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What constitutes compensation... really...


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Okay so the other day we were having a discussion in the lounge. The scenario is this: A PPL (H) with a -44/300/whatever has a friend. The friend says "hey man, since you're gonna go out and fly around today, can you drop me off at X airport (say, 30.2nm away from home airport) and I'll reimburse you for, say, the pro rata it takes for the .7 hobbes time it takes to get out there?"

 

Now you're not doing anything that day, but you're itching to burn holes in the sky somehow. Let's say the direct operating cost for .7 is 200 bucks. Your buddy slips you 100 bucks for the favor as you drop him off and fly back to your home airport on your own dime, as he's gonna catch a ride back home on his own. Did you bust a FAR? Why?

 

I personally say no. You received your pro-rata share for the portion of the flight in which you carried a pax. You flew home on your own dime, so really you lost money on that deal. Does the fact that you did your buddy a "favor" by flying him out there mean you received compensation? I've looked in Pt 1 and Pt 91 for definitions of "compensation" and have found nothing. So what defines compensation as far as the FAA is concerned?

 

I'm not looking for legal advice, just a general consensus on the matter.

 

Question 2: Same scenario, but that FBO just happens to have ridiculously good hamburgers, and it'll be lunchtime by the time you land. You really want one of those burgers and your buddy still slips you that hundred bucks. What then?

 

Discuss.

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Can-o-worms time.

 

So your buddy slips you a hundred bucks. Who's going to know?

 

Now before ya'll start yellin'at me about integrity and all, be forewarned I'm not advocating anything.

 

Now then, like I said, who's going to know? Does one report every dollar one accrues? Does one report to the administrator any compensation? How many private pilots report any monies taken for compensation? Is this even a problem?

 

I'd like to compare that to building a fence for your grandma. She pays for the materials, and you erect the fence. Afterwords, she gives you a hundred dollars for your trouble. The tax code says you must report this as income and therefore pay FICA, social security, State and local taxes. How many of ya'll do that? As a matter of fact, when you trade labor, you must report the equivalent amount in dollars and report that as income also. Barter has similar rules also. I again ask, how many of ya'll do that? There are those that will report all income, but I betcha the vast majority never will, mostly because they're never aware of the tax code.

 

So if your buddy gives you a hundred bucks for a flight, what government agency will be there to document the transaction?

 

I'd be more concerned about the drop-off of your pax. As I understand it, if you take someone for a flight as a private pilot, the pax must return to the point of origin. I recall seeing that in the FAR somewhere, but I'm too lazy to search right now.

 

But then I again ask, who's gonna know?

 

Later

 

I just thought of something. You take your budd for a flight, and the next week, he replaces the radiator on your 76 Datsun pick-up. Do you report that as compensation? What about the beer?

Edited by Witch
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My take would be that the problem is not in the compensation recieved but the fact that you could be considered to have been involved in a part 135 'air taxi' operation. A private pilot can fly around and share the costs for that trip with pax. A commercial pilot could recieve compensation for flying his pax around. If that pax is dropped off anywhere along that flight then you have provided air taxi service and are not in compliance with part 135.

Just the thought off the top of my head, could be off base. Good luck.

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Senario 1..... The FAA would/might bust you.... case law has established for the FAA the following..

 

If your buddy is the one who initiates the flight like you illustrated then you're busted.....

Same senario but you suggest you guys go flying and you end up dropping him off and taking the $100.... no problem

 

 

 

Senario 2..... same thing... The key that the FAA brings up time after time is why are you making that flight to begin with... if it was your buddy's suggestion (you weren't planning on flying first) your busted. They consider that on demand air taxi.

 

 

There is absolutely nothing wrong with me suggesting we go flying and taking somebody somewhere and dropping them off and splitting the cost of the operation... Part 91.

Edited by apiaguy
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There are two answers to your question.

 

First, there is the legal, FAA approved answer...

 

Then there is the practical what happens in the real world answer...

 

What you describe no doubt goes on all the time, to little notice by anyone, much less the FAA. From a practical perspective, flying your buddy somewhere and having him pay you something towards it is unlikely to draw much attention, so long as you don't draw it yourself (such as posting a notice somewhere)

 

Where people get into trouble is either when they get ramp checked, or when someone complains (usually a part 135 company that sees this going on and doesn't like their business undermined).

