How the FAA Killed Uber for Planes
Flight-sharing helped fill seats on small, private trips and cut costs. But regulators stopped it.
Private flight has long been a luxury limited largely to the über-rich or super dedicated. Unless you have the deep pockets or connections to buy or rent your own small plane, plus a pay for a pilot, fuel costs, insurance, and hangar fees, you will be stuck in the chicken coop of crammed commercial flights with the rest of us peasants for all your flying needs.
But what if it didn't have to be that way? What if you could purchase an empty seat on a private flight that was going where you needed to go anyway for a majorly discounted price? This was, for a glorious and brief period of time, made possible by a promising new crop of startups dedicated to bringing flight-sharing to the masses.
Dubbed "the Uber of the skies," startups like Flytenow and AirPooler aimed to connect pilots whose private flights were not yet filled to passengers eager to reach their destinations without suffering the horrors of commercial air travel. Founded in 2013, the services were a great win-win for both parties: Pilots no longer had to simply eat the cost of empty seats on each trip, and passengers got to enjoy the thrill of small-scale flight for a very affordable price. For the first time, it seemed like consumers would have a real inexpensive alternative to the hell of economy class travel.
That is, until the Federal Aviation Administration (FAA) caught wind of all this innovation and decided to quash it once and for all. In a sneaky bid to shut down this kind of arrangement, the FAA decided to expansively interpret its own definition of a "common carriage" operator so that non-commercial small-scale pilots using these services would be legally put on the same level as the big boy commercial flights—with the same expensive regulatory and licensing requirements.
The FAA knew that small services like Flytenow and AirPooler simply could not keep up with these requirements, and thus effectively shut them down. Flytenow valiantly challenged the FAA's capricious actions in court all the way up to the Supremes; but unfortunately, the Supreme Court declined to take up the case in January of this year, effectively upholding the lower courts' siding with the FAA.
My Mercatus Center colleague Christopher Koopman recently released a study analyzing the sad saga of flight-sharing's destruction at the hands of the FAA. It is an amazing tale of regulatory overreach and targeted statutory interpretation that seems to have been undertaken for little reason beyond FAA antipathy to non-commercial cost-sharing arrangements. And unfortunately for all of us non-millionaires out there, this agency bias ultimately leaves the public bereft of an encouraging new development in transportation.
To understand the current brouhaha surrounding the legal status of flight-sharing services, you have to know a little bit about the FAA's historical approach to non-commercial flights. Services like Flytenow and AirPooler are really only a new evolution of long-standing practices among amateur pilots.
For around as long as small scale flight has existed, pilots would leave messages on airport bulletin boards advertising their upcoming flight plans. Other pilots who needed to get to the same destination could hitch a ride and help defray the cost of the unused seats. This kind of cost-sharing arrangement made the relatively expensive hobby of amateur flight a lot more reasonable for all parties involved, and was explicitly authorized in the federal code, albeit with a considerable set of limitations. Chief among these caveats was that flight-sharing pilots could not seek to profit from flights, but rather merely offset the costs. This was good enough for the pilots' needs, and the convention became a critical and fiercely defended element of private flight. Flytenow and AirPooler are merely digitized versions of this practice, which allow pilots and passengers to connect and contract for mutually-beneficial air travel.
America's aviation regulators have long loathed the benign practice of cost-sharing in private flight. They attempted to outright ban the practice two times in the past, once in 1950 and again in 1963. Yet both times, the Civil Aeronautics Board and Federal Aviation Agency (precursors to the modern FAA) were forced to back away from their attempted regulatory expansion after immediate and severe opposition from the private flight community.
With its expansion of the "common carriage" designation to cost-sharing arrangements like Flytenow and AirPooler, the FAA may have won its first major success in its longstanding efforts to clamp down on the practice. But there is clearly little difference between such services and the analog bulletin board system that predated it—it is just a digitized version of the practice. Unlike airline carriers, cost-sharing pilots do not earn a profit, nor are they obligated to shuttle any passenger that wants to purchase a ticket—they can turn down anyone they want.
But that didn't stop the FAA. The regulator's prevailing "common carriage" rules were not established by Congress, but were promulgated by the FAA in 1986. There is a four-part test: If an airline operator undertakes 1) a "holding out of willingness" to 2) "transport persons or property" 3) "from place to place" 4) for "compensation or hire," it will be considered a common carrier subject to regulations on commercial airlines.
When Flytenow and AirPooler were first getting off the ground, their attorneys reached out to the FAA to verify that their activities were all above-board. Unfortunately, it may have been better for them to have asked for forgiveness than permission: The FAA responded that such services indeed fit the definition of a common carrier, despite the fact that pilots would not be soliciting passengers from the general public (condition #1) or making a profit (condition #4). For some reason, a pilot can suddenly become a common carrier if he advertises an open flight online, but not if he posts it to a bulletin board in the real world. It is a tortured logic, but it is unfortunately the one that the FAA and the courts are sticking with.
Underlying this regulatory antagonism is the legal distinction between a commercial and a non-commercial pilot. All airplane pilots are required to hold current certifications in order to legally fly. But the requirements differ depending on the pilot class. Hobbyists are only required to log three takeoffs and landings every three months, plus a minimum number of flight hours. Commercial pilots on the other hand, who routinely shepherd hundreds of lives through the skies, must meet more stringent requirements.
Regulators, therefore, want to jealously block non-commercial pilots from engaging in any kind of activities that might even superficially resemble commercial activities out of an abundance of caution for passenger safety. The flight community would not stand for a ban on bulletin board messaging, but the FAA got away with it when it came to digital platforms.
Yet paradoxically, limiting cost-sharing abilities for non-commercial pilots may actually make those activities less safe. As Koopman points out, non-commercial pilots will be less able to log air hours if they cannot afford to practice. Cost-sharing therefore allows pilots to become more proficient and therefore safer in the skies. And on the consumer side, cost-sharing allows for efficiency in air travel (and much more comfort and enjoyment).
There is an easy solution to the FAA's regulatory overreach. "This problem can be solved by relatively simple congressional action," Koopman concludes. Congress could create a straightforward definition of a common carrier in aviation that would allow for promising innovations such as flight-sharing, while ensuring the safety and affordability that consumers and pilots alike desire. And such a reform would have the rare attribute of cutting across typical party lines. As far as innovation in aviation goes, there is definitely a way. Now the challenge is to get our Congress to muster up the will.
