Private Pilot Reimbursement

DrMack

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DrMack
A stroke of the pen may be all that is needed to breath new life into general aviation,which is being strangled by the FAA Chief Counsel's interpretation of a single regulation, 14 CFR 61.113 (b):

61.113 - Private pilot privileges and limitations: Pilot in command.

(a) Except as provided in paragraphs (b) through (h) of this section, no person who holds a private pilot certificate may act as pilot in command of an aircraft that is carrying passengers or property for compensation or hire; nor may that person, for compensation or hire, act as pilot in command of an aircraft.

(b) A private pilot may, for compensation or hire, act as pilot in command of an aircraft in connection with any business or employment if:

(1) The flight is only incidental to that business or employment; and

(2) The aircraft does not carry passengers or property for compensation or hire.

The FAA CC has determined that a private pilot may be reimbursed by an employer for expenses incurred by the pilot if they fly their own airplane to attend to company business but ONLY if that pilot flies ALONE and there is no company property aboard. If there is any other passenger
on the trip (let's say a business colleague) or company property, then no reimbursement is allowed. The spirit of the regulation is to prevent private pilots from holding out their piloting skills for compensation without obtaining the necessary commercial license or to circumvent regulations applicable to commercial flight operations, a policy that I agree is in the public interest.

The execution however is deeply flawed. We have thrown the baby out with the bath water. If employees who just happen to hold
private pilot licenses were able to be reimbursed for the use of their own airplane, providing that all the provisions of the regulations to distinguish such operations from commercial flying enterprise are kept intact, then it is probable that general aviation would expand dramatically and immediately. What private pilot wouldn't jump at the chance to fly if their employer was willing to pick up the tab for actual expenses like they would if we were talking about the use of their private automobile? Aviation industries would employ more, build more, design more, and all businesses who have private pilots in their employ (not as pilots mind you) would experience all the efficiency gains inherent in general aviation that our forebears who built this amazing infrastructure had envisioned.

For this to work, employees who operate as private pilots would necessarily not be required to possess a pilot license as a condition of their employment and the employer would have to be indifferent as to the mode of transportation that en employee chooses to use for any business trip, i.e., the employee can never be compelled to use their airplane (or one they rent) for a business trip. As long as the common purpose test is met and the pilot is not compensated as a professional pilot, reimbursement of direct expenses for the use of a private aircraft for incidental business purposes should be allowed, regardless of whether other employees or business associates are carried.

We have relied on government regulators and the courts to provide relief but to no avail. Under the current statutory, regulatory and case law regime no change in the status quo will occur. Therefore, a statutory change is the best unambiguous way to achieve this goal.

No other country on Earth has a general aviation infrastructure that compares to the Untied States. Let's put it to work for the benefit of all Americans! Private aviation is an exceptional characteristic of the American economy. Let us unfetter this miracle of the modern age from the shackles of onerous and unnecessary government meddling in our freedom to fly for private benefit.

Let's have a public dialogue on the issue and see if the notion has any merit in the marketplace of ideas. I admit that I may be overlooking something but let's hear your thoughts and perhaps we can identify if there is something of value in the idea, enough perhaps to build a case with Congress for statutory relief.


 
Even if this were to be, I'm not sure how many companies allow their employees to fly GA aircraft for business travel. I tried last week for a company trip to another facility which was a stone's throw from an airport. I would have been there in less than half the time to drive, but it was against company policy, even if I paid for it. AND we are an aerospace company!
 
I don't get it. Does this mean that if I have my laptop in the plane, I can't charge the gas to my company (which I own)?
 
And I disagree with the opening statement. GA's problem will not be cured by permitting employers to reimburse employees under certain circumstances.

-Skip
 
Even if this were to be, I'm not sure how many companies allow their employees to fly GA aircraft for business travel. I tried last week for a company trip to another facility which was a stone's throw from an airport. I would have been there in less than half the time to drive, but it was against company policy, even if I paid for it. AND we are an aerospace company!

That bridge has been crossed by many employers. Here is a good example: http://blink.ucsd.edu/travel/training-guidelines/booking/air/private-aircraft.html
 
I don't get it. Does this mean that if I have my laptop in the plane, I can't charge the gas to my company (which I own)?

"Property" in the regulation is synonymous with freight. I'm pretty sure your company laptop would not be considered as cargo.
 
I don't get it. Does this mean that if I have my laptop in the plane, I can't charge the gas to my company (which I own)?

If I were reading Mangimele (the Chief Counsel letter in question), I would say you're fine. According to the decision (but not the plain text of the regulation), you cannot transport passengers or property for compensation or hire.

