Private Pilot Reimbursement

Ron Levy said:
You keep talking about "private benefit." The Congress and the FAA are pretty clear that when you take money from others in return for providing air transportation to others, that is no longer a case of "private benefit" -- that is now a commercial transaction unless you stay within some very narrow exceptions. We may debate whether or not the conduct proscribed in the Mangiamele letter really does fall outside the exceptions in 61.113 (and personally, I think it does not, and that letter's logic is flawed), but to suggest that taking money in return for providing air transportation to others is merely using your plane for your "private benefit" is disingenuous. The fact is that those others are now benefitting from your use of your plane, and that means the benefit is no longer "private," i.e., yours alone.
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If it is not a public benefit, it is private. If I want to use my private property (airplane) to further my business or the business of my employer, why should I be denied the right to do so? I'm not holding out to the public nor am I employed as a professional pilot. I'm not making a profit on the operation, only reimbursement of the expenses defined by the regulations, which is allowed now but only if I do not carry passengers or property. It's an entirely private operation, using my private property, for private benefit. The current case law surrounding 61.113 impinges arbitrarily on my private property rights.
 
DrMack said:
If it is not a public benefit, it is private. If I want to use my private property (airplane) to further my business or the business of my employer, why should I be denied the right to do so? I'm not holding out to the public nor am I employed as a professional pilot. I'm not making a profit on the operation, only reimbursement of the expenses defined by the regulations, which is allowed now but only if I do not carry passengers or property. It's an entirely private operation, using my private property, for private benefit. The current case law surrounding 61.113 impinges arbitrarily on my private property rights.
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I was right -- you don't understand the meaning and limitations of the term "private benefit". :sigh: Here's some reading:
http://www.irs.gov/pub/irs-tege/eotopich01.pdf
http://www.irs.gov/pub/irs-tege/eotopicc90.pdf
http://www.nonprofitlawreport.com/guide/private-benefit/

You'll see that the term has absolutely nothing to do with pilots sharing expenses with their passengers.
 
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While I don't necessarily agree with it, I think. I understand DrMack's point. He's not talking private vs public benefit in the IRS sense. It's not a fair point to apply some other agency's specialized use of a term to an unrelated subject.

The FAA has long made a distinction between public and private carriage based upon the relevant market and the application of centuries old tests like "holding out" as a way of distinguishing the two. I think that's the kind of "public" vs "private" distinction DrMack is making and trying to fit into the 61.113 model.

The only benefit (the English word) he sees in the typical relationship of flying friends, family, customers, clients and co-workers is private in the sense that it only involves a discrete and more or less limited group than someone targeting a broader and arguably more public group of strangers, and should be accorded less regulated status.

Am I at all close, Doc?
 
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midlifeflyer said:
The only benefit (the English word) he sees in the typical relationship of flying friends, family, customers, clients and co-workers is private in the sense that it only involves a discrete and more or less limited group than someone targeting a broader and arguably more public group of strangers, and should be accorded less regulated status.
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I understand his point, but understand that from the FAA's perspective (as directed by Congress), when money changes hands, the stakes are raised, and they want a higher standard of qualification and safety than when you're just flying friends and family for free. Take the money out of it, and you can do all of that, but when you're charging for the ride, per Congressional direction, it's a whole 'nother story. I know Dr. Mack thinks Congress can be persuaded to relax on this issue, but if anything, Congress' aims seem to be higher, not lower, standards of safety for aviation.

In any event, throwing the term "private benefit" around and claiming there's some sort of "right" to collect money from passengers without going through the commercial qualification standards doesn't seem to me to be the way to accomplish this. Make the Mangiamele letter go away, and most of the objections go with it. You don't need to involve Congress to do that, and AOPA and others are working very hard to accomplish that goal. Muddying the waters by claiming there is some sort of previously unheard-of Constitutional "right" to collect money from passengers without obtaining commercial qualifications seems counterproductive to me.
 
Let's see if this helps (btw, it would be my sublime pleasure to buy the next round for you chaps if we were ever to find ourselves in a pub):

If I take business colleagues across town in my privately owned vehicle to further our business, whether it be my own or in connection with my employment, and I am not employed as a driver, I am allowed to seek reimbursement from my business or employer for the expenses without having to possess a chauffeur's license nor a taxi license for the operation. It is a private affair. Why should it be any different if the only difference is the conveyance. Whatever happened to the equal protection doctrine in this case?
 
