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Court upholds FAA ruling that bans ride-sharing for planes

Uber for flying companies argued their pilots didn't need commercial licenses

Uber-for-flying startups will stay grounded after a federal appeals court declined to review a ruling by the Federal Aviation Administration that prohibited cost-sharing by private pilots.

Flytenow.com, one of the companies that connects passengers with small-plane pilots to split the cost of predetermined flights, argued the FAA was unjustified in ruling that those pilots were required to have commercial licenses. The company asked an appeals court to overturn the ruling, but the judges sided with the FAA, citing, among its reasons, concerns over passenger safety.

A setback for the Uber-for-flying industry

"The FAA's distinction between pilots offering expense-sharing services on line to a wide audience and those offering expense-sharing services to a limited group is justified," the court said in its ruling. "[H]olding out to the public creates the risk that unsuspecting passengers, under the impression that the service and its pilots lawfully offer common carriage, will contract with pilots who in fact lack the experience and credentials of commercial pilots."

The FAA ruling, which came August 2014, was meant to clarify a 1963 proposal that allows for pilots to privately ask passengers to split travel expenses like the cost of fuel. It does not prohibit commercial flight-sharing services, like Blade, the Uber for helicopters.

Private pilots are regulated by the FAA, but receive far less scrutiny than commercial pilots. Flytenow had argued that its pilots did not need commercial licenses because they were not out to make a profit, but simply split the costs of predetermined flights to tony vacation spots like Martha's Vineyard and Lake Tahoe.

In a blog post from earlier this year, Flytenow says: "[O]ur argument, consistent with the common law definition, is that the determination of whether an enterprise is a common carrier hinges on whether it exists to make a profit, independent of the size of its audience. If a pilot shares expenses and is thus not engaged in an enterprise for profit, then he or she should be free to communicate without restriction, because the flight does not fall under commercial advertising regulations."

A spokesperson for the startup said they were "disappointed" by the court's ruling, but are exploring other options, such as federal legislation to legalize flight-sharing, to get its services back up and running. "The current state of the law is extreme deference to regulatory actions, at the expense of innovation," the spokesperson told The Verge. The court relied on that regulatory deference, and the result is less choice for consumers, and less innovation in general aviation. We're looking at the opinion for possible rehearing and cert options."

The court cited passenger safety among its concerns

As startups, these Uber for flying companies have struggled to raise much capital. The Boston-based Flytenow only raised $145,000 in two rounds of financing, while AirPooler has yet to post any financial information, according to CrunchBase.

Wheels Up, a service used by venture capitalists and wealthy families, but was not involved in the appeal, has raised $115 million in financing. Still, that startup had a scary incident that may have factored into the court's ruling: a door on a Wheels Up plane opened shortly after take-off during a flight last August.