Greg Reigel
by Greg Reigel, Attorney At Law
Back on July 8, 2010, the FAA published a Proposed Interpretation seeking public comment regarding a proposal to modify the FAA’s broad prohibition on pro-rata reimbursement for the cost of owning, operating and maintaining a company aircraft when used for routine personal travel by senior company officials and employees. After receiving comments, and in response to the National Business Aviation Association’s (NBAA) request that the FAA modify its longstanding prohibition, on December 10, 2010, the FAA issued a Modified Interpretation in which it agreed that, under certain circumstances, it would allow “a company to be reimbursed for the personal travel by an individual whose position merits such a high level of interference into his or her travel plans.”
What does that mean? Well, for those limited number of employees who are so important to a company that they can be called back to work at any time upon a moment’s notice, even during personal travel, then the FAA will consider their travel on the company aircraft as “within the scope of and incidental to the business” of the company operating the aircraft. However, the Modified Interpretation warns that not all personal travel will meet the conditions for reimbursement, such as “when the high-level employee or official may have personal travel plans that are unlikely to be altered or cancelled, even for compelling business reasons.” By way of example, and for purposes of guidance, the FAA cites travel for a significant event, such as a wedding or funeral of a close family member, or for necessary or urgent medical treatment, as instances of personal travel that would not likely qualify for reimbursement.
It is important to note that this interpretation applies to reimbursement under FAR 91.501(b)5, which specifically regulates “large airplanes of U.S. registry, turbojet-powered multi-engine civil airplanes of U.S. registry, and fractional ownership program aircraft of U.S. registry that are operating under FAR 91 Subpart K in operations not involving common carriage.” However, companies operating other aircraft may be able to take advantage of the regulation under the NBAA’s Exemption 7897, as amended. Exemption 7897, or the “Small Aircraft Exemption” as it is called by NBAA, allows NBAA members to operate small civil airplanes and helicopters of U.S. registry under the operating rules of FARs 91.503 through 91.535.
In order to take advantage of this interpretation, the company will need to make a written determination that the flight in question was of a routine personal nature. The FAA also advises that the company should maintain a list of individuals whose position with the company require him or her to routinely change travel plans within a short time period. The company must then provide that list to the FAA upon request.
With the proper documentation, companies will be able to provide their select few executives with personal travel on the company aircraft and receive reimbursement while still operating under Part 91. Not a big move by the FAA, but certainly a move in the right direction!
© Reigel Law Firm, Ltd.-Aero Legal Services 2002-Present. All rights reserved.
EDITOR’S NOTE: Greg Reigel is an attorney with Reigel Law Firm, Ltd., a law firm located in Hopkins, Minnesota, which represents clients in aviation and business law matters (www.aerolegalservices.com, 952-238-1060, greigel@aerolegalservices.com).
