61.113 and expense reimbursements

Recently, posted:

On Nov 21, 3:06 pm, "Neil Gould" wrote:
Recently, posted:

Huh? Paying just 51% doesn't make 61.113(c) moot, but paying just
25% does make it moot? So the boundary between mootness and
non-mootness lies somewhere between 50% and 25%?

If the actual calculation doesn't matter -- e.g. it could be 1% or
99% as long as it can be "calculated precisely" -- then the FAR has
no regulatory power. How could one *not* meet the requirement if one
has a calculator? That is why I wrote that it would be moot.

Ok, thanks, I understand your point now. But you've missed the
essential meaning of "pro rata": it refers to a *proportionate* share,
not just any old calculated share. Hence, among four people, each
one's pro rata share would be 25%--not 1% or 99% or 50%.

In some specialized circumstances, pro rata amounts are not evenly
divided according to the number of people, but rather by some other
calculable criterion, such as the number of shares of a corporation
owned by each person. But by default, if you speak of a pro rata
distrubution among N people, you're referring to 1/Nth apiece, unless
a substitute criterion (such as corportate shares) is specified or
obvious.

Thanks, and I understand the logic of your interpretation. It clarifies
the 50% notion that I've been taught, but it seems to make the regulation
rather pointless so long as there is some rationale to the application of
"pro rata" (for example, shares of ownership in the aircraft or number of
club members). If the FAA agrees with this usage then the matter is
settled! However, I'm still skeptical, given the precedence of such as
free ferrying to be considered "compensation". ;-)

Regards,

Neil

"Neil Gould" wrote:
Thanks, and I understand the logic of your interpretation. It
clarifies the 50% notion that I've been taught, but it seems to make
the regulation rather pointless so long as there is some rationale to
the application of "pro rata" (for example, shares of ownership in the
aircraft or number of club members). If the FAA agrees with this usage
then the matter is settled! However, I'm still skeptical, given the
precedence of such as free ferrying to be considered "compensation".

The following web page titled "Traps For The Unwary: Business Flying
And The 'Compensation Or Hire' Rule" discusses "pro rata" issues, among
others (such as the judicial invention of the "common purpose" test):

http://www.aviationlawcorp.com/content/traps.html

On Nov 21, 4:49 pm, "Neil Gould" wrote:
Thanks, and I understand the logic of your interpretation. It clarifies
the 50% notion that I've been taught,

Sorry, I can't understand your reply well enough to tell whether you'e
agreeing with me. You say my interpretation "clarifies" the 50%
requirement, but in fact my interpretation is that there is no such
requirement.

but it seems to make the regulation
rather pointless so long as there is some rationale to the application of
"pro rata" (for example, shares of ownership in the aircraft or number of
club members).

I don't follow what your're saying. "Pro rata", by default, refers to
an even distribution among the participants. No other criterion is
specified in the relevant FAR, so it's just referring to an even
split. Shares of ownership or number of club members has no bearing.

If the FAA agrees with this usage then the matter is
settled! However, I'm still skeptical, given the precedence [you mean 'precedents']
such as free ferrying to be considered "compensation". ;-)

But how is that a precedent for the examples under discussion here?
Free flight time is indeed a valuable commodity. So if it's provided
in exchange for a service that one often pays a commercial pilot to
perform, then it is indeed compensation. And private pilots can't
receive compensation for flying, except under specified conditions.

But the point is that the cases under discussion here are indeed
covered by the specified exceptions (the cases a choosing to fly,
rather than drive, to a business meeting; or flying with friends and
splitting the flight expenses evenly, i.e. pro rata). In the ferrying
case, the specified exceptions do *not* apply. So that case is no
precedent for situations where the specified exceptions *do* apply.

The 51% rule applies to homebuilt aircraft.




