It's a case I am pretty familiar with.
It's likely going to go to the general commissioners for a ruling.
I believe that the inspector in question offered one concession, which is that the business is exempt from BIK if all the pilots own the aircraft between them. This may be the AOPA concession I referred to.
The Revenue page referred to, which is an internal guidance note for their inspectors, doesn't mention this. I suspect a lot of people have done individual deals, and obviously they won't be advertising them.
If this is upheld, it's obviously worrying for groups that operate on the basis of somebody purchasing a plane, and then a number of others renting it freely. In a way, the Revenue has got you by the goolies; if your customers are at an arm's length then you will get done for BIK; if OTOH they are all co-owners then it's obviously not a real business anyway.
It's possible this particular inspector is just being aggressive, of course. This is standard Revenue procedure these days. Jump on somebody really hard and try to get a settlement of some sort, then close the case and move on to the next file. Racehorses, yachts and planes are obvious targets, and politics of envy is never too far away.