What do the terms 'holding out' and 'common carriage' mean?

Question

A pilot with a new commercial certificate is excited at the new world of getting-paid-to-fly they have opened up. That is, until their instructor or good friend reminds them of 14 CFR 119 and the grey line that separates operations that do or do not require an operating certificate.

It is cut and dry that a commercial pilot can be paid to do certain things, but when you decide you are going to start doing things for a friend ("yea, I can transport XYZ for you on my next trip to Kalamazoo") things start to get murky. Especially once your friend starts paying you, you make a habit of transporting things and he tells his friends about your service.

At what point are you holding out your services to the public and when do you cross the line from private carriage into common carriage? How far can you go without an operating certificate.

I'm looking for regulatory answers or anything written from a FSDO, basically anything not anecdotal.

Answer 1

Oddly enough, "common carriage" is not defined in the FAR's, but that is because it is a "common law term" and not specific to aviation.

AC120-12A - Private Carriage Versus Common Carriage of Persons or Property contains guidance that can be used to help determine whether or not an operation falls under common carriage. Take a look at it for specific examples, but the "plain language" version is:

Common Carriage: A carrier becomes a common carrier when it "holds itself out" to the public, or to a segment of the public.

Holding Out: A carrier is holding out when they represent themselves as willing to furnish transportation within the limits of its facilities to any person who wants it.

There are lots of ways to "hold out", but the basic idea is if someone in the general public comes to you and asks you to fly them and you agree, you are probably holding out. Any form of advertising demonstrates a clear sign that you are holding out. There are also other activities that qualify, so look over the AC if you have further questions, and if that doesn't answer it your best bet is to contact an aviation lawyer. You could also contact your local FSDO with questions.

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As far as transporting a third part for hire, both common and private carriage require an air carrier certificate issued under 125 or 135 depending on the size of the airplane¹. This means that your trip for a friend would be in violation because you don't have the required air carrier operating certificate. (Thank you @p1l0t for clarifying this for me!)

119.23 says:

Operators engaged in passenger-carrying operations, cargo operations, or both with airplanes when common carriage is not involved.

(a) Each person who conducts operations when common carriage is not involved with airplanes having a passenger-seat configuration of 20 seats or more, excluding each crewmember seat, or a payload capacity of 6,000 pounds or more, shall, unless deviation authority is issued--

(1) Comply with the certification and operations specifications requirements of part 125 of this chapter;

(2) Conduct its operations with those airplanes in accordance with the requirements of part 125 of this chapter; and

(3) Be issued operations specifications in accordance with those requirements.

(b) Each person who conducts noncommon carriage (except as provided in Sec. 91.501 (b) of this chapter) or private carriage operations for compensation or hire with airplanes having a passenger-seat configuration of less than 20 seats, excluding each crewmember seat, and a payload capacity of less than 6,000 pounds shall--

(1) Comply with the certification and operations specifications requirements in subpart C of this part;

(2) Conduct those operations in accordance with the requirements of part 135 of this chapter, except for those requirements applicable only to commuter operations; and

(3) Be issued operations specifications in accordance with those requirements.

The FAA takes a very dim view of people who start competing with actual air carriers and are unlicensed to do so. It's a quick way to have your license suspended and end up with some hefty fines and other legal troubles.

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¹ There are of course the regulations that allow operations "in furtherance of a business" which is why I specified a third party.

Answer 2

I agree with Lnafziger's post with the advisory circular definition of holding out versus common carriage.

"AC120-12A - Private Carriage Versus Common Carriage of Persons or Property contains guidance that can be used to help determine whether or not an operation falls under common carriage. Take a look at it for specific examples, but the "plain language" version is:

Common Carriage: A carrier becomes a common carrier when it "holds itself out" to the public, or to a segment of the public.

Holding Out: A carrier is holding out when they represent themselves as willing to furnish transportation within the limits of its facilities to any person who wants it.

There are lots of ways to "hold out", but the basic idea is if someone in the general public comes to you and asks you to fly them and you agree, you are probably holding out. Any form of advertising demonstrates a clear sign that you are holding out. There are also other activities that qualify, so look over the AC if you have further questions, and if that doesn't answer it your best bet is to contact an aviation lawyer. You could also contact your local FSDO with questions."

