Last December the U.S. Court of Appeals for the District of Columbia Circuit ruled in a case involving the flight-sharing service Flytenow.com.
The website offered to match private pilots having planned itineraries with persons desiring air travel and willing to share their pilot’s expenses. Pilots posting on Flytenow.com had final say on whether to accept a prospective passenger’s request, and the website helped facilitate the sharing of expenses on a pro rata basis between passengers and pilot. The opinion notes that Flytenow.com was “designed to attract a broad segment of the public interested in transportation by air.”
Under current regulations, private pilots are only allowed to provide private carriage for hire service. A Federal Aviation Administration “Advisory Circular” explains that private carriage for hire is carriage for one or several selected customers, generally on a long term basis. As long as the private pilot does not hold himself or herself out to the public generally, and any compensation s/he receives does not exceed the passenger’s pro rata share of expenses, a private pilot may offer private carriage consistently with FAA regulations.
The Advisory Circular defines “holding out” as making representations to the public or to a segment of the public that a carrier is willing to furnish transportation within the limits of its facilities to any persons who wants it. It can be done in many ways and it apparently does not matter how it is achieved. Merely refraining from advertising does not automatically avoid a determination of holding out.
The FAA determined that pilots offering flight-sharing services on Flytenow.com were holding themselves out, and operating, as “common carriers,” transporting persons from place to place for compensation. This meant the pilots would need a commercial pilot license to remain in compliance with FAA rules.
The review on appeal focused upon the FAA’s interpretation of “compensation” and “holding out,” the key factors in determining whether pilots are engaging in common carriage. The panel found that the FAA had correctly concluded that even permissible expense-sharing constituted the payment of compensation to a pilot. The court also found that pilots posting on Flytenow.com satisfied the “holding out” standard:
Flytenow.com is a flight-sharing website putatively limited to members, but membership requires nothing more than signing up. Any prospective passenger searching for flights on the Internet could readily arrange for travel via Flytenow.com.
By receiving compensation and holding themselves out as providing services to the public, the panel agreed that participating pilots required commercial pilot licenses. The decision proved to be a dealbreaker for Flytenow.com, which has since shut down.
Perhaps offering up tips to Flytenow.com and other aviation entrepreneurs on how to avoid common carriage regulation in the future, the panel added that
“[p]ilots communicating to defined and limited groups remain free to invite passengers for common purposes expense-sharing flights . . . posting on a bulletin board is permitted in certain circumstances. . . . Private pilots continue to enjoy the right to share expenses with their passengers, so long as they share a common purpose and do not hold themselves out as offering services to the public. . . . Other kinds of internet-based communications, such as e-mail among friends, for example, seem unlikely to be deemed ‘holding out’ under the FAA’s Interpretation.”
In other words, perhaps some subset of passengers who utilized Flytenow.com’s service and shared a common purpose with their pilot can be carefully targeted by a website, app or other online (or offline) service limited to such well-defined group. By broadly referring to its former passenger base as “aviation enthusiasts,” Flytenow.com appears to concede that it was not reaching out to a discrete group of potential travelers. Perhaps it will find a way to rectify this in the future. Or maybe it won’t need to, if efforts in Congress to liberalize FAA regulations are successful.