Friday, August 15, 2014

Federal Aviation Administration letter may keep aviation startups like AirPooler grounded

By Scott Kirsner 

Cambridge-based AirPooler isn’t exactly “Uber for private planes.” But it is a way for private pilots to offer extra seats on their trips to people who’d like to tag along and share some of the expenses. (I wrote about the startup’s launch in April, and in June it won entrance to the MassChallenge entrepreneurial program.) Trouble is, the Federal Aviation Administration doesn’t seem to love the notion.

AirPooler’s attorney had asked the FAA for a clarification of the rules: could passengers on private flights with non-commercial pilots chip in for part of the expenses, on a pro rata basis? AirPooler’s plan was to calculate the maximum shared cost allowed for each flight, bill the passenger, and pocket a small transaction fee before handing the rest of the money to the pilot.

Co-founder and CEO Steve Lewis tells me that some pilots participating in AirPooler’s beta test earlier this year “had gotten phone messages from FAA regional [officials], saying that you may be violating FAA rules, and that worried other pilots.” That’s why the company had requested additional information about the FAA’s stance on the matter.

Unfortunately, while AirPooler tried to argue that chipping in on expenses isn’t quite the same thing as buying a ticket on Delta or chartering a private jet, the FAA disagreed. “By posting specific flights to the AirPooler website,” the FAA wrote in a letter to the company, a private pilot would be advertising a trip — something that they need a special air carrier certificate to do. Essentially, it’s kosher to invite an old college friend on a trip to Bar Harbor and ask her to share the expenses, but using a site like AirPooler to promote that you’re going on the trip and invite just anyone along to defray the costs isn’t.

Lewis called the FAA decision “confusing, because it seems to rely critically on language lifted from a draft version of a 1963 regulation, that the agency itself rejected in the final rule it adopted the following year.” In a statement he circulated earlier this evening, he said it means that “private pilots with empty seats will not be able to use services like AirPooler to list flights they are intending to take and share the costs with passengers, unless they obtain a government certificate to operate as an air carrier — a prohibitively stringent requirement for private pilots.”

Lewis says that more than 800 pilots have registered to use AirPooler in Boston, San Francisco, and San Diego, the three cities that the company has focused on so far. When we spoke tonight, he said he hoped to meet with the FAA later this month to “have an opportunity to put our views forth to them. Whether it will result in a change of mind, I really couldn’t speculate. But we’re certainly going to try.”

But Lewis also said that the startup may adjust its offering and business model in response to the ruling. “What we’ve discovered is that there’s tremendous demand out there among pilots, and we think demand is pretty good with the general public,” he says. 

The decision seems likely to also affect FlyteNow, a startup founded by Northeastern University students that has been participating in the Y Combinator accelerator program this summer in Silicon Valley.

Scott Kirsner writes the Innovation Economy column and blog, which track entrepreneurship, investment, and big company activities around New England. 

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Flight-Share Deemed Illegal by Federal Aviation Administration in Blow to AirPooler

Airplane ride-sharing services such as AirPooler Inc. that connect pilots with passengers willing to share fuel costs and other travel expenses aren’t operating legally, the U.S. Federal Aviation Administration said.

Arranging such travel is equivalent to a charter flight, which requires additional licenses and regulatory oversight, the FAA said in an Aug. 13 letter to a lawyer for AirPooler. The letter was in response to a May 19 letter in which AirPooler asked the FAA whether its pilots needed commercial licenses.

The FAA’s legal interpretation rejects the idea that these air-travel services simply amount to cost-sharing rather than commercial aviation operations. The pilots or the company may face FAA enforcement action should they continue.

The letter was sent by Mark Bury, the FAA’s assistant chief counsel for international law, to Rebecca MacPherson, a lawyer at Jones Day representing AirPooler.

The legal opinion is consistent with prior rulings the FAA has made, according to the letter.

AirPooler was founded in 2013 by Steve Lewis and Andy Finke with the idea of making general aviation more affordable, according to the company’s website.

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