General Aviation: putting grey air charter in the shade - DAC Beachcroft

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General Aviation: putting grey air charter in the shade

Published 25 marzo 2022

A consultation by the UK Civil Aviation Authority (the “CAA”) proposes changes to the current cost sharing regulations for private pilots (CAP 2270[1] (the “Consultation”)).  Underpinning the same is the aim of, “strengthening the existing cost sharing regulations to minimise the potential for both misunderstanding and abuse”. 

Cost shared flights

The categorisation of a civil aircraft operation determines the regulatory and safety oversight regime to which it is subject.  In the UK, a flight for the transportation of passengers, for which remuneration or other valuable consideration is given, is categorised as a commercial flight (defined more specifically, either as Commercial Air Transport (“CAT”) or Public Transport (“PT”)).  Aircraft operating as CAT or PT must be certificated, maintained in accordance with rigorous requirements, and the operator must hold an Air Operator’s Certificate and the pilot must hold at least a Commercial Pilot’s Licence.  Less stringent regulation and oversight applies to non-commercial flights, to include those operated by private pilots for private, pleasure and business purposes.  The rationale, as noted by the CAA in its Consultation document is that, “in non-commercial aviation the safety level of a flight is not determined by the giving of remuneration or other valuable consideration, however, when money changes hands for a service, there is an expectation of a resultant level of safety standards being applied.”

A flight of a private aircraft that carries passengers and that might otherwise be categorised as commercial, will instead be identified as a non-commercial flight (and so subject to less stringent oversight) if specific criteria governing “cost sharing” flights are met[2].  In brief terms, under the existing Regulations, there must be a sharing, but only of “direct costs” of the specific flight, as between the pilot and passengers, with no element of profit or fee payable to the pilot.   If the criteria are satisfied the cost-sharing derogation applies. 

Blurred lines

In its Consultation document, the CAA acknowledges that, “we have found that there has been considerable confusion between legally conducted cost shared flights and illegal commercial air transport.”  

First, there are those (private pilot and passenger alike) who inadvertently fall foul of the cost sharing derogation in the Regulations due to genuine misunderstanding of the provisions.  There are others (to include aircraft owners and private pilots) who collude to present illegal or “grey” air charter flights as legal, cost sharing flights.  In the latter scenario, passengers might connive with the operator and/or pilot in the arrangement but in many instances, passengers are duped that the flight is a formal, legal charter arrangement, when it is not. 

The effective policing of private aircraft flights is a challenge : a 2020 General Aviation survey run by the Department for Transport, as part of an evidence-gathering exercise to gain insights into operations at general aviation airfields across the United Kingdom[3] addressed the same to 500 identified airfields, based on access to contact details via visual flight rule publications.  The General Aviation Awareness Council (“GAAC”)[4] speaks in terms of there being upwards of 750 airfields/helipads in the UK. 

CAA inspectors regularly visit airfields as well as public events where aviation operations involving general aviation aircraft or helicopters take place (eg major sporting events, motor racing circuits and horse racing meetings), to monitor for possible illegal activity, to include illegal air charter. The CAA also carries out regular spot checks of flight plans. As the CAA notes, “There are tens of thousands of light aircraft [and] helicopters …… in the UK, flying in and out of small airfields across the country every day….not every plane and airstrip can be monitored 24 hours a day….[5].”

Minimising the potential for both misunderstanding and abuse

The following are some of the key proposals that are set out in the Consultation.

Direct Costs

To avail of the cost sharing derogation that operates to identify a flight as a non-commercial operation, the sharing of costs can extend only to “direct costs” of the specific flight.  However, under the current Regulations, just what costs fall within that term can be unclear.  The definitions[6] speak to the term as  “including” fuel, airfield charges and rental or hire fees for use of the aircraft and so do not suggest exclusivity.  The fact of CAA produced additional guidance (currently CAP1589[7] and CAP1590[8]) speaks in part perhaps to the confusion that exists.  It is in CAP1589  that we find CAA guidance that  “annual costs” (a defined term in the Regulations, meaning the cost (excluding any element of profit) of keeping, maintaining and operating the aircraft over the period of one year) cannot be included in cost sharing. It is also in CAP1589, as opposed to in the Regulations, that we find guidance as to how the CAA views the matter of hourly rates that are payable by a joint owner of an aircraft for their use of the same: the CAA considers the same, to be a permitted 'direct cost' (being akin to rental costs). 

Cost, or “expense sharing” flights are also permitted (on specific criteria being satisfied) in the United States[9]  and so it is of interest to note the approach that is adopted by the Federal Aviation Authority (“FAA”).  The FAA cost or expense sharing derogation consists of a single paragraph but it has given rise to explanatory guidance material to include most recently a 12 page Advisory Circular AC 61-142 (the “AC”).[10]  In the US, permitted shared costs are identified in express, rigid terms as comprising “only” of fuel, oil, airport expenditures or rental fees[11]. The AC provides additional assistance and sets out examples of costs (for the avoidance of doubt) that are prohibited from consideration as shared costs and which must therefore be paid by the pilot.  These include but are not being limited to aircraft maintenance, aircraft insurance and aircraft depreciation (similar then to “annual costs” here).  Other  flight costs are identified as prohibited from consideration as shared costs and include navigation charts and oxygen that may be used in-flight.

