FAA has released a proposed legal interpretation that would revise the agency’s broad prohibition on reimbursements for executive use of company aircraft for personal reasons.

FAA generally bars aircraft operators for seeking reimbursement for costs associated with flights conducted under Part 91, except when the flight involves “carriage of officials, employees, guests and property of a company on an airplane operated by that company, or the parent of a subsidiary of the parent, when the carriage is within the scope of, and incidental to, the business of a company.”

However, the agency has held that personal travel aboard company aircraft does not fall into the scope of company business. This finding stems from a 1993 legal interpretation (commonly referred to as the Schwab Interpretation) by the Office of the Chief Counsel.

Earlier this year, the National Business Aviation Association asked the agency to consider revising the Schwab Interpretation in cases of senior officers and executives who could be recalled at any moment or whose travel plans could be changed immediately before personal travel because of company demands. NBAA also argued that personal travel could be within the scope of the company’s business (even if incidental to business) if company officials must conduct meaningful, real-time work aboard company aircraft and maintain communications, FAA notes.

The agency still rejects arguments that certain personal travel falls within company business because companies must maintain communication with senior executives. “If anything, the advances in communication technology weaken any argument that the use of company aircraft is necessary for personal travel,” the agency says. But FAA found more compelling the argument that certain executives may be unable to reliably schedule personal travel due to the nature of their employment.

“Recalling an individual from a vacation because of an emergency is clearly within the scope of a company’s business,” the agency says, adding, “To the extent that using company aircraft is the most efficient way to transport the individual in an emergency situation, the FAA would not object to the company being used.” FAA warns that some question could arise as to whether the transport was still incidental to company business.

The agency, however, also says “there is merit to the position that even the first leg of the trip could, under limited circumstances, be within the scope of the company’s business, even though there was no emergency circumstances at play.” The agency recognizes that summer vacations, weekend ski trips or other personal travel could be canceled up to the last moment because of business concerns. “As such, the company may determine that it is more efficient to provide the company aircraft than to reimburse the individual for the cost of canceled commercial airfare,” FAA says. Additionally, the company may accommodate the individual’s altered plans by providing the company aircraft once business has been resolved.

“While the personal travel is not within the scope of the company’s business, indeed it is clearly incidental to that business, the need to modify the travel on very short notice may well be,” the agency says, adding that the return trip may also fall within the scope.

“FAA has tentatively determined that a company could be reimbursed for the pro rata cost of owning, operating and maintaining the aircraft when used for routine personal travel by an individual whose position merits such a high level of company interference into his or her personal travel plans.”

The agency warns that not all travel would count — certain long-established events such as weddings or medical procedures are unlikely to change. The agency also believes a company should maintain a list of covered individuals and that those individuals would generally include certain officers, directors and more than 10% owners of a company.

FAA is accepting comments on the proposed interpretation through Aug. 9. Comments can be sent to www.regulations.gov. Specify docket number FAA-2010-0667.

Photo Credit: FAA