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The cost sharing - reimbursment - flight for hire mess



 
 
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  #1  
Old October 20th 03, 01:55 AM
Roger Long
external usenet poster
 
Posts: n/a
Default The cost sharing - reimbursment - flight for hire mess

There have been some disjointed threads on the topic, the most recent of
which I started.

I got interested in this because my flying club board felt that our flight
rules should cover the basics of this issue. A couple days ago, AOPA sent me
a great book which is a compilation of articles by their chief counsel and
others on the topic. Talking to their hot line people has been less than
satisfactory but it's a complex topic and I can't fault them. It probably
had as much to do with my fuzzy questions and explanations as them. I give
them the highest marks generally and am proud to be a member.

Having gone through the book and some other material, I've drafted a
proposed rules addition for the club. It should make a great target for
this forum and, who knows, I might even learn something more. These are
rules for a club, an individual owner might skate closer to the line but I
think these are good guidelines for staying legal.

Anyway, here it is. Potshots welcome. I'll be glad to explain my reasoning
in response to any inquiries not preceded by flames.

----------------------------------

23. Members, including those with commercial ratings, shall not accept
direct or
indirect compensation or expense reimbursement for operation of club
aircraft or
participate in flights where they have knowledge or expectation of
payments being
made by third parties for the flight. The specific and only
exceptions to this rule a

a) Member CFI's providing dual instruction, BFR's, or checkout
flights to other
members.

b) Charitable flights approved in advance by the board and
conducted in
accordance with FAA regulations covering these events.

c) Members using the aircraft for transportation incidental to
business in
accordance with FAA regulations may accept reimbursement
from their
employer. Employer reimbursement must be limited to hourly
rate, landing,
and tie down fees and may not exceed the pilot's share if
expenses are shared.


24: Members may share the costs of a flight with passengers only when all
of the
following conditions are met:

a) Shared costs are limited to hourly club rate, landing and tie down fees.

b) All persons on the flight, including the pilot, pay an equal
share.

c) All persons on the flight, including the pilot, have a
common purpose in
making the flight. If the flight is to another airport,
the common purpose must
include the activities at the destination.

d) The member's undertaking of the flight must not be, or be
represented to be,
contingent on the participation or cost sharing of the
other passengers.

25. Members who reposition the aircraft for club purposes such as
maintenance or to
transport persons who will perform maintenance may record the time as
"Club
Time" on the time sheets with the advance approval of the Maintenance
Officer and
will not be charged for the flight time. Members who accept Club
Time do so with
the understanding that this time will not be entered in their
logbooks.

Club time is only to be approved for maintenance related flights or
for delivery of the
aircraft back to PWM after stranding due to weather or mechanical
problems.

26. Any flight which involves charitable donations, even if the pilot
receives no
reimbursement, shall be reviewed with the board prior to being
undertaken.

--
Roger Long


Ads
  #2  
Old October 20th 03, 02:39 AM
C J Campbell
external usenet poster
 
Posts: n/a
Default

Frankly, I would not try to address the issue with club rules. The club
should simply require pilots to abide by the FARs and any insurance
requirements. Attempting to interpret those FARs and putting them in the
club rules puts the club in a funny position.

Let the FAA enforce the rules against pilots flying for hire and keep the
club out of it.


  #3  
Old October 20th 03, 02:46 AM
Don Tuite
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Posts: n/a
Default

On Mon, 20 Oct 2003 00:55:47 GMT, "Roger Long"
om wrote:

.. . .
Having gone through the book and some other material, I've drafted a
proposed rules addition for the club. It should make a great target for
this forum and, who knows, I might even learn something more. These are
rules for a club, an individual owner might skate closer to the line but I
think these are good guidelines for staying legal.

Anyway, here it is. Potshots welcome. I'll be glad to explain my reasoning
in response to any inquiries not preceded by flames.



I think that having a club rule that attempts to duplicate a
regulation in some other language just opens the door for grief. Ask
a lawyer.

You can make the club rule more stringent, of course, but the members
are not going to be happy with that.

You might have a test for new members that requires them to state what
they think the regs mean, and you could have standards for passing the
test. Then you could keep the test on file to show the feds when it
becomes necessary. Another one to ask a lawyer about.

Or you might insist that BFRs be given only by certain CFIs, who will
make sure that "for hire" questions are part of the oral.

Don
  #4  
Old October 20th 03, 05:37 AM
Larry Fransson
external usenet poster
 
Posts: n/a
Default

On 2003-10-19 17:55:47 -0700, (null) said:

25. Members who reposition the aircraft for club purposes such as
maintenance or to
transport persons who will perform maintenance may record the time as
"Club
Time" on the time sheets with the advance approval of the Maintenance
Officer and
will not be charged for the flight time. Members who accept Club
Time do so with
the understanding that this time will not be entered in their
logbooks.


