Time To Revisit Holding Out And Common Carriage

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If you were busy last week, you may not have noticed the story about Flytenow scrolling by on AVweb. In a nutshell, the brief described how the U.S. Supreme Court had declined to hear the company’s challenge of a ruling upholding a lower court finding that Flytenow was engaged in improper common carriage.

Flytenow, you may or may not recall, proposed to be a ride finding/sharing service for general aviation. It has been compared to Uber and Lyft, but it is—or was—definitely not that. Those taxi services are staffed by paid drivers and the company organizing it provides a service for which a profit is earned. They definitely meet the “holding out” standard of common carriage because they’re an on-demand service that takes all comers.

Flytenow simply proposed to help passengers or fellow pilots find rides on an expense-sharing basis. It’s the difference between a taxi company and a carpool, where everybody chips in for gas and tolls. I’ll get to how this could be—and probably would be—abused in a minute, but for now, just understand the concept.

In a webpage it maintains on the subject, Flytenow included recordings of the actual oral arguments of the case and they make interesting listening. The FAA’s case turned on what represents common carriage and holding out to the public to offer a transportation service. The FAA insisted that Flytenow’s electronic pairing of riders and pilots constituted holding out while Flytenow argued that its service was merely the electronic equivalent of a bulletin board notice, which the FAA long ago determined did not represent holding out.

So what we have here is what we’re seeing more and more of: inflexible government rules and interpretations that can’t keep up with the speed of modern life, especially modern technology. Still, a lower court agreed that the FAA had it right and denied Flytenow’s petition for relief. SCOTUS declined to weigh in and there the issue ended, at least judicially. Legislation may be introduced in Congress making such arrangement legal by statutory fiat.  

The question du jour is this: Is this a righteous thing to do? Does the unsuspecting and dull-witted public need to be protected from sharing expenses with a pilot who hasn’t been vetted by the FAA’s vaunted medical and fly-for-hire oversight? In a word, no. It’s 2017 for Pete’s sake; we need flexible regulation that accommodates the fact that the dorm-hall cork board has been displaced by Facebook and focused websites. In all of its regulation, the FAA needs to recognize this, just as it needed to understand that it was finally time to trash the Third Class medical. (It’s debatable if we’ve actually done that. I haven’t seen any dancing in the streets.)

So what’s the worst that can happen in this scenario? I’m sure some sharpies would game the cost-sharing system in such a way so that the sharing would benefit them to the extent of paying for airplanes and/or gas. Some might even be running a little underground airline of sorts. So? I can’t get my ethical pants snagged on this because I just don’t see much of a downside. I doubt if it would be widespread enough to represent a clear and present danger to the public. Or at least one that the FAA could justify stepping in to stifle things like Flytenow and others that might follow. Sure, passengers would be boarding little airplanes  completely unvetted by the government. They could be killed in a crash as a result or robbed at gunpoint. Yup, for sure. It’s a dangerous world and people ought to be allowed to live it and make their own risk/benefit decisions following informed consent.

I know one argument I’ll hear is that one of these crashes would get on the evening news and that would harm GA even more. I tire of this kind of defeatism. We all should. Flytenow had an interesting concept that could have benefitted aviation. It should have been allowed to plant the seed.   

Comments (26)

If congress succeeds in passing a law over riding the FAA interpretation of holding out it will probably be the insurance companies who will make any final policy. They will be the ones who will be stuck paying for the accidents that might/will occur. Considering how much insurance companies try to duck out of paying out any large claims now, I think what will happen is they will write exclusions for these operations just like they do for commercial operations of airplanes operated by private pilots now. The only possible solution might be what skydiving outfits and other "extreme" sports do by requiring waivers to ride along in this situation. Maybe someone who deals in insurance can comment how it works with Uber drivers.

