In March, Private Jet Card Comparisons published an extensive report detailing potential legal risks for users
“Despite BlackBird’s assertion that the pilots are not transporting persons or property, it is clear that they are being hired for that very purpose.” – Federal Aviation Administration
BlackBird CEO Rudd Davis says the company “will pause” activity under FAA scrutiny. Calls it “a minority of our business.”
Read the full letter from the FAA to BlackBird
In a letter dated Dec. 17, 2019, obtained by Private Jet Card Comparisons, the Federal Aviation Administration tells Uber for private flight digital platform Blackbird it plans to continue an investigation into the company.
Earlier today, the FAA posted on LinkedIn, “Attention pilots and passengers! The FAA recently sent a letter to Blackbird Air, a web-based application that connects passengers with pilots, notifying them that any pilot who provides charter flights without complying with the Part 119 certification will be violating the Federal Aviation Regulations. Pilots need be aware of the requirements. Passengers need to be clear of their rights.”
The letter stated, “In sum, the FAA has concluded that pilots’ use of the BlackBird platform constitutes ‘holding out’ and participating pilots are engaged in common carriage.”
It continues, “Because these operations are subject to part 119 certification, a pilot who holds an airline transport pilot or commercial pilot certificate must obtain and hold a certificate issued under part 135 or the pilot must be employed by a company operating the flight that is certificated under part 119.”
FAA investigates Blackbird
The letter from Naomi Tsuda, Assistant Chief Counsel for Enforcement, concludes, “Accordingly, please expect further investigative activity into BlackBird’s operations, particularly regarding its pilot database. In addition, we would be interested in learning of any action you intend to take in view of the jeopardy facing pilots who participate in BlackBird’s service.”
Tsuda tells the law firm representing Blackbird, “To date, the FAA has issued two legal interpretations in which the agency concluded that pilots using companies with a web-based presence, similar to BlackBird, were common carriers.”
A common carrier is an entity whose business transports people or goods from one place to another for a fee, according to Find Law.
The correspondence sites AirPooler and FlyteNow, two other start-ups that shutdown under government scrutiny.
Despite BlackBird’s assertion that the pilots are not transporting persons or property, it is clear that they are being hired for that very purpose.– Federal Aviation Administration
The letter also stated, “We have little trouble concluding that the pilots listed on BlackBird’s pilot database selected by the user are transporting persons or property, from place to place, for compensation.”
It noted, “Despite BlackBird’s assertion that the pilots are not transporting persons or property, it is clear that they are being hired for that very purpose.”
It continued, “In addition, as BlackBird concedes, the pilots are being compensated for the flight service (whether the money comes directly from the lessee or through the BlackBird platform). That leaves only the issue of holding out.”
Legal Risk for Users
In the report in March, Private Jet Card Comparisons highlighted in many cases that users were agreeing to lease the aircraft they were flying on when they clicked the Buy button.
Terms were buried in over 10,000 words of multiple agreements giving the user operational control, meaning legal responsibility that the pilots they were matched with were qualified, insurance was current, and proper maintenance records had been maintained.
It also meant they could be liable for any claims made during their operational control of the aircraft. That could include injuries to other passengers who booked seats on the flight via the Blackbird app.
One source said the FAA had been looking into BlackBird prior to it raising $10 million earlier this year.
When I interviewed BlackBird CEO Rudd Davis, I asked if the company had submitted an FAA Chief Counsel Interpretation?
At the time, he told me no, but said the company was working with regulatory authorities and expressed confidence its operations were legal.
He also dismissed the website’s lack of disclosure to users as well as to reporters about the risks to consumers of what it was offering.
He told me his view was most journalists writing about BlackBird have no idea about chartering versus leasing let alone Part 91 or 135. He sees what BlackBird is doing as new and different.
He said, reporters will use old language until a new language is created. That new language he said is that BlackBird is a marketplace.
At the time I wrote, “Davis has created an easy to use marketplace. By the same token, his customers deserve to understand the risks as well as the benefits.”
One business aviation executive I spoke with at the time added, “Customers are not buying flash drives on eBay.”
The FAA did not respond to an enquiry about any actions they are planning.
Davis responded via email, “We disagree with the FAA’s interpretation and look forward to our continued discussions with them.”
He added, “We are the largest digital aviation marketplace and the one place travelers can find all private flight options.”
