AC 61.142

8 COMPENSATION.

8.1 Explanation of Compensation. Compensation is the receipt of anything of value that is contingent on the pilot operating the aircraft; i.e., but for the receipt of the compensation, the pilot would not have taken that flight. Compensation does not require a profit, profit motive, or the actual payment of funds. Reimbursement of expenses, accumulation of flight time, and good will in the form of expected future economic benefits(9) can be considered compensation. Furthermore, the pilot does not have to be the party receiving the compensation; compensation occurs even if a third party receives a benefit as a result of the flight.
(9 Blakey v. Murray, NTSB Order No. EA-5061 (Oct. 28, 2003).)

https://www.faa.gov/documentLibrary/med ... 61-142.pdf

I think that’s the bottom line. The rules provide a lot of leeway because clever people find all sorts of creative ways they think will get around black & white rules. The real rule is , “if it quacks like a duck…” The rules that come out of the cases and interpretation letters are derived from that basic principle.

Philosophically, many of us out here beleve that freedom is the default status in our Country.

I know; radical.

If a law/regulation does not clearly say you can't, then you can.

It really is or at least should be that simple.

At some level, even the FAA agrees (at least in writing; in practice is another matter).

See, e.g. FAA Order 8900.1 and specifically Volume 14, Chapter 2, Para. 14-2-2-3, which states “if a regulation does not specifically say a person cannot, then a person can.” (My emphasis).

For those of you unfamiliar, FAA Order 8900.1 is, among other things, what guides and is binding upon FAA inspectors int the conduct of their duties.

Just b/c lawmakers can't use their words obligates me to or prohibits me from nothing.

Philosophically, many of us out here beleve that freedom is the default status in our Country.

I know; radical.

If a law/regulation does not clearly say you can't, then you can.

It really is or at least should be that simple.

At some level, even the FAA agrees (at least in writing; in practice is another matter).

See, e.g. FAA Order 8900.1 and specifically Volume 14, Chapter 2, Para. 14-2-2-3, which states “if a regulation does not specifically say a person cannot, then a person can.” (My emphasis).

For those of you ufamiliar, FAA Order 8900.1 is, among other things, what guides and is binding upon FAA inspectors int the conduct of their duties.

Just b/c lawmakers can't use their words obligates me to or prohibits me from nothing.

This is a key item that deserves more attention. If you have young pilots in your lives that are flying 91 and trying to build hours, please talk to them about this. They don't want to ruffle feathers so they are rarely involved in the financial aspects of the airplane they are flying, but the FAA will absolutely come after them personally. My 61.58 instructor has had a couple of his clients get busted for this and the pilots had no idea it was an illegal charter. So now he's including a section on this in all of his ground schools.

The FAA is definitely going after this stuff - including calling local FBOs and pretending to be someone looking for a flight to somewhere so even word of mouth is considered holding out.

Back in November some friends asked if I could fly a family member that was too sick (brain cancer) to fly commercial for Thanksgiving. I knew I couldn't fly just move the family, but one of their family worked at a horse stable and my daughter LOVES horses so we went out to spend a day at the stables working with the horses. No harm no foul since we were going out there for our own personal reasons and the other family simply rode along with us.

Anyway it's a thing. Be careful out there.

This is a key item that deserves more attention. If you have young pilots in your lives that are flying 91 and trying to build hours, please talk to them about this. They don't want to ruffle feathers so they are rarely involved in the financial aspects of the airplane they are flying, but the FAA will absolutely come after them personally. My 61.58 instructor has had a couple of his clients get busted for this and the pilots had no idea it was an illegal charter. So now he's including a section on this in all of his ground schools.

The FAA is definitely going after this stuff - including calling local FBOs and pretending to be someone looking for a flight to somewhere so even word of mouth is considered holding out.

Back in November some friends asked if I could fly a family member that was too sick (brain cancer) to fly commercial for Thanksgiving. I knew I couldn't fly just move the family, but one of their family worked at a horse stable and my daughter LOVES horses so we went out to spend a day at the stables working with the horses. No harm no foul since we were going out there for our own personal reasons and the other family simply rode along with us.

Anyway it's a thing. Be careful out there.

You are referring to the "common purpose" test that the FAA uses. This test is NOT codified in ANY regulation.

This is a total regulatory fantasy. If I wanted to fly someone somewhere, I should be able to do that regardless of my purpose.

For example, I have volunteered for the Special Olympic Airlift. There is no "common purpose" there at all. I am purely flying some folks for their benefit as a gift. To call that "commercial" is crazy.

You should be able to fly your friends somewhere if you want, just like you could drive them in a car.

Today I am flying to pick up an employee in VA. Is my "common purpose" doing business generally? I'm not doing it for me to be there.


It is stupid overreach by a government agency. The "common purpose" test need to die.

Mike C.

Another element to consider is insurance.

A lessor can require a lessee's pilot qualify but that's doesn't address who is insured.

You could add the lessee to the policy, which is way cheaper than a whole new policy, but it still costs some coin.

On turboprops, I've seen lessees paying $2k give or take and that usually requires a signed lease (even if under 12.5k lbs) sent to insurance.

Makes you wonder if insurance will play ball and still extend coverage in an incident or if they'd hang you out to dry.

Sorry I left out that detail. Yes, the plan was for them to share in the costs for the legs that they flew with us. The plan ended up falling apart as the family member was deemed too ill to even travel privately.

If it's your plane and you are paying for all of it you can do this.

The problems come when either the passengers or a third party pay for all or some of the costs.

You are referring to the "common purpose" test that the FAA uses. This test is NOT codified in ANY regulation.

This is a total regulatory fantasy. If I wanted to fly someone somewhere, I should be able to do that regardless of my purpose.

For example, I have volunteered for the Special Olympic Airlift. There is no "common purpose" there at all. I am purely flying some folks for their benefit as a gift. To call that "commercial" is crazy.

You should be able to fly your friends somewhere if you want, just like you could drive them in a car.

Today I am flying to pick up an employee in VA. Is my "common purpose" doing business generally? I'm not doing it for me to be there.


It is stupid overreach by a government agency. The "common purpose" test need to die.

Mike C.

Mike Ciholas wrote:
Show me where "flight time is compensation" is written in the rules.

That was a fabrication of the FAA to get someone. It isn't in the rules. If the FAA can arbitrarily make stuff up, like your "I know it when I see it" comment, that's capricious.

Mike C.


That's not a FAR or rule that's gone through the regulatory process of rulemaking.

Probably not something I should mention and maybe there will be guys saying hey shut up. LOL

But I see more questionable 134.5 kind of stuff with partial ownership than anything else.

Someone can buy into a company that owns a plane with a bunch of other guys and have their own charter. I see some groups with over 10 aircraft being managed and flown with all Part 91 fractional owners. My bet is most of those owners do not understand what it takes to operate a part 91 jet aircraft.

So maybe the industry has moved on from dry leases and just sells shares in companies that own and operate aircraft under part 91. No paper work and it looks to be much easier. Not sure how you solve this and maybe it's not really a problem to solve.

But if I am a legit 135 I am more worried about those operations taking my business away than random dry lease guys.

Mike

I was honestly surprised the fractional Part 91 model survived scrutiny. IMHO, it got too big too fast and had too much money rolled into it before the FAA came to grips with it so they had to retcon the regs to allow it (aka 91 K).

I'm not sure it would have passed muster under different circumstances, but here we are.