HOWEVER, and this is the big but that can get you into a world of trouble, just because you have a commercial pilots license and yes you can get legally paid to fly you really cannot carry passengers for compensation. Typically a commercial pilot can have a job like flying skydivers, crop dusting, aerial photography and (with an instructors certificate) provide flight instruction for compensation.

There seems to be a big misconception though that a person can just get a commercial pilots license and take their friends up for compensation. This is false. FAR 1.1 clearly defines commercial operator as:

Commercial operator means a person who, for compensation or hire, engages in the carriage by aircraft in air commerce of persons or property, other than as an air carrier or foreign air carrier or under the authority of Part 375 of this title. Where it is doubtful that an operation is for "compensation or hire", the test applied is whether the carriage by air is merely incidental to the person's other business or is, in itself, a major enterprise for profit.

In fact, inside of AC120-12A itself it even states under Part I:

In summary, persons intending to conduct only private operations in support of other business should look cautiously at any proposal for revenue-generating flights which most likely would require certification as an air carrier.

So while you can fly for hire, you cannot carry passengers or property because then you are acting as a commercial operator. You can work for a commercial operator with that license although for 135 you will need 1200hrs to be PIC. You can do other for hire flying like carrying skydivers, crop dusting, banner towing or aerial photography though as perscribed in the only exceptions stated in FAR 119.1(e).

If you want to fly with your friends you cannot charge them for your time. You could be flying to a business meeting and happen to be on the clock anyway but you cannot specifically charge for the transportation. What you also can do (even as a private pilot) is share costs. FAR 61.113 says:

A private pilot may not pay less than the pro rata share of the operating expenses of a flight with passengers, provided the expenses involve only fuel, oil, airport expenditures, or rental fees.

To summarize a commercial pilots license allows you to fly for hire but does not allow you to act as a commercial operator and carry persons or property other than as an air carrier. You can work for someone who has that certificate but you can't just rent or buy a plane and charge a passenger for your time as pilot legally even as a commercial pilot. You can only split costs with them just like you could as a private pilot.

Traps For The Unwary: Business Flying And The "Compensation Or Hire" Rule

Now I have seen some mentions of trying to get away with Part 91 Subpart K as well. § 91.1005 Prohibitions and limitations. (a) Except as provided in § 91.321 or § 91.501, no owner may carry persons or property for compensation or hire on a program flight. FAR 91.501, however, is going to say this:

(b) Operations that may be conducted under the rules in this subpart instead of those in parts 121, 129, 135, and 137 of this chapter when common carriage is not involved, include— (1) Ferry or training flights; (2) Aerial work operations such as aerial photography or survey, or pipeline patrol, but not including fire fighting operations; (3) Flights for the demonstration of an airplane to prospective customers when no charge is made except for those specified in paragraph (d) of this section; (4) Flights conducted by the operator of an airplane for his personal transportation, or the transportation of his guests when no charge, assessment, or fee is made for the transportation; (5) Carriage of officials, employees, guests, and property of a company on an airplane operated by that company, or the parent or a subsidiary of the company or a subsidiary of the parent, when the carriage is within the scope of, and incidental to, the business of the company (other than transportation by air) and no charge, assessment or fee is made for the carriage in excess of the cost of owning, operating, and maintaining the airplane, except that no charge of any kind may be made for the carriage of a guest of a company, when the carriage is not within the scope of, and incidental to, the business of that company; (6) The carriage of company officials, employees, and guests of the company on an airplane operated under a time sharing, interchange, or joint ownership agreement as defined in paragraph (c) of this section; (7) The carriage of property (other than mail) on an airplane operated by a person in the furtherance of a business or employment (other than transportation by air) when the carriage is within the scope of, and incidental to, that business or employment and no charge, assessment, or fee is made for the carriage other than those specified in paragraph (d) of this section; (8) The carriage on an airplane of an athletic team, sports group, choral group, or similar group having a common purpose or objective when there is no charge, assessment, or fee of any kind made by any person for that carriage; and (9) The carriage of persons on an airplane operated by a person in the furtherance of a business other than transportation by air for the purpose of selling them land, goods, or property, including franchises or distributorships, when the carriage is within the scope of, and incidental to, that business and no charge, assessment, or fee is made for that carriage. (10) Any operation identified in paragraphs (b)(1) through (b)(9) of this section when conducted— (i) By a fractional ownership program manager, or (ii) By a fractional owner in a fractional ownership program aircraft operated under subpart K of this part, except that a flight under a joint ownership arrangement under paragraph (b)(6) of this section may not be conducted. For a flight under an interchange agreement under paragraph (b)(6) of this section, the exchange of equal time for the operation must be properly accounted for as part of the total hours associated with the fractional owner's share of ownership.

