Another AOC Question: Classification of Operations

[Rattlegun]

Apologies for the wall of text, but I want to be certain I am operating within the law.

Let’s say I own and operate an IT Support business which sells computer parts and performs computer repairs.

Scenario 1
I hire a car and drive to the customer’s premises to set up a computer which he has purchased from a third party. I invoice the customer for my labour (including labour required to drive the car) and the hire cost of the car.

Scenario 2
Exactly the same as Scenario 1, but replace the words ‘car’ with ‘aircraft’ and ‘drive’ with ‘fly’. (Grammar Gestapo: the first ‘a’ also becomes ‘an’)

Scenario 3
The customer orders a computer from my business, which I send via courier. As soon as it arrives, I hire an aircraft and fly to the customer’s premises and set it up. I invoice the customer for my labour (including labour required to fly the aircraft), the computer parts, and the hire cost of the aircraft.

Scenario 4
Same a Scenario 3, except that instead of sending the computer via courier, I take it with me in the aircraft. Again, I invoice the customer for my labour (including labour required to fly the aircraft), the computer parts, and the hire cost of the aircraft.

Scenario 5
My Customer orders the computer from a third party. I agree to pick it up, fly out and set it up. I invoice the customer for my labour (including labour required to fly the aircraft), and the hire cost of the aircraft.

Scenario 6
The customer orders a computer from my business for urgent delivery, but wants to set it up himself. I hire an aircraft and fly the computer out to him. I invoice for the computer parts, labour to fly the aircraft and hire of the aircraft.

Which of these scenarios qualify as private ops?

Reference:
CAR 2 (7)(d)(v) The carriage of persons or the carriage of goods without a charge for the carriage being made, other than the carriage, for the purposes of trade, of goods being the property of the pilot, the owner or hirer of the aircraft;
Shall be taken to be employed in private operations.

And CAR 206 (1)(viii) Commercial Purposes Act, s 27 (9)) carriage, for the purposes of trade, of goods being the property of the pilot, the owner of hirer of the aircraft;

[KNOW NUFFEN]

Do you land on the customers roof or long line the parcel in?
You might be charging for cargo delivery so might be commercial ops , however if it was " free delivery " Tuesday (avoid peak hour traffic) you should be private , then again I Know Nuffin.
KN

[Soujushi]

Scenario 1
I hire a car and drive to the customer’s premises to set up a computer which he has purchased from a third party. I invoice the customer for my labour (including labour required to drive the car) and the hire cost of the car.

Scenario 1 does not involve an aircraft at all, and therefore does not meet the definition of "private operations".

Scenario 2
Exactly the same as Scenario 1, but replace the words ‘car’ with ‘aircraft’ and ‘drive’ with ‘fly’. (Grammar Gestapo: the first ‘a’ also becomes ‘an’)

You are charging the customer for the hire cost of the aircraft, and therefore making a charge for the carriage being made. Therefore this does not count as private operations.

Scenario 3
The customer orders a computer from my business, which I send via courier. As soon as it arrives, I hire an aircraft and fly to the customer’s premises and set it up. I invoice the customer for my labour (including labour required to fly the aircraft), the computer parts, and the hire cost of the aircraft.

Starting to get interesting. The 'carriage' of the goods has been done elsewhere by a commercial courier, and not relevant to the CAR. You are not providing carriage by air of any persons or goods, but merely passing on the costs you incur while travelling to and from your customer's premises. This does meet the definition of private operations.

Scenario 4
Same a Scenario 3, except that instead of sending the computer via courier, I take it with me in the aircraft. Again, I invoice the customer for my labour (including labour required to fly the aircraft), the computer parts, and the hire cost of the aircraft.

The only difference between this and Scenario 2, is that at the time of the flight, here you are the owner of the computer, whereas in Scenario 2, someone else is. You are therefore engaged in carriage, for the purposes of trade, of goods being the property of the pilot, the owner of hirer of the aircraft; and therefore this is explicitly Commercial Purposes, and does not count as private operations. Like Scenario 2, you are also charging for the cost of carriage, and does not count as a private operation.