Posted by: matthew wagner | January 19, 2017 7:50 PM    Report this comment

PREVIOUSLY PUNLISHED AT JDA JOURNAL:
Work with the FAA to design a standard which maximizes safety and protects consumers (adequate disclosures and realistic limitation on dissemination)

Convince Congress to amend the FAA's interpretation of the Act and the FARs. The advocates have taken the first step in that legislative process and briefed the House Aviation Subcommittee

Posted by: JE Murdock III | January 19, 2017 9:04 PM    Report this comment

Paul:

Not having read the associated briefs, I ask this question:

Would the FAA have been okay with some FliteNow-like service if there had been NO sharing of expenses involved? Is their issue the money, or the come-one-come-all?

Thanks in advance.

Posted by: Tom Yarsley | January 19, 2017 9:30 PM    Report this comment

Paul,

I have never commented on an AVweb article, or any other for that matter, but after reading this I could not stop myself.

I wish I could share your optimistic view that this would end up all above board. Although it is a great idea and would be amazing for all involved if nobody fudged the numbers or broke the rules.

Your statement of "So what's the worst that can happen in this scenario?" is what forces me to comment.

Obviously you have never had to deal with illegal charters (134.5), or cowboy pilots who think the rules don't apply, or never seen dead bodies of "the unsuspecting and dull-witted public" who paid for a ride with a "licensed pilot", who was not rated.

As a CFII, MEI, ATP, A&P/IA holder who has spent my whole adult life in the aviation industry, and has seen some of the best and worst in this business I have to say that it is my professional opinion that you are wrong in your opinion that the "worst that can happen in this scenario" is "Some might even be running a little underground airline of sorts".

The worst that can happen is that someone who expects that aviation is safe, but knows nothing about it, is killed by someone who broke the rules. It would not be the first time, and I believe that a website that allows pilots to offer rides in exchange for money will add to the numbers.

Respectfully,
Craig

Posted by: craig schneider | January 20, 2017 3:31 AM    Report this comment

Tom, I listened to much of the lower-court argument, but I don't remember the issue being framed quite this way. If expenses aren't shared, however, I don't see how it would meet common carriage standards. The "for hire" requirement defines common carriage. Here's some language in AC 120-12A that show how murky and silly this can get.

"Carriage for hire which does not involve "holding out" is private carriage. Private carriers for hire are sometimes called "contract carriers," but the term is borrowed from the Interstate Commerce Act and legally inaccurate when used in connection with the Federal Aviation Act. Private carriage for hire is carriage for one or several selected customers , generally on a long-term basis. The number of contracts must not be too great, otherwise it implies a willingness to make a contract with anybody."

The concept of "anybody" did come up in the case. If anybody can come along and buy the service, than the entity is seen as holding out. But what constitutes "too great" is classic example of bureaucratic capriciousness and why Flytenow petitioned for relief.

Posted by: Paul Bertorelli | January 20, 2017 3:50 AM    Report this comment

Hi Paul,

Does the general public have a realistic idea of the risk in general aviation? Some do, most have no idea. Every mainstream article written about Flytenow has the same headline: "Uber for Airplanes blah blah blah." It is clearly being presented to the public as an Uber analogue, and the general public rightly sees Uber as at least as safe as traditional taxis.

So how risky would private pilot charter operations be? Statistically it would be like hopping on the back of a random motorcycle. It would certainly be more dangerous than 135 operations. 135 has many safety benefits:
-pilot undergoes route specific training, then supervision
-pilots are vetted during the hiring process, and during training, and during the extra flight checks
-pilots are supervised by a chief pilot who is experienced in the operation, and who is responsible to the FAA
-pilots are likley current on the route and aircraft
-aircraft are maintained to a standard that is guaranteed by the organization

Many of the general public users will treat it like an Uber. I see an 80-hour teenage pilot being pressured to fly by an angry businessman who absolutely has to get to his meeting on time, and he bought his ticket last week and why aren't we flying there is just a bit of cloud, and he sees planes taking off just there, where are they going and why can't we fly too, I thought you were a licensed pilot? A bad decision under a bit of pressure is easy for a half-broke kid hungry for flight hours.

I also see the absolute worst pilots, accidents waiting to happen, who are eager to offer rides to the general public. These are pilots that would never get hired by any commercial operation but would be flying around the general public for Flytenow.