Taken to it's extreme on the property side, you would need to fly in the nude, as your clothing is "property"!:yikes:

I would draw the line at if you are transporting property to be left at the other end of the trip. Your tools (like your laptop) would be fine, but if you were to transport gear to be left at the site, that would probably run afoul the decision.

IMHO, this interpretation is contrary to the regulation...I just don't have the time, money, etc. to intentionally violate it, and then get it into a court where it could be ruled as "arbitrary, capricious or otherwise not according to the law"...which is a damn tough standard to meet.
 
"Property" in the regulation is synonymous with freight. I'm pretty sure your company laptop would not be considered as cargo.

The regulation has nothing to do with the interpretation thereof.
 
And I disagree with the opening statement. GA's problem will not be cured by permitting employers to reimburse employees under certain circumstances.

-Skip

I agree with your disagreement as elucidated in your second sentence. GA's problem will not be cured by such a change in regulation, but it would certainly go a long way towards doing so.

Imagine the hue and cry from all corners if the IRS was to announce that reimbursement for the use of personal automobiles was no longer allowed. It doesn't take a PhD in economics (like mine) to see that such a regulation would inflict a devastating blow to the economy. The same is true of general aviation, except that such a regulation already exists.

I'm not suggesting that we repeal the regulation entirely, only that we have gone too far and should consider a public choice to dial it back somewhat.
 
How does this work if the employee is commercially rated and owns his own plane? Same rules?

Say for example I am commercially rated and I own a 172 for private use. My company has an event in atlanta. I fly 2 employees and myself down for the event. I'd be going regardless. Can I be reimbursed?
 
I agree with your disagreement as elucidated in your second sentence. GA's problem will not be cured by such a change in regulation, but it would certainly go a long way towards doing so.

Imagine the hue and cry from all corners if the IRS was to announce that reimbursement for the use of personal automobiles was no longer allowed. It doesn't take a PhD in economics (like mine) to see that such a regulation would inflict a devastating blow to the economy. The same is true of general aviation, except that such a regulation already exists.

I'm not suggesting that we repeal the regulation entirely, only that we have gone too far and should consider a public choice to dial it back somewhat.

The issue with that analysis is that, I would venture, that not 10% of private pilots are aware of that interpretation of 61.113(b). The other 90% read the regulation as it is written, as fully permitting reimbursement regardless of passengers, provided that the purpose of the trip is not flying.

Take an area I'm familiar with. A core switch goes down 300 miles away. As 61.113(b) is written, as a technician, I could grab a replacement switch, hop in my Cherokee, and fly in to replace the switch, no problem. The fact that I flew is incidental to the issue.

If I knew nothing about the FAA Chief Counsel's interpretation (and I would venture to say that >90% of private pilots do not), I wouldn't think twice about that being legal and acceptable. And unless something goes wrong, the FAA will never be the wiser, and this flight will happen.
 
AOPA's Regulatory and Governmental Affairs unit has been working on the Chief Counsel's office over the Mangiamele interpretation for some time. I'll see if I can get an update on it from the person to whom I provided some input a while back. But it will have to wait until tomorrow, 'cause they're done for the day.
 
How does this work if the employee is commercially rated and owns his own plane? Same rules?

Say for example I am commercially rated and I own a 172 for private use. My company has an event in atlanta. I fly 2 employees and myself down for the event. Can I be reimbursed?

I'm an economist, not a lawyer so hopefully an attorney will chime in, but my understanding is the following:

Pilot brings the airplane = Part 135
Company owns/rents the airplane = Part 91
 
How does this work if the employee is commercially rated and owns his own plane? Same rules?

Say for example I am commercially rated and I own a 172 for private use. My company has an event in atlanta. I fly 2 employees and myself down for the event. I'd be going regardless. Can I be reimbursed?
Yes, As far as the Part 61 issues are concerned, because you are legal to be compensated for providing pilot services. However, the possible 135 implications have never been addressed by the FAA, so the safest course is for the company to rent the plane and the CP/ATP employee to fly it.
 
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Yes, because you are legal to be compensated for providing pilot services. However, the possible 135 implications have never been addressed by the FAA, the safest course is for the company to rent the plane and the CP/ATP employee to fly it.

Now, if the plane is not owned by you, but by an LLC (albeit controlled by you), then have the company rent the plane directly from the LLC (which is legally a separate entity), not from you.

And don't forget...if you have a CP/ATP, you gotta have at least a 2nd Class medical to exercise the commercial part of the certificate. If you just have a third (or a 1st/2nd over 6 months/1 year old), then you're, effectively, a private pilot.
 