Scenario 5
My Customer orders the computer from a third party. I agree to pick it up, fly out and set it up. I invoice the customer for my labour (including labour required to fly the aircraft), and the hire cost of the aircraft.

Same. You're carrying goods to the customer and charging for it. This does not count as private.

Scenario 6
The customer orders a computer from my business for urgent delivery, but wants to set it up himself. I hire an aircraft and fly the computer out to him. I invoice for the computer parts, labour to fly the aircraft and hire of the aircraft.

Same. You're carrying goods to the customer and charging for it. This does not count as private.



The only way you can do this is by not charging for the delivery of the goods. By all means charge for your time, which, given you are travelling by aircraft, includes this cost, but the computer itself cannot attract any delivery cost itself if you use a privately operated aircraft. There are plenty of businesses that work quite well using aircraft to transport goods around, but without charging specifically for air freight.

[shortone]

Only way to do it is up your labour rate by 110%

[Rattlegun]

G'day Soujushi,

Thanks for taking the time to respond, but I'd like to examine these scenarios a little more closely.

Scenario 1 does not involve an aircraft at all, and therefore does not meet the definition of "private operations".

Fair point. This was only included as a reference to a typical (real world) scenario, and also to illustrate the similarities of Scenario 2.

Scenario 2
Exactly the same as Scenario 1, but replace the words ‘car’ with ‘aircraft’ and ‘drive’ with ‘fly’. (Grammar Gestapo: the first ‘a’ also becomes ‘an’)

You are charging the customer for the hire cost of the aircraft, and therefore making a charge for the carriage being made. Therefore this does not count as private operations.

I would argue that this does meet the criteria for Private ops in the same way Scenario 3 does:

The 'carriage' of the goods has been done elsewhere by a commercial courier, and not relevant to the CAR. You are not providing carriage by air of any persons or goods, but merely passing on the costs you incur while travelling to and from your customer's premises. This does meet the definition of private operations.

If you agree with this, we have established that you can hire an aircraft for the purpose of flying to and from a (commercial) job, recover the cost of the aircraft hire and charge for the labour required to fly it - all as a private operation. (Scenarios 1, 2 & 3)

Scenario 4
Same a Scenario 3, except that instead of sending the computer via courier, I take it with me in the aircraft. Again, I invoice the customer for my labour (including labour required to fly the aircraft), the computer parts, and the hire cost of the aircraft.

The only difference between this and Scenario 2, is that at the time of the flight, here you are the owner of the computer, whereas in Scenario 2, someone else is. You are therefore engaged in carriage, for the purposes of trade, of goods being the property of the pilot, the owner of hirer of the aircraft; and therefore this is explicitly Commercial Purposes, and does not count as private operations. Like Scenario 2, you are also charging for the cost of carriage, and does not count as a private operation.

I agree this cannot be classified as private ops, because the goods carried are the property of the hirer, but I do not agree that a charge has been made for the carriage - the cost of the flight is the same with or without the computer on board.

Scenario 5
My Customer orders the computer from a third party. I agree to pick it up, fly out and set it up. I invoice the customer for my labour (including labour required to fly the aircraft), and the hire cost of the aircraft.

Same. You're carrying goods to the customer and charging for it. This does not count as private.

I disagree. Because the cost of the flight is the same with or without the computer on board, no charge has been made for the carriage. And because the goods do not belong to the hirer of the aircraft, the flight qualifies as private ops.

So, by that reason, I can carry a computer which the customer has purchased from Harvey Norman, but I cannot carry the same computer if they have purchased it from me without an AOC.

Scenario 6
The customer orders a computer from my business for urgent delivery, but wants to set it up himself. I hire an aircraft and fly the computer out to him. I invoice for the computer parts, labour to fly the aircraft and hire of the aircraft.

Same. You're carrying goods to the customer and charging for it. This does not count as private.

I think your interpretation is correct, but I don't think it represents the intention, or spirit, of the legislation. I would argue the law is to protect the general public, and AOC holders. As long as you not carrying anyone other than employees, and are carrying only your own stock from A to B, and not according to fixed schedules, this ought to be considered private ops.

Have I got the wrong end of the stick?

Ninja edit due to accidentally pressing submit.

