Response #1: I have a couple of points that may be useful:
1. Years ago when I worked at a Fortune 500 company, we concluded that the company could not accept reimbursement for the cost of corporate aircraft used to transport our CEO to other public company board meetings because doing so would effectively put the company within the commercial transport sections of FAA flight regulations. I am not sure how these regulations might apply, if at all, to individual directors with full or fractional ownership or leased interests in private planes. As a practical matter, they are less sensitive to what may be a technical regulatory violation, if there is one, than a large company with a separate aviation department.
2. At my current company, our policy is that the company will reimburse up to the cost of a first class commercial plane ticket for directors who travel via private aircraft. There are some logistical issues such as what day to use to price the ticket for purposes of determining the amount of reimbursement, but otherwise this works reasonably well.1Response #2: I have a fair bit of experience in this area.
In order for a company to receive payment from an executive or board member for the personal use of corporate aircraft, it must comply with the FAA regulations regarding such reimbursement, which include entering into a time-sharing agreement with each person expected to use the aircraft. Under such an agreement, a person may be charged only the following specific flight expenses:1. Fuel, oil, lubricants and other additives.2. Travel expenses of the crew, including food, lodging and ground transportation.3. Hanger and tie-down costs away from the aircraft's base of operations.4. Insurance obtained for the specific flight.5. Landing fees, airport taxes and similar assessments.6. Customs, foreign permits, and similar fees directly related to the flight.7. In-flight food and beverages.8. Passenger ground transportation.9. Flight planning and weather contract services.10. An additional charge equal to 100% of the fuel, oil, lubricants and other additives.
These charges must be directly related to the specific flight and cannot be based upon average flight costs. In addition, these charges represent the maximum amount that the company may charge an executive or board member. The time sharing agreement must be filed with the FAA in Oklahoma City and carried aboard the plane at all times.
The FAA allows for amounts received pursuant to item 10 to be applied to any other service for which a fee was not charged, as long as the amounts do not exceed the amount charged for fuel, oil, lubricants, and other additives. For example, the fee could be used to pay the crew's salary, an expense that federal aviation regulation section 91.501(b)(6) does not otherwise specifically allow to be charged. See Administrator v. Bowen, NTSB Order No. EA-3351 (1991).2
Response #3: This is an extremely tricky area as there are FAA regulations that must be taken into account. Reimbursement of expenses may be viewed as compensation for flying which, subject to some exceptions, isn't permitted with a private pilot's license. I would be happy to recommend excellent aviation counsel if you wish.3
Response #4: We took a look at this a few years ago when we scaled back our corporate aircraft and benchmarked our practices against several other public companies who were not in the business of carrying passengers for hire. The Board (following our recommendation reviewed in advance with the Chairman) adopted a policy providing that the company would reimburse directors for first class air fare for flights that were scheduled for one hour or more. (Our Chairman took great pride in the fact that he flew economy for his 45 minute flight.) One of our directors routinely chartered a private aircraft and was reimbursed for the cost of first class airfare (it was easy enough to use the internet to check the rates close to the dates he traveled). In the name of cost cutting, we previously did away with the annual resort-based meeting and never invited spouses during my tenure so we avoided all the attendant issues arising from those kinds of things.4