That's a bit much, don't you think? Flight time is flight time, and logging that time is what logbooks are for. Yes, I know one kook once upon a time said, "Ooh, he's logging that flight time towing gliders - he's being compensated!" Whatever. That's one of the screwiest things anyone has ever come up with and should be completely disregarded, especially in this case. I can't imagine anyone getting bent because a private pilot ferried a flying club aircraft somewhere for some reason and then logged that time in order to show recency of experience.

But that's just me.

--
Larry Fransson
Seattle, WA

  #5  
Old October 20th 03, 07:22 AM
Peter Duniho
external usenet poster
 
Posts: n/a
Default

"Roger Long" om wrote in
message ...
Anyway, here it is. Potshots welcome. I'll be glad to explain my

reasoning
in response to any inquiries not preceded by flames.


I have to admit, I tend to agree with Don's comments that duplicating
regulations seems just to be asking for trouble. Why not just say something
like "all operation of club aircraft is limited to those allowed for the
holder of a Private Pilot certificate, unless otherwise authorized"?
Specific authorizations such as dual instruction by member CFI's can be
called out, but otherwise seems like all the extra rulemaking at best is
redundnant and at worst could create loopholes or additional confusion on
the part of your members.

That said, in the spirit of your question...

Seems to me that in #23, you need "d) Sharing of costs with passengers as
stipulated in #24".

In #24, no allowance is made for fuel. Does the club always reimburse fuel
expenses completely? Where I've rented, there is usually a cap on fuel
price, and the pilot is responsible for any fuel costs above that per-gallon
cap. If your club is similar, you'd want to allow passengers to share in
that additional cost.

Also in #24, no allowance is made for ATC service charges, as one would
incur flying in Canada. Does the club automatically pay those? If they are
billed to the pilot, that should allowed.

I may have missed other direct operating expenses that ought to be allowed,
given the spirit of the rules you've posted, but which are not. This is one
of the problems with writing a new version of existing rules...it's easy to
miss something or to create inconsistencies.

In #24(b), what happens if the cost is not divisible by the number of
passengers? Is the pilot permitted to pay the extra penny or pennies? May
seem like a silly question, but again, when you write language like you've
written, you open the door for this kind of issue.

I find 24(c) to be both vague and potentially overly restrictive. It
appears to allow local flights in which "common purpose" may be defined
however the pilot likes, and yet require 100% synchrony at the destination
for a non-local flight (which would preclude one couple antique shopping and
the other sitting on the beach, even though all are friends and are
otherwise having a nice weekend together, for example).

As for 24(d), a strict interpretation would prohibit pretty much all rentals
by cash-strapped members. When I was first starting out flying, I pretty
much could afford no flying unless I brought a friend or two. I couldn't
afford enough time in the plane to make it worth the drive to the airport.

I agree with Larry that #25 is just plain silly. It's true that the FAA
says a Private Pilot is not allowed to receive free use of an aircraft for
services rendered, since that amounts to compensation. But a) I see no
reason to disallow Commercial pilots from receiving such compensation
(ferry, repositioning, etc. are all legal under Part 91) and b) the club
should not be asking non-commercial pilots to be doing such tasks anyway.

Anyway, I'll reiterate my feeling that your club is going a little overboard
with all these rules. But assuming you want to stick to that plan, the
rules you've posted need some work, I think.

Pete


  #6  
Old October 20th 03, 10:52 AM
Roger Long
external usenet poster
 
Posts: n/a
Default

I think that having a club rule that attempts to duplicate a
regulation in some other language just opens the door for grief. Ask
a lawyer.


Generally, I agree with that. The compensation issue is such a mess however
because it has been so modified by opinions and case law scattered all over
the place that you just can't look at the FAR's and know what to do. You
will also find differing interpretations everywhere, even from FSDO to FSDO.

You can make the club rule more stringent, of course, but the members
are not going to be happy with that.


We are not just trying to insure that members are legal when they fly, we
are trying to avoid a possible long and expensive process of proving to the
FAA or our insurance company that we were right. Cost sharing at the edges
of the envelope isn't critical to any of our members. These rules are
intended to keep members clearly on the right side of the line.

You might have a test for new members that requires them to state what
they think the regs mean, and you could have standards for passing the
test. Then you could keep the test on file to show the feds when it
becomes necessary. Another one to ask a lawyer about.



I can tell you, they would be a lot less happy about that!