[Vorticey]

If you charge them 'labour to fly' then you must be a commercial pilot, and its commercial (and you charged them in all examples) Even the car example is commercial or work related and you could get tax deductions. If they pay half and you pay half of the cost then its private. If you don't charge them for the flight but are taking the computer to sell it, then its commercial (same as a farmer taking crops to market in his own plane). If they pay you to fly to their house and fly home again with no computer then that's still commercial.

"As long as you not carrying anyone other than employees, and are carrying only your own stock from A to B, and not according to fixed schedules, this ought to be considered private ops.
Have I got the wrong end of the stick?" ah, yes because of this:
CAR 206 (1)(viii) Commercial Purposes Act, s 27 (9)) carriage, for the purposes of trade, of goods being the property of the pilot, the owner of hirer of the aircraft;

[Rattlegun]

G'day Vorticey,

I see your point, but by this interpretation any private business using an aircraft for (almost) anything would require an AOC.

Even if I perform the work as per Scenario 2 (hire an aircraft, fly out, set up the computer then fly home), but instead of an itemised invoice, I send a one-liner for "Computer Repairs" for the same amount (as suggested by shortone), any astute accountant would conclude that I have still made a (indirect) charge for the flight, and therefore, used the aircraft in a commercial sense.

Many private businesses (private practice doctors, veterinarians, LAME’s, avionics specialists, etc) use a more lateral interpretation of the legislation, under which they fly from place to place, (sometimes carrying goods being the property of the pilot, owner or hirer of the aircraft for the purposes of trade) under PVT rules and without an AOC. I’m pretty sure these business are recovering their aircraft operating costs and their time required to fly it.

I think your interpretation is correct, but I don't think it represents the intention, or spirit, of the legislation. I would argue the law is to protect the general public, and AOC holders. As long as you not carrying anyone other than employees, and are carrying only your own stock from A to B, and not according to fixed schedules, this ought to be considered private ops.

Have I got the wrong end of the stick?

ah, yes because of this:
CAR 206 (1)(viii) Commercial Purposes Act, s 27 (9)) carriage, for the purposes of trade, of goods being the property of the pilot, the owner of hirer of the aircraft;

Apologies, I should have been clearer: This is how I think the law ought to be written. It is my opinion that the regulator (and the legislation) should be concerned with the safety standards of the operation, not whether goods are carried for trade or how the operating costs are met.

Rattlegun.

Ninja edit: I accidentally a few words.

[SuperF]

Rattlegun, good luck getting common sense into anything the government has anything to do with...

I agree that looking at some of your scenarios, then yes compared to a car they should, or could possibly be deemed to be pvt ops, but according to the law they probably aren't, in fact reading those rule extracts, there is no probably about it.

Another way to think about it, is looking at the Car example, is a courier van or a Taxi a pvt operation? Do you need a specific license or operating certificate to operate those? and at what point when you are delivering items that have been purchased by your customers do you need a Goods Service Certificate, or Taxi operators licence.

Also, start to think about if you had an accident while delivering those items, weither you are delivering them, or doing delivery and install, is the motor vehicle covered as a workplace? As a business owner, if your employee has an accident while driving a vehicle that you have hired for them to deliver items, or travel to install items, are you liable?? Are the items covered by insurance while in transit? And then whos insurance? is it a business accident? would he have been undertaking that trip if it wasnt for business???

Check your insurance policy, most state that you are covered for items, while in the home... not in transit. just the same as most aircraft are covered while flying and while stationary, not while in transit on a trailor or boat!!

The next question that i think is more interesting, and may open a can of worms, what about these guys that have their own business aircraft? Do they have an AOC? it is a similar question, they hire a pilot to fly them around, obviously a CPL as you need to be a commercial pilot to be paid for flying, so does that make it a commercial operation and therefore needing an AOC?

[CYHeli]

When are PVT Ops private? The easiest example is the group who hire an aircraft and split the costs, no profit made. Not always that simple. I like the answers above, and going to throw in my ideas to add to them. I know rattlegun, having done a lot of his training and even sent him solo and we have had this discussion before. He is not actually in IT which does confuse the scenario a little, but close enough and he doesn't want to burn an opportunity.