Now, if the plane is not owned by you, but by an LLC (albeit controlled by you), then have the company rent the plane directly from the LLC (which is legally a separate entity), not from you.
You'd have to be careful of the duck test, but it might work if the plane was available for rental to others besides the LLC owners. When I had the Cougar, I established a C-Corp which owned the plane, the corporation leased it to a flight school, and the only way for me to use it was to rent it from the school just like any other school customer. I think that was sufficiently "arm's length."
 
Now, if the plane is not owned by you, but by an LLC (albeit controlled by you), then have the company rent the plane directly from the LLC (which is legally a separate entity), not from you.

And don't forget...if you have a CP/ATP, you gotta have at least a 2nd Class medical to exercise the commercial part of the certificate. If you just have a third (or a 1st/2nd over 6 months/1 year old), then you're, effectively, a private pilot.

The real headache here is insurance as much as anything else. If your company rents the plane directly from the LLC you control (or participate in controlling) and then puts other company personnel or equipment on the plane, then it will likely fall under "commercial use" and your normal personal and business use insurance policy won't cover you.

Jeff
 
Back in the days before Mangiamele, I worked for the gov't, both as an employee and a contractor. Part of the job was meeting with vendors in far away places. Several times I rented an airplane, and myself and others from the company or gov't flew to the meeting. Everyone had to be there, I put the rental down on my travel voucher, got paid, all was well. And yes, I got paid my regular salary while we were travelling.

After Mangiamele, I had my employer rent the airplane, and I (with a commercial certificate) flew it. Same situation - the FBO got paid, I got paid my regular salary, and it was ok because my employer was the operator, not me.

I wish that the FAA would overturn that interpretation - it seems that the Chief Counsel invented stuff that wasn't there.
 
So, how does this rule read if the company owns the plane and I were to fly it as my "company vehicle"?
 
So, how does this rule read if the company owns the plane and I were to fly it as my "company vehicle"?

That would be absolutely fine if you're a commercial pilot or ATP. If you're a PP, that *could* skate on some thin ice if you were to ever do a single personal thing with the aircraft. Of course, the CP is pretty easy and inexpensive (in the grand scheme of aviation) to get, so if that was the scenario the easy answer is just get the CP cert.

Jeff
 
That would be absolutely fine if you're a commercial pilot or ATP. If you're a PP, that *could* skate on some thin ice if you were to ever do a single personal thing with the aircraft. Of course, the CP is pretty easy and inexpensive (in the grand scheme of aviation) to get, so if that was the scenario the easy answer is just get the CP cert.

Jeff

That is my course of action here soon. I'm going for the IR first, then multi and commercial.
 
Even if this were to be, I'm not sure how many companies allow their employees to fly GA aircraft for business travel. I tried last week for a company trip to another facility which was a stone's throw from an airport. I would have been there in less than half the time to drive, but it was against company policy, even if I paid for it. AND we are an aerospace company!

It's an insurance/liability thing. Insurance companies rule the world, not federal regulations.
 
It's an insurance/liability thing. Insurance companies rule the world, not federal regulations.

Usually it's when insurance companies get themselves in over their heads that government regulations are purchased via buying off politicians to secure their business interests. (See: AIG)
 
My company has okayed flying on business trips. Unfortunately, Mangiamele eliminates the usefulness to 0 for doing so, so I'll probably never get the opportunity to do so.

And that's bull**** - its not often that a big corporation like my employer allows such a thing. I really wish someone can get this fixed, since we could be a real case study for other large corporations.
 
So, how does this rule read if the company owns the plane and I were to fly it as my "company vehicle"?

If you're a PP, that *could* skate on some thin ice if you were to ever do a single personal thing with the aircraft.

"thin ice" with whom? from a tax perspective, you simply deduct the proportional use, like you do with any other company vehicle.

Are you saying the FAA would have trouble with this approach?
 
My company has okayed flying on business trips. Unfortunately, Mangiamele eliminates the usefulness to 0 for doing so, so I'll probably never get the opportunity to do so.

Wait. I read Mangiamele. Why would you not be allowed to fly yourself and get reimbursed? as long as its incidental to the business, and if you're only transporting yourself and not cargo, it should be OK, no?
 
Wait. I read Mangiamele. Why would you not be allowed to fly yourself and get reimbursed? as long as its incidental to the business, and if you're only transporting yourself and not cargo, it should be OK, no?
It's hard to beat the cost of airline travel in most GA airplanes if the pilot is the only one travelling. With a passenger or two it's usually the other way around. One way around that is to justify the cost of a solo flight on the basis of a full fare ticket and the flexibility to travel on a moment's notice and return when you're done with business instead of having to stick with an airline schedule.
 