I have been following this thread since the beginning. First, I have no dog in this hunt whatsoever. I do think Ron has done an excellent job of at least explaining how the FAA is looking at this. Does not mean the FAA is correct, just that they do have a point.

Dr. Mack, you state you want to further the business of your employer. That statement right there IMO moves you out of the realm of personal use. As Ron has so well put it the FAA puts priority on safety of the paying public. My stance is that once you accept money to benefit anyone else other than yourself then you have crossed the line. Profit or not, has no bearing.

Let me give you one example of what the FAA is trying to avoid. You, I, Bob and Bill all work for the same company. There is an out of town meeting next week that our boss wants all of us to attend.
The boss says, "Look, we are going to pay Dr. Mack for the use of his plane and you can all ride together. That will save the company money". We now have a potential problem. I for one ain't going. If you want me to fly then procure a plane and pilot that meets FAA standards for hauling passengers for hire. That simple. The amount you are being paid, profit or not has no bearing. It has became a trip that you are furnishing aircraft and pilot for which you are being paid.The passengers have every right to expect the plane and pilot are held to a higher standard, that of a commercial operation.

Another example. Let's put you Dr. Mack as the CEO of XYZ corporation. You are going to accept reimbursement for your personal plane for a trip that is business related. You pick three employees to go with you. Can you see the potential problem? Again, if I am one of those employees I ain't going with a PP in a SE plane. If the company is going to force me to fly then I want the commercial standards. As an employee I do not want the responsibility of determining qualifications. I will leave that to the FAA and its regulations. And yes the employee will feel pressured to fly in either of the examples.

That is the reason that cost sharing is OK. If I am personally paying a share of the cost of a trip with common purpose then I bear some responsibility to determine the qualifications of plane and pilot.

The "holding out" part does not enter into it. It is true that you are not advertising to the general public but, you are flying passengers and collecting money for that.

Like Ron, I do not think congress will ever lower that standard. If anything they will raise it. The other thing congress will look at is the impact it will have on private pilots. Impact will be very tiny since very few companies are going to allow this anyway. It will be a tough sell for an employee to convince the average CEO to expose the company to this much liability for such a small return, IMO. I think congress may look at this as having little up side and a lot of potential down side.

But, as I stated, I have no dog in the hunt. Does not matter to me either way. I just think you might be swinging at windmills. I plan to continue to monitor and ask that you keep us informed. Good luck!
 
Dr. Mack, the conveyance does matter. The general public is much better qualified to judge the operation of a car than a plane. Also sub standard maintenance of a car is not quite as life threatening as in a plane, IMO.
 
Ron Levy said:
I understand his point, but understand that from the FAA's perspective (as directed by Congress), when money changes hands, the stakes are raised, and they want a higher standard of qualification and safety than when you're just flying friends and family for free.
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of course it does and as you know from other discussions i agree with you. But to argue the point but it's not fair to say the equivalent of , "well, the maritime commission says 'pilot means...' so you are wrong in using that term in an aviation discussion" a a way of making it.
 
[FONT=&quot]The proposed legislation affirms the need for a clear distinction between commercial and private operations and strives to unambiguously bar private pilots from operating commercially, while simultaneously providing protection of private property rights that have been unnecessarily trampled by a bureaucracy that seems incapable of rulemaking that accomplishes both goals.[/FONT]
[FONT=&quot]The proposed draft bill has five provisions (SEC. 2) that incorporate all the elements of the firewall doctrines that the FAA has constructed between private and commercial operations.[/FONT]
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[FONT=&quot]1. [/FONT][FONT=&quot]By restricting the compensation to reimbursement of expenses, paragraph (a) ensures that the flight is not the business, i.e., that it is not conducted by the private pilot for profit as an aviation business.[/FONT]