If we simplify it right down, don't confuse goods for the purposes of trade, with spare parts. If you are carrying a number of computers, pictures, woollen blankets, whatever, that you intend to sell, then you are carrying freight and goods for trade; commercial ops. This is not the same as carrying spare parts.

If you are flying to the job and have a number of spare parts with you, I would suggest that you are not carrying goods for sale. Sure they would have a mark up (use the shop price on site), but is the reason for the flight to sell that item? (Commercial) Or for you to get there and perform an activity which actually forms the basis of the flight (PVT) and you might use some of these spare parts as part of that activity? Are you there to sell goods or offer a service?

How are you deriving income? If you have a skill; IT, mechanic or a surveyor, then that is your job. You have an hourly rate which you charge when you are away from the office and not able to perform that skill. You can charge any reasonable expense, and it doesn’t matter if you are sitting on a bus, riding a bicycle, driving or flying. That is your rate. You are charging for time being tied up with the job, not for being a pilot.

But can a person get paid for being a pilot without holding a CPL or operate under an AOC? Yes, under the circumstances listed in Reg 7, where it allows. For example, (d)(i) the personal transportation of the owner of the aircraft;
But, “(d)(ii) aerial spotting where no remuneration is received by the pilot or the owner of the aircraft or by any person…” makes it clear that no payment is allowed.

Can you charge for the hire of the aircraft? Yes. It is an expense, but no mark up. Why? Because this bit tells us “without a charge for the carriage being made other than the carriage”. You can charge for the hire, but not charge for carrying the goods as freight.

That is why pilots work on stations and get paid as a pilot on aeroplanes and helicopters and it is legal. They fly the boss around, they run errands, check fences, stock and water and they even pick up the food for the station. The business pays for the aircraft costs. When they sell cattle the operating costs of the business, including the aircraft, are built in. ie charged to the cattle buyer.

The final paragraph makes it fairly safe to define PVT Ops when we are splitting hairs,
(d)(viii) any other activity of a kind substantially similar to any of those specified in subparagraphs (i) to (vi).

Just be aware of the paragraphs that state “where no remuneration is received…”.

[SuperF]

CYheli

those regs almost seem logical... we must be reading them wrong. Wait until CA$A change your regs over to EASA style rules and you get some of the grief that we currently have in NZ.

[Vorticey]

“without a charge for the carriage being made other than the carriage”.

You have to be careful removing a comer there and changing the context. You can not charge for the hire at all, as I understand it.
CAR 2 (7)(d)(v) The carriage of persons or the carriage of goods without a charge for the carriage being made, That is the rule and it is followed by an exemption> other than the carriage, for the purposes of trade, of goods being the property of the pilot, the owner or hirer of the aircraft;
Shall be taken to be employed in private operations.

[CYHeli]

Nicely put V.
I still believe the tech going to fix a computer and using a helicopter to get there is PVT.

[froginasock]

Nicely put V.
I still believe the tech going to fix a computer and using a helicopter to get there is PVT.

But cant charge 'additionaly' for it (i.e. no profit from flight component).

A tech going to fix his own remote computer is PVT.

[Rattlegun]

CYHeli - Nice post with some very good points. I agree with most of them.

How are you deriving income? If you have a skill; IT, mechanic or a surveyor, then that is your job. You have an hourly rate which you charge when you are away from the office and not able to perform that skill. You can charge any reasonable expense, and it doesn’t matter if you are sitting on a bus, riding a bicycle, driving or flying. That is your rate. You are charging for time being tied up with the job, not for being a pilot.

Nicely put. It is on this basis I feel it is reasonable to charge for the hours spent flying without breaking PVT rules.

If you are flying to the job and have a number of spare parts with you, I would suggest that you are not carrying goods for sale. Sure they would have a mark up (use the shop price on site), but is the reason for the flight to sell that item?

On this point I disagree. I really don't think you can discern "spare parts" from "goods". They're one and the same. And under the rules if they're the "property of the pilot, the owner or hirer of the aircraft" and you intend to charge for them, you'll need an AOC to carry them.

