Transporting customers under Part 91

[RichardFitzwell]

Here's the scenerio...

I am flying Part 135 in a King Air for a company with a fairly large maintenance base. This company frequently has customers fly their aircraft in for maintenance that requires the aircraft to be left for extended periods of time. Often the flight crew need to be transported home while the work is being performed.

Here's the question...can we use a Cessna owned by the company to transport maintenance customers home AT OPERATING COST under part 91? If not, we will need to put the Cessna on the 135 cert. but it doesn't meet icing requirements for IFR so it would be VFR 135 only.

I have read 61.113(c)-ref. "A private pilot may not pay less than the pro rata share of the operating expenses of a flight with passengers, provided the expenses involve only fuel, oil, airport expenditures, or rental fees." and I was told 61.113 applies to any certificate, not just a private pilot.

I have also done a search on this board but haven't found anything directly related to this question. Thanks for your answers.

 

[TurboS7]

The flying is incidental to the business at hand, I would do it Part 91, the transportation cost should be worked into the maintenance bill so that it does not appear that you are charging for the transportation.

 

[Timebuilder]

Recently, I saw a discussion involving a part 91 operation where a pilot and some skydivers were sharing equal costs of the aircraft. The FAA said that there was a lack of, are you ready for this?..."common purpose". In other words, the purpose of the skydivers was to get to altitude and get out, and the purpose of the pilot was to get to altitude and then fly back to the airport.

I guess if the pilot had gotten out, too, then they would have been ok with it.

It sounds like the purpose here is for a crew to get home, and your pilot's purpose is to fly the airplane back to your base.

If the crew flys for free, I think you are fine.

 

[SierraPilot]

FAR 119.1 (e) Except for operations when common carriage is not involved conducted with airplanes having a passenger-seat configuration of 20 seats or more, excluding any required crewmember seat, or a payload capacity of 6,000 pounds or more, this part does not apply to --

(6) Nonstop flights conducted within a 25-statute-mile radius of the airport of takeoff carrying persons or objects for the purpose of conducting intentional parachute operations..

 

[Timebuilder]

If you want to read the story for yourself, go here:

http://www.propilot.com/doc/logging2.html

Scroll down to the bottom of the page to #5. Get comfy.

 

[avbug]

Sierrapilot, Timebuilder isn't talking about anything from Part 119, and never made reference to that part. It's a Part 91/105 operation, and the issue was splitting costs between jumpers and the pilot.

Setting aside the ridiculousness of a professional pilot splitting costs with passengers, one can only assume that this was a private pilot trying to skate under the regulation. (Sorry, Timebuilder. Didn't take the time to follow the link). That's a whole different discussion.

In this case, we're talking about reimbursable costs for the transportation of passengers and/or property. It has been the policy of the FAA to permit the carriage of [prospective] customers on [a corporation's] aircraft without holding a commercial operator certificate, so long as NO charge is made for the transportation and common carriage is not involved.

Taken from a FAA Legal Interpretation dated 04-19-1993, the FAA Chief Legal Counsel quoted the preamble to Amendment 91-101, 37 FR 14758, July 25, 1972. The preamble explained certain aspects of the new Subpart D of Part 91, now designated Subpart F. In part, it said,

It is our opinion that this policy should be continued without change. Accordingly, Sec. 91.181(b)(9) of the rule as adopted herein expressly permits the carriage of prospective customers under the rules of Subpart D. However, no charge of any kind may be made for that carriage, regardless of whether the charge represents the customer's pro rata operating expenses for the flight, or a loss. To permit a charge of any kind for the carriage of customers would require constant surveillance and time consuming investigations by FAA inspectors to determine if the charge represents an amount that is permitted under the regulations, or is in fact considered compensation as that term is used in the definition of a commercial operator.

