FAA issues new Guidance on sharing Aircraft Operating Expenses

One of the ways to get into hot water with the FAA without busting an airspace, a runway incursion, or deviating from a clearance is to accept compensation for a flight conducted under part § 61. However, it is also known that the FAA allows cost-sharing under specific circumstances. The question of which expenses can be shared and under what conditions has long been considered a grey zone. As the cost of general aviation has steadily increased, sharing the expenses of a flight is an attractive option for pilots building PIC time on their way to a professional career or simply making a joy flight more affordable. Time and again pilots have taken advantage of these exceptions but some have also pushed the limits and deviated from the spirit of this regulation.

A recently issued advisory circular AC 61-142 provides more details on which expenses are permissible to share and gives some concrete examples. This AC primarily discusses 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 his or her pro rata share of the operating expenses of that flight. Those operating expenses are limited to fuel, oil, airport expenditures, or rental fees.

The AC defines “compensation” for a flight as an exchange of anything of value in return for the pro rata share, even if the compensation is received by a third party. “Reimbursement of expenses, accumulation of flight time, and good will in the form of expected future economic benefits can be considered compensation”.

A private pilot must have a common purpose with his or her passengers and have his or her own reason, other than the receipt of compensation for the flight, for traveling to the destination. In assessing whether a pilot is operating consistently with the expense-sharing provision, the FAA considers whether the pilot has his or her own reason for traveling to the destination. When the pilot, not the passenger, chooses the destination, it suggests that the pilot is not simply transporting passengers for compensation. For example, if you and your friends want to participate in the Iron Man contest in Kona it is obvious that you have common purpose since you would have flown there even without your passengers. In a similar scenario, you might have a business meeting but you have to return to Oahu later that day. A common purpose exists for the first leg of the flight but not for the second leg, even though the aircraft needs to be returned to Honolulu. Pro rata compensation is only permitted for one flight in this case.

Finally, the AC discusses in length the issue of “holding out” to the general public to find paying passengers, regardless of whether the flight would take place with or without passengers. This includes publication in print, internet and social media.

Consider that the FAA has the higher safety standards in mind that commercial operators have to comply with when transporting the general public for hire or compensation. The exceptions made in § 61.113(c) are predominantly meant for friends, family, acquaintances, and to allow pilots to share expenses when flying for currency and proficiency.

Posted in GACH.

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