FAA May Allow Some Executives to Pay for Non-Business Flights

In response to a request from the National Business Aviation Association (NBAA) earlier this year, the FAA's Chief Counsel's Office issued a proposed interpretation in July that would allow company executives to pay for non-business flights under certain circumstances.

The FAA has historically taken the position (as expressed in the 1993 "Schwab opinion") that executives couldn't pay for personal travel on corporate aircraft because the flights weren't within the scope of the company's business. Under the new proposal, the FAA acknowledges that use of corporate aircraft instead of the airlines allows an executive to cancel or change travel plans at the last minute--to return unexpectedly from vacation for an important meeting, for example--and avoids the need to reimburse the executive for cancelled commercial flights. Thus, "a company could be reimbursed for the pro rata cost of owning, operating and maintaining the aircraft when used for routine personal travel by an individual whose position merits...a high level of company interference into his or her personal travel plans."

Companies seeking to take advantage of the new rule would be required to maintain a list of employees who might be required for business reasons to alter their travel plans on short notice. In addition, only certain personal travel would qualify as incidental to a company's business. In its comments on the proposal, the NBAA praised the FAA for achieving an appropriate balance between safety concerns and the business needs of aircraft-operating companies.--Jeff Wieand