We all know that private aviation can provide significant benefits to businesses who use general aviation aircraft rather than the airlines. It can be more productive and/or economical to travel via private aircraft rather than driving or using commercial airlines. But for those businesses (the “Employer”) who do not actually operate their own aircraft, what happens when an employee with a valid private pilot certificate (“Employee-Pilot”) wants to be reimbursed for flying an aircraft that is not owned or leased by the Employer (“Private Aircraft”) for the purposes of the Employer’s business?
For starters, an Employer needs to understand that an Employee-Pilot’s operation of a Private Aircraft on Employer business creates additional liability exposure for the Employer (because the Employee-Pilot is viewed as an agent of the Employer). As a result, if an Employer is going to allow an Employee-Pilot to fly him or herself on Employer business, then the Employer should have a policy in place that spells out the conditions and requirements under which this will be permitted. An appropriate policy will ensure that the Employer is protected, to the extent it can be, from liability for the Employee-Pilot’s operations.
So, what questions should an Employer be asking when it is considering a policy for Private Aircraft use by an Employee-Pilot?
One of the first issues the Employer will need to address is whether the Employee-Pilot will be reimbursed in any way for his or her flights. If the answer is yes, then both the Employer and the Employee-Pilot need to understand the limitations imposed upon a private pilot by 14 C.F.R. §61.113 with respect to compensation or reimbursement. (For purposes of this article we will focus on a policy that applies to an Employee-Pilot holding a private pilot certificate, or a higher certificate, but only operating under the private pilot privileges and limitations. If the Employee-Pilot holds a commercial pilot certificate then a different analysis is required that is beyond the scope of this article.)
An Employee-Pilot holding a private pilot certificate utilizing Private Aircraft for purposes incidental to the Employer’s business may only receive compensation (including salary or wages) or reimbursement from the Employer to the extent such operations can be conducted, as a general matter, pursuant to 14 C.F.R. Part 91 (e.g., the carriage does not involve the transportation of any persons or property for compensation or hire).
Additionally, the Employee-Pilot may NOT carry any passengers, either employees of the Employer or otherwise, nor may he or she carry Employer property, other than what would be incidental to the Employee-Pilot doing his or her job. For example, the Employee-Pilot may carry tools etc. that he or she will use to do the Employee-Pilot’s work. However, if certain parts, equipment etc. are needed at a job site which will not be used by the Employee-Pilot to perform his or her work, then the Employee-Pilot would not be permitted to bring those parts/equipment with him or her.
Assuming the above-requirements are met, then the Employer should decide who will approve reimbursement requests and how those approvals will be made. Also, at what rate will the Employee-Pilot be reimbursed? Will the rate vary if the Private Aircraft is owned by the Employee-Pilot versus if the Employee-Pilot rents or leases the Private Aircraft? And what will the reimbursement include?
In addition to limiting its liability by ensuring the Employee-Pilot is complying with applicable Federal Aviation Regulations, the Employer will also want to consider insurance as an option for limiting its liability exposure arising from the Employee-Pilot’s operation of a Private Aircraft. Will the Employer require that the Employee-Pilot maintain insurance for his or her operation for the Private-Aircraft? If so, what type of coverage and/or limits will it require? Will the Employer be named as an additional insured? What other standard insurance requirements will the Employer require to protect its interests?
The Employer should also think about what limits/conditions it may want to impose upon the Employee-Pilot’s aircraft operations. In addition to compliance with the minimum regulatory requirements, does the Employer want to set other expectations with respect to pilot qualifications and experience (e.g. pilot total time, time in type and/or recency of experience), aircraft requirements, weather minimums (e.g. VFR only, or also IFR), and insurance requirements?
Whether upon initial request for approval, or on an ongoing basis before each flight, the Employer needs to determine what type of documentation an Employee-Pilot will need to provide to the Employer. Will the Employee-Pilot need to provide the Employer with a copy of the Employee-Pilots’ current and valid private (or more advanced) pilot certificate with no night restriction? Is a copy of the Employee-Pilot’s current and valid medical certificate issued by any FAA-authorized aviation medical examiner or FAA Regional Flight Surgeon necessary?
The Employer may also want a copy of the Employee-Pilot’s 14 C.F.R. § 61.56 Flight Review endorsement or other satisfactory evidence of compliance with Section 61.56. Similarly, a copy of the entries in the Employee-Pilot’s pilot log evidencing (i) that the Employee-Pilot meets the recency of experience requirements of 14 C.F.R. § 61.57(c) for IFR flight and (ii) a designated minimum number of hours of flight time within the preceding ninety (90) days as pilot in command of a Private Aircraft of the same make and model as the Private Aircraft to be used for the trip may be requested.
If the Employer is requiring insurance, the Employer may also want to ask for an insurance certificate or policy reflecting the agreed insurance coverages and other related insurance terms and conditions.
An Employee-Pilot’s use of a Private Aircraft incidental to his or her employment with the Employer certainly may make both business and financial sense in certain circumstances. If you, the Employer, are faced with this situation, it is important to implement a policy that will accommodate the use while still protecting the Employer’s interests. By answering the above-questions, the Employer will be able to determine what it does and does not want in a private aircraft use policy.
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