Taken from a different legal interpretation dated 12-09-1992, we read,

A pilot flying under Part 91 may not carry persons or property in air commerce for compensation or hire. This means that the aircraft owner may only transport passengers and property that pertain to the owner or the owner's business, as long as that business is not air transportation (See FAR 91.501). One example of this Part 91 operation is the corporate pilot flying a company airplane carrying company property and passengers. The corporate pilot is paid for his work, and therefore must have a commercial pilot certificate. Another example is pilot service, where a commercial pilot is paid by an airplane owner to fly the airplane for the owner. As long as there is no "carriage in air commerce of persons or property for compensation or hire", the commercial pilot can operate under Part 91 and be paid for his services.

See the next post for more information...

 

[avbug]

Continuing, the situation is addressed very well in an interpretation dated 06-10-1992. In this letter, reference is made frequently 14 CFR 91.501, which applies to large and turbojet powered multi engine airplanes. While in this thread we're discussing transportation of the passengers on a Cessna (presumably a light single engine airplane?), the stance of the administrator and the rule still applies.

This interpretation is too long to print entirely on one post, and I have had to split the post to make it fit. Apologies for the length, but it does address the question. To clarify, again, no reimbursement, even for basic operating costs, is acceptable in this case.

June 10, 1992

Dear Mr. Willkie:

Thank you for your letter of July 11, 1991, requesting further clarification of the rules regarding payments to corporations for transportation on private airplanes. We apologize for the delay in responding to your letter.

Your letter asks a number of questions. Some of the answers will tend to overlap, but we will try to address each issue. Our function is to interpret the Federal Aviation Regulations (FAR). While we do not pass on the ethical aspects of the situations presented, we do note that certain ethical guidance in this area does exist, such as the Ethics Reform Act and the implementing GSA regulations, which you cite in your letter.

All of the questions you ask concern Subpart F, section 91.501, of the FAR. This subpart applies to the operation of large and of turbojet powered multiengine civil airplanes. Some operators of small airplanes may also use this section by means of an exemption granted to members of the National Business Aircraft Association (NBAA) and certain individuals.

Under FAR 91.501(a) the rules of Subpart F, including the expense recoupment provisions, do not apply to the described airplanes if they are required to be operated under the certification rules of Parts 121, 125, 129, 135, and 137 of Subchapter G of the FAR. FAR 91.501 is aimed primarily at the corporate airplane operator who wishes to conduct company business without following the more stringent safety and certification requirements of the FAR that apply to commercial operators responsible for transporting the public.

FAR 91.501(b)(5) allows a company to carry only its employees, property, officials, and guests without being certified as a commercial operator, as long as no reimbursement is made to the company for travel that is not within the scope of, and incidental to, the business of the company. Reimbursement to the company is limited to actual operating expenses, and no profit is contemplated.

FAR 91.501(b)(5) applies because your questions raise issues of reimbursement to a corporation for carriage of a government official as a guest on a corporate aircraft.

FAR 91.501(b)(5), in pertinent part, allows:

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.

The word "officials" in the first line of the regulation means company officials and not government officials. A government official can only be classified as a guest in FAR 91.501(b)(5). The first test, therefore, is whether the carriage of a government official as a guest reasonably can be considered to be "within the scope of, and incidental to, the business of the company." If so, the company may be reimbursed, not to exceed the cost of owning, operating, and maintaining the airplane.

If the travel of the government official as a guest aboard a corporate aircraft is not "within the scope of, and incidental to, the business of the company," receipt by the company of any remuneration, compensation or benefit for the carriage triggers the requirement to hold an appropriate FAA operating certificate.

In your first question you ask, "... If a private company leases or charters an aircraft, may it accept reimbursements for air transportation in situations where a company owning the airplane may not, or are the reimbursement rules identical for travel on corporate-owned and corporate-leased aircraft?"

Because of the context in which you mention "lease or charter," we assume that you describe the situation where a company charters an airplane from an operator who holds an appropriate FAA operating certificate and who supplies the airplane and crew for one trip. The company would assume no control or interest as operator of the airplane. If the cost of the charter is divided equally and paid to a certificated commercial operator, the sharing of expenses would not be different from dividing the cost of a cab to the airport. Because the flight is conducted by an operator holding an FAA operating certificate, it is taken out of the FAR 91.501 context.

