FAA Cautions Pilots on Illegal Charter Pitfalls

Continuing its campaign to combat illegal charter, the U.S. Federal Aviation Administration has issued an informational letter reminding that private pilots may not fly for compensation or hire and warning against the use of “sham” dry leases and certain unauthorized flight-sharing schemes. Sent out late last month, the letter is part of a multi-pronged approach that the agency is taking in partnership with industry to discourage illegal charter activity through educational and enforcement efforts.

“Unauthorized [Part] 135 operations continue to be a problem nationwide, putting the flying public in danger, diluting safety in the national airspace system, and undercutting the business of legitimate operators,” the agency said in the letter.

The letter advises that “private pilots may neither act as pilot-in-command (PIC) of an aircraft for compensation or hire nor act as a PIC of an aircraft carrying persons or property for compensation or hire. Furthermore, to engage in air transportation a pilot must hold a commercial or airline transport pilot license and must operate the flights in accordance with the requirements that apply to the specific operation conducted (e.g., Part 135).”

There is concern that pilots could fall into this activity with a proliferation of computer and cell phone apps to facilitate commercial air transportation, either directly or indirectly. Some of the recent enforcement actions have pointed to the use of pilots who did not meet proper qualifications for the Part 135 operation.

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In addition, the FAA letter highlights another common pitfall that leads to illegal charter: the use of what the agency termed "sham" dry leases or “wet lease[s] in disguise.” Noting that a dry lease is an aircraft leased with no crew, the FAA explained that sham dry leases can occur when one or more parties “act in concert to provide an aircraft and at least one crewmember to a potential passenger.”

As an example, the agency cited a passenger entering into two independent contracts with a party that provides the aircraft and the pilot. Another instance could involve when two or more parties bundle the aircraft and crew. The FAA noted that this scenario is further detailed in Advisory Circular (AC) 91-37B, "Truth in Leasing."

“Whenever you pilot an aircraft subject to a dry-lease agreement…you should consider the following: Is it truly a dry-lease agreement whereby the lessee, in practice and agreement, has operational control in accordance with AC 91-37B and the FARs?” the FAA said. “If not, then flights operated under this agreement may be illegal charters and you, the pilot, may be in violation of the FARs for those flight operations.”

Further, if a pilot is the provider of the aircraft involved in the dry lease, that pilot might be in violation of the FARs if he or she does not have proper Part 135 authorizations.

The agency also cautioned on the misuse of flight-sharing. The regulations permit private pilots to share certain operating expenses on a pro-rata basis with passengers covering fuel, oil, airport costs, and rental fees.

“To properly conduct an expense-sharing flight under 61.113(c), the pilot and passengers must have a common purpose and the pilot cannot hold out as offering services to the public,” the FAA said. In this case, the pilot has chosen the destination and the pilot and passengers have a “bona fide common purpose.” But pilots must avoid activities such as advertising a flight that would constitute “holding out” for common carriage.

The FAA has released a few advisory circulars on use of flight-sharing, including AC 61-142, "Sharing Aircraft Operating Expenses in Accordance with 14 CFR 61.113(c)," and AC 120-12A, "Private Carriage vs. Common Carriage of Persons or Property."