--
Roger Long






  #7  
Old October 20th 03, 11:01 AM
Roger Long
external usenet poster
 
Posts: n/a
Default

I agree 100%! It is absolutely the screwiest thing I ever heard of, too.
However, I have in my hand a discussion of the FAA counsel's opinion and an
article by AOPA's chief counsel about it. If you are provided with free
flight time, say moving a plane, the FAA considers that you gain an economic
advantage, which is therefore compensation, by logging the time. You may be
able to use the hours to lower your insurance rate, get an advanced rating,
better job, etc. They do not consider the experience, joy, etc. to be
compensation as long as it is not logged, because those things do not convey
an economic advantage. Screwey?, Very. Complain to your congressman.

--
Roger Long

Larry Fransson wrote in message
t...


That's a bit much, don't you think? Flight time is flight time, and

logging that time is what logbooks are for. Yes, I know one kook once upon
a time said, "Ooh, he's logging that flight time towing gliders - he's being
compensated!" Whatever. That's one of the screwiest things anyone has ever
come up with and should be completely disregarded, especially in this case.
I can't imagine anyone getting bent because a private pilot ferried a flying
club aircraft somewhere for some reason and then logged that time in order
to show recency of experience.

But that's just me.

--
Larry Fransson
Seattle, WA



  #8  
Old October 20th 03, 11:29 AM
Roger Long
external usenet poster
 
Posts: n/a
Default

I have to admit, I tend to agree with Don's comments that duplicating
regulations seems just to be asking for trouble. Why not just say

something
like "all operation of club aircraft is limited to those allowed for the
holder of a Private Pilot certificate, unless otherwise authorized"?
That said, in the spirit of your question...

See reply to Don above.

In #24, no allowance is made for fuel. Does the club always reimburse

fuel
expenses completely?


Yes, rates are wet and club pays for all fuel and oil. If not, fuel and oil
would be included.

Also in #24, no allowance is made for ATC service charges, as one would
incur flying in Canada. Does the club automatically pay those? If they

are
billed to the pilot, that should allowed.


That's never come up for us. Everyone who's ever gone to Canada just paid
it.

I may have missed other direct operating expenses that ought to be

allowed,
given the spirit of the rules you've posted, but which are not. This is

one
of the problems with writing a new version of existing rules...it's easy

to
miss something or to create inconsistencies.


I don't see any compelling reason why the club has to insure that a cost
sharing member get every possible penny. These cover the major expenses,
any others are going to be just spare change and open us up to a long
onerous process of having to justify them. The intent of having flight
rules like this is to give us a little margin so we are clearly on the right
side of the line.

In #24(b), what happens if the cost is not divisible by the number of
passengers? Is the pilot permitted to pay the extra penny or pennies?

May
seem like a silly question, but again, when you write language like you've
written, you open the door for this kind of issue.


Even the FAA is not that silly. Common law and accounting practice
recongnize that the penny is not divisible.

I find 24(c) to be both vague and potentially overly restrictive. It
appears to allow local flights in which "common purpose" may be defined
however the pilot likes, and yet require 100% synchrony at the destination
for a non-local flight (which would preclude one couple antique shopping

and
the other sitting on the beach, even though all are friends and are
otherwise having a nice weekend together, for example).


This has been interpreted both ways by different FSDO's and in different
cases. If I was a single owner planning to got to Podunk for a meeting and
a friend wanted to hitch along and go to a museum, I would let him share the
expenses. I think that, in a club, where we are all effected if someone
else screws up, we need to stay a little clearer. This is an area where
someone could easily get in a jamb. If a member went off the runway, the
passenger might innocently say to an FAA inspector that the pilot "Brought
me down to go to...." Until I know that our FSDO and insurance company
considers going the same place for different reasons to be "commanality of
purpose", I'd think we should stick with this.

As for 24(d), a strict interpretation would prohibit pretty much all

rentals
by cash-strapped members. When I was first starting out flying, I pretty
much could afford no flying unless I brought a friend or two. I couldn't

d enough time in the plane to make it worth the drive to the airport.

I doubt this will crimp anyone's style in our club. If someone decides not
to go flying because they can't find a companion, fine. This is just a
warning not to leave a paper trail or have discussions that might be
repeated in an investigation. There's a good AOPA article on this as well.


I agree with Larry that #25 is just plain silly. It's true that the FAA
says a Private Pilot is not allowed to receive free use of an aircraft for
services rendered, since that amounts to compensation. But a) I see no
reason to disallow Commercial pilots from receiving such compensation
(ferry, repositioning, etc. are all legal under Part 91) and b) the club
should not be asking non-commercial pilots to be doing such tasks anyway.

Yup, it's silly. See reply to Larry above.

Our insurance does not permit uses of the plane that would require a
commercial license. I don't want to split this hair with them.

