Under FAA Advisory Circular AC 120-12A, the line between private carriage and common carriage comes down to a four-part test: an operation is common carriage when someone holds out to the public a willingness to transport persons or property, from place to place, for compensation. Meet all four elements and you need a Part 121 or Part 135 certificate. Miss any one of them, and the flight may qualify as private carriage under Part 91 or Part 125, though other rules can still apply.
The circular itself is guidance, not regulation. An advisory circular is not legally binding on the public unless its contents are incorporated into a regulation by reference.1Federal Aviation Administration. Advisory Circular Checklist and Status of Other FAA Publications But treating AC 120-12A as optional is a mistake. The FAA uses its framework when deciding whether to bring enforcement, and federal courts have cited it when evaluating unauthorized commercial operations. It is the agency’s working playbook for this analysis.
The Four Elements That Make an Operation Common Carriage
AC 120-12A defines a common carrier as an operator who satisfies all four of the following:
- Holding out a willingness, communicated to the public, to provide air transportation.
- Transport of persons or property as the actual service.
- From place to place, meaning movement between two locations rather than a sightseeing loop.
- For compensation, in any form.
When every element is present, the operation must be conducted under 14 CFR Part 121 (scheduled airlines) or Part 135 (on-demand charter and commuter operations).2Federal Aviation Administration. AC 120-12A – Private Carriage Versus Common Carriage of Persons or Property Meeting three of the four does not automatically make the flight legal under Part 91; it just means the operation is not common carriage. Other regulations may still govern.
How the FAA Identifies Holding Out
Holding out is where most operators get into trouble, because it does not require a paid advertisement. AC 120-12A recognizes several ways an operator can signal availability to the public:
- Signs and advertising in any medium.
- Agents or salespeople who solicit business or gather passengers on the operator’s behalf, even if the operator never speaks to the customer.2Federal Aviation Administration. AC 120-12A – Private Carriage Versus Common Carriage of Persons or Property
- Reputation. The circular states plainly that “physically holding out without advertising where a reputation to serve all is gained is sufficient.”2Federal Aviation Administration. AC 120-12A – Private Carriage Versus Common Carriage of Persons or Property
The circular dates to 1986, so it does not mention the internet or social media, but the FAA has extended the same principles to digital channels. A separate FAA safety publication treats internet and social media activity as a recognized method of holding out.3Federal Aviation Administration. Air Charter Safety for Everyday Operations
Scale is irrelevant. A single pilot with one airplane serving one town can be a common carrier if the objective conduct shows a willingness to fly anyone who calls. The FAA looks at behavior, not self-image. If you rarely turn down a paying customer, you are almost certainly holding out.
Flight-Sharing Websites and Apps
In 2014, the FAA issued a legal interpretation finding that pilots posting available seats on flight-sharing websites such as Flytenow were holding out. The site was “designed to attract a broad segment of the public interested in transportation by air,” which satisfied the holding-out element even though the pilots only wanted to share expenses.4Federal Aviation Administration. U.S. Court of Appeals Decision on FAA Flight-Sharing Interpretation
The FAA distinguished internet platforms open to the general public from private communications among friends. Posting a trip online is holding out; texting a friend about splitting fuel is not. The D.C. Circuit upheld that interpretation, and no rulemaking has changed the position since. If you are considering any app or website that matches you with passengers, assume the FAA views it as common carriage requiring certification.4Federal Aviation Administration. U.S. Court of Appeals Decision on FAA Flight-Sharing Interpretation
What Private Carriage Actually Looks Like
Private carriage is defined by what it lacks. AC 120-12A describes it as “carriage for one or several selected customers, generally on a long-term basis.”2Federal Aviation Administration. AC 120-12A – Private Carriage Versus Common Carriage of Persons or Property These arrangements are typically documented in written contracts that identify who gets flown and when.
Exclusivity is the point. A private carrier picks its clients and does not accept business from the general public or a broad segment of it. Adding new clients on a regular basis, or maintaining a rotating roster, invites the FAA to reclassify the operation as common carriage. The absence of holding out is what makes carriage private.
Depending on aircraft size and configuration, private carriage falls under 14 CFR Part 91 (Subpart D) or Part 125.2Federal Aviation Administration. AC 120-12A – Private Carriage Versus Common Carriage of Persons or Property Part 125 applies to larger aircraft with 20 or more passenger seats or a payload capacity of 6,000 pounds or more, when common carriage is not involved.5eCFR. 14 CFR 119.1 – Applicability Do not assume Part 91 covers every private operation; the aircraft itself can push you into Part 125.
