Compensation vs. Cost sharing?

[Mark Morissette]

Hey everyone.. Since I'm in Canada, and the rules are somewhat
different here in many regards, I'm pretty sure this will remain a
relevant question with a straightforward answer, none the less.

Where exactly is the fine line between being "Compensated" for flying
(contrary to a PPL) versus "Cost Sharing"...aka, my brother comes
along and offers to split the cost of a few hours rental.

Obviously, most people do this routinely, and even several of the
instructors at my flightschool have said that they gained a great
majority of hours themselves on the way to their instructor rating by
flying friends and familly around on shared-cost rentals.

However, Surely the "line" exists somewhere, and I'd sure like to
clarify it before I accidentally cross it and find myself in trouble.

Is it safe to assume (For example) that if I pay for exactly half the
flight plus 1cent (or any arbitray sum over 50%) that I am OK?

Is there an accepted percentage?

Any info appreciated..

Thx
Mark

[Ron McKinnon]

"Mark Morissette" > wrote in message
...
> Hey everyone.. Since I'm in Canada, ...
>
> Where exactly is the fine line between being "Compensated" for flying
> (contrary to a PPL) versus "Cost Sharing"...aka, my brother comes
> along and offers to split the cost of a few hours rental.

FYI, The relevant regulations are here:

http://www.tc.gc.ca/CivilAviation/Regserv/Affairs/cars/Part4/401.htm#401_28

Basically, if carrying your brother is incidental to the purpose of the
flight,
and your brother pays no more than 'his share' (pro rata) of the direct
costs,
you're ok

[Mark Morissette]

>He asked me how much it would cost and I said "about 3 hours each way
>at $20/hour (this was a while ago) so it would cost around $120". He thought
>for a second and said "This briefcase is awfully heavy, I'll pay you $150 to
>carry it around for me when I go to the seminar next Wednesday". Being
>a rather astute student I said "Deal". "But that's a long drive, How about
>I rent a plane and we just fly out there". "Sure", he said, "As long as you're
>willing to pay for the plane".
>I must have picked up a good 50 hours that way.:-)

Interesting.. :-)

Kind of reminds me of the Photographer I read about a few months
back..may have been in this NG for that matter, I forget exactly.

He "Happened" to be taking pictures of lots of high-end houses while
flying and building hours.

Upon landing, he "Happened" to provide small copies of the resulting
photo's to the owners of the houses in question, the owners of whom
often "Happened" to call him back and offer larger sums of cash for
sizable framed copies of said photos's.

Worked for him.. ;-)

[BTIZ]

"Mark Morissette" > wrote in message
...
> >He asked me how much it would cost and I said "about 3 hours each way
>>at $20/hour (this was a while ago) so it would cost around $120". He
>>thought
>>for a second and said "This briefcase is awfully heavy, I'll pay you $150
>>to
>>carry it around for me when I go to the seminar next Wednesday". Being
>>a rather astute student I said "Deal". "But that's a long drive, How about
>>I rent a plane and we just fly out there". "Sure", he said, "As long as
>>you're
>>willing to pay for the plane".
>>I must have picked up a good 50 hours that way.:-)
>
> Interesting.. :-)
>
> Kind of reminds me of the Photographer I read about a few months
> back..may have been in this NG for that matter, I forget exactly.
>
> He "Happened" to be taking pictures of lots of high-end houses while
> flying and building hours.
>
> Upon landing, he "Happened" to provide small copies of the resulting
> photo's to the owners of the houses in question, the owners of whom
> often "Happened" to call him back and offer larger sums of cash for
> sizable framed copies of said photos's.
>
> Worked for him.. ;-)
>

But in this example.. he is a photographer... flying is just incidental to
the photography business.. and flying for himself.. he is not getting paid
for the flying.. he is being paid for his pictures..

a very fine very gray line..

B

[Julian Scarfe]

"Mark Morissette" > wrote in message
...
> Hey everyone.. Since I'm in Canada, and the rules are somewhat
> different here in many regards, I'm pretty sure this will remain a
> relevant question with a straightforward answer, none the less.

It's a relevant question but with very different answers depending on where
you are.

In the US, pro-rata cost sharing of direct costs is permitted. But then
there's this extraordinary "common purpose test" which doesn't appear in the
FARs but seems to have been added by the ALJs in some contorted chains of
precedence. That suggests that cost-sharing is only permitted if the pilot
and passengers have a "common purpose" (e.g. as cited in Administrator vs
Rawlins EA-4583). Taken to extremes, this is absurd -- if the pilot's
prupose is to enjoy the piloting and the passengers' purpose is to enjoy the
view, does that make cost sharing illegal?! My guess, not having the
earliest opinions, is that it was originally a test for the credibility of
absence of compensation or hire. ("So you took these guys 1000 miles to
their meeting in an aircraft normally used for air taxi, owned by a FAR 135
operator and you're trying to tell me they didn't pay you for it and you did
it because you like the burgers at that airport? Yeah right.")

It looks like the Canadian regs are different and clearer:

401.28(2) The holder of a private pilot licence may receive reimbursement
for costs incurred in respect of a flight where:
(a) the holder is the owner or operator of the aircraft;
(b) the holder conducts the flight for purposes other than hire or reward;
(c) the holder carries passengers only incidentally to the purposes of the
flight; and
(d) the reimbursement
(i) is provided only by the passengers referred to in paragraph (c), and
(ii) is for the purpose of sharing costs for fuel, oil and fees charged
against the aircraft in respect of the flight, as applicable.

