Misuse of Expense Sharing and Understanding Pilot Privileges
Notice Number: NOTC2238
Unauthorized 135 operations continue to be a problem nationwide. This puts the flying public in danger by diluting safety in the national airspace system and undercutting the business of legitimate operators.
This letter is a follow-on to the May 2020 Informational Pilot Letter and a continuing[LW1] effort to remind all pilots to be on the lookout for possible illegal operations.
Two ongoing pilot error issues:
- The misuse and/or misunderstanding of expense sharing between pilots and passengers.
- The apparent lack of understanding of pilot privileges and limitations versus operating rules.
Expense Sharing Reminders: (See AC- 61-142)
When compensation is exchanged for transportation, the public expects, and the regulations demand, a higher level of safety.
As a general rule, private pilots may neither act as PIC of an aircraft for compensation or hire nor act as PIC of an aircraft carrying persons or property for compensation or hire. Refer to 14 C.F.R. § 61.113(a). Section 61.113(b) through (h) contains seven exceptions to this general prohibition against private pilots acting as PIC for compensation or hire.
One commonly misapplied provision is the expense sharing exception contained in § 61.113(c), which permits a pilot to share the operating expenses of a flight with passengers provided the pilot pays at least (may not pay less) his/her pro rata share of the operating expenses of that flight. Those expenses are strictly limited to fuel, oil, airport expenditures, or rental fees. In addition, only reimbursement from the passengers is allowed.
(NOTE: The § 61.113 exceptions also apply to ATP and commercial certificate holders who are exercising private pilot privileges and also broadly applies under § 61.101 and § 61.315.)
Pilots must also remember, if they want to share expenses under § 61.113(c), they must not “hold out” to the public or a segment of the public to expense share because that would put them into the realm of common carriage—i.e., (1) the holding out of a willingness to (2) transport persons or property (3) from place to place (4) for compensation or hire. As discussed more below, common carriage changes the operating rules under which the flight must be conducted and, necessarily, triggers the higher certification and qualification requirements for pilots required by those operating rules. (See AC 120-12A).
Common Purpose Test
A major point of emphasis to keep in mind regarding expense sharing flights is the “common purpose test”. This means, that the pilot must have his or her own reason for traveling to the destination, not simply for the transportation of the passengers.
- For example: A private pilot is flying to Stillwater, Oklahoma, to visit her mother in the hospital over the weekend. Five of her friends would be coming with her to attend a football game that same weekend. She CAN legally share expenses because she has a reason to fly to Stillwater (visit her mother) not simply to transport her friends. Expanding the same scenario; if she has too many friends going to the football game that she has to make a second trip to pick up the rest, she CANNOT legally share expenses on the second trip because her purpose for flying to Stillwater was complete when she arrived the first time. The second flight was solely for the transportation of passengers.
Distinction Between Pilot Privileges and Operational Rules:
It has come to the attention of the FAA that, in general, pilots do not know or completely understand that the privileges and limitations of their certificates are separate and distinct from the operational rules required to conduct a flight, or to put it simply, pilot certification rules vs. operational rules. [LW2]
A person who holds an ATP Certificate or a commercial pilot certificate may act as PIC of an aircraft operated for compensation or hire and may carry persons or property for compensation or hire. However, simply holding a commercial pilot or ATP certificate does not end the inquiry.
A commercial pilot or ATP must meet the qualification requirements not only of part 61 but also the part under which the operation is conducted, and the operator must hold the proper operating authority. Most operations involving the carriage of persons for compensation require the operator to hold a certificate under part 119 authorizing such operations to be conducted under part 135 or 121. (See 14 C.F.R. §§ 119.1 et seq., 135.1, and 121.1, and definitions codified at § 110.2)
Therefore, in addition to ensuring compliance with the applicable pilot privileges and limitations in part 61, prior to conducting any operation a pilot must also determine what operational rules the flight is conducted under, whether the operator has the appropriate operational certification (a part 119 certificate), and whether the pilot has the requisite qualifications.
Unless a valid exception from operational certification rules applies pursuant to § 119.1(e), operators (could be the pilot under certain circumstances) cannot engage in common carriage, e.g., holding out, unless they are operating in accordance with an air carrier certificate or commercial operating certificate. (See AC 120-12A).
- An example of pilot confusion over these distinctions is as follows: During a conversation between an experienced part 135 pilot and an Aviation Safety Inspector (ASI),
Pilot: “Doesn’t part 61 (61.133) say that a commercial pilot can transport persons or property for hire?”
ASI “Yes…but what does the rest of the sentence say?” …provided the person is qualified in accordance with the applicable parts of this chapter that apply to the operation…”
ASI “Do you fly under part 61 or under an operating rule such as part 91 or part 135?”
Pilot “Ohhhh! I see” he said, “part 61 is privileges and limitations, but we also must comply with the operating rules. Got it!”
Commercial and ATP pilots should also remember that although these certificates allow them to receive compensation and operate aircraft carrying people for compensation or hire, they themselves cannot hold out the public unless they have been issued a part 119 certificate. (See Legal Interpretation from Mark Bury to Rebecca B. MacPherson (August 13, 2014)). If you have questions regarding sharing of operating expenses, holding out, or pilot certification rules versus operating rules, please contact Jetlaw.