So if you think that you can fly as a "private carrier" under Part 91 and charge for it and not be found as needing a 135 air carrier certificate (or maybe 121, 125, etc..) you are in for a world of hurt. AOPA Legal Counsel Offers a nice write up on some of the differences between having a CPL and being a commercial operator. The exceptions to this rule are the ones in 119.1(e) as mention before (aerial photography, etc..).

Why "private carriage" does NOT relieve you of getting an air carrier certificate. Even if you are found to be private carriage FAR 119.23(b) clearly states:

(b) Each person who conducts noncommon carriage (except as provided in §91.501(b) of this chapter) or private carriage operations for compensation or hire with airplanes having a passenger-seat configuration of less than 20 seats, excluding each crewmember seat, and a payload capacity of less than 6,000 pounds shall—

(1) Comply with the certification and operations specifications requirements in subpart C of this part;

(2) Conduct those operations in accordance with the requirements of part 135 of this chapter, except for those requirements applicable only to commuter operations; and

(3) Be issued operations specifications in accordance with those requirements.

Guess what Subpart C of 119 is going to say:

§119.33 General requirements. (a) A person may not operate as a direct air carrier unless that person—

(1) Is a citizen of the United States;

(2) Obtains an Air Carrier Certificate; and etc..

So any notion that you can fly for compensation other than exceptions in 119.1(e) is FALSE unless you also possess the appropriate operating certificate.

Answer 3

Advisory Circular 120-12A

According to part D, it would seem that when you have long-term contracts to serve somewhere between 3 and 18 customers are you likely to be considered a common carrier.

But what they're getting at is that those guys who had 18-24 had the ability to serve 18-24 clients at max. So while they were still working private contracts and not open to the general public, they were accepting as many contracts as they were able, which is really no different than holding out to the public. But if you have three full-time aircraft and are flying contracts for two clients on a semi-regular basis, you are not likely to be seen as holding out.

This is a very hard thing to define because there is no right answer. The definition varies between FSDOs and even between operations in question. If you do a lot of research you'll find that the FAA tends to be conservative and will say that operations that may blatantly fall under private carriage via 120-12A's guidelines must still be a 135 operation or worse. Then another case that strikingly similar might come up and the ruling is that it's okay.

The only real way to know where that line turns from light gray to dark gray is to call the FSDO and ask.

Answer 4

I believe answers so far to this question are incorrect.

14 CFR 119.23(a & b) was referenced to disallow a commercial pilot from engaging in all private carriage. However, Part 119 would not apply to several instances. Look at 14 CFR 119.1(a) -

Blockquote This part [that is all of Part 119] applies to each person operating or intending to operate civil aircraft—

Blockquote (1) As an air carrier or commercial operator, or both, in air commerce; or

Blockquote (2) When common carriage is not involved, in operations of U.S.-registered civil airplanes with a seat configuration of 20 or more passengers, or a maximum payload capacity of 6,000 pounds or more.

119.23(b) is written with this applicability in mind so you must interpret it with its applicability context in mind. So 119.23(b) does not rule out someone conducting private carriage in an aircraft with less than 20 passenger seats or a max payload less than 6,000lb.

14 CFR 91.501(b) was referenced to disallow a commercial pilot from engaging in private carriage. However, 91.501(a) indicates Part 91 Subpart F (under which 91.501 is found) is only applicable to certain airplanes or operations under 91 Subpart K (fractional ownership) only. If the type of operation is not a fractional ownership operation, then this objection is moot.

The way I understand it, if a company X buys a small airplane, and hires a certificated commercial pilot to fly their executives around, the commercial pilot can be compensated for his flying the airplane.