Your second question, with subparts, concerns reimbursements to companies for travel related to company business. You give a number of scenarios and ask which events are considered travel for which reimbursements may be accepted. Please understand that for reimbursements to be allowed, there would have to be a finding that the carriage is "within the scope of, and incidental to, the business of the company," for carriage of Department of Commerce officials.

In fact situation (a) you ask about travel to a company shareholders meeting, at which Government officials will participate.

To answer the question it is necessary to make assumptions because we do not have any facts about the company or its business. We assume that the participation of the officials in the shareholders meeting is "within the scope of, and incidental to, the business of the company."

In that case, reimbursement by the Government to the company under the standard set in FAR 91.501(b)(5) is permitted.

In part (b) of question 2, you ask about travel to a company directors or officers meeting, at which Government officials will participate. Again, the dearth of facts provided forces us to make the same assumption that we did in our response to part (a). With this assumption, the travel of government officials is reimbursable to the company under FAR 91.501(b)(5).

As for the remaining parts of question 2, we feel that we would have to make too many more assumptions to answer these questions. We need more circumstances, including the business of the company, the agency the government official represents, the nexus between the government official and the business of the company, and whether the company would be making the trip regardless of the presence of the government officials. Without this, we can advise you only that each company would bear the burden of showing how the carriage of Department of Commerce officials, or any other guest, for that matter, is "within the scope of, and incidental to, the business of the company."

To be continued...

 

[avbug]

Continued and ending...

One way to make that showing would be a Board of Directors' resolution and opinion of the company's general counsel which fully explains why that carriage is "within the scope of, and incidental to, the business of the company." Another would be correspondence between the Commerce Department and the company explaining the purpose of the trip. Each scenario involves a situation where the travel of the government official appears, at most, to be tangentially related to the business of the company. You should be aware that the FAA has adopted a strict interpretation of FAR 91.501. This provision represents an exception to certification requirements for commercial operators and air carriers. One of the FAA's principal safety policies is that a person who transports another for compensation or hire must maintain a high level of safety by obtaining and maintaining an appropriate FAA operating certificate. To serve the public interest in carrying out this policy, we resolve any doubt about whether FAR 91.501 applies in favor of requiring the operator to be certificated under one of the Parts requiring an operating certificate, with their stricter safety requirements.

This is how we would view each of the remaining scenarios you have presented if we receive more facts. At this time, however, we can make several observations. It is not enough alone for the Government and the company to be both separately interested in the same thing, or to be going to the same destination, or both, for the carriage of a guest to be considered "within the scope of, and incidental to, the business of the company." Mutual interest is not enough. The government's interest may well run counter to the interests of the company. Nor does a desire on the part of the government to reimburse for transportation, to avoid the appearance of impropriety, mean that carriage by the company is automatically "within the scope of, and incidental to, the business of the company," so that payment can be accepted.

The third question is "May a company accept reimbursement for travel unrelated to company business?" We assume the persons offering reimbursement are government officials or other persons who are carried as guests on corporate aircraft. As explained earlier, the answer is that acceptance of reimbursement would, under FAR 91.501(b)(5), require that the operator be certificated.

In the fourth question you ask, "Do the restrictions that apply to a non-airline company also apply to a company that operates a hotel, resort, or similar tourism-related activity and that provides air transportation to its facilities as part of its general operations?" The only difference in application of the restrictions would be if the resort company were certificated under some part of the FAR, such as Part 121, Part 125, or Part 135. That certification would remove the operation from the provisions of FAR 91.501.

Provision of air transportation by a hotel or resort to its facilities as part of its general operations, even at no charge, has been held to be common carriage. Las Vegas Hacienda v. CAB, 298 F.2d 430 (9th Cir. 1962) cert. denied 360 U.S. 851 (1962).