Equal Shares 

At present, the UK Regulations do not make explicit the required basis of sharing or contribution by the pilot to the direct costs of the flight that they are conducting.  The situation has been seized by opportunists who “play the game” and claim a cost sharing compliant arrangement when the contribution by the pilot to shared costs is no more than nominal in value.  The CAA’s proposal is for transparency: the total direct costs of the flight are to be shared equally between all occupants of the aircraft, including the pilot, with the option for the pilot to bear more than an equal share if they so choose.  The CAA in its Consultation notes, “...we hope that this proposed change will provide clarity to both passengers, and the pilot/operator and ensure no profit is made from the flight…”

Common Purpose

The requirement to evidence a “common purpose” for the flight, as between the pilot and passengers, is a feature of the US FAA cost sharing derogation but not currently a criteria under the UK Regulations.  The CAA’s proposal is that if a cost shared flight does not start and also end at the same place (A to A), the pilot and passengers must have a shared, “common purpose” other than the payment and receipt of remuneration or other valuable consideration.  The existence of a genuine “common purpose” is likely a matter to be determined on a case-by-case basis and depending on the facts of each individual flight.  Again, consideration of the US approach is of note.  In its 2020 AC the FAA includes some examples of circumstances that do and also those that do not speak to this necessary “common purpose”.

  • No common purpose : A friend asks a pilot to fly him to another city to pick up a new car he ordered and offers to share the expenses of the flight. The private pilot agrees, as he is not doing anything else and would enjoy the flight. As the passenger chose the destination and the private pilot does not have a purpose of his own to be in the other city at that time, this is an example of a situation where no common purpose exists.”
  • Common purpose : A pilot plans to fly his plane to a wedding on Long Island. He is transporting passengers whose destination is also Long Island, but they are heading to a basketball game. As the pilot dictated the destination and both the passengers and the pilot have personal business on Long Island, a common purpose exists in these circumstances.”

Informed Consent

A further proposal is for a requirement on the part of the pilot/‌operator to identify unequivocally to the passengers, and prior to flight, that it is a cost sharing rather than a commercial or public transport flight: “ it is intended that this proposed change will ensure passengers have sufficient information to make an informed decision whether they will undertake the flight.”   The CAA envisages consent forms being signed by the passengers attesting to the same and to be retained by the pilot in case of later enquiry  by the CAA or other third party interest (eg insurers).   CAP2270 suggests a retention period of (just) six months.  We expect the recommended retention period will be revised upwards to a more appropriate period (two years, if not longer). 

Valuable Consideration

Whilst not flagged by the CAA in the Consultation, in the interest of minimising, “the potential for both misunderstanding and abuse” focus might usefully be paid to the definition and related guidance of the term, “valuable consideration” .  A pilot and passengers who might otherwise satisfy the cost-sharing flight criteria may inadvertently fall foul of the prohibition against the payment or receipt of valuable consideration.  In the ANO, the term is defined in legalistic terms to mean, “any right, interest, profit or benefit, forbearance, detriment, loss or responsibility accruing, given, suffered or undertaken under an agreement, which is of more than a nominal nature.” 

The FAA, in its 2020 AC, provides the following more workable explanation.  Guidance in similar terms could provide much-needed assistance here in the UK, “Compensation is the receipt of anything of value that is contingent on the pilot operating the aircraft; i.e., but for the receipt of the compensation, the pilot would not have taken that flight. Compensation does not require a profit, profit motive, or the actual payment of funds. Reimbursement of expenses, accumulation of flight time, and good will in the form of expected future economic benefits can be considered compensation. Furthermore, the pilot does not have to be the party receiving the compensation; compensation occurs even if a third party receives a benefit as a result of the flight.”

The problems with grey or illegal air charter

The operation of grey or illegal air charter flights can have potentially serious consequences:

  • Flight operations, outside of the regulatory oversight that applies to commercial flights, increases the potential for air incidents and accidents, to include those having fatal consequences. The tragic air accident that occurred on 21 January 2019 in the English Channel, north of Guernsey, brought the issue of illegal air charter to wider public attention.  The Argentinian striker, Emilio Sala, was being flown from Nantes in France to Cardiff when the single-engine Piper PA-46-310P Malibu aircraft crashed at night and in bad weather.  Mr Sala's body was subsequently recovered from the sea bed.  The body of the pilot, Mr Ibbotson, has never been found. The subsequent UK AAIB air accident investigation[12]  concluded that the pilot lost control of the aircraft in bad weather and was probably affected by carbon monoxide poisoning, likely to have originated in the aircraft’s exhaust system.  Further, the fatal flight had been an illegal air charter: the regulations under which the Piper PA-46 was operated and maintained permitted it to be used for private use only, but the flight had been one for reward.  This payment element brought the flight into the realm of commercial air transport, but Mr Ibbotson did not hold a commercial pilot's licence and the flight was not operated under an Air Operator Certificate. To compound matters, Mr Ibbotson did not have the necessary qualification to fly at night and his type rating had expired. 

