www.avweb.com/aviation-news/business-aviation-news/surf-air-acquires-blackbird/

Surf Air Acquires BlackBird
Kate O'ConnorFebruary 25, 20200

Image: Surf Air
California-based Surf Air has acquired BlackBird, an “online aviation marketplace” that pairs passengers with private aircraft owners and
charter operators via mobile app. The companies will form the new Surf
Air Mobility Corporation, which will focus on 50- to 400-mile trips as
an “alternative to commercial airlines and driving on short routes.”
As part of the acquisition, BlackBird founder and CEO Rudd Davis has
been named chief operating officer of Surf Air Mobility Corp.

“Similar to the way that three-sided marketplaces have transformed the
home and ride-sharing economies, Blackbird has unlocked the potential
of general aviation with a simple consumer experience and by tapping
into an existing underutilized asset base to create affordable
on-demand flying,” said Surf Air CEO Sudhin Shahani. “Combining this
with our scheduled membership platform will bring increased value and
options to both of our customer bases and current and future operating partners.”

Surf Air offers flights to its members via a network of Part 135
operators. As previously reported by AVweb, the FAA sent a letter
(PDF: https://www.faa.gov/about/initiatives/safe_charter_operations/media/Blackbird_Letter.pdf
) to BlackBird in December 2019 stating that its operations would be
subject to Part 119 certification. According to BlackBird, all of its
flights are now also conducted by Part 135 operators.
----------------

https://www.faa.gov/about/initiatives/safe_charter_operations/media/Blackbird_Letter.pdf

U.S. Department of Transportation
Federal Aviation Administration
Office of the Chief Counsel
Enforcement Division

December 17, 2019
Via Electronic Mail
Roy Goldberg, Esq.
StinsonLLP
1775 Pennsylvania Avenue N.W.
Suite 800
Washington, D.C. 20006

Re: Your client, BlackBird Air

Dear Mr. Goldberg:

800 Independence Ave., SW.
Washington, DC 20591

We have considered the June 10, 2019 letter from BlackBird Air, Inc. (BlackBird), that set out many aspects of its business model and
operating assumptions. The information that BlackBird has presented
leads us to conclude that the pilots participating in BlackBird's
platform and using its app are holding out and thus are engaged in
common carriage. This conclusion does not apply to individual
commercial pilots who are legally operating the flights for operators authorized to conduct operations under 14 C.F.R. part 135, or pilots
who are legally operating under 14 C.F.R. §91.501.1

In arriving at this conclusion, we considered BlackBird's position
articulated in its June 10th letter. BlackBird stated that, "[u]nlike
air carriers, BlackBird is not building an operation based on crews,
aircraft, or routes. BlackBird is building an infrastructure that
supports all of general aviation, which includes air carriers and
operators."2 · BlackBird manages two databases: one for aircraft
available for lease and a second one for commercial pilots ( described
as "independent person[ s] with a specific skill set (pilot))."

BlackBird uses the databases as part of a marketplace service that
serves as an aggregator of information and connects third-party
service providers (the pilots) with users seeking to charter an
aircraft or purchase a ticket on a direct air carrier.

BlackBird asserts, "the ultimate business goal is to create an online
platform that surfaces the many options available to users; [and] NOT
to provide air transportation."

1 The exceptions from certification provided under 14 C.F.R. §91.501
only apply to large airplanes of U.S. registry, turbojet-powered
multiengine civil airplanes of U.S. registry, and fractional ownership
program aircraft of U.S.

registry that are operating under subpart K of part 91 in operations
not involving common carriage. Most of the aircraft offered on
BlackBird's app appear to be outside of those requirements.

2 The FAA notes that, although not defmed in regulation, the term
"general aviation" is commonly understood not to
include air carriers or commercial operators engaged in scheduled air
services or non-scheduled air transport
operations for hire.