"Neil Gould" wrote in message
...
| Recently, Gig 601XL Builder wrDOTgiaconaATsuddenlink.net posted:
|
| Neil Gould wrote:
| Recently, Gig 601XL Builder wrDOTgiaconaATsuddenlink.net posted:
|
| Neil Gould wrote:
| Recently, BT posted:
|
| As long as the total of reimbursements are less than 50% of the
| cost of the flight, it doesn't conflict with the FARs. OTOH, if
| someone has a bug up their posterior and wants to hassle you,
| they don't have to be right or interpret the FARs correctly.
|
| Neil
|
| As long as their total contribution is not more than their pro
| rata share of the cost of the flight.
| 50% if there is only one person going with you.. but the example
| was three others.
|
| Reading of 61.113 (c) is pretty clear:
|
| (c) A private pilot may not pay less than the pro rata share of the
| operating expenses of a flight with passengers, provided the
| expenses involve only fuel, oil, airport expenditures, or rental
| fees.
|
| So, the 50% figure *is* the "pro rata share" that the private
| pilot must pay *for the flight*. It doesn't matter how many
| contributors there are.
|
| Neil
|
| WHAT! If there are 4 the pro rata share of $100=$25. If there are
| 100 the pro rata share is $1.
|
| pro ra·ta (pro ra't?, rä'-, rat'?)
| adv.
| In proportion, according to a factor that can be calculated exactly.
|
| Your generalized application of the term "pro rata" does not account
| for the 50% requirement. For example, one could easily "calculate
| exactly" 20% of the cost of a flight, but if that is all a private
| pilot pays, then the FAA is likely to consider the other 80% paid
| compensation.
|
| As long as the private pilot must pay 50% of the cost of the flight,
| the sum of all other contributions can't exceed that amount. Now, if
| someone can support the notion that the private pilot doesn't have to
| pay 50% of the cost of a flight except under the remaining 61.113
| guidelines, that is a different matter. However, such a notion would
| make 61.113 (c) moot, so it seems a pretty remote possibility to me.
|
| Neil
| Who will continue to pay 50% of the cost of the flight.
|
| I just went back a reread all of 61.113. No where can I find the
| phrase "greater than 50%" or even 50%. 61.113 (c) as written above is
| the only part of the regulation that discusses splitting of costs of
| flight among the passengers of a PPL piloted aircraft.
|
| Since there is no definition of "pro rata" in the FAR definition
| section we must assume that pro rata is meant to be the common usage
| which means, as I've written above, In proportion, according to a
| factor that can be calculated exactly. In this case the factor that
| can be calculated exactly is the number of passengers.
|
| Yes, but that usage renders 61.113 (c) meaningless without some additional
| parameters. One can calculate many things precisely, even without the use
| of a calculator. ;-) That might not guarantee compliance with the FARs.
|
| Now in the case of a plane rented wet it is easy (Rental price +
| airport fees)/pax. If on the other hand I'm in my plane and I know
| the cost of flying includes things like overhaul and maintenance
| prepaids I have to deduct those before I do the math as the
| regulation specifically says that I can only pro rata the fuel, oil,
| airport expenditures and rental fee.
|
| The cost of maintenance etc. is typically factored into a rental fee. But,
| I think the purpose of 61.113 is to set guidelines for what might
| constitute compensation. You and other travel to a work site, they can
| share the cost of fuel, oil, airport expenditures and rental fees. They
| can't pay you for the use of your plane and have you ferry them about, so
| the closer the financing looks like that's what is going on, the more
| likely one is to violating the FARs.
|
| I'm curious where you get the 51% rule?
|
| As has been mentioned by others, the 50% figure has been taught and
| tossed around for quite a while. I don't know if its origin is formal, was
| established by precedence, or just common practice. I would be happy to
| find out that my company could pay the entire cost of a flight without it
| becoming an issue of compensation, but that seems a long shot unless
| someone can show evidence that it is an acceptable practice. Do you know
| of any such evidence?
|
| Neil
|
|

On Wed, 21 Nov 2007 22:42:22 -0000, Jim Logajan wrote:

"Neil Gould" wrote:
Thanks, and I understand the logic of your interpretation. It
clarifies the 50% notion that I've been taught, but it seems to make
the regulation rather pointless so long as there is some rationale to
the application of "pro rata" (for example, shares of ownership in the
aircraft or number of club members). If the FAA agrees with this usage
then the matter is settled! However, I'm still skeptical, given the
precedence of such as free ferrying to be considered "compensation".

