A non-pilot purchases an aircraft and puts it into an LLC. Then non-pilot hires pilots, places insurances, rents a hangar and pays for all other costs and expenses with the sole purpose to fly the his family on personal trips and vacations (no business purpose), can the aircraft still be operated under Part 91? Or, because the non-pilot who owns the LLC is providing funding for the operation of the aircraft, does this constitute operations under Part 135?
The short answer is yes, an aircraft owner can hire a pilot to fly him or her, as well as other friends and family, and operate under Part 91. This is called private carriage, as opposed to common carriage.
Just to clarify a few points:
- The pilot hired would need to have a Commercial Pilot Certificate, even if no money changes hands, because the FAA considers flight time as compensation.
- The owner could not charge other passengers because this would constitute common carriage, (operating as a charter) and require a Part 135 Operating Certificate.
- It makes no difference whether the owner is a rated pilot or not. Some owners fly themselves, but want the security of having a more experienced pilot along with them.
P.S. I realized looking related questions on the right side that this is pretty much a duplicate of this question: Can an aircraft operator hire a Commercial Pilot to fly their aircraft under part 91?
In order to find out whether a particular operation requires an operating certificate or an air carrier certificate (and thus must conform to Part 135 or 121 or etc), you have to look at Part 119, which describes all the operations that need to be conducted under those Parts. So let's take a look at FAR 119.1:
This part applies to each person operating or intending to operate civil aircraft - (1) As an air carrier or commercial operator, or both, in air commerce; or... [yada yada large airplanes]
Let's assume that you don't mean a large airplane for the purposes of this discussion. If you do mean a large airplane, flown privately by the single owner, then the flight must be under Part 125.
If you mean a small airplane, then Part 119 would only apply if the aircraft were operated as "an air carrier or commercial operator" So the question becomes whether a private entity (being an LLC has no bearing on these questions; it might as well just be Bob the airplane owner) can hire a pilot and not be an air carrier. The practical answer is that that happens all the time under Part 91. Corporate aircraft with hired pilots fly under Part 91 regularly. They are able to do this because when an entity like Bob or the LLC or the corporation flies their own airplane, then they are not acting as air carriers or commercial operators.
The definitions of these things are in FAR 1.1:
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.
Bob, LLC is clearly not a commercial operator because Bob, LLC is not carrying persons or property for hire. Bob, LLC is engaged in private flights for the benefit of its owner(s) and is not a major enterprise for profit. Nor is Bob, LLC an "air carrier." An air carrier is all those things a commercial operator is, and operates interstate routes. Again, the definitions are in Section 1.1, but you have to root around a bit to really get to the heart of the question.
As an aside, most commercial operations are air carriers. But because Federalism, Part 119 has to formally treat interstate and intrastate commerce differently. That is why there is a difference between "air carrier" (which is interstate commerce) and "commercial operator" (which is intrastate commerce).
Since the LLC does not act as an air carrier or commercial operator, Part 119 doesn't apply to it and it can operate Part 91.
All this noise about "private" vs "common" carriage is a red herring. Part 119 applies to both. The only difference it makes is whether you have to look at 119.21 or 119.23 to determine what kind of certificate you need and which part of the FARs (135 or 121) you must comply with. ...IF you're a commercial operator, which your LLC is not.