2
BlackBird states it is a facilitator, in that it supports users with
the process of(1) leasing an aircraft and (2) separately hiring a
commercial pilot to fly the aircraft the user has leased.
BlackBird states that it does not own, manage, or maintain the
aircraft and does not employ pilots. BlackBird also states that,
through the application, the user, not BlackBird, (1) selects and
leases the aircraft and (2) chooses and hires the pilot. BlackBird
asserts that operational control ofthe aircraft remains with the user
at all times. BlackBird represents that it only facilitates the
agreements, processes payments, and provides customer support to all
three parties (user, i.e., person leasing the aircraft and hiring the
pilot; pilot; and aircraft lessee).

As a general rule, a party must obtain a part 119 certificate to
engage in the transportation of passengers or property for
compensation or hire.^ This applies to operations involving both noncommon/private carriage and common carriage. As BlackBird noted in
its letter, to determine whether common carriage is present, the FAA
assesses whether there is: (1) a holding out of a willingness to (2)
transport persons or property (3) fiom place to place (4) for
compensation."^ The courts have determined that these criteria are
consistent with common law precepts and are appropriate within the
aviation context.^

We have little trouble concluding that the pilots listed on
BlackBird’s pilot database selected by the user are transporting
persons or property, from place to place, for compensation. Despite
BlackBird’s assertion that the pilots are not transporting persons or
property, it is clear that they are being hired for that very purpose.
In addition, as BlackBird concedes, the pilots are being compensated
for the flight service (whether the money comes directly from the
lessee or through the BlackBird platform). That leaves only the issue
ofholding out.

With respect to whether the pilots are holding out, we believe the
BlackBird database establishes that element. “Holding out” is a common
law concept that the FAA has applied to aviation in a fimctionalist,
pragmatic maimer. Holding out can be accomplished by any means that communicates to the public that a transportation service is
indiscriminately available to the members ofthe segment ofthe public
it is designed to attract. There is no specific rule or criteria
as to how holding out is achieved. Holding out is determined on a
case-by-case basis by assessing the specific facts ofthe situation.
Advertising in any form raises the question of holding out.®
“Holding out” can be done in many ways, including signs and
advertising; the actions of agents,

agencies, or sales people who may procure passenger traffic; and
individual ticketing on known common carriers. In addition the
expression to all customers with whom contact is made that the
operator can and will perform the requested service is sufficient to
conclude that a person is holding out.

To date, the FAA has issued two legal interpretations in which the
agency concluded thatpilots using companies with a web-based presence,
similar to BlackBird, were common carriers.

Legal Interpretation to MacPherson, dated August 13,2014, and Legal Interpretation to Winton ^ 14 C.F.R. 119.1(e) identifies certain
operations not subject to certification. '‘FAA AC 120-12A.
^ See Woolsev v. National Transportation Safety Board. 993 F.2d 516
(5* Cir. 1993).

® Legal Interpretation to Yodice (April 7, 1978); AC 120-12A.
3
Aviation Law Firm, dated August 14, 2014. The legal interpretations
discussed the expense sharing provision of 14 C.F.R. § 61.113(c) and
addressed whether specific circumstances cause a pilot to become a
common carrier.
In the Legal Interpretation to MacPherson, the FAA concluded that the
use of a website by pilots constituted common carriage because by
posting specific flights to the AirPooler website, a pilot
participating in the AirPooler service held out as willing to
transport persons or property from place to place for compensation or
hire. The FAA stated that, although the pilots chose the destinations,
the pilots were holding out because they were willing to transport
passengers for compensation. In the Legal Interpretation to Winton
Aviation Law Firm, the FAA assessed a scenario in which a website
called FlyteNow connected pilots and “general aviation enthusiasts”
who paid a share ofthe flight expenses in exchange for travel on a
route predetermined by the pilot. Only FlyteNow members could search
for flights on the website, but anyone could become a member by
filling out an online form. If a pilot carried one or more passengers,
FlyteNow facilitated the sharing of expenses on a pro rata basis
between the passenger(s) and the pilot. The FAA issued a legal
interpretation to FlyteNow referring Mr. Winton to the Legal
Interpretation to Ms. MacPherson for answers to the questions
presented in his request, as it involved a similar web-based
expense-sharing seheme.