  • The CAA is empowered not simply as the UK’s civil aviation regulator, but also as an enforcer as regards breaches of air safety. It has powers to detain aircraft and, where appropriate, to take enforcement action, to include issuing formal warnings, the revocation of licences, approvals or certificates, and where warranted, to bring criminal prosecutions. As regards illegal air charter flights, all those involved, from the operator, the pilot in command to the person identified as the charterer of the aircraft concerned, (without prejudice to the liability of any other person) face the potential for CAA investigation and possible criminal prosecution. Consequent upon the Sala air accident, criminal proceedings were brought, initiated by the CAA, against a Mr Henderson who had organised the flight. In November 2021, and following a trial at Cardiff Crown Court, Mr Henderson was sentenced to  an 18-month sentence in jail.  In sentencing, Mr Justice Foxton  told Mr Henderson he had a “cavalier” attitude to organising the flight, adding that Mr Henderson had been in "flagrant breach" of air safety regulations, for profit. 
     
  • Illegal air charter flights have implications also for aviation insurance cover. Typically, the insurance for privately-owned and operated GA aircraft are limited to private, pleasure and business use, with the cover including an express exclusion as regards flight operation for commercial purposes for reward. The level of cover will reflect the fact that it is operated for private flight purposes.  Where a private aircraft is operated as an illegal air charter, in the event of an incident or accident involving that aircraft, it is likely that the aircraft’s insurance cover simply will not respond.  Those who may have suffered personal injury or death, or other loss (eg as regards property, to include on the ground) will face challenge in achieving compensation against uninsured owner and operator interests. This includes passengers who will likely have assumed that insurance cover, at levels that are mandatory for commercial operation of flights, was in place for their benefit. 

  • Finally, the operation of illegal air charters tarnishes the good reputation of those commercial charterers who conduct their operations in compliance with the applicable civil aviation regulation and oversight.  

Next steps

The Consultation is now closed and the CAA has comments received under review.  Based on the same, it will consider any need to amend the Regulations and if so, will issue a Comment Response Document (CRD) outlining its decision.  A proposal will then be submitted to the CAA's and Department for Transport's Joint Rule Making Committee, who will use it as a technical basis to decide whether or not to amend the current regulations.

The proposed changes outlined in the Consultation have a positive two-fold aim for the GA community.  First, to enable legitimate cost sharing flights to continue to operate.  They are generally viewed as a benefit to the GA community.  Inter alia, they make it considerably more affordable for private pilots to fly more hours and to gain flight experience.  Secondly, to make it easier to identify those flights that are operated outside of the Regulations and in turn for the CAA to take appropriate action against those who breach the same.

DACB’s Aviation team has provided a response to the CAA’s Consultation and will be monitoring and further reporting on any resulting amendment of the current Regulations .


[1] CAA CAP 2270, Consultation: UK Cost Shared Flights.

[2] The applicable provisions  are found in a derogation within the Air Operations Regulation (EU) 965/2012, as retained (and amended in UK and domestic law under the European Union (Withdrawal) Act 2018), the UK Air Navigation Order 2016 (“ANO”)  at Article 13, and subsequent Official Record Series (ORS) 4 No 1406 exemptions, which aligns those aircraft which were not subjected at the time to the Air Operations regulation to that derogation (together, “the Regulations”). 

[3] General aviation airfields survey

[4] General aviation awareness council 

[5] CAA Project Pegasus  - report anything suspicious – leaflet: https://www.caa.co.uk/media/acilhzlv/pegasus-leaflet.pdf

[6] In guidance material (GM2 Article 6.4a) to the Air Operations Regulation and in Schedule 1 of the ANO.

[7] CAP 1589, “Cost sharing flights - GA guide”, 2 August 2018.

[8] CAP 1590, “Cost sharing flights - guidance and information”, 2 August 2018.

[9] Code of Federal Regulations (CFR) Part 61 at § 61.113(c).

[10] AC 61-142 Sharing Aircraft Operating Expenses in Accordance with 14 CFR Part 61.113(c)).

[11] 14 CFR Part 61.113(c).

[12] AAIB Final Report published on 13 March 2020  (1/2020)

Authors

Lorraine Wilson

Lorraine Wilson

London - Walbrook

+44 (0) 20 7894 6608

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