 

As the others have said, there is a ton of case law about this, the FAA has busted pilots for exactly what you describe. The FAA doesn't want you flying someone to another location that you had no need to go to in the first place.

 

You want an even better twist? Him giving you money has nothing to do with it, a commercial operation is a commercial operation, regardless of the level of compensation. The FAA has taken the position (and it has held up on appeal to the full NTSB board) that no one does commercial operations for free, there is money somewhere, even if it is just a favor owed in the future.

 

So if you're doing something that can be defined as a commercial operation, then it is one, regardless of who is paying.

 

Now, lets get back to that ramp check. If the FAA walks up, splits you two up and asks you both some questions, and you can tell him the names of the other guys kids, where he went to school, where he lives, etc. and so can the other guy, then odds are nothing will happen because you obviously know the guy and you're buddies. Where you get into trouble is when you take Bob from accounting flying somewhere and you're not sure if he is married or not, what his last name is, etc. Then you're in a pile of it. :)

 

Another way to think of it is that private pilots with no intention of flying for a living can probably take a bit more risk than professional pilots can, if you get a 90 day smack down, so what... If a commercial pilot gets one, it can really cause career problems.

 

This is why I advise our professional pilot program students to avoid any possible issues with commercial operations, they are spending too much money to take foolish chances with their career.

 

My 2 cents...

 

Fly Safe!

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Good points by all.

 

Flying is expensive and it is very tempting for a pilot/aircraft owner to have their "friend" "share" a little more for the flight.

 

Resist this temptation! You may get away with it for years, but your certificate is worth just a little bit more than the extra cash you'll get for the flight.

 

This also comes up all the time for the part 91 operator. How many times does someone need a "quick" charter and are willing to pay big bucks?! Who will know? Right? Ya....

 

Save yourself the headache. Split the costs evenly as stated in the FAR's.

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This has, and will always be, just another gray area in the FARs. The feds will take the strictest, most restrictive interpretation of it *IF* they want to nail you. The key word being "if". As long as you don't tick anyone off and keep quite, they'll have no reason to even think about you.

 

You can fly (shuttle) people around from place to place as a private pilot as never do anything illegal. It's just going to look suspicious to them if they ever find out about it. How are they going to find out about it? You don't need to log those flights, they don't "track" those flights, they have no idea how many are on board, etc. Since you ENJOY flying, is that considered compensation in itself? They'll probably try to make a case out of it.

 

On ramp checks, they have no right to detain you, nor your passengers. That being said, you shouldn't just blow them off, because that will upset them. Then they'll write "uncooperative" into any action against you. But you are under no obligation to tell them where you came from, where you're going, etc. You just have to show them your certificate, photo ID, etc. when asked by FAA & LEO. That's it! Just like a traffic stop with cops.....but the FAA cannot detain or arrest you. But if you're a jerk to them, you're going to get it back 10 fold.

 

It's just like with the ATF and buying/selling guns. It's perfectly legal for non-licensees (non-dealers) to buy and sell guns every day in any quantity. But, you cannot purchase a gun WITH THE INTENT TO SELL IT. Profit, break-even, or loss, it doesn't matter--if they can prove you bought it with the sole intent to sell it, you're looking at a big fine, seizure of your firearms, and possible jail time. So,

 

In both cases, it's up to you to not look suspicisious, leave any patterns, or get vocal about it. Even when your honesty and morals are in the right place, actions can still look suspicisious and bring about unwanted government attention.

 

Just keep your mouth shut and follow the rules. There are no "loop holes" with the FAA.

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Another analogy is political contributions. It's illegal to bribe politicians, but perfectly legal to give them money as long as it's a 'campaign contribution', and you don't openly ask for something in return (wink, wink). It goes on all the time, and nothing happens as long as it isn't made too obvious. Attract enough attention from the wrong people, though, and you can be busted.

 

Enacting laws that can't be enforced is stupid, and in the long run encourages people to break the law. Allowing grey areas like these is just as stupid.

