Commercial or Private Operation

[QSK?]

I know this topic has been done to death before on PPrune but, after searching all previous threads on the subject, I can't seem to get an answer that relates to this particular scenario:

1. Company A, Company B and Company C have agreed to form a business alliance to collaboratively undertake a number of projects in regional Australia.

2. Due to the remoteness of some of the locations, it is considered using scheduled services is not a feasible option as the team will require flexibility to travel on an "on demand" basis and the cost of using scheduled services would also be prohibitively expensive and significantly extend the project schedule.

3. The three companies are considering hiring an aircraft to transport members of the various companies between the various project locations. It is intended that one of the project members from Company C who holds a PPL with MECIR will pilot the aircraft. All 3 companies have agreed to share equally in the cost of the aircraft operation.

The question is: Is this considered to be a commercial or private operation and can it be legally flown by a PPL in a hired aircraft?

Advice from PPruners would be most welcome!

[ForkTailedDrKiller]

My two bob's worth.

No! Not if Companies A, B and C are paying for it.

If PPL/MECIR guy was employed by Company A and the flying involved Company A only then, yes - it can be done by a private pilot as a private operation, using a hired aircraft. I have done this for many years. Although I hold a CPL, I am not employed as a pilot, my company does not have an AOC, and the flying is all done as private ops.

Dr :8

[ReverseFlight]

Private. :)

[tmpffisch]

As I have Bob Tait's Air Law book infront of me, there's a practice question with similar circumstances - classified as private.

CAR Part 1, 7 d

(7)For the purposes of these regulations:
(a) an aircraft that is flying or operating for a commercial purpose referred to in paragraph 206 (1) (a) shall be taken to be employed in aerial work operations;(b) an aircraft that is flying or operating for a commercial purpose referred to in paragraph 206 (1) (b) shall be taken to be employed in charter operations;
(c) an aircraft that is flying or operating for the commercial purpose referred to in paragraph 206 (1) (c) shall be taken to be employed in regular public transport operations; and
(d) an aircraft that is flying or operating for the purpose of, or in the course of:
(i) the personal transportation of the owner of the aircraft;
(ii) aerial spotting where no remuneration is received by the pilot or the owner of the aircraft or by any person or organisation on whose behalf the spotting is conducted;
(iii) agricultural operations on land owned and occupied by the owner of the aircraft;
(iv) aerial photography where no remuneration is received by the pilot or the owner of the aircraft or by any person or organisation on whose behalf the photography is conducted;
(v) the carriage of persons or the carriage of goods without a charge for the carriage being made other than the carriage, for the purposes of trade, of goods being the property of the pilot, the owner or the hirer of the aircraft;
(va) the carriage of persons in accordance with subregulation (7A);
(vi) the carriage of goods otherwise than for the purposes of trade;
(vii) conversion training for the purpose of endorsement of an additional type or category of aircraft in a pilot licence; or
(viii) any other activity of a kind substantially similar to any of those specified in subparagraphs (i) to (vi) (inclusive);
shall be taken to be employed in private operations.

[Ascend Charlie]

But would an employee of one of these companies feel safe flying with a PPL in a rented aircraft? I know that I would only feel safe with a professional pilot rather than an amateur.

[3 Holer]

To be squeaky clean, the pilot could be employed by all 3 companies...............but not as a Pilot. ;)

[Jabawocky]

Well I will disagree with the Dr on this one.

If I take myself and an employee to say St George, and I am paying for my own plane, or hiring one from the local school, its a private flight.

If our subbie sparky comes along and shares some costs, its still a privte flight. So if there are three seperate parties sharing costs, its still not a commercial operation. They are not running charters and carrying people or goods for profit.

Ready to be shot down in flames here.

J

Ascend charlie....what sort of idiotic comment is that......I can show you a guy who at present flies on a PPL.....who I might add I would rather fly with than YOU....and right now I have no idea of your qualifications. Just so happens that all his other ratings etc are lapsed..........and there would be thousands out there in a similar boat. :ugh::=

[tail wheel]

CAR 206.

Aerial Work.

CPL and AOC required.

Some years ago a PPL, in his own aircraft, photographed properties in Queensland. He subsequently sold some of the photographs.