He said, “Part 91 operations (short-term leases to users) are the minority of our business and for the moment we will pause that aspect of the business and continue to provide charter and individual seats from our part 135 partners.”
FAA Letter to Blackbird
The letter to Blackbird was apparently in response to a June letter from Blackbird’s counsel to the FAA as part of its investigation.
The text of the full letter appears below:
Re: Your client, BlackBird Air
Dear Mr. Goldberg:
We have considered the June 10, 2019 letter from BlackBird Air, Inc. (BlackBird), that set out many aspects of its business model and operating assumptions.
The information that BlackBird has presented leads us to conclude that the pilots participating in BlackBird’s platform and using its app are holding out and thus are engaged in common carriage.
This conclusion does not apply to individual commercial pilots who are legally operating the flights for operators authorized to conduct operations under 14 C.F.R. part 135, or pilots who are legally operating under 14 C.F.R. §91.501.1
In arriving at this conclusion, we considered BlackBird’s position articulated in its June 10th letter.
BlackBird stated that, “[u]nlike air carriers, BlackBird is not building an operation based on crews, aircraft, or routes. BlackBird is building an infrastructure that supports all of general aviation, which includes air carriers and operators.”
BlackBird manages two databases: one for aircraft available for lease and a second one for commercial pilots (described as “independent person[s] with a specific skill set (pilot)).”
BlackBird uses the databases as part of a marketplace service that serves as an aggregator of information and connects third-party service providers (the pilots) with users seeking to charter an aircraft or purchase a ticket on a direct air carrier.
BlackBird asserts, “the ultimate business goal is to create an online platform that surfaces the many options available to users; [and] NOT to provide air transportation.”
BlackBird states it is a facilitator, in that it supports users with the process of (1) leasing an aircraft and (2) separately hiring a commercial pilot to fly the aircraft the user has leased. BlackBird states that it does not own, manage, or maintain the aircraft and does not employ pilots.
BlackBird also states that, through the application, the user, not BlackBird, (1) selects and leases the aircraft and (2) chooses and hires the pilot. BlackBird asserts that operational control of the aircraft remains with the user at all times.
BlackBird represents that it only facilitates the agreements, processes payments, and provides customer support to all three parties (user, i.e., person leasing the aircraft and hiring the pilot; pilot; and aircraft lessee).
As a general rule, a party must obtain a part 119 certificate to engage in the transportation of passengers or property for compensation or hire.
This applies to operations involving both noncommon/private carriage and common carriage. As·BlackBird noted in its letter, to determine whether common carriage is present, the FAA assesses whether there is: (1) a holding out of a willingness to (2) transport persons or property (3) from place to place (4) for compensation. The courts have determined that these criteria are consistent with common law precepts and are appropriate within the aviation context.
We have little trouble concluding that the pilots listed on BlackBird’s pilot database selected by the user are transporting persons or property, from place to place, for compensation.
Despite BlackBird’s assertion that the pilots are not transporting persons or property, it is clear that they are being hired for that very purpose. In addition, as BlackBird concedes, the pilots are being compensated for the flight service (whether the money comes directly from the lessee or through the BlackBird platform).
That leaves only the issue of holding out.
With respect to whether the pilots are holding out, we believe the BlackBird database establishes that element.
“Holding out” is a common law concept that the FAA has applied to aviation in a functionalist, pragmatic manner.
Holding out can be accomplished by any means that communicates to the public that a transportation service is indiscriminately available to the members of the segment of the public it is designed to attract.
There is no specific rule or criteria as to how holding out is achieved. Holding out is determined on a case-by-case basis by assessing the specific facts of the situation.
Advertising in any form raises the question of holding out.
“Holding out” can be done in many ways, including signs and advertising; the actions of agents, agencies, or salespeople who may procure passenger traffic; and individual ticketing on known common carriers.
In addition, the expression to all customers with whom contact is made that the operator can and will perform the requested service is sufficient to conclude that a person is holding out.
To date, the FAA has issued two legal interpretations in which the agency concluded that pilots using companies with a web-based presence, similar to BlackBird, were common carriers.
See Legal Interpretation to MacPherson, dated August 13, 2014, and Legal Interpretation to Winton Aviation Law Firm, dated August 14, 2014. The legal interpretations discussed the expense sharing provision of 14 C.F.R. § 61.l 13(c) and addressed whether specific circumstances cause a pilot to become a common carrier.