How the FAA Defines Compensation
Compensation is broader than most pilots expect. It is not limited to profit or cash payment. The FAA treats compensation as “the receipt of anything of value” tied to the pilot operating the aircraft. That includes reimbursement for fuel, oil, transportation, lodging, and meals when the reimbursement is conditioned on the pilot flying. Even logging flight time counts as compensation when the pilot is not paying the operating costs.6Federal Aviation Administration. Legal Interpretation to Randy Howell
Losing money on a flight does not defeat the compensation element. If anything of value changes hands in connection with the flight, the fourth element is satisfied. Whether the operation becomes common carriage then depends on the other three.
Private Pilot Expense Sharing
A narrow exception under 14 CFR 61.113(c) lets private pilots share operating expenses with passengers. The pilot must pay at least a pro rata share, and only four categories of expense are shareable: fuel, oil, airport expenditures, and rental fees.7eCFR. 14 CFR 61.113 – Private Pilot Privileges and Limitations: Pilot in Command Maintenance, insurance, hangar fees, and depreciation cannot be split with passengers.
Expense sharing is still compensation. The Flytenow decision said so directly: the rule “creates a category of compensated flight that is permitted,” but it remains compensation.4Federal Aviation Administration. U.S. Court of Appeals Decision on FAA Flight-Sharing Interpretation The exception only survives when there is no holding out. Advertise seats to strangers and the exception collapses.
Flights Incidental to Business
Under 14 CFR 61.113(b), a private pilot may receive compensation for flying in connection with a business or employment, but only when the flight is “incidental to that business or employment” and the aircraft carries no passengers or property for compensation or hire.7eCFR. 14 CFR 61.113 – Private Pilot Privileges and Limitations: Pilot in Command The critical factor is common purpose. Flying yourself to a required meeting is incidental to the job. Carrying coworkers to the same meeting is generally acceptable because transportation is a byproduct of the underlying business.
This breaks down when the pilot’s only reason for making the trip is to transport the passengers. If you would not be on the flight but for the passengers, the flight is not incidental to anything else.
Wet Leases, Dry Leases, and Operational Control
Aircraft leasing is one of the most common ways operators drift into unauthorized common carriage. The difference between a wet lease and a dry lease turns on operational control, which federal regulations define as “the exercise of authority over initiating, conducting or terminating a flight.”8eCFR. 14 CFR 1.1 – General Definitions
A dry lease transfers the aircraft without crew. The lessee assumes operational control and full regulatory responsibility, and the operation may fall under Part 91 if no common carriage is involved. A wet lease provides both aircraft and at least one crewmember, with the lessor retaining operational control.9eCFR. 14 CFR 110.2 – Definitions Because the lessor is effectively running the flight, a wet lease typically requires Part 135 certification.
The FAA has repeatedly warned about “sham” dry leases, where the paperwork says the lessee has operational control but the lessor actually supplies the crew, maintains the aircraft, and makes every flight decision. AC 91-37B, “Truth in Leasing,” cautions that aircraft owners may try to sidestep Part 121 and Part 135 through “devious leases and conditional sales contracts.”10Federal Aviation Administration. Truth in Leasing The agency looks at the totality of circumstances: who hires and trains the crew, who schedules flights, who pays for fuel and maintenance, and who decides whether a flight departs. Lease language cannot transfer operational control if the facts on the ground say otherwise.
Enforcement has intensified. The FAA may conduct ramp inspections when an aircraft appears on numerous lease arrangements, which can signal an attempt to work around Part 119 certification.10Federal Aviation Administration. Truth in Leasing Before entering a dry lease, verify that the lessee actually controls crew selection, airworthiness decisions, and flight management.
Penalties for Getting It Wrong
Operating as a common carrier without the right certificate carries substantial financial exposure. Civil penalties for individuals and small businesses reach $17,062 per violation, capped at $100,000 per enforcement action. Larger entities that do not operate aircraft for passenger or property transport face the same $17,062 per-violation maximum but a cap of $1,200,000. Companies that operate aircraft for compensation face up to $42,657 per violation, capped at $1,200,000 per action.11Federal Register. Civil Monetary Penalty Adjustments for Inflation These amounts adjust for inflation periodically.
Criminal exposure is also on the table. Under 49 U.S.C. ยง 46316, knowingly and willfully violating aviation regulations, including operating without proper certification, is a federal offense. Violators face fines under Title 18, with a separate violation for each day the conduct continues.12Office of the Law Revision Counsel. 49 USC 46316 – General Criminal Penalty The FAA can also revoke pilot certificates and operating certificates.
The agency does not have to prove that anyone was harmed. The violation is operating outside the scope of your certificate, safely conducted flights or not. That is why the four-part test is worth working through honestly before the first paying passenger boards.