Maybe you are right though Paul, that our society needs more tolerance for risk and that the considerable benefits of cheaper air taxi would be worth the occasional accident. But if that is the case, then there should be an amendment to 135 to make it more lax. Selling flights to the general public as Uber-for-Airplanes, even if the pilot doesn't profit, falls under 135.

Regards,
Gareth Allen

Posted by: Gareth Allen | January 20, 2017 4:22 AM    Report this comment

Gareth, you comment brings to mind Buddy Holly's last flight.

Posted by: Kirk Wennerstrom | January 20, 2017 5:30 AM    Report this comment

Paul:

Thanks for that input; It certainly clarified ( ? ) some concepts for me.

"If anybody can come along and buy the service, than the entity is seen as holding out." I can understand that; I MIGHT even be able to support that. But I'd like to pivot to the sentiments shared above by Craig Schneider.

First, I need to point out that if the FAA allowed this kind of "hooking up," then the participating pilots would NOT be "breaking the rules" - at least THOSE rules. But Craig seems to be going down a path that would prohibit a "non-rated" pilot from giving a ride to ANYONE other than... an immediate family member? A member of your church? A bowling buddy? Where does that line get drawn?

And is it the method of the offering, or is it the classification of the persons upon whom the offer is bestowed? A principled stance against holding out should/would prohibit a simple flyer on the airport bulletin board, as much as it would prohibit FliteNow..

Fertile and dangerous ground, this. But fascinating, because it calls into question the entire concept of the "amateur pilot."

Be careful what you ask for....

Posted by: Tom Yarsley | January 20, 2017 5:40 AM    Report this comment

AirBnB started off with the idealistic notion that weary travelers could find a nice place to stay with neat folks in their homes.

It has quickly devoled into landlords running defacto hotels, in some cases displacing renters when leases expire so they can increase their occupancy rates. At least here in NYC.

Of course, the big difference between Lyft, Uber, and AirBnB versus FlyteNow is the (lack of) profit motive. But, it's not uncommon for FBOs to offer "discovery flights" to Martha's Vineyard or Nantucket. It would be a small percentage of operators, but I suspect a large number of FlyteNow rides would be equally 'commercial'. Now that pilots need 1500 hours to get to the majors, a 50% discount on the cost of building hours is a great incentive. Actually, the discount could be 75% if the pilot can fill the seats of a Warrior or 172.

Witness the recent balloon accident where 16 people were killed in one accident. The FAA may now require a medical for commercial balloon flights and/or restrict basket size. I'm sure such operators were a fringe population, but may have accounted for a large percentage of passengers by sheer dint of capacity or activity. It wouldn't surprise me if FlyteNow resulted in a similar perversion of the principle, with a small percentage of FlyteNow pilots running defacto airlines and flying a large percentage of passengers, yet without the safe practices and procedures of an airline.

(But, maybe mine is just a knee-jerk reaction, and won't stand up to fact or debate.)

Posted by: Kirk Wennerstrom | January 20, 2017 5:42 AM    Report this comment

"And is it the method of the offering, or is it the classification of the persons upon whom the offer is bestowed?"

In the oral argument, it was clear that the FAA sees it as both. They're okay with a penned note pinned to a bulletin board, but not okay with the electronic equivalent of this because it reaches too many "anybodies" and thus constitutes common carriage.

Posted by: Paul Bertorelli | January 20, 2017 6:52 AM    Report this comment

So if I were an amateur pilot, and I walked into a bar - "Norm!" - and announced "I'm thinking about going to Nantucket on Saturday morning, as long as the weather is 200-and-a-half or better. Anybody interested in joining me? We can share flight expenses, and if we fill the six available seats, it will cost us next to nothing," Would that comprise "holding out?" How about if I made the same announcement over the stadium PA while calling Friday night's high school football game? Would THAT cross that ill-defined threshhold into a holding?

I mean this as more than rhetoric; more than Devil's advocacy. Where lies an identifiable line between the general public and some more-exclusive population?

"Revisited," indeed. Great topic, Paul. And important, IMWO.

