over]

Don't forget the big "L". LIABILITY.