CASA swooped and the matter went to Court.

The Court found the flight was in the course of or for the purposes of trade and conducted without an Aerial Work AOC.

They are not running charters and carrying people or goods for profit.

But they can not conduct their business and/or trade (and thus presumably make a profit) unless the three companies "charter" or otherwise use or operate an aircraft.

A number of years ago, Stock and Station Agents, country vets and flying mechanics were all considered fair game by DCA/CASA for operating without an Aerial Work AOC.

[3 Holer]

So if there are three seperate parties sharing costs, its still not a commercial operation. They are not running charters and carrying people or goods for profit.


I agree with Jaba. :ok:

[Maloo]

I agree with Jabawocky,

The important thing here is that because the pilot is part of the company and he is at work whilst flying the plane, he is technically carrying out pilotage duties for reward. So to keep it a private operation, the pilot would have to have a CPL or share in the cost of the aircraft being the pilot in command. I used to work in a situation like this and we had no AOC and never had any dramas from CASA.

Maloo

[3 Holer]

The Court found the flight was in the course of or for the purposes of trade and conducted without an Aerial Work AOC.

That's drawing one hell of a long bow.

I would have appealed!:eek:



They did - and lost. It is a well known case from the 1990s.

Tail Wheel

[tail wheel]

I used to work in a situation like this and we had no AOC and never had any dramas from CASA.

Probably not. There are probably many similar operations around Australia every day.

Until there is an accident or incident, CASA gets involved and the insurance company decides it doesn't want to pay...........

[MakeItHappenCaptain]

From CAR 2:
7A An aircraft that carries persons on a flight, otherwise than in accordance with a fixed schedule between terminals, is employed in a private operation if:
(a) public notice of the flight has not been given by any form of public advertisement or announcement; and
(b) the number of persons on the flight, including the operating crew, does not exceed 6; and
(c) no payment is made for the services of the operating crew; and
(d) the persons on the flight, including the operating crew, share equally in the costs of the flight; and
(e) no payment is required for a person on the flight other than a payment under paragraph (d).


Under cost sharing, no more than 6 persons total.

[ZappBrannigan]

I can't back the following up with any legal reference or precedent apart from the above - but my opinion is that it isn't a private operation. My reason is simply this - every bit of law regarding cost-sharing (including (d) above) states that the costs must be shared equally between the persons on the flight. Not the companies employing them.

That is, I've always read the cost-sharing thing as "each person present in the aircraft must fork out of their own pocket equally for it to be a private operation". It seems inconsequential to me whether 3 companies are equally sharing costs - this doesn't seem to be covered by the cost-sharing rule - and they're flying for professional duties, and no doubt getting paid for it. And if none of the 3 persons on the flight aren't out of pocket at all after the flight - then by definition some other person(s) (who aren't on the aircraft) have picked up the tab for the hired aircraft - so it isn't a private flight.

[tail wheel]

Keep in mind that if the limit were 6 POB, all contributing to cost, there would be no corporate jets larger than a Cessna 206!

Too late in the day to think about it, but a private corporate jet with far greater than 6 seats, may be operated without an AOC and could, theiretically, be piloted by a PPL, subject to holding an appropriate type rating if over 5,700 kg.

[tmpffisch]

Tail Wheel, nowhere in Reguation 206 regarding air work does it mention the situation you used in your example. It's not Air work.
The problem with the example you gave (aerial photography) is that the photos were sold. You can take your boss up to take photos of his house, while you're on the clock....still a private operation. But if those photos are taken to make money, it becomes air work.

If all on board, pilot and pax are getting paid for their time, it's still private.

As for the flight needing to be cost shared between the 'persons' and not the 'companies', that doesn't matter. The companies are either hiring the aircraft, or own the aircraft. Either way, the law looks upon it the same.

[MakeItHappenCaptain]

Yeah, but who private hires a corporate jet under cost sharing?
If the company owns the jet, they are transferring their own staff/property and section 7A doesn't apply.

Rules be rules.:cool:

[UnderneathTheRadar]

It's private - but with a caveat related to the 'carrying on a business' which I remember from ATPL.