In the fifth question you ask, "Do the restrictions discussed above also apply if the travel includes transportation to or from a foreign destination, or do special rules apply?" The FAA jurisdiction extends to operation of United States registered aircraft in foreign countries, and the FAR apply equally to foreign flights as to domestic flights, with certain exceptions not relevant to this discussion, such as foreign air traffic control rules.

In the sixth question you ask about personal travel. "Although the primary purpose of this letter concerns reimbursements by the Commerce Department, there may be situations in which we determine that acceptance of transportation on a corporate airplane for personal travel should be declined. Do the same rules apply for reimbursements by an individual as apply for reimbursements by a Federal agency?" The answer is yes.

In your last question you ask about calculations for reimbursements: "If reimbursements are permitted, please describe the method for calculating appropriate reimbursements and the items which should be included in the calculations. For example, are all relevant costs added (fuel, landing fees, overhead) and then divided by the number of persons flying? Can we continue to use first class commercial airline rates or are we required to use actual costs?"

FAR 91.501(b)(5) allows reimbursement not to exceed the cost of owning, operating, and maintaining the airplane. Certainly the fuel, landing fees and overhead mentioned in the question are properly included. Most operators have an hourly cost figure for operation of their airplane that includes many items that fall into the broad categories given in the FAR. Because these categories are so broad, we have not made a comprehensive list of what items can and cannot be included; it is more a question of what items a diligent airplane owner can become aware of and reasonably include. The FAR makes no mention of first class airline rates as a measure of reimbursement, and only allows the owner payment for the cost of owning, operating, and maintaining the airplane.

Note that the FAR does not prevent an airplane owner from accepting less reimbursement, it only prohibits the owner from accepting more than the cost of airplane ownership, operation, and maintenance.

It is likely that any savings that result from paying the operator's costs rather than the fare applicable to a commercial flight, in situations where payment is permitted, would be viewed as a gift to the agency, or the individual, as the case may be. In the case of official travel, unless the agency has appropriate authority to accept them, such gifts could be viewed as unauthorized augmentations of appropriations. If the cost of traveling on corporate planes exceeds the GSA contract price for the trip, the traveler may not get full reimbursement.

The division of costs, whether on a per passenger basis, per group, or some other basis, is more a consideration of the government's travel reimbursement limits. The airplane owner should not be concerned with whether reimbursement for costs comes from one or all government officials on board the aircraft, as long as the total is correct. To divide costs equally among passengers seems most equitable, but the regulation does not address this issue. The airplane owner cannot make a profit, but can only recover costs. Also note that the list of ten recoverable costs given in FAR 91.501(d) does not apply to reimbursement given for carriage of a guest under FAR 91.501(b)(5).

Reimbursement is limited to the cost of owning, operating, and maintaining the airplane.

We hope this information is helpful.

Sincerely,

Kenneth P. Quinn
Chief Counsel

 

[LrBob]

Question-can a owner of a turbo-jet legally rent his airplane to his buddies and charge them for it

 

[avbug]

You're going to have to get a whole lot more specific than that, Bob. Not enough information is provided.

 

[RichardFitzwell]

Thanks for all the responses...

Avbug,

It sounds like from what you posted, the only way we can legally fly customers back to their home base in our Cessna (BTW, its a C210) is if we only get reimbursed for the operating cost (fuel, insurance, landing fees, etc.) of the aircraft. In addition, this reimbursement must be shown as being divided equally among the total number of passengers and the pilot.

For example, if the C210 has a direct operating cost of $48/hour and one pilot flys three passengers to their destination in a one hour flight. The company can only be reimbursed $36 from the customers (The other $12 would have to be paid for by the pilot). The cost of the empty return flight could not be recouped by the company in anyway, except for being paid for 100% by the pilot. Does that sound right?

On the otherhand, flying to pick up parts from other maintenance facilities and billing the travel charges to the customer would be O.K. because it falls, "within the scope of, and incidental to, the business of the company."

I wonder if this could be any more complicated?

 

[avbug]

It sounds like from what you posted, the only way we can legally fly customers back to their home base in our Cessna (BTW, its a C210) is if we only get reimbursed for the operating cost (fuel, insurance, landing fees, etc.) of the aircraft

You can't get reimbursed for a single dime. Read the legal interpretations again, because these will be the foundation for enforcement action against the pilot and company, in the event one is caught.