Speaking of silly, I don't see any reason why a PP member should not make a
flight they would otherwise consider routine just because the oil is going
to be changed at the destination. It's good experience for members to have
exposure to the shop and see under the cowl. We are all owners of the plane
and owners are permitted to move their aircraft around. Since we have an
hourly rate however, we have to insure that no member gains an economic
benefit by flying the plane. FAA, silly or not, says, "no logging, no
compensation". Easier to do it their way than get the rules changed.

Anyway, I'll reiterate my feeling that your club is going a little

overboard
with all these rules. But assuming you want to stick to that plan, the
rules you've posted need some work, I think.


Thanks. This is very helpful preparation for dodging the eggs and tomatoes
tonight.

--
Roger Long




  #9  
Old October 20th 03, 12:46 PM
Roger Tracy
external usenet poster
 
Posts: n/a
Default

It seems to me the club is making it way too complicated. Does a member
need to hire a lawyer to review each flight they make to insure compliance?
Just state that all flights must be made in compliance with FARs and be
done with it. Are the members actually in favor of all this?


"Roger Long" om wrote in
message ...
There have been some disjointed threads on the topic, the most recent of
which I started.

I got interested in this because my flying club board felt that our flight
rules should cover the basics of this issue. A couple days ago, AOPA sent

me
a great book which is a compilation of articles by their chief counsel and
others on the topic. Talking to their hot line people has been less than
satisfactory but it's a complex topic and I can't fault them. It probably
had as much to do with my fuzzy questions and explanations as them. I

give
them the highest marks generally and am proud to be a member.

Having gone through the book and some other material, I've drafted a
proposed rules addition for the club. It should make a great target for
this forum and, who knows, I might even learn something more. These are
rules for a club, an individual owner might skate closer to the line but I
think these are good guidelines for staying legal.

Anyway, here it is. Potshots welcome. I'll be glad to explain my

reasoning
in response to any inquiries not preceded by flames.

----------------------------------

23. Members, including those with commercial ratings, shall not accept
direct or
indirect compensation or expense reimbursement for operation of

club
aircraft or
participate in flights where they have knowledge or expectation of
payments being
made by third parties for the flight. The specific and only
exceptions to this rule a

a) Member CFI's providing dual instruction, BFR's, or checkout
flights to other
members.

b) Charitable flights approved in advance by the board and
conducted in
accordance with FAA regulations covering these events.

c) Members using the aircraft for transportation incidental to
business in
accordance with FAA regulations may accept reimbursement
from their
employer. Employer reimbursement must be limited to

hourly
rate, landing,
and tie down fees and may not exceed the pilot's share if
expenses are shared.


24: Members may share the costs of a flight with passengers only when all
of the
following conditions are met:

a) Shared costs are limited to hourly club rate, landing and tie down

fees.

b) All persons on the flight, including the pilot, pay an

equal
share.

c) All persons on the flight, including the pilot, have a
common purpose in
making the flight. If the flight is to another airport,
the common purpose must
include the activities at the destination.

d) The member's undertaking of the flight must not be, or be
represented to be,
contingent on the participation or cost sharing of the
other passengers.

25. Members who reposition the aircraft for club purposes such as
maintenance or to
transport persons who will perform maintenance may record the time

as
"Club
Time" on the time sheets with the advance approval of the

Maintenance
Officer and
will not be charged for the flight time. Members who accept Club
Time do so with
the understanding that this time will not be entered in their
logbooks.

Club time is only to be approved for maintenance related flights or
for delivery of the
aircraft back to PWM after stranding due to weather or mechanical
problems.

26. Any flight which involves charitable donations, even if the pilot
receives no
reimbursement, shall be reviewed with the board prior to being
undertaken.

--
Roger Long




  #10  
Old October 20th 03, 12:56 PM
Roger Long
external usenet poster
 
Posts: n/a
Default

Having just been through the FAR's, had several phone calls with AOPA, and
read a bunch of stuff, I can tell you that trying to figure it out straight
from the FAR's is what would require a lawyer to review each flight. Easy to
say "Fly in accordance with FAR's", our by-laws already do, but it's
actually very complicated to do in this area. Most of the stuff you need to
know about compensation isn't in the FAR's but buried in case law and
letters of opinion from FAA counsel.

We're making it simple, follow these short, clear rules, and you should be
safe from all but the most over the top FAA action. The club also has an
interest in avoiding any gray areas or pushing the envelope because we don't
want to be volunteering our time to splitting hairs with the FAA or
insurance company.

--
Roger Long

Roger Tracy wrote in message:

It seems to me the club is making it way too complicated. Does a member
need to hire a lawyer to review each flight they make to insure

compliance?
Just state that all flights must be made in compliance with FARs and be
done with it. Are the members actually in favor of all this?




 




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