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Okay so the other day we were having a discussion in the lounge. The scenario is this: A PPL (H) with a -44/300/whatever has a friend. The friend says "hey man, since you're gonna go out and fly around today, can you drop me off at X airport (say, 30.2nm away from home airport) and I'll reimburse you for, say, the pro rata it takes for the .7 hobbes time it takes to get out there?"

 

Now you're not doing anything that day, but you're itching to burn holes in the sky somehow. Let's say the direct operating cost for .7 is 200 bucks. Your buddy slips you 100 bucks for the favor as you drop him off and fly back to your home airport on your own dime, as he's gonna catch a ride back home on his own. Did you bust a FAR? Why?

 

I personally say no. You received your pro-rata share for the portion of the flight in which you carried a pax. You flew home on your own dime, so really you lost money on that deal. Does the fact that you did your buddy a "favor" by flying him out there mean you received compensation? I've looked in Pt 1 and Pt 91 for definitions of "compensation" and have found nothing. So what defines compensation as far as the FAA is concerned?

 

I'm not looking for legal advice, just a general consensus on the matter.

 

Question 2: Same scenario, but that FBO just happens to have ridiculously good hamburgers, and it'll be lunchtime by the time you land. You really want one of those burgers and your buddy still slips you that hundred bucks. What then?

 

Discuss.

My 2 cents worth (non compensation!)....

 

Who owns the helicopter? If you are renting the helicopter and your buddy is paying you a $100 for it, that could be a big no, no. Is the helicopter compliant with commercial operations namely 100hr inspection? Is the company who owns it a 135 operator? Obviously the pilot is a PPL so this is not a good position to be in.

 

If you own your own helicopter and your buddy pays you $100 to fly from A to B, sounds like sharing to me. Should be ok for a PPL or even if you are CPL.

 

But if you are renting it from a 3rd party, watch out for possible violation.

 

My PPL's worth

 

rotorrodent

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Compensation aside, I was always taught that dropping pax off at anywhere other than the point of origin, made it a 135 operation.

 

As Jehh posted, I can see how this could be considered a commercial flight even without ANY money changing hands.

 

I don't see how it could be seen as NOT being a 135 flight though...

 

Just my 2c.

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Compensation aside, I was always taught that dropping pax off at anywhere other than the point of origin, made it a 135 operation.

 

As Jehh posted, I can see how this could be considered a commercial flight even without ANY money changing hands.

 

I don't see how it could be seen as NOT being a 135 flight though...

 

Just my 2c.

 

OK here is one case where you are wrong on that point. Private pilots fly passengers for free every week and the FAA has no issue with it.

 

http://www.angelflight.com/

Edited by RotorWeed
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OK here is one case where you are wrong on that point. Private pilots fly passengers for free every week and the FAA has no issue with it.

 

http://www.angelflight.com/

 

You are correct, because there is a charity provision for private pilots... And everyone (including the FAA) knows that this is a good cause, and no one in the government wants to kill their career by coming down hard on "the children".

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You are correct, because there is a charity provision for private pilots... And everyone (including the FAA) knows that this is a good cause, and no one in the government wants to kill their career by coming down hard on "the children".

 

It has nothing to do with being a "good cause". Read your FARs.

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It has nothing to do with being a "good cause". Read your FARs.

 

Umm, I do believe that would fall under the "charity" provision I already mentioned...

 

61.113(d)

 

The rest of my comment has to do with the real world, a place the FAA doesn't always inhabit, but from time to time they stick their heads out to have a peek in it. This is one of those times.

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Some good points you guys have made. I originally thought 91.146 provided for charitable operations to get passengers from point a to the hospital or whatever but 91.146 (B.)(1) says the flight must be non-stop, begin and end at the same airport, and be 25 miles from the beginning airport. However there is not a FAR that I know of that limits private pilots with passengers to beginning and ending at the same airport so it would seem kind of like a gray area unless someone with further knowledge has a good solid answer they can come up with.

Edited by slick1537
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Here is an article from AVweb that provides insight to the compensation for hire rule. Phillip J. Kolczynski who is a practicing aviation attorney wrote the article.

 

http://www.avweb.com/news/avlaw/186346-1.html#Section4

 

Tom22, that is a very good article; thank you for posting it! Trap 5 "common propose" speaks to the original question in this thread. You can NOT make a flight of this type with out violating 61.113

 

Romeo Whiskey

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