[FONT=&quot]2. [/FONT][FONT=&quot]Sub-paragraph (1) codifies the incidental doctrine that is well established in case law and there is no controversy surrounding its application:[/FONT]
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[FONT=&quot] (1) The flight is only incidental to that business or employment; and[/FONT]
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[FONT=&quot]3. [/FONT][FONT=&quot]Sub-paragraph (2) codifies in statute the common purpose doctrine that the FAA has developed on its own to plug the gap between the definition of operations that are quid pro quo transactions and flights in which the private pilot shares a bona fide common interest in the mission:[/FONT]
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[FONT=&quot] (2) The private pilot shares a common purpose with passengers or property carried on the aircraft; and[/FONT]
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[FONT=&quot]4. [/FONT][FONT=&quot]Sub-paragraph (3) ensures that the private pilot is not compelled to operate the flight as a condition of their employment or some other business compulsion. This is in stark contrast to a pilot employed in a commercial operation. It ultimately grants the private pilot the discretion to choose the mode of transportation, thus reinforcing the incidental doctrine.[/FONT]
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[FONT=&quot] (3) The possession and exercise of the privileges of a private pilot license is not a condition of that business or employment for the private pilot; and[/FONT]
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[FONT=&quot]5. [/FONT][FONT=&quot]Sub-paragraph (4) extends the same doctrine as (3) to the passengers and property carried by a private pilot:[/FONT]
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[FONT=&quot] (4) Consent to be carried by an aircraft operated by a private pilot is not a condition of that business or employment for the passengers or owners of property.[/FONT]
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[FONT=&quot]These five provisions incorporate all the doctrinal elements that are to be found in the regulations, legal opinions of the FAA General Counsel, and administrative law court decisions, that separate commercial operations from private, without all of the mental gymnastics and logical fallacies that have befuddled the entire community as a result of the poorly crafted regulations currently on the books. The "holding out" issue is covered sufficiently in Part 119 et al so it is not addressed in the proposal.
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I'm sorry DrMack, but most of the interpretations of the existing rules are due to efforts by clever people to find ways to make what looks like a commercial operation into something that isn't in. Silly (and practically speaking somewhat limited) notions like "flight time compensation" and "good will compensation" are just ad hoc ways of getting at that type of conduct. Once done, we wind up with what is called in legal circles, "bad facts make bad law" in that the rules as interpreted can be used to apply to conduct one would otherwise think was OK.

If you think your proposal is immune from that, whether by the FAA or the NTSB or the courts, I think you're mistaken.
 
The flaw I see in your proposal is that the FAA is interested not only in air transportation for hire/compensation, but also the provision of pilot services for hire/compensation. At the end of the day, when a pilot is flying on business and carrying others while the expenses are being paid by the employer, the pilot is providing pilot services to the employer whether that is the pilot's official job or not. Further, the pilot is being compensated both with pay and free/reduced-cost flying time, so it is pilot services for hire/compensation whether that is in the pilot's job description or not. It is the FAA' position (backed by Congress) that one cannot expect either the employer or the other passengers to be able to determine the competence of that pilot to perform such piloting tasks with the requisite level of safety for paid piloting, so it is the FAA's responsibility to ensure the pilot's competence at the level expected of a pilot working for hire/compensation, i.e., a Commercial Pilot certificate.

As for the part about "Consent to be carried by an aircraft operated by a private pilot is not a condition of that business or employment for the passengers or owners of property," it is disingenuous to expect an employee to decline to ride with the pilot with whom the company asks the employee to fly in order to save money for the company no matter what some paper ways about that not being a condition of employment -- too many people are "employees at will" and can be axed in a heartbeat for almost any reason. It is equally disingenuous to expect the average non-pilot employee to be able give informed consent to flying with that pilot, since (as pointed out above), it's not the same as getting in a car with another driver where:
  1. the passenger is almost certainly qualified to judge the driver's competence, and
  2. the passenger can very quickly say "Stop the car" and get out.
 
midlifeflyer said:
I'm sorry DrMack, but most of the interpretations of the existing rules are due to efforts by clever people to find ways to make what looks like a commercial operation into something that isn't in..
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If you buy these $2000 pencils, I have some free concert tickets for you.
 
Ron Levy said:
1. the passenger is almost certainly qualified to judge the driver's competence, and
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How? The driver has a valid driver's license? Hasn't had any accidents? Went to driver's ed in high school? Insurance company is willing to insure them? How is any of this different from a pilot that the passenger knows?
2. the passenger can very quickly say "Stop the car" and get out.
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While hurtling down the Interstate at 70 MPH? That would be the same as, "Land now so I can get out", or "Land now so I don't barf all over your leather interior."
 
