FAA Cost Sharing Rules: 61.113 Pro Rata Share and Holding Out

A pilot who paddled with a Hawaii canoe club once flew the team from Honolulu to Molokai for a race in a 172 owned by a friend of the club, nine trips over two days. The paddlers chipped in $900, he covered $380, and everyone assumed that was fair cost sharing. The FAA Chief Counsel disagreed in a 2009 letter: the team picked the destination, the pilot had no reason of his own to be there, and even if he had, only the first trip out and one trip home would have qualified. Under the FAA cost sharing rules, a private pilot can split the bill with passengers, but only on a flight the pilot was taking anyway, for the pilot's own reasons, with people the pilot already knows.

1. What 61.113(c) actually says

The rule is one sentence in 14 CFR 61.113(c): 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.

Three things fall out of that sentence, and AC 61-142 (the FAA's 2020 advisory circular on expense sharing) spells each one out:

• Only four categories can be shared: fuel, oil, airport expenditures like landing and parking fees, and aircraft rental fees. Maintenance, insurance, depreciation and charts are on the pilot. The AC's own example is oxygen, which you burn on the flight and still cannot split because the rule doesn't list it.
• Only the passengers can pay. A third party, like an employer or a club treasury, may not reimburse the pilot under this exception.
• Shared expenses are still compensation. The D.C. Circuit said so in Flytenow v. FAA. The exception allows a narrow kind of compensation, which is why everything else about the flight gets scrutinized.

2. The pro rata math

Pro rata means equal shares across everyone on board who is splitting, pilot included. The pilot's share is the floor, not a target. AC 61-142 uses a $1,800 flight with two passengers: three people, so the pilot pays at least $600.

A smaller one. You rent a 172 at $165 an hour wet, fly 2.4 hours on the Hobbs to a $100 hamburger field, and pay a $15 landing fee. The shareable pot is $396 of rental plus $15, or $411.

• One passenger: two people, $205.50 each. Your friend can pay up to $205.50. You pay at least $205.50.
• Three passengers: four people, $102.75 each. You can collect up to $308.25 and must pay at least $102.75 yourself.
• The $40 of headset rental, the $20 tip to the line guy and your renter's insurance premium are not in the pot. Neither is a share of the flight review you did last month.

If you own the airplane, the pot shrinks to fuel, oil and airport costs. Your engine reserve and hull insurance are real costs of the flight and still not shareable. Owners who reason that "my real cost is $140 an hour" and split that are collecting more than the rule allows.

If you rent often enough to be splitting the bill most weekends, run the same hours as an owner or partner. Past some number of hours a year a share costs less than the rental, and your own flying in your own airplane stops being a 61.113 question.

3. The common purpose test

The FAA reads 61.113(c) to require a bona fide common purpose, and the D.C. Circuit accepted that reading in Flytenow. AC 61-142 puts it as a but-for test: if you wouldn't have taken the flight without the money, there is no common purpose. The pilot needs their own reason to go to that destination, and when the pilot picks the destination, that helps.

• A friend asks you to fly him to pick up a new car and offers to split costs. You weren't going anyway. No common purpose.
• You are flying to a wedding on Long Island and your passengers are going to a basketball game there. Different business, same destination, your choice. Common purpose exists.
• Seven runners rent a four-seat airplane for a race, and the pilot is one of them. Only the first outbound trip shares a purpose. Once the pilot is at the race, the next trip is just carrying passengers.

4. Holding out: where Flytenow lost

Common carriage has four elements: holding out a willingness to transport persons or property from place to place for compensation or hire. A cost sharing flight already meets three of them. The only thing keeping you out of Part 119 territory is not holding out.

Flytenow ran a website where private pilots posted planned trips and members split costs pro rata. Anyone could become a member by filling in a form, and pilots could accept or reject passengers for any reason. The FAA said those pilots were holding out, and in December 2015 the D.C. Circuit denied Flytenow's petition for review. The AC applies the same logic to apps and to public social media posts.

What the FAA does accept is reaching out to a defined, limited group of people with whom you have an ongoing, preexisting relationship: family, friends, close acquaintances. The AC gives five examples.

1. A post in a private book club Facebook group, where the board approves members, is likely fine.
2. A post on an open page used by a community college's students is holding out.
3. An email to close friends is fine. An email blast to every contact you have may not be.
4. A newspaper ad for two passengers to Boston, filled first come first served, is holding out.
5. No advertising at all can still be holding out. A pilot whose whole town knows he flies to Orlando every Friday and takes whoever asks has built a course of conduct that looks like a service.

5. Co-owners splitting costs is a different question

Three partners who split the hangar, insurance, annual and an hourly rate for their own flying are sharing the cost of owning an airplane among themselves. That is what a partnership agreement and a cost sharing formula are for, and 61.113(c) is not the rule that sets it.

61.113(c) shows up the moment someone rides along and pays toward that flight. If partner A flies partner B to Oshkosh and B chips in, that leg is a cost sharing flight with a passenger, and the four-category list, the pro rata floor and the common purpose test all apply. Whether an internal hourly rate the partnership charges its own members counts as a "rental fee" for this purpose is a question for your attorney, not a blog post. Our post on co-ownership legal structures covers the separate flight department company issue for LLCs that charge members for flights.

6. Will your insurance cover it?

Maybe. It depends on the policy. One insurance vendor, SkyWatch, writes that a genuine 61.113 cost share is generally treated as private use under most renter policies, but that many non-owned policies exclude any operation that amounts to compensation or hire, and a pilot who regularly collects money from passengers can start to look like an air taxi. Owner policies have their own use clauses. Read the exclusions in yours and ask your broker about the specific trip, by email, so the answer is on file.

7. The other exceptions in 61.113

Cost sharing is one of several narrow carve-outs. 61.113 also covers flying that is only incidental to your business or employment with no passengers or property carried for hire, charitable and community event flights that meet 91.146, reimbursed search and location flights directed by an agency or search organization, aircraft salesmen with 200 hours demonstrating to a buyer, glider towing under 61.69, and certain light-sport production flight tests. Each has its own conditions, so read the section before relying on one.