An August 11, 2011 Legal Interpretation discusses the difference between common carriage and private carriage and how the FAA determines in which type of carriage an aircraft operator is engaged. The Interpretation was issued in response to an inquiry from an FAR Part 125 certificate holder regarding its ability to enter into certain contracts with the United States government or foreign governments.
The FAA initially noted that Operations Specification (“OpSpec”) ADO1, which is typically issued to Part 125 certificate holders, authorizes the certificate holder to conduct flight operations in non-common carriage and private carriage and prohibits operations carrying people or property for compensation or hire, where such operations result directly or indirectly from any person’s holding out to the public to furnish transportation. Thus, if a Part 125 certificate holder were to engage in common carriage, that operation would be in violation of the operators OpSpecs.
Next, the Interpretation states that “[n]on-common carriage and private carriage for hire involve the carriage of persons or property that does not involve a holding out.” An operator who engages in “non-common carriage” or “private carriage for hire” is often referred to as a “contract carrier.” The Interpretation goes on to describe private carriage as carriage for one or several selected customers, which is often on a long-term basis and pursuant to an exclusive, mutual agreement. The key fact for the FAA is whether the operator has so many contracts that “a willingness to contract with anyone is implied.” If the number of customers exceeds three, especially if the customers are entirely unrelated, the operator stands a good chance of being investigated for operating as a common carrier.
Next, the Interpretation observes that under Advisory Circular 120-12A Private Carriage Versus Common Carriage of Persons or Property “[a]n operator may be deemed to be a common carrier when it:
holds itself out to the public, or to a segment of the public, as willing to furnish transportation within the limits of its facilities to any person who wants it. Absence of tariff or rate schedules, transportation only pursuant to separately negotiated contracts, or occasional refusals to transport, are not conclusive proof that the carrier is not a common carrier. There are four elements in defining a common carrier: (l) a holding out of a willingness to (2) transport persons or property (3) from place to place (4) for compensation. This “holding out” which makes a person a common carrier can be done in many ways and it does not matter how it is done.
An operator may be holding out by advertising, through an agent or salespersons, or if the operator simply has a reputation of serving whoever makes contact with them. The Interpretation concludes that the final determination of whether an operator was engaged in common carriage “would be based on the nature and character of the operations involved, which would depend on the particular facts in each case.”
The distinction between common carriage and private carriage applies to Part 91 operators as well. An operator conducting flights under FAR Part 91 may not engage in common carriage. Rather, that operator would need an operating certificate under FAR Part 119 and would likely conduct flights under FAR Part 135. If the FAA finds that a Part 91 or Part 125 operator is engaged in common carriage, you can bet an enforcement action will probably be in the operator’s future.