Posted by: Tom Yarsley | January 20, 2017 7:22 AM    Report this comment

Is it just me that thinks that this is a great idea just waiting to become a nightmare? What could possibly go wrong? You post a ride share offer, "flying to Blivotville on Thursday morning and returning that afternoon, have room for one." You get a call from some total stranger who wants to go. You tell him your plan and what his share would be, he says that's cool, see you Thursday. Offer made and accepted, is this a contract? What if you get to your destination, the weather goes to crap or for some reason you need to alter the schedule, what is your obligation to your passenger? What if the guy turns out to be a totally obnoxious idiot, has health issues, or any of a thousand things that make taxi drivers reconsider their careers? Do I really want to cope with that?

Then there are the potential legal issues when things go wrong. I suspect lawyers are watching this like old pilots were watching the third class medical.

To be honest, I am indifferent to this, for some it could be a real help, ideally it could be a good thing but I'll pass on it.

Posted by: Richard Montague | January 20, 2017 8:00 AM    Report this comment

Richard: Would it be fair to conclude that you're suggesting that amateur pilots would be better off by not allowing strangers to board their aircraft?

Posted by: Tom Yarsley | January 20, 2017 8:35 AM    Report this comment

" Where lies an identifiable line between the general public and some more-exclusive population?"

I've always used the "degrees of separation" test: more than 2 degrees of separation to me is "the general public". So my friend and my friend's friend are fine, but the brother of my friend's friend is not (unless they're also accompanied by my friend or my friend's friend). And "friend" can be family or coworkers or club members, etc.

In the case of posting a note on an FBO bulletin board, I generally assume that only pilots, wannabe pilots (I mean that positively, not negatively), and their immediate family/friends would see it, so it's not really "the public". But going to a random bar or club and announcing you're flying to such-and-such on this day, that would be "the public".

At least, that's how I've generally interpreted it.

Posted by: Gary Baluha | January 20, 2017 8:35 AM    Report this comment

Paul, I would like to make two points, one practical and one legal. The practical point is that most of the comments submitted to date have focused of the safety of aviation ride sharing, which is a good thing to focus on. But the implication appears to be that, if the commenter thinks its unsafe, then FAA should make it illegal. That's not necessarily true. My mother-in-law thinks small planes are unsafe so she prefers to drive 8 hours to visit us rather than let me fly her 3.5 hours in my Cherokee. I'm fine with that choice but I'm happy FAA doesn't require it. You mentioned that ride sharing ought to be fine in a context of informed consent. If FAA wants to mandate something, it should regulate the information that flight sharing pilots provide to prospective riders so the riders can make their own informed safety decisions.
The legal point is that the DC Circuit, whose opinion the Supreme Court declined to disturb, relied on what called "Auer Deference" in reaching its conclusion. There are two or three main "rules of deference" in federal practice, known by the names of their leading cases: Auer, Seminole Rock, and Chevron. Basically these rules say that federal courts will not disturb a federal agency interpretation of a statute (Chevron) or the agency's own regulation (Auer) unless that interpretation is, basically, crazy. Legal scholars, several Supreme Court justices, and lots of us in the trenches think its well past time for the Supreme Court or Congress to cut back on these rules of deference. The fact is, under these rules of deference, the agencies get it wrong far more often than courts set things right. One last legal item: The DC Circuit had a very good rule, announced in a case called Paralyzed Veterans, that said an agency had to go through the rule making process when it changed its interpretation of a statute or a regulation in a way that changed things on which the public had come to rely. This was a good rule because it gave the public both advance notice of a pending change and a chance to comment on it, to inform the agency of the consequences. The Supreme Court, in a case called Perez v Mortgage bankers, which the DC Circuit cited in the Flytenow case, killed the rule of Paralyzed Veterans based on a very dull reading of the Administrative Procedure Act. The dissents in the Mortgage Bankers case are much more interesting reading than the main opinion. Congress would do well to change that result through legislation too.

Posted by: JOSEPH CORRAO | January 20, 2017 8:54 AM    Report this comment

"... the FAA needs to ... trash the Third Class medical. (It's debatable if we've actually done that. I haven't seen any dancing in the streets.)"