In the Legal Interpretation to MacPherson, the FAA concluded that the use of a website by pilots constituted common carriage because by posting specific flights to the AirPooler website, a pilot participating in the AirPooler service held out as willing to transport persons or property from place to place for compensation or hire.
The FAA stated that, although the pilots chose the destinations, the pilots were holding out because they were willing to transport passengers for compensation.
In the Legal Interpretation to Winton Aviation Law Firm, the FAA assessed a scenario in which a website called FlyteNow connected pilots and “general aviation enthusiasts” who paid a share of the flight expenses in exchange for travel on a route predetermined by the pilot.
Only FlyteNow members could search for flights on the website, but anyone could become a member by filling out an online form. If a pilot carried one or more passengers,
FlyteNow facilitated the sharing of expenses on a pro-rata basis between the passenger(s) and the pilot.
The FAA issued a legal interpretation to FlyteNow referring Mr. Winton to the Legal Interpretation to Ms. MacPherson for answers to the questions presented in his request, as it involved a similar web-based expense-sharing scheme.
FlyteNow petitioned the United States Court of Appeals for the District of Columbia Circuit for review of the FAA’s interpretation that the pilots would be considered common carriers, which meant that the pilots would be required to hold at least commercial pilot licenses and hold certificates issued under 14 C.F.R. part 119.
In 2015, the court decided the case FlyteNow Inc. v. Federal Aviation Administration,7 and the court upheld the FAA’s conclusion that the pilots’ participation on Flytenow.com would amount to holding out an offer of transportation to the public.
The court stated that the FAA uses “holding out” as that concept is defined through common law and applies it in a functionalist and pragmatic manner.
The court explained that, while Flytenow.com is a flight-sharing website limited to its members, membership requires nothing more than signing up to the website and any prospective passenger searching for flights could readily arrange for travel via the website.
Furthermore, the court stated that there is no conclusive proof that a pilot is not a common carrier based on the absence of rate schedules or pilots occasionally refusing service.
The court distinguished FlyteNow’s facts from other internet-based communications, such as emails among friends, which the court stated would not likely be deemed as holding_out.
The court upheld the FAA’s determination that the pilots were holding out via the website, expense-sharing was a form of compensation, and all four elements of common carriage were met. Because these were common carriage operations, the pilots were required to hold a part 119 certificate to engage in them.
The BlackBird platform is similar to the websites considered by the court in the FlyteNow case.
BlackBird stated in its June 10, 2019 letter that its pilots are commercial pilots operating under part 91 or part 135.
However, as previously stated, unless a specific exception applies that allows an operation for compensation or hire to occur in the absence of an operating certificate, certification under part 119 is required.
Thus, if a pilot conducts an operation under only part 91 that is subject to the requirements of part 119, the pilot would be in violation of 14 C.F.R. § 61.133 in that the person acting as pilot in command of an aircraft carrying persons or property for compensation or hire must be qualified in accordance with part 61 and must comply with the applicable parts of 14 C.F.R. that apply to the operation.
The BlackBird platform, like the FlyteNow website, is available to everyone. Anyone can readily search the BlackBird platform and boo.k a flight, and the pilots on BlackBird’s website are available and willing to transport passengers who solicit pilot services through the platform.
Much like the pilots participating on FlyteNow.com, commercial pilots utilizing the BlackBird application express their willingness to transport people by posting their availability to conduct flights to the BlackBird platform.
Although some exceptions from the part 119 certification requirement exist for certain, discrete types of operations, no exception applies in this case. A pilot’s participation in the BlackBird platform amounts to holding out a willingness to transport persons from place to place for compensation and requires certification under part 119 prior to conducting the operation.
In sum, the FAA has concluded that pilots’ use of the BlackBird platform constitutes “holding out” and participating pilots are engaged in common carriage.
Because these operations are subject to part 119 certification, a pilot who holds an airline transport pilot or commercial pilot certificate must obtain and hold a certificate issued under part 135 or the pilot must be employed by a company operating the flight that is certificated under part 119.
Accordingly, please expect further investigative activity into BlackBird’s operations, particularly regarding its pilot database. In addition, we would be interested in learning of any action you intend to take in view of the jeopardy facing pilots who participate in BlackBird’s service.
Please let me know if you would like to present any additional information in response to this correspondence.
Naomi Tsuda, Assistant Chief Counsel for Enforcement