At issue is weather your flight is incidental to your business. It is not. As an example, if you were flying from your home base to the same destination as the customer, to purchase parts, you could carry the customer; the carriage is incidental to the purpose of the trip. If you simply fly there for the purpose of returning the customer, that becomes your business, and receiving money in return is compensation.

For your part as pilot, weather money changes hands isn't relevant, as the FAA considers the logging of flight time as compensation. Conceivably, enforcement action could be promulgated against you, and the company might go untouched.


These are excerpts from the interps given thus far:

One of the FAA's principal safety policies is that a person who transports another for compensation or hire must maintain a high level of safety by obtaining and maintaining an appropriate FAA operating certificate.

Accepting reimbursement in whole, or in part, is compensation. By transporting the passengers to another location for compensation, a Part 135 certificate is required.

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.

However, no charge of any kind may be made for that carriage, regardless of whether the charge represents the customer's pro rata operating expenses for the flight, or a loss.

To permit a charge of any kind for the carriage of customers would require constant surveillance and time consuming investigations by FAA inspectors to determine if the charge represents an amount that is permitted under the regulations, or is in fact considered compensation as that term is used in the definition of a commercial operator.

Especially as you are now operating under Part 135, there is no good reason why you shouldn't put this airplane on the certificate and conduct the operations under that part. Your primary concern, it appears, is icing.

The provision with which you must deal is 135.227(c)(1), which prohibits flight under IFR into known or forecast light or moderate icing conditions without appropriate ice protection.

The problem for you is that the same thing applies to VFR flight, under 135.227(c)(2). In other words, it makes no difference if the flight is IFR or VFR. You need to stay out of the ice, which is a good policy in general, and certainly a good policy in a light single engine airplane. In fact, staying out of the clouds is a good policy in a single engine airplane.

You may operate the airplane under IFR under Part 135...just don't go into known or forecast ice.

 

[DitchDriver]

The provision with which you must deal is 135.227(c)(1), which prohibits flight under IFR into known or forecast light or moderate icing conditions without appropriate ice protection.

The problem for you is that the same thing applies to VFR flight, under 135.227(c)(2). In other words, it makes no difference if the flight is IFR or VFR. You need to stay out of the ice, which is a good policy in general, and certainly a good policy in a light single engine airplane. In fact, staying out of the clouds is a good policy in a single engine airplane.

You may operate the airplane under IFR under Part 135...just don't go into known or forecast ice.

Unless by "Cessna" RichardFitzwell means a Caravan, ice will be the last concern. You can pretty much forget about running 135 IFR passenger service in a single engine plane - unless it's a Caravan or a PC-12 (?)

See 135.163(f), (h) about the dual alternators and vacuum pumps.

Also part 135 IFR with passengers will require SIC or an autopilot.

 

[Toy Soldier]

Avbug

What do you have in your library that covers pilots flying charity, IE; church pastors on trips using:

1. Their own plane
2. Rented plane
3. Pastor paying expenses, gas, whatever
4. Etc...
5. Private versus commercial ticket, etc.
6. Any combination of scenerios that you can think of.


Thanx.....

 

[avbug]

Toysoldier,

Are you asking about a pastor flying him or herself to a destination, a commercial pilot flying a pastor for compensation or hire in an airplane the pastor provides, a pastor flying congregation members for compensation, a pastor flying congregation members for free...? Some specifics?

Ditchdriver, you're correct, to a point. Redundant installations are available in the Cessna 210. I've operated them as such under Parts 91 and 135, with dual vacum (though backup independant instrument electrical is also available) and electrical redundancy. Yes, a single Cessna can be flown IFR under Part 135, so long as it meets the requirements of that part.

I would reiterate the point that regardless of weather the airlane is appropriately equipped, single work in ice or in weather isn't necessarily a wise thing to do, circumstance excepting.