The following web page titled "Traps For The Unwary: Business Flying
And The 'Compensation Or Hire' Rule" discusses "pro rata" issues, among
others (such as the judicial invention of the "common purpose" test):

http://www.aviationlawcorp.com/content/traps.html

It's too bad that article does not discuss the premise of the OP's
situation -- that of an employee flying himself, and possibly some other
employees, to a business meeting which he, and they, would be attending
anyway; and being reimbursed for that trip.
--ron

In article ,
Ron Rosenfeld wrote:

On Wed, 21 Nov 2007 22:42:22 -0000, Jim Logajan wrote:

"Neil Gould" wrote:
Thanks, and I understand the logic of your interpretation. It
clarifies the 50% notion that I've been taught, but it seems to make
the regulation rather pointless so long as there is some rationale to
the application of "pro rata" (for example, shares of ownership in the
aircraft or number of club members). If the FAA agrees with this usage
then the matter is settled! However, I'm still skeptical, given the
precedence of such as free ferrying to be considered "compensation".

The following web page titled "Traps For The Unwary: Business Flying
And The 'Compensation Or Hire' Rule" discusses "pro rata" issues, among
others (such as the judicial invention of the "common purpose" test):

http://www.aviationlawcorp.com/content/traps.html

It's too bad that article does not discuss the premise of the OP's
situation -- that of an employee flying himself, and possibly some other
employees, to a business meeting which he, and they, would be attending
anyway; and being reimbursed for that trip.
--ron

Exactly. The problem here is the precise meaning of the word
"compensation" and whether or not compensation is distinct from
"reimbursement." There are two ways to look at the situation. One is
that I paid the entire cost of the flight and was reimbursed for a
travel expense. The second is that the company paid the entire cost of
the trip and therefore I did not meet the "pro-rata share" requirement.

rg

In article ,
"Gig 601XL Builder" wrDOTgiaconaATsuddenlink.net wrote:

Neil Gould wrote:
Yes, but that usage renders 61.113 (c) meaningless without some
additional parameters. One can calculate many things precisely, even
without the use of a calculator. ;-) That might not guarantee
compliance with the FARs.


Pro Rata means a specific thing. It is well defined in law and common usage.
In 61.113 (c)the regulation is quite clear. A pilot may not pay less that
his pro rata share of the allowable expenses.

There's still an ambiguity here. The obvious way to compute the
pro-rata share is to divide the total cost by the number of passengers.
But that is not the only reasonable way to do it. One could, for
example, assign a pro-rata share according to weight, so that heavier
passengers (or passengers with more bags) pay more than lighter ones.
One could likewise use height, on the theory that taller passengers use
more room inside the plane, or some combination of weight and height.
If all the passengers are owners of the company for which business is
being conducted they might choose to assign their pro-rata shares
according to their percentage ownership in the company. None of these
are unreasonable on their face, and none of them are specifically
excluded by the regs. But I wouldn't want to be the one defending any
of these theories against an FAA enforcement action.

rg

On Wed, 21 Nov 2007 18:00:49 -0800, Ron Garret
wrote:

Exactly. The problem here is the precise meaning of the word
"compensation" and whether or not compensation is distinct from
"reimbursement." There are two ways to look at the situation. One is
that I paid the entire cost of the flight and was reimbursed for a
travel expense. The second is that the company paid the entire cost of
the trip and therefore I did not meet the "pro-rata share" requirement.