FlyteNow petitioned the United States Court of Appeals for the
District ofColumbia Circuit for review ofthe FAA’s interpretation that thepilots would be considered common carriers, which meant that the
pilots would be required to hold at least commereial pilot licenses
and hold certificates issued under 14 C.F.R. part 119. In 2015, the
court decided the case FlyteNow. Inc. V. Federal Aviation
Administration.^ and the court upheld the FAA’s conclusion that the
pilots’ partieipation on Flytenow.com would amoimt to holding out an
offer oftransportation to the public. The court stated that the FAA
uses “holding ouf’ as that concept is defined through common law and
applies it in a functionalist and pragmatic manner. The court
explained that, while Flytenow.com is a flight-sharing website limited
to its members, membership requires nothing more than signing up to
the website and any prospective passenger searching for flights
could readily arrange for travel via the website. Furthermore, the
court stated that there is no conclusive proofthat a pilot is not a
common carrier based on the absence ofrate schedules or pilots
occasionally refusing service. The court distinguished FlyteNow’s
facts from other internet-based communications, such as emails among
friends, which the court stated would not likely be deemed as holding
out.® The court upheld the FAA’s determination that the pilots were
holding out via the website, expense-sharing was a form of
compensation, and all four elements of common carriage were met.
Because these were common carriage operations, the pilots were
required to hold a part 119 certificate to engage in them.
The BlackBird platform is similar to the websites considered by the
court in the FlyteNow case.® BlackBird stated in its June 10, 2019
letter that its pilots are commercial pilots operating under
part 91 or part 135. However, as previously stated, unless a specifie
exception applies that allows * 808 F.3d 882 (Dec. 18,2015), rehearing
en banc denied Feb. 24,2016.
*14
® Part ofthe FlyteNow and Airpooler issues focused on the pilot
databases involving private pilots and compliance
with § 61.113. BlackBird’s pilot database only includes pilots holding commercial or airline transport pilot certificates.
an operation for compensation or hire to occur in the absence of an
operating certificate, certification under part 119 is required. Thus,
if a pilot conducts an operation under only part 91 that is subject to
the requirements of part 119, the pilot would be in violation of 14
C.F.R.
4
§ 61.13 3 in that the person acting as pilot in command of an aircraft
carrying persons or property for compensation or hire must be
qualified in accordance with part 61 and must comply with the
applicable parts of 14 C.F.R. that apply to the operation.
The Black:Bird platform, like the FlyteNow website, is available to
everyone. Anyone can readily search the BlackBird platform and boo.k a
flight, and the pilots on BlackBird's website are available and
willing to transport passengers who solicit pilot services through the platform.

Much like the pilots participating on FlyteNow.com, commercial pilots
utilizing the Black:Bird application express their willingness to
transport people by posting their availability to conduct flights to
the BlackBird platform. Although some exceptions from the part 119 certification requirement exist for certain, discrete types of
operations, no exception applies in this case. A pilot's participation
in the Black:Bird platform amounts to holding out a willingness to
transport persons from place to place for compensation and requires certification under part 119 prior to conducting the operation.
In sum, the FAA has concluded that pilots' use of the Black:Bird
platform constitutes "holding out" and participating pilots are
engaged in common carriage. Because these operations are
subject to part 119 certification, a pilot who holds an airline
transport pilot or commercial pilot certificate must obtain and hold a certificate issued under part 135 or the pilot must be employed
by a company operating the flight that is certificated under part 119. Accordingly, please expect further investigative activity into
BlackBird's operations, particularly regarding its pilot database. In
addition, we would be interested in learning of any action you
intend to take in view of the jeopardy facing pilots who participate
in BlackBird' s service.

Please let me know if you would like to present any additional
information in response to this correspondence.

Sincerely,
Naomi Tsuda
Assistant Chief Counsel for Enforcement
Federal Aviation Administration
------------------

https://www.flyblackbird.com

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