Contract Pilots

Kent S. Jackson | February 20, 2020

Taking the Long View on Short Term Solutions

Contract Pilots

Taking the Long View on Short Term Solutions

With more business aircraft pilots joining the scheduled carriers, the importance and appeal of temporary contract pilots is gaining attention. What are the operational, insurance and legal considerations for these pilots and the companies that need them?

Operational

The operational issues are numerous. Does your company need a type-rated PIC, or a SIC that can get qualified under FAR 61.55 quickly? There are plenty of flight time hungry pilots giving flight instruction, waiting to hit 1,000 hours for restricted ATP or 1,500 hours for ATP. Your company will have to burn enough Jet-A to give this pilot the required three take-offs and landings to be SIC, but the SIC that you create may not ask for much in the way of pay. However, are you willing to fly into KTEB with a copilot that hasn’t experienced New York airspace? Do you have time to instruct on company flights?

PICs in the contract market often complain that they get little chance to learn an aircraft before flying it on the line. Type ratings typically cover a broad spectrum, and avionics packages can vary widely. Legal to fly does not always equal safe to fly.

Insurance

“Approved” vs. “Insured.” Many pilots believe that being an “approved” pilot under a company’s aviation insurance policy gives the pilot protection. It does not. For the insurance coverage to apply at all, the aircraft must only be flown by “approved” pilots. Therefore, if you fly for Acme Anvil Corporation, and you are an approved pilot, then Acme is covered in the case of an accident. Unless you are also insured, the insurance may pay Acme following an accident, and then sue you to collect what the insurance company just paid to Acme. This is called subrogation. You need to be approved and insured, with a waiver of subrogation: then the insurance company cannot sue you for claims that they pay to, or for Acme, and the insurance company must provide you legal counsel and pay judgments on your behalf. Policy language varies, so a pilot might be an “additional insured” a “named insured” or even an “additional named insured.” In some situations, you may also buy “non-owned aircraft” coverage, which insures you on a policy separate and apart from the company’s policy. This should be a last resort. Typically, Acme won’t get charged an additional premium for adding pilots as additional insureds.

Legal

The FAA has issued a number of Legal Interpretations regarding contract pilots. The recurring theme is the FAA’s concern that the contract pilot is part of an illegal leasing scheme designed to circumvent the charter rules. The FAA has asserted that the contract pilot must make his/her customer acknowledge responsibility for operational control:

When you fly [Customer] and [Customer’s] employees on [Customer’s Bonanza] aircraft, if [Customer] does not acknowledge that you are [Customer’s] direct employee or agent for the flight and does not acknowledge that [Customer] is liable for your actions or inactions, then [Customer] is not assuming operational control of the flight.

For legal history buffs, the operational control acknowledgment saga went like this:

  1. Acknowledgement of operational control civil liability was imposed on fractional aircraft owners pursuant to FAR 91.1013.
  2. This responsibility was extended to FAR Part 91 operators in charter-management agreements through OpSpec A008.
  3. This responsibility was extended down to the Bonanza level of FAR Part 91 operations through FAA Legal Interpretations.

Ironically, most “contract” pilots fly without any such formal agreement and those who do typically have an “independent contractor” document, which means they are NOT direct employees or agents. Usually these independent contractor contracts were not trying to conduct illegal charter, but rather simply trying to avoid tax problems for their customers. The solution is to have a contract explaining that the pilot is an agent for FAA purposes, and an independent contractor for all other purposes. Not an elegant solution by any means, but a compromise that reflects the awkward compromises that both pilots and operators must accept when utilizing contract pilot services.

The most common contract pilot complaint is pay. Not pay rate, because that is higher than ever, but getting paid at all. Contract pilots that agree to get paid after their service often find that even large, reputable companies may be very slow to pay, and may impose administrative hurdles that delay payment for weeks or even months. The adage remains true: No bucks, no Buck Rogers. Get the money up front.

This article appeared in the September, 2019 issue of Business & Commercial Aviation as a Point of Law article.