Who Is Really in Control? Continued from page 19 company to provide pilot and man- agement services, either to its under- lying owners or to separate aircraft owners, as its main or sole source of business activity, and that assumes operational control of the aircraft for the benefit of those owners or cus- tomers. In either event, these types of companies—mere holding or mere management companies whose sole purpose is to fly passengers around and be reimbursed by other persons or companies to do it—are called flight department companies by the FAA, and the FAA considers them to be per se commercial operators. In summary, if you are an in- dividual or a company that oper- ates and pays for your own flights out of your own pocket, then you are a non-commercial operator. Conversely, if you are a person or a company that receives any amount of compensation, in any form or fashion, to help cover the costs of a passenger-carrying flight, then you are a commercial operator. So You Are a Commercial Operator—Now What? Now that you have a grasp of what the FAA considers to be a commercial operator, you can start the analysis of which operational rules you can fly under—just Part 91, or does the flight need to be operated under Part 135 instead? Keep in mind that this analysis needs to be conducted on a flight-by-flight basis, and, again, starts with the simple test: Who is the “operator” of the flight, and is that operator carrying “persons or property” for “compensation or hire?” If you are a person or a company, such as the WidgetCo, using the aircraft for your own personal or business use and paying all of the flight costs out your own pocket, then the answer to the question is ‘No,’ you are not a commercial operator and can fly under Part 91. If the answer is that you are usually a non-commercial opera- tor, but you would like to do a little cost sharing on occasion, then the next question is whether or not you can fit into one of the exemptions crafted by the FAA to allow for some limited reimbursement arising from the use of the aircraft when you are not doing so as a way to indirectly hold out to the general public. These exemptions are primarily found at 14 C.F.R. Section 91.501, and include concepts such as time sharing agree- ments, demonstration flights, joint- registered ownership agreements, and interchange agreements. All of these exemptions are actually quite narrow and can be very tricky to do properly (and a further discussion of them is well beyond the scope of this article); but the main point here is that these exemptions cannot, on their face, be used by operators that are certificated charter companies or that are flight department companies. In both of those instances, the FAA has made it very clear for some 40 years that such operators are per se commercial in nature and must have Part 135 certification—and oper- ate each flight under Part 135—in order to conduct passenger flights. Stated another way, if you are a flight department company and you want to carry passengers and get reimbursed for it, then you must obtain your own Part 135 certificate. If you don’t want to do that, then your only option becomes leasing or transferring operational control of the aircraft to some person who is a legal Part 91 operator as set out above, or to someone else who holds a Part 135 air carrier certificate. And, if you are a company whose primary business is holding such an air carrier certificate to get paid to carry passengers around, then you can only operate (i.e., assume and exercise operational control over) such passenger flights under Part 135—a key to the next common problem facing charter operators. Other Common Problems for Charter Operators— “Part 91 Owner Flights” and Part 91 Authorizations Many charter operators lease aircraft from registered owners on a non-exclusive basis, with the un- derstanding that when the charter operator is conducting third-party charter flights, those flights will be conducted under Part 135, and when the charter operator has the aircraft owners, members, employees or their guests on board, those flights will be conducted as non-commercial operations under Part 91—commonly referred to as “Part 91 owner flights.” What is really going on here is that when the flights have charter pas- sengers on board, then the lease acts to transfer operational control of the aircraft to the charter operator, who then has the certification to act as the commercial operator of those flights and be paid to do so. Conversely, when the aircraft owner wants to Continued on page 22 Aviation Business Journal | 1st Quarter 2017 21