As long as the purpose the flight is only to transport people from A to B then you're not carrying on a business.

If, however, a salesman takes samples or other such things with him or IIRC a tradesman takes tools with him (not sure about the tools one but definately the samples one) then the flight is for carrying on business and so Aerial work.

Stupidity personified if you ask me!


On the the 'other' issue - Company A should be careful that it is insured for when the pilot injures (or worse) Company B or C's employees (or even it's own and Workcover gets involved).

UTR

[3 Holer]

They did - and lost. It is a well known case from the 1990s.



Should have hired a smarter solicitor ! :E

[ZappBrannigan]

As for the flight needing to be cost shared between the 'persons' and not the 'companies', that doesn't matter. The companies are either hiring the aircraft, or own the aircraft. Either way, the law looks upon it the same.Fairy nuff. Just seems to stretch the cost-sharing law a bit. What would be the legal cost-division requirements if there were 2 people from Company A, and one each from B and C? Same thing as for individuals, A must pay for 50% of the hire costs, and B/C 25% each?

What if I have a PPL, 3 guys I've never met before from Company X want to fly to ABC for work, and I agree to fly them there and absorb 25% of the hire costs myself? Same thing - essentially a charter operation, but legally can be flown as a private op, as it's for transport only (no goods carried), the costs are shared equally and I receive no money or benefit from the flight?

If, however, a salesman takes samples or other such things with him or IIRC a tradesman takes tools with him (not sure about the tools one but definately the samples one) then the flight is for carrying on business and so Aerial work.Makes sense and ties in with the highlighted bit in tmpffisch's post (#4).

[VH-XXX]

Question for TailWheel, tell us how the traffic choppers get away with being a private operation? (eg. Melb and Sydney)

They operate a company, let's just say "Australian Traffic Management."

They get paid for video and audio footage from a number of sources, including radio and television stations.

They operated Night and Day, NVFR in Single Engine R44's, which we all know can't fly for charter under NVFR.

How does such a high profile company get away with this then? The way I understand this, it's the same as the quoted example because it's private flying.

[tail wheel]

I have no idea.

The case I mentioned occurred in the mid to late 1990s in the Cairns area. Maybe a C182 on the Atherton Tablelands? It was relatively high profile in aviation circles at the time, was mentioned in the media and I think, created some debate on PPRuNe in the early days of the site.

It was in an era when CASA mounted a number of successful prosecutions in respect to the nature of operations, including Seaview (http://parlinfo.aph.gov.au/parlInfo/search/summary/summary.w3p;query=(Dataset:weblastweek,hansardr,noticer,webt hisweek,dailyp,votes,journals,orderofbusiness,hansards,notic es,websds)%20Decade:%221990s%22%20Electorate_Phrase:%22short land%22%20Responder_Phrase:%22mr%20sharp%22;rec=0;) and Monarch (http://www.lib.adfa.edu.au/guides_assistance/course_guides/aviation_safety_07.pdf).

[Jabawocky]

a number of successful prosecutions in respect to the nature of operations

Taillie.....you should know better...... just coz they won does not mean they were right!

[Unhinged]

They operated Night and Day, NVFR in Single Engine R44's, which we all know can't fly for charter under NVFR. <snip> ... it's the same as the quoted example because it's private flying.

It's certainly not private ops, and nor is it charter; it's airwork. (Ref CAR 1988, Reg 206) No problem at all for NVFR.

[tail wheel]

I would agree it appears to be aerial work, Unhinged and no problems with NVFR.

206 Commercial purposes (Act, s 27 (9))

(1) For the purposes of subsection 27 (9) of the Act, the following commercial purposes are prescribed:

(a) aerial work purposes, being purposes of the following kinds (except when carried out by means of a UAV):

(i) aerial surveying;

(ii) aerial spotting;

(iii) agricultural operations;

(iv) aerial photography;

(v) advertising;

(vi) flying training, other than conversion training or training carried out under an experimental certificate issued under regulation 21.195A of CASR or under a permission to fly in force under subregulation 317 (1);

(vii) ambulance functions;

(viii) carriage, for the purposes of trade, of goods being the property of the pilot, the owner or the hirer of the aircraft (not being a carriage of goods in accordance with fixed schedules to and from fixed terminals);

(ix) any other purpose that is substantially similar to any of those specified in subparagraphs (i) to (vii) (inclusive);

You may take a photo from your aircraft Jaba, but if you sell that photo, CASA will determine the operation is aerial work, requiring an AOC and CPL.