To 7500 this thread a bit - with all the changes announced for the Third Class medical, one thing that hasn't changed is the list of approved meds. As I understand it, if you're taking a medication that is not on the FAA list of approved meds you're still not allowed to be PIC, valid driver's license and doctor's exams notwithstanding.

Posted by: Kirk Wennerstrom | January 20, 2017 9:29 AM    Report this comment

We live in a analog universe entirely rendered in shades of gray with no perfect black nor perfect white, yet humans have this deep-rooted compulsion to approach every question as if it were binary. Makes for some amusing debates, no?

Bureaucrats have this massive bias toward the "safe" decision, always living with the fear they will allow something that later creates blowback. Personally, I'd allow the service and if it later developed that fine-tuning or even outright reversal was needed, bite the bullet and do it.

Posted by: John Wilson | January 20, 2017 9:40 AM    Report this comment

Good insight, Joseph. Thanks.

Posted by: Paul Bertorelli | January 20, 2017 9:55 AM    Report this comment

Allow "Flyenow" type ops but increase the minimum flight time for private pilots to conduct these flights. Say 200 hours. Also, make mandatory a Second-Class medical requirement and a 100hr a/c inspection and a landing light as in for rental or hire aircraft. Then let the insurance companies have fun with this.

Posted by: Rafael Sierra | January 20, 2017 4:05 PM    Report this comment

This has got to change. Uber call themselves ride sharing but they are not. They're running a paid taxi service. Lucky google paid their fines huh? This flying stuff actually is ride sharing. I'm going there, anyone wanna come?

The risk is obviously a culture of open-ended flights where the destination is notional via some nod nod, wink wink thing. If anyone cares enough, those pilots can be weeded out via some basic GPS/ATC button clicking.

All of the rest is no one's business but those involved. Like in one of those free countries.

Posted by: Cosmo Adsett | January 20, 2017 6:21 PM    Report this comment

On June 26, 2015, the Administrator issued a two page National Policy Order 8000.373 entitled "FAA Compliance Philosophy."

Para 1 defined the documents purpose as setting forth, "overarching guidance for implementing the FAA's strategic safety oversight approach to meet the challenges of today's rapidly changing aerospace system."

Para 2 says, "This order applies to the compliance and enforcement programs and activities of all FAA offices that have regulatory responsibilities. These offices include the Flight Standards Service, Aircraft Certification Service, Office of Aerospace Medicine, Air Traffic Safety Oversight Service, Office of Airports, Office of Security and Hazardous Materials Safety, and Office of Commercial Space Transportation."

I see the problem here ... the Order didn't specifically name the FAA's legal department. Either that or the legal department 'didn't get the memo?'

Instead of being 'the kinder and gentler FAA' we all want ... once again it's "them" vs "us" and/or it's their way or the highway (or was it the HITS?).

Posted by: Larry Stencel | January 21, 2017 12:41 PM    Report this comment

My takeaway from all of the foregoing is:
1. It's not very much about the money - the rules about that are fairly well-understood.
2. It's very much about the population to whom a ride is offered.
3. It's absolutely about how the offer is made.
4. It appears that there's quite a bit of sentiment here among us, to recommend against (if not prohibit) amateur pilots from conducting such flights.
5. It appears that there's some sentiment here among us, to recommend against (if not prohibit) amateur pilots from giving aircraft rides to anyone who could be considered "a stranger" - irrespective of any cost-sharing.

As to "who's a stranger?" I'm left believing that:
1. On the first date, take him/her to dinner.
2. On the second date, make the dinner a $300 hamburger experience.
3. On the third date, by all means, have sex after dinner!

This comprises a clear hierarchy that establishes beyond much doubt that you don't have to have an intimate relationship with somebody, in order to give them an airplane ride! (But you shouldn't give plane rides OR have sex with a complete stranger.) ;-)

Posted by: Tom Yarsley | January 21, 2017 1:06 PM    Report this comment

Yars, I'm not opposed to strangers in my plane, as a matter of fact some of my friends and most of my relatives are stranger than you would believe. I am, however, wary of obligating myself to people I don't know. A lawyer of my acquaintance has the opinion that I should get a waiver from anyone I give a ride to, especially in my experimental and says it would be nice to get the person's family to sign as well. Overkill, but he can cite examples supporting his suggestion.