DrMack said:
How? The driver has a valid driver's license? Hasn't had any accidents? Went to driver's ed in high school? Insurance company is willing to insure them? How is any of this different from a pilot that the passenger knows?
While hurtling down the Interstate at 70 MPH? That would be the same as, "Land now so I can get out", or "Land now so I don't barf all over your leather interior."
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You really can't see the difference? You don't think the average Joe/Jane can tell after two or three blocks in a car with a driver that they really don't want to be in the car with this person driving? You don't think you can get from 70mph to standing on the side of the road faster than you can get from 7000 feet to being on the ground? :no:

It's clear you have a very strong personal agenda on this, but your proposal ignores some basic legal, physical, and psychological realities.
 
Regarding Ronnie's post. I do agree that an employee cannot and should not be TOLD to fly in my bugsmasher. Even if the flight was with a commercial pilot in a cabin class twin I would never attempt to dictate that someone fly that mode of transportation. There are after all perceptions regarding General Aviation aircraft.

I am starting on my commercial ticket but find that this still will not resolve the issue because then I need to determine what FAR part xyz my flight falls into. I have read some of the free stuff provided by NBAA and quite honestly it just confuses the matter even more.
 
Ron Levy said:
You really can't see the difference? You don't think the average Joe/Jane can tell after two or three blocks in a car with a driver that they really don't want to be in the car with this person driving?
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Still a man hears what he wants to hear
And disregards the rest
— Paul Simon
 
Tim, even though I agree with you, if a company owned a corporate aircraft with a corporate pilot then I could see a company at time of employment letting the employee know that his job description will include travel in the company plane. Then how about current employees that are employed prior to plane purchase? Don't know the answer to that one.

Dr. Mack, I was going to reply to your last post but Ron in post #211 pretty much said it all. You are in fact asking for an exemption or change in law to allow a PP to furnish aircraft and pilot for compensation from a third party for the benefit of the third party. It is that simple and it does not matter if there is a profit or not.

It shows you have given this a lot of thought, with the restrictions of common purpose with the third party and protection for the employees. It just does not change what you are asking for. I still believe there would be unintended consequences. Second, neither the FAA or congress is likely to expose themselves to this much potential liability for such a small pay back. I would be surprised if this new law would affect even 20 companies nation wide. They could even tighten up the restrictions prohibiting you flying solo if you are being compensated. Under current law they seem alright with this but, it could change if they get to looking at the big picture.

But, I repeat, I have no dog in this hunt. If I were king, I am not sure what I would decree. I am pretty much of a person that wants government to leave me alone. However, I do believe that government does have SOME responsibility to protect those who can not protect themselves. I want government to provide assurance that the surgeon that is taking out my appendix meets a higher standard than my neighborhood butcher. I want the government to provide me with some assurance that when I get on that 747 that at least one of the pilots has a good chance of getting the plane up and back down with all of the pieces intact. At least a better chance than the 300 hour PP at his hangar wiping on his 1963 Cherokee that he has flown 35 hours since the last annual and would need three touch and go's to carry a passenger.

I am looking forward to see how this shakes out.
 
For the moment let's forget about compensation or private vs. commercial operation and ask, how can any passenger assess the risk of flying with a private pilot? Then what is wrong with using those same criteria when the flight is incidental to business or employment and there is regulatory prohibition of compulsion to fly with a private pilot as a condition of doing business or employment?
 
DrMack said:
For the moment let's forget about compensation or private vs. commercial operation and ask, how can any passenger assess the risk of flying with a private pilot?
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The FAA's position is that if they're going for a free ride, they're getting exactly what they paid for, and let the rider beware.

Then what is wrong with using those same criteria when the flight is incidental to business or employment and there is regulatory prohibition of compulsion to fly with a private pilot as a condition of doing business or employment?
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The fact that money is now involved, and to the FAA and Congress, that changes everything. And if you think employees will believe your proposed "regulatory prohibition of compulsion to fly with a private pilot as a condition of doing business or employment" is going to stop employers from finding an excuse to discharge an employee who costs them money, you are living in a dream world -- and the Feds know that.
 