I suspect CASA may view the arrangement proposed by QSK? as aerial work under 206 (1) (a) (viii) and (ix).

[VH-XXX]

Not if the photo was sold as a hobby ..... ?

[tail wheel]

As the ATO taxes both income and capital gain from "hobbies", I don't see why CASA would differentiate?

No use asking me - I don't make the rules, interpret the rules, or work for CASA!

I guess QSK? should seek a ruling from CASA rather than a consensus from PPRuNe?

[Jabawocky]

Agreed TW

So how about is QSK, I dare you to phone three state offices, to get a representive view of the organisation, and get the verdict and report back here.

Now I am prepared to put $50 on the bar at the next ppruners bash that you get different answers. Every time I have phone both fine institutions about a simple straight forward question like this one, CASA and the ATO displayed similar results. (different issues mind you for each).

So get three answers, get the details of all people, Diary note it, or get it in writing (which they rarely will do :=) and pick the one you want!

J

[185skywagon]

A few years ago, Aerial baiting Ops lived in this grey area of Reg 206.
IE it wasn't specifically mentioned as being a commercial op.
It seemed to be the view of the Authority at the time, that Aerial baiting was not specifically mentioned in reg 206 and could therefore be conducted as a private op, notwithstanding the fact that money was changing hands.

The fact that it had all the hallmarks of a commercial op, appeared to be willfully ignored, because there was a ruling from Canberra saying it wasn't.

There is still the odd operator in QLD that conducts this oeration as private ops.
Things should change when all the rulings and exemptions expire(to allow time to comply with Part 137) .
Aerial baiting then reverts to Part 137 rules (aerial ag).

185

[QSK?]

Jaba:So how about is QSK, I dare you to phone three state offices, to get a representive view of the organisation, and get the verdict and report back here.
Mate, I thought of going down that path but then I came to the same realisation as you i.e. all the answers were likely to be different, not based on legal interpretation and not formalised which is why I decided to put the question to the combined wisdom of PPrune in the hope that some PPrune lawyer may come to our rescue. Notwithstanding the well-intentioned assistance of Ppruners, who also hold varying opinions, the group has now decided to seek formal legal advice on this issue and we'll act in accordance with that. If nothing else we should be able to demonstrate, in the event of any subsequent inquiry, that we were diligent in trying to establish the correct legal position.

UTR:On the the 'other' issue - Company A should be careful that it is insured for when the pilot injures (or worse) Company B or C's employees (or even it's own and Workcover gets involved)Thanks for that and, yes agreed, Company C will ensure this aspect is covered off as well. It is the group's understanding at this stage that their respective employees would be covered by each company's workers compensation policies, combined with the respective aircraft insurance policy (provided the operation is legally based). Formal confirmation is also being sought.

Thanks everyone for your individual advice, we'll keep everyone posted on the outcome.

[ForkTailedDrKiller]

And then of course there are commercial parachuting operating jump aircraft in the private category - which makes a mockery of the whole thing!

Dr :8

[tail wheel]

So how about is QSK, I dare you to phone three state offices, to get a representive view of the organisation, and get the verdict and report back here.

Jaba. You know as well as I know that if you ask five different CASA employees, you will get ten answers.

CAR206 is one of the most ambiguous and inappropriate Regs in CASA's book. I know what they are trying to say, but that CAR does not say what some may think it says. :confused:

The problem is that one may get away with what could be legally construed as aerial work, for many years - until an accident or incident occurs. The problems start when an incident/accident occurs, as it did in Seaview and Monarch.

Any CASA interpretation must be in writing.

[VH-XXX]

The ATO doesn't necessarily include hobby payments, particulary limited numbers of transactions as taxable income. Eg if I take a pic of a criminal and sell it to the newspaper. That is a hobby. The way you wrote about some guy who took pics of property and sold them implied that it was not a business of his.

