Comstock - 1977

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DEPARTMENT OF TRANSPORTATION ~~RAl AVlATION AOMfNISTRATION WASHINCTOt1, O.C. 20591 MG. Tucker Co~usto:::k

Dear Me. Comslo~:

Thi.;; is in rcspo.:is e to your letter of June 8. 1977. in which yo'.i ask for . clari1fication o!" the privileges of a private pilo~ witb a free ballo·::>:i ruti.ng. Y01.1 clesc:ribc the circumstances that have given rise to your inQ'.1iry at1 follows~ It is traditional in balloon gath erings for the organizer or sponsor a: an e·1ent to provide certain incentives ~o encottrage participatio:i in these events. The ihcenti\res arc "Js:ially frea p r opane. !ree lodging. and som..: or all mea1s for the pilot and a few crew p erscms (balloon s require only one pilot. but about 4 to 6 lo.unch and chw:;e cre•w). In some instances.. the organizer will also pay fo r the Sanctio!led Task Score Sheet. a $2 5 e ntry iee for Balloon .Fedcra.tion of America sanctioned comi:>etition. You also poi.'1! out that "The rem:.1neration. if it can be call ed s~ch. r arely covers all the expenses incurred by the event participant; i t dO<!S, however, allow the pilot/owner to cover some of b is e)..-pe..,ses. 11 As yo-~ know, to riCt as p ilo~ in comman:.l of <ln aircraft for com.;>ensatio!'l or hire. a pilot must have at least a commercial pilot cer!ificate. Section 61 . 118 of the Federal Avia ti<rt Regulations (14 CFR 61.118) prohibits a pr~vo.ltc p i.lot from actfag as pilot in command of a.'t aircraft that is carrying p.alssengers or property fo r .::o!npensation or ilil-e and from acting foi' comp•ensation o:r hire as pilot in com mand o~ an air craft, None of the exccptio:lS in section 61. 118 (incide."ltal business activity, expense sharing, '1ircraft sales, and charitable airlifts ) nppear to apply to the cu·curnstanc•es y ou des~ribe . Accordingly, whether a pdvate pilot wo'..lld be in vio1l::ition o~ section 61. 118 by receiving any of the "incentives" you describe wo~ld d~pend o:i whether they constitute compc.,sation. O•Jr comments on whether the specific incentives yo:.i list are co.::npe..-.- saticm within tlrn meaning of secti on 61. ! 18 are as follows: 1) The organizer pays t~1e sanction fee: In this instance the pilot WOULD ha"e to fly in order for' the fee to be paid . a s the registration fee is only applicab]c to register r esults of competition.

The payment oi this $25.00 fe e for Llie pilot, which is conditioned upon op.era.tine the balloon at the gat.l1ering. would be compensation. 2) The oreanize r pays for propane: this is a very sniall part of the cost of operating ~ hot 3.ir balloon. Many races and rallies p r ovide the propane a t no charge mainly for convenience; it is difficult to obtain propane because retail outlets a.re not open on weekends. when most batloo:l events are held, and non aretail operations have no way oi computing charges. since there is no now gauge on propane bulk tank 5 . · In spite 0£ the s mall cost involve d, propane p:rovided by the organizer wc1uld be compensation t o the pilot . However. if a small. one-time charge we:re paid by .e:acb participant to cove~ total cost of propane used at the gath eril'-8, t he FAA would not consider a pilot who u$eS up more than hls nr h,..r 11i:;hRre" of the propane to be receivina compensation.

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3) The orga:ii:z.er provides housing and/or food fOr pilots and crew. The housing and food are not a conditi(')nal item; if the pilot does not fly, these are in any e\rent provided.

In view of the fact that housing and food are not conditioned upon the pilot operating- the balloon, these it.ems would not be considered to be compensation. · 4} The organizer requires that banners be affiXed to the basket of the balloon in order to compete. The banner · may well have the name of a sponsor" or the name of the race organizer., or the name of the event. For example. Urn banner may say a) Porter Paint Company b} World .Balloon Championships.. Inc • . c) U . S. National Hot Air Balloon Championships Some of these may in addition ha.ve the competition number assigned to the balloon included on the sign. These signs at"e approximately 3 by 3 feet.

Whether the pilot is receiving compensation far participation in the race is determined by what, if anything. he receives, not by what he is requested to do in order to participate in the race. Moreover.. even if another person, eg. a paint company .. were to pay the organizer to requit'e an advertising banner on each balloon, the display of the banner would not be considered to be carrying property for compensation or hir e within the meaning of § 61. 118.

5) The pilot is requi.I'ed to carry a member of the press. oi'ganizer's committee, or one of the sponsors for the event. No:ie of these people have paid for a balloon ride, except the sponsor, who may have donated reso':.lrces in order for the balloon event to take place. The pil~t does not receive any additional compensation for taking the · passenger above and beyond what is given to all other participants.

Under the circmnstances y ou descrfbe. the fact that the pilot is req'.lired . to carry perso:ls or ~roperty in the ballo-::m is not s ignificant in determinir'.g Whethet' the I incentives" YOU describe are COIDpensation. FurtherttlOre, since the persons 1·eceiving the ride do not pay the organizer any charge. the pilol is not operating an aircraft that is carrying passengers ·for compensation or hire. _ 6) Prize money is awarded on the basis of competitive finish.

Prize money awa·rded on the basis of competiton is not compensation. 7} Mileage money is paid at a r:ate less than allowed ·by the IRS.

Any mileage pa.id to participant s wo'11d be compensation. We trust that we have sat isfactorily responded to your q".lestio:is . In an · effort to. ensure uniform a.pplication of section 61.118, the legal opinions . expressed in this l etter wm be disseminated among FAA enforcement . personnel. · ·Sincerely.

·i·' \ ' .->1, •. ti ; I ( '*. • ,• \ N~L ~.'E!SNER 1 - · \ '·A.eting Assistant Chief Counsel Regulations and Enforcement Dtvision Office of the Chief Cou.nscl