No problem as I see it, as long as you do not receive compensation. As Ron said you get what you pay for.
Dr., anyway you turn it, you want to provide service to a third party and be compensated for it. The FAA says not with passengers. They may look at this as generous and if they examined it closely may decide you can not be compensated at all. You might be opening a box you wish had stayed closed. The compensation from the third party is what is throwing the wrench into it.
 
Ron Levy said:
The fact that money is now involved, and to the FAA and Congress, that changes everything. And if you think employees will believe your proposed "regulatory prohibition of compulsion to fly with a private pilot as a condition of doing business or employment" is going to stop employers from finding an excuse to discharge an employee who costs them money, you are living in a dream world -- and the Feds know that.
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But this exists now when we consider the situation where a private pilot with his/her own airplane flies alone on business. What is to prevent an employer from compelling the pilot to fly their airplane to attend a business meeting for example? The current regulations allow the employer to pay for the expenses.
 
An employer would force a pilot who happened to own a plane to supply said personal airplane for company travel at his own expense? Not in my world. That would make owning and operating a plane a condition of employment?
Only without passengers can they reimburse. And on closer look that might change as I pointed out above.
 
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With the possible exception of the Paul Simon metaphor, I wish to commend everyone on this thread for not engaging in any ad hominem exchanges. This is a difficult legal issue and a frank public dialogue is necessary for us as a society to make a beneficial public choice. Bravo and cheers to all.

Now back to the brawl :)
 
DrMack, you can deflect and obfuscate all you want. The position of FAA and the Congress is clear. From here on, you can argue with them. But the points made by Mark, Ronnie, and me will be the arguments you have to overcome to accomplish your goal, and it's pretty obvious you have no justification for your position other than some imaginary right to "private benefit" when "private benefit" isn't even an applicable legal concept when your company is benefitting from the use of the plane, not just you.

-30-
 
ronnieh said:
Dr. Mack, the conveyance does matter. The general public is much better qualified to judge the operation of a car than a plane. Also sub standard maintenance of a car is not quite as life threatening as in a plane, IMO.
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I'm willing to bet that far more innocent bystanders are killed each year by faulty cars, trucks, buses, motorcycles, etc than are killed by aircraft falling on them. That's why air crashes are news. There are so few of them.
 
Shepperd, also very few aircraft as compared to the other conveyances you mentioned. There is already other threads on small aircraft (or lack of) safety. We do not IMO need to morph this into another one.

Dr. Mack, I had to look up "ad hominem". I think it is obvious that I, and I suspect Ron and Mark, do not in any way want to tie this discussion to any assumed character flaw. I suspect for your particular situation it might work with no adverse unintended consequences. The FAA and congress is going to have little concern for you individually. But, again, good luck and please keep us up to date on what is going on.
 
Here's the problem, give people an inch and you'll see them take the next ten miles, or more. The FAA constantly has to deal with the "134.5" operators (illegal charters) and folks who look for every way possible to circumvent the rules. Open up an avenue such as was suggested and I promise you it will be twisted and contorted to justify a new wave of "134.5's".
 
midlifeflyer said:
I'm sorry DrMack, but most of the interpretations of the existing rules are due to efforts by clever people to find ways to make what looks like a commercial operation into something that isn't in. Silly (and practically speaking somewhat limited) notions like "flight time compensation" and "good will compensation" are just ad hoc ways of getting at that type of conduct. Once done, we wind up with what is called in legal circles, "bad facts make bad law" in that the rules as interpreted can be used to apply to conduct one would otherwise think was OK.

If you think your proposal is immune from that, whether by the FAA or the NTSB or the courts, I think you're mistaken.
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Agreed.
 
RotorAndWing said:
Here's the problem, give people an inch and you'll see them take the next ten miles, or more. The FAA constantly has to deal with the "134.5" operators (illegal charters) and folks who look for every way possible to circumvent the rules. Open up an avenue such as was suggested and I promise you it will be twisted and contorted to justify a new wave of "134.5's".
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Operating outside of the statutory language that we propose would be illegal. Because criminals might do so is no reason to punish law abiding citizens by restricting their freedom.
 
DrMack said:
Operating outside of the statutory language that we propose would be illegal. Because criminals might do so is no reason to punish law abiding citizens by restricting their freedom.
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I think what R&W is saying is that every one of those rules is a result of someone finding a loophole in the existing regs through which they could get paid for flying when the FAA really didn't want them to do that. The rules you propose create more loopholes for people to do things the FAA finds fundamentally objectionable in terms of the level of safety Congress requires them to provide to the public.