But, if you pick up those same spare parts from a different supplier, and the cost of the flight is exactly the same (labour + aircraft hire) you don't - you're back to PVT Ops. ie: The goods are not the "property of the pilot, the owner or hirer of the aircraft" and you have not charged for their carriage.

Can you charge for the hire of the aircraft? Yes. It is an expense, but no mark up. Why? Because this bit tells us “without a charge for the carriage being made other than the carriage”. You can charge for the hire, but not charge for carrying the goods as freight.

You can not charge for the hire at all, as I understand it.

I can't see why aircraft hire costs can't be recovered, or even marked up (as you would the car hire). Again, if the cost of the flight is the same with or without the goods being carried, then you have not charged for carriage of the goods. The problem with this law is not that you have charged for aircraft hire, the problem is that you own the goods and intend to carry them for trade. It doesn't make a great deal of sense to me.

As one more example: If you were a Green Grocer, and you do a station run every Tuesday in your own C172 Bug Smasher, carrying only your own produce, should you really need an AOC (besides CAR2 & CAR206)?

[KNOW NUFFEN]

Remember, if its private , you can't claim a tax deduction for it !!!! KN

[Vorticey]

Ive always been told that the farmer couldn't take his crops to market privately but the more I read it the more I think it can be done:
CAR 2 (7)(d)(v) The carriage of persons or the carriage of goods without a charge for the carriage being made, That is the rule and it is followed by an exemption to not charging other than the carriage, for the purposes of trade, of goods being the property of the pilot, the owner or hirer of the aircraft;
Shall be taken to be employed in private operations.

It could also be read like this since we are concentrating on goods:
The carriage of goods without a charge for the carriage being made, other than the carriage, of goods for the purposes of trade, being the property of the hirer of the aircraft;
Shall be taken to be employed in private operations.

I picked hirer as it is in there as equal as owner or pilot. If you have a good lawyer I'm sure he could read it like this: If you hire an aircraft to take your goods to market then you can charge for it through the sales of those items and it is still a private operation. Although it does sound a lot like a cargo flight and I think I may have read way too much into this

[arrrj]

Rattlegun,

May I suggest you just call CASA. For real.

That's what I did when I wanted to know the answer to a similar scenario, and the chap I spoke to (in Brisbane) was very helpful and I got the answer within minutes.

Arrrj

[Rattlegun]

It could also be read like this since we are concentrating on goods:
The carriage of goods without a charge for the carriage being made, other than the carriage, of goods for the purposes of trade, being the property of the hirer of the aircraft;
Shall be taken to be employed in private operations.

G'day, Vorticey. This was also my interpretation (that the exemption is to allow for the carriage of goods for the purposes of trade, not to prohibit it), until I read

206 Commercial purposes (Act, s 27 (9))
(1) For the purposes of subsection 27 (9) of the Act, the following commercial purposes are prescribed:
(a) aerial work purposes, being purposes of the following kinds (except when carried out by means of a UAV):
(viii) carriage, for the purposes of trade, of goods being the property of the pilot, the owner or the hirer of the aircraft (not being a carriage of goods in accordance with fixed schedules to and from fixed terminals);

Back to square 1 again.

[Rattlegun]

Rattlegun,

May I suggest you just call CASA. For real.

I have emailed CASA a few weeks ago, but still awaiting a response. I'll be giving them a call today.

Cheers.

[Rattlegun]

Rattlegun,

May I suggest you just call CASA. For real.

That's what I did when I wanted to know the answer to a similar scenario, and the chap I spoke to (in Brisbane) was very helpful and I got the answer within minutes.

I have emailed CASA a few weeks ago, but still awaiting a response. I'll be giving them a call today.

Cheers.

So, I finally got hold of an FOI and posed the question (as best I could). He referred the question to a "Lawyer" and phoned me back:

Any flight, for which money changes hands, is airwork.

So I am wondering where this leaves those businesses which use an aircraft in this fashion. I'm sure a few 'Slappers would know a LAME or Avionics Tech who'll fly out for breakdown maintenance - often on a PPL, & without an AOC- and still recover the operating costs of the aircraft (unless they're doing it from the goodness of their heart).

Back to the drawing board.