It's hard to beat the cost of airline travel in most GA airplanes if the pilot is the only one travelling. With a passenger or two it's usually the other way around. One way around that is to justify the cost of a solo flight on the basis of a full fare ticket and the flexibility to travel on a moment's notice and return when you're done with business instead of having to stick with an airline schedule.

Oh, I see... I guess from my perspective, I never cared that my flying myself cost my company a little more than what we could expense for (typical example - our cost $500, client cost $400). We justify it internally precisely the way you mention, but of course, I happen to have the prerogative to make the decisions 'round here :D

Another way this works is by splitting the cost, instead of between pax, between clients. For example, I sometimes fly to one city to work with two different companies (half days). If we bill each of them half the cost of my GA flight, it is cheaper for them, and a lot more fun for me.
 
"Property" in the regulation is synonymous with freight. I'm pretty sure your company laptop would not be considered as cargo.

If the regulation meant "freight" then it should say "freight."
 
If the regulation meant "freight" then it should say "freight."

Yep, they should. With the same CC who wrote Mangimele, I wouldn't be shocked if they read the word "property" very expansively.
 
And that's bull**** - its not often that a big corporation like my employer allows such a thing. I really wish someone can get this fixed, since we could be a real case study for other large corporations.

Bulls eye!

I am a professor in a university and our "industry" typically has no problem, as the previously posted example from UCSD illustrates. It is highly likely that hundreds of thousands of businesses in the US, small and large, would be more than happy to reimburse employees for direct expenses just as they do with the use of a personal automobile. There is no doubt that the pent-up demand must be huge.

The most common knee-jerk reaction I get to the proposal is that the liability issue is the cause of this absurdity. That of course is nonsense. Universities are just as sensitive to that issue as any private enterprise and yet somehow their lawyers and insurance companies have easily accommodated the risk as they routinely do with any other similar issue.
 
Interesting. My personal belief is the liability implications FOR ME mean that I would never fly anyone else on business. Do for fun all the time, including fellow employees, no reimbursement desired or allowed. I like to think that limits me to gross negligence as opposed to simple negligence.

Opinions on that?

Ernie
 
Ernie,

If you come to grief in an airplane, and people or property get damaged, you can expect to be sued. What matters when that happens is how good your insurance coverage is. I don't think there's any difference between gross and ordinary negligence as far as getting sued goes, though your insurance may have an escape clause in it in the case of gross negligence.
 
Wait. I read Mangiamele. Why would you not be allowed to fly yourself and get reimbursed? as long as its incidental to the business, and if you're only transporting yourself and not cargo, it should be OK, no?

Its because my business trips usually involve one or two other colleagues. That's where the rub comes in.

Edit: And the benefit comes when compared to driving. If I drive, using the reimbursable rate, it often becomes MORE expensive than flying myself. An example -

Winston-Salem to Hilton Head, SC and back:
Driving: 696mi (or 12 hours) @ $0.555 = $386.28
Flying: 4 hours @ $90/hr = $360

What my company has offered is to pay the reimbursement rate as if I had driven. Fair enough.

But - unless I'm going alone, that's never going to be ok. And that is messed up, IMHO.
 
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But - unless I'm going alone, that's never going to be ok. And that is messed up, IMHO.

Another square hit on the nail's head.

Aside from the large negative macroeconomic effect of this prohibition, there is the much larger issue of whether we as a people should accede to this intrusion on our basic liberty to fly for the benefit of ourselves and for the incidental benefit of others. The common argument is that it is necessary to prevent private pilots from "holding out" their flying skills in commerce because doing so would shortcut regulations designed to enhance public safety. But as long as the principles of "common purpose", "incidental" and "non-charter" apply to a flight we should think no differently about it than we would for any other mode of private transportation. I feel that the FAA Chief Counsel's opinion is an egregious overreach of federal power and is yet another example of the nanny state ideology that permeates the current administration. I guess We the People are just too damned dangerous to be trusted with this kind of freedom.
 
"thin ice" with whom? from a tax perspective, you simply deduct the proportional use, like you do with any other company vehicle.

Are you saying the FAA would have trouble with this approach?
If you have only a PP, yes, they would. You would be providing pilot services to the company and getting compensated for your time -- that's CP or better territory.
 
Wait. I read Mangiamele. Why would you not be allowed to fly yourself and get reimbursed? as long as its incidental to the business, and if you're only transporting yourself and not cargo, it should be OK, no?
It is, as long as you're not carrying anyone else in the plane.
 
If you have only a PP, yes, they would. You would be providing pilot services to the company and getting compensated for your time -- that's CP or better territory.

No, I would not be. I would be transporting myself to a meeting and not be compensated for my time. The expenses associated with the flight are the company's, not mine, just like in the company car. I don't get paid to drive either.
 
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