Now, if you can convince Congress to lower those safety standards as you wish, more power to you, but history tells us that Congress does not lower aviation safety standards unless there is a pressing requirement to keep air commerce flowing (e.g., the increase to age 65 for Part 121 pilots to stave off the impending pilot shortage). Other than that, take a look at their move to make 121 co-pilots meet ATP experience standards (or very close to them) as a result of the Colgan wreck near Buffalo and other past Congressional mandates to the FAA -- you're almost certainly opposing an irresistible force.
 
Agree with Ron, and again it would not surprise me if the FAA takes another look at third party compensation for a private pilot and do away with it entirely. Sometimes it is better to not mess with a sleeping dog.
 
ronnieh said:
Agree with Ron, and again it would not surprise me if the FAA takes another look at third party compensation for a private pilot and do away with it entirely. Sometimes it is better to not mess with a sleeping dog.
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Amen, Brother Ronnie. For decades, people were doing what Mangiamele asked about, and nobody in the FSDO's raised an eyebrow. Then Mangiamele asked the Chief Counsel about it, and suddenly everyone finds out its forbidden. You want to stir up trouble about doing something people have been doing for years, ask the Chief Counsel.

OTOH, if you think it's really OK to do something that some FSDO says you can't, that's a good time to ask. That's how I obtained clarification of the rules regarding instrument instructors logging approaches for currency as well as the instrument time when giving training someone on approaches in actual instrument conditions. A lot of us thought it was OK, but we couldn't prove it to a FSDO Inspector without that interpretation. With that letter, we can fly IFR on that basis without worrying about some picky Inspector making trouble for us.
 
Ron Levy said:
The rules you propose create more loopholes for people to do things the FAA finds fundamentally objectionable in terms of the level of safety Congress requires them to provide to the public.
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What loopholes do you perceive and how would you propose they could be closed?
 
Read all my posts above, and you'll see why I do not think they can be closed -- the entire concept runs contrary to the multi-layered "levels of safety" concept that Congress has mandated and the FAA wants. I'd put your plan in the same box as the EAA/AOPA proposal to allow DL's to sub for the Third Class medical that -- it's DOA. But if you want to press on, be my guest -- it's only your time you are wasting, not mine, as I'll have no further comment on your idea.
 
Dr. Mack, let me throw this out there. First, for me, I am not just beating up on Dr. Mack. I can not speak for others but I and others are simply trying to show you what you are going to run up against. Whether it is a good idea or not is another thread as far as I am concerned.

The word private may have a different meaning to the FAA than to you. You use the term private to be any activity not for the general public use or not for profit. The FAA uses the word private to mean personal. It might be more correct to call it a personal pilot license. The FAA is OK as long as only you benefit from your use of your airplane. When you receive money for services rendered (furnishing and flying an aircraft) you have moved out of personal use. The FAA has made some exceptions. For example you can share expenses if you have a common need. It appears they have gone another step and said OK, you can receive compensation from a third party for a shared benefit as long as you are not taking other passengers. The FAA is stretching the term personal for this one particular act since nobody else is at risk. Now you are asking for this to include passengers. They will never cross that line IMO. In fact I firmly believe the most likely outcome would be the moving the line back to shared expense only. It has been a good discussion without personal attacks.
 
I should really know this, but i don't...
If I'm going to a business meeting with a couple co-workers and I fly them and myself in a plane I provide, can the company reimburse all of my costs if I have a commercial rating? This is private carriage (or non-common carriage?) and so a part 91 flight, right?

I presume I'd also need a 2nd class medical for this, as I'd be exercising my commercial pilot privileges.
 
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My opinion, repeat opinion, when you furnish the plane you have moved into 135 ops. You can share the costs with you passengers but, can not get third party compensation and carry passengers.
If the company owns or leases a plane, they can certainly hire a commercial pilot to fly it. Does this help?
 
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Here are a couple questions regarding shared expenses. Is there a limit on the total that is shared? Does the FAA care if the individuals turn these expenses in to their employer for reimbursement as they would for other methods of travel? Can the shared expenses be used to pay for the pilots owner aircraft.
 
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