I do enjoy giving rides but don't care to be an Uber pilot.

Posted by: Richard Montague | January 21, 2017 2:18 PM    Report this comment

I flew at a USAF Aero Club for > 17 years. "Rides" day was an opportunity for the Base Clubs to introduce flight and the Club to anyone on Base authorized to ride. They charged a pittance. Just enough to keep everyone from showing up wanting something for free. The pilots were required by USAF Reg to be rated at the Commercial level, or higher. Why couldn't such a common sense meeting in the middle rule be established for Flytenow, et al, operations? It'd ensure that freshly minted 80 hour private pilots weren't doing it AND it wouldn't be as onerous as the new Colgan / ATP rule has been for the airlines. As to the airplane, someone suggested a 100 hour inspection. THAT -- in itself -- would slow things down some without killing the idea altogether.

I'm surprised that no one has brought up drones capable of carrying people. So if I buy one of those contraptions and my neighbor wants me to allow him to use it, do I incur liability, too? We are -- after all -- in a "rapidly changing aerospace system."

Posted by: Larry Stencel | January 21, 2017 3:15 PM    Report this comment

Two examples of private pilots giving rides to strangers (albeit with no $$ charged) are Young Eagles and Angel Flight (and other charity orgs). In both situations, the passenger is required to sign a waiver absolving the pilot of liability, which I doubt would hold up in court. However, it does give the passenger (or Young Eagles parent) a sense that the flight is not as safe as an airline flight. The risk is obviously much higher than the airlines, and that's an important point for any passenger in a private airplane to know. Every private pilot has a unique tolerance to risk, and their own set of motivations for performing a flight (and whether to continue the flight when things go awry). That, by definition, is one reason that the FAA is unwilling to let organizations like Flytenow sign "strangers" up for flying in small airplanes.

US airlines are extraordinarily safe. If I have my facts right, the last passenger to die in a major US domestic carrier (not regional) accident was 2001 (the Airbus that lost its tail and crashed in Queens, NY right after 9/11). Even the regional carriers have a tremendously good safety record. Part 135 operations are also much safer than private aviation.

I would bet that the safety differences between Uber and taxis is negligible, and I don't think buses have a tremendously good safety record (although it's certain to be much better than all forms of autos).

Posted by: BRUCE POULTON | January 21, 2017 3:50 PM    Report this comment

"Rides Day" and "Young Eagles" are different from FlyteNow in that there is no 'travel' - the destination is the point of departure. Such short flights have no travel purpose, thus removing the "get-there-itis" that is so often the first link in the chain of events resulting in many accidents. I believe there's also a 25-mile radius around the airport limit, I guess to prevent flying beyond local good weather.

"Angel Flights" are more akin to FlyteNow, although they often require IFR ratings, minimum hours, and the passengers are usually warned to have alternate travel arrangements in case the PIC cancels the flight due to MX or WX reasons. Also, these are medically-stable patients, not accident victims rushing to the ER. Thus, the "get-there-itis" factor is again minimized or missing.

Uber, despite their protestations to the contrary, is a taxi service (apply the walks/talks like a duck test). Such unregulated taxi services have always existed. Their abuses are the reasons why taxi and limousine commissions came to be - to prevent the public from being taken advantage of by unscrupulous operators using rigged meters, shoddy equipment, and unsafe drives.

But Uber succeeds not because they've figured out something no one has before. Rather, their age-old model of the unregulated taxi service simply works now due to modern technology - GPS doesn't lie, and cars, tires, brakes, etc., are way better than ever before. That leaves just the driver. But, again, technology is the filter - to be an Uber driver requires a bit of income and intelligence to afford handle the technology and app and to navigate the sign-up process. Drivers also like Uber because the technology filters out their customers - only those that can afford a valid credit card and a smartphone with a data plan get to use Uber. The riff-raff paying cash are left at the curb.

Posted by: Kirk Wennerstrom | January 21, 2017 9:19 PM    Report this comment

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