Fortunately, when I was flying on business -- which was solely to attend
meetings and the business had nothing to do with aviation -- the
"structure" was that the corporation leased the a/c and paid all of the
operating expenses. I would occasionally (rarely) carry a passenger to the
meeting, but the passenger would not be charged. In addition, and perhaps
critically so in view of the controversy regarding logging time as
compensation, I have a commercial certificate and, at the time I made these
flights, a 2nd class medical.

But when I made those flights, the FAA ruling concerning logging time as
compensation had not been promulgated, and the general opinion was that
those flights would have been legal even if I only had a private
certificate or a third class medical.
--ron

Recently, posted:

On Nov 21, 4:49 pm, "Neil Gould" wrote:
Thanks, and I understand the logic of your interpretation. It
clarifies
the 50% notion that I've been taught,

Sorry, I can't understand your reply well enough to tell whether you'e
agreeing with me. You say my interpretation "clarifies" the 50%
requirement, but in fact my interpretation is that there is no such
requirement.

I am agreeing with you. The way I was taught was incomplete in its
application, and as such the intention of that FAR was apparently
misinterpreted to mean that the pilot must pay the largest portion of the
costs so that the reimbursements from other sources would not be
considered compensation. Your interpretation approaches the issue from a
perspective of default legal usage of the term "pro rata" (as you
correctly noted, the piece I was missing). For what it's worth, the 50%
notion isn't rare, possibly because few of those teaching or explaining
the FARs have legal backgrounds.

If the FAA agrees with this usage then the matter is
settled! However, I'm still skeptical, given the precedence [you
mean 'precedents'] such as free ferrying to be considered
"compensation". ;-)

But how is that a precedent for the examples under discussion here?
Free flight time is indeed a valuable commodity. So if it's provided
in exchange for a service that one often pays a commercial pilot to
perform, then it is indeed compensation. And private pilots can't
receive compensation for flying, except under specified conditions.

But the point is that the cases under discussion here are indeed
covered by the specified exceptions (the cases a choosing to fly,
rather than drive, to a business meeting; or flying with friends and
splitting the flight expenses evenly, i.e. pro rata). In the ferrying
case, the specified exceptions do *not* apply. So that case is no
precedent for situations where the specified exceptions *do* apply.

Thanks, again. I think your explanations address these issues well.

Regards,

Neil

Recently, Ron Garret posted:

In article ,
"Gig 601XL Builder" wrDOTgiaconaATsuddenlink.net wrote:

Neil Gould wrote:
Yes, but that usage renders 61.113 (c) meaningless without some
additional parameters. One can calculate many things precisely, even
without the use of a calculator. ;-) That might not guarantee
compliance with the FARs.


Pro Rata means a specific thing. It is well defined in law and
common usage. In 61.113 (c)the regulation is quite clear. A pilot
may not pay less that his pro rata share of the allowable expenses.

There's still an ambiguity here. The obvious way to compute the
pro-rata share is to divide the total cost by the number of
passengers. But that is not the only reasonable way to do it. One
could, for example, assign a pro-rata share according to weight, so
that heavier passengers (or passengers with more bags) pay more than
lighter ones. One could likewise use height, on the theory that
taller passengers use more room inside the plane, or some combination
of weight and height. If all the passengers are owners of the company
for which business is being conducted they might choose to assign
their pro-rata shares according to their percentage ownership in the
company. None of these are unreasonable on their face, and none of
them are specifically excluded by the regs. But I wouldn't want to
be the one defending any of these theories against an FAA enforcement
action.

I also saw such ambiguities, based on the dictionary definitions of the
terms rather than their basis in law. However, the explanations by
AirplaneSense in other parts of this thread have cleared up the matter for
me. I now see that Gig 601XL Builder's comments are in agreement with the
interpretations of AirplaneSense, but were a bit terse to be enlightening.

Neil