There's still that issue of purpose in (b) and (c). And you must be the
owner or operator, and it's not clear if the hirer of an aircraft is the
"operator" -- I doubt it.

(The conditions for reimbursement by an employer also seem particularly
strict: you have to be a full-time employee.)

FWIW, the regs in the UK are much clearer, allowing pro-rata sharing of
diect costs when:
a) no more than 4 people including the pilot are on board
b) the flight has not been advertised (outside a flying club)
c) the pilot is not employed by the aircraft operator

There's no issue of purpose. But then the 25% share is probably as much as
100% of the cost of a similar N American flight! :-(

Julian Scarfe

[Brian]

I think, one would have trouble "selling" this to the FAA. Because the
result is different when using an aircraft.

Unless he is flying by at only a few feet off the ground and taking
photos he could otherwise take from his care the FAA would consider
this a comercial operation. Or not incidental to the Business.

Unlike the guy being paid to carry a Briefcase. he could carry the
Briefcase if he flew or if he drove a car.

Brian

[John Galban]

Brian wrote:
> I think, one would have trouble "selling" this to the FAA. Because
the
> result is different when using an aircraft.

Probably not. The FAA has long held that aerial photography (i.e.
snapping photos and selling them) is not a commercial pilot activity.

Keep in mind that the compensation rules are primarily designed to
discourage private pilots from flying passengers for hire.

John Galban=====>N4BQ (PA28-180)

[Peter Duniho]

"John Galban" > wrote in message
ups.com...
> [...]
> Probably not. The FAA has long held that aerial photography (i.e.
> snapping photos and selling them) is not a commercial pilot activity.
>
> Keep in mind that the compensation rules are primarily designed to
> discourage private pilots from flying passengers for hire.

"Primarily", perhaps. Hard to say without talking to the person who
designed them (which I haven't, but he did publish a FAQ :) ).

However, there are plenty of examples of "for hire" operations that don't
involve passengers, and which are prohibited. Crop dusting, banner towing,
etc. Obviously the "design" of the compensation rules incorporates those
concerns as well. Whether they are all only secondary or not, I don't know.

That said, it's my recollection that you're correct about aerial
photography. I haven't been able to find a reference, and I believe that
the allowance applies only to pilots who are doing the photography
themselves. A pilot carrying a passenger who is doing the photography would
require a commercial certificate (but the operation would otherwise still be
allowed under Part 91, at least).

I would love to see the references that describe all this. The Part 61 FAQ
implies it, but doesn't state so directly.

Pete

[John Galban]

Peter Duniho wrote:
<snip>
>
> That said, it's my recollection that you're correct about aerial
> photography. I haven't been able to find a reference, and I believe
that
> the allowance applies only to pilots who are doing the photography
> themselves. A pilot carrying a passenger who is doing the
photography would
> require a commercial certificate (but the operation would otherwise
still be
> allowed under Part 91, at least).
>
> I would love to see the references that describe all this. The Part
61 FAQ
> implies it, but doesn't state so directly.

Like you, I couldn't find a handy reference, but I know there's one
out there. I recall having seen it a few times. Can't remember if
it's a General Consul opinion or not.

John Galban=====>N4BQ (PA28-180)

[Highflyer]

"Peter Duniho" > wrote in message
...
> "John Galban" > wrote in message
> ups.com...
>> [...]
>> Probably not. The FAA has long held that aerial photography (i.e.
>> snapping photos and selling them) is not a commercial pilot activity.
>>
>> Keep in mind that the compensation rules are primarily designed to
>> discourage private pilots from flying passengers for hire.
>
> "Primarily", perhaps. Hard to say without talking to the person who
> designed them (which I haven't, but he did publish a FAQ :) ).
>
> However, there are plenty of examples of "for hire" operations that don't
> involve passengers, and which are prohibited. Crop dusting, banner
> towing, etc. Obviously the "design" of the compensation rules
> incorporates those concerns as well. Whether they are all only secondary
> or not, I don't know.
>
> That said, it's my recollection that you're correct about aerial
> photography. I haven't been able to find a reference, and I believe that
> the allowance applies only to pilots who are doing the photography
> themselves. A pilot carrying a passenger who is doing the photography
> would require a commercial certificate (but the operation would otherwise
> still be allowed under Part 91, at least).
>
> I would love to see the references that describe all this. The Part 61
> FAQ implies it, but doesn't state so directly.
>
> Pete
>

As I recall the FAA makes the distinction based on whether or not the pilot
is being compensated for flying the airplane. They will accept compensation
as long as it is not for flying. For example, an employee can fly an
airplane on company business with a private ticket if he is not paid for
flying. He may be paid for the trip, but the payment must be the same
whether he is flying, driving, or taking the bus. :-) There are many
"dodges" used to allow the pilot to get someone else to pay for his flying,
but the FAA closes them down as fast as they can find them. By the way,
they now consider "flying time" in the logbook as "compensation."

The photographer can fly his own or rented airplane and take pictures and be
paid for the pictures. He is not being paid for the flying.

If your cousin wants to fly to Schenectady and offers to pay for the
airplane if you will fly him there and back it is considered compensation
( the flying time ) and you will get nailed.

If YOU are flying to Schenectady and your cousin wants to go along and he
pays half the cost of the flight, that is OK. But you had to be going to
Schenectady even if your cousin didn't want to go along. Therein lies a
large gray area, because intentions are a lot more difficult to discern than
actions are.

Highflyer
Highflight Aviation Services
Pinckneyville Airport ( PJY )