Back to previous topic, what does airwork mean in the context of the helicopter nvfr, as I thought you can't fly charter nvfr in a single engine? Let's say they used fixed wing instead. Is s/e rotor different to s/e fixed wing in that regard?

[Jabawocky]

Jaba. You know as well as I know that if you ask five different CASA employees, you will get ten answers.

Yep........ you are correct.....I was trying to be diplomatic! :}

[c100driver]

QSK, if you are looking for a legal opinion you may as well ask for your insurance coverage while you are at it. A lot of available company cover will only cover sched air transport for employees.

For example our specific company insurance will only cover employees if the aircraft is chartered from Part 121 and 125 approved operators, and all aircraft must be turbine powered.

[tail wheel]

Back to previous topic, what does airwork mean in the context of the helicopter nvfr, as I thought you can't fly charter nvfr in a single engine? Let's say they used fixed wing instead. Is s/e rotor different to s/e fixed wing in that regard?

It is not charter, we are talking Aerial work. Forget charter for the moment! :=

For example:

Flying training is aerial work and that is conducted in SE fixed and rotary wing aircraft, NVFR, as authorised by an AOC.

Aerial agriculture (crop spraying and mustering) is aerial work and that is conducted in SE fixed and rotary wing aircraft, NVFR, as authorised by an AOC.

Charter is conducted under CAR206 (1) (b)

(b) charter purposes, being purposes of the following kinds:

(i) the carriage of passengers or cargo for hire or reward to or from any place, other than carriage in accordance with fixed schedules to and from fixed terminals or carriage for an operation mentioned in subregulation 262AM (7) or under a permission to fly in force under subregulation 317 (1);

(ii) the carriage, in accordance with fixed schedules to and from fixed terminals, of passengers or cargo or passengers and cargo in circumstances in which the accommodation in the aircraft is not available for use by persons generally;

If you read both sections of CAR206 which I have now posted, you will see the difference.

If you hold a CPL or higher license and operate in general aviation I'm surprised you do not know the three categories of commercial operations.

For example, regular, scheduled airline airservices, when operating for the mining industry fly in/fly are still charter and conducted under CAR206 (1) (b) (ii) as "accommodation in the aircraft is not available for use by persons generally".

Best you study CAR206 and CASA's authority to issue AOCs in the Civil Aviation Act Sect 27 (9) because one day it will bite you.

[QSK?]

PPruners:

The advice we have received is that our proposed flights can be classified as private flights.

Reading through the supporting analysis, it would appear this assessment is based on the following considerations:

1. The aircraft being hired is not owned by any of the companies or pilot involved, so there is no commercial benefit or reward being obtained by any participating company member as a result of the aircraft hire;

2. No charge is being levied on the persons being carried save an equal share of the cost of hiring and operating the aircraft;

3. The pilot is sharing equally in the costs of hiring and operating the aircraft;

4. The aircraft is being used solely for personnel transportation purposes and not as a direct commercial revenue generation platform;

5. The pilot is not receiving any reward or remuneration above what she would normally receives as an employee.

[Two_dogs]

And then of course there are commercial parachuting operating jump aircraft in the private category - which makes a mockery of the whole thing!Six or seven jumpers to a Caravan, FL140 and back in about 20 mins = $********/Hour
If I could get the same hourly return I would buy a new Caravan too.

If these guys are (not for profit/club) private ops, I must be a philanthropic organisation. :{

[conflict alert]

assuming that the rules are pretty much the same from Oz to NZ, said employee who flew would have to have ties with all A B and C and that any flying business would have to be related to A B and C. Then there would be no problem with it being PPL. There can be no B or C and then theres A or A and C but theres B or B and A but no C !!!! you get my drift Its all about Hire and Reward...cost sharing would be only okay if you were A B and Cing in the same thing and said pilot was involved, or had shares in, or was employed by A B and C. Clear as mud!!

PS Tailwheel...whats with that hideous picture below your handle which clogs up my dialup!!!(rural bloke that don't have access to broadband) It's a screen of of nothing but looks like 'hissing'. Is it really necessary??

[VH-XXX]

I question point 2 above. When did it become that the pilot was equally sharing the hire costs?