Sponsorship Legalities

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MikeYQM
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Sponsorship Legalities

#1 Post by MikeYQM » Tue Oct 07, 2014 4:45 am

Morning everyone,

I'm looking for a bit of advice with regards to sponsorship for competition and air show performances. I'm a PPL holder with pretty good time. I have all the flying requirements for a CPL and am just waiting for a Cat 1, Flight Test and CPAER written.

I'd like to approach sponsors with an arrangement to cover operating costs related to training, competition and shows in exchange for advertising opportunities. My logic is simple, many amateur athletes secure sponsorship while maintaining an amateur status which covers equipment, training, travel etc and as long as they arent paid a salary for their services, they aren't professionals.

Backing this up from CARS I've found basically:
- flights cannot be conducted for reward or hire unless:
- Pilot is owner or operator of the aircraft
- must not be some purpose of the flight
- payments must be for costs only

So in the case that the advertising offered is not directly related to any particular flight, but offered through online media for example, and is funding is used to cover costs of operation only, I see this as being acceptable and totally different from if I were to do a show and be paid directly to do it beyond costs.

From those with experience, am I wrong in this thinking?
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Re: Sponsorship Legalities

#2 Post by cgzro » Tue Oct 07, 2014 4:53 am

Nobody is going to sponsor you to fly in contests because there are very few spectators and the plane is too far from what few spectators there are. So for that you are on your own financially.

As far as airshows, i think most pilots do them free for a few years to build up a reputation. You may be able to get gas and free hangar space initially.
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Re: Sponsorship Legalities

#3 Post by AirFrame » Tue Oct 07, 2014 6:34 am

cgzro wrote:As far as airshows, i think most pilots do them free for a few years to build up a reputation.
If that's true, it's unfortunate. The reputation being built is that you don't value your time or skills.
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Re: Sponsorship Legalities

#4 Post by 5x5 » Tue Oct 07, 2014 7:48 am

I think that it's unfortunate that some people feel that the only time there is value in working to build skills and gain experience is when someone will invest outside money in it. Our material focused society I guess.

But that aside, how many hockey, football, baseball or basketball (all sports with lots of money to made once you're a pro) players get sponsor deals or advertising opportunities while they are building their skills prior to turning pro? That's what cgzro was getting at I think.
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Re: Sponsorship Legalities

#5 Post by cgzro » Tue Oct 07, 2014 8:25 am

Exactly. Sponsorship requires prooving than large numbers of people will be interested in you. That does not happen until large numbers of people are actually interested in you. I suppose if you had an awesome idea you could perhaps sell as marketing - like the Red Null highest skydive but those things are rare.

Guys like Goulian/Holland spent many years unsponsored and paying every penny
The competition route got them titles like US champ etc that definitely helps but I cant see pulling in sponsoship without a serious track record to back you.

Anyway Im not advocating pilots work for free but airshows are the entertainment buisness.
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Re: Sponsorship Legalities

#6 Post by ahramin » Tue Oct 07, 2014 9:47 am

I don't think you'll find anyone around here with experience in what you're trying to do so it's all going to be guesses and flatulence. I agree that it's possible to interpret the CARs as you suggest. Ask a few TC enforcement offices and see what kinds of answers you get. There are many private pilots out there getting paid that TC turns a blind eye to because it's a grey area and sponsorship would certainly muddy the waters considerably.

If you are as close to a commercial licence as you say though, why not just get it done this week and eliminate that part of the question?
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Re: Sponsorship Legalities

#7 Post by MikeYQM » Tue Oct 07, 2014 10:17 am

Thanks for the input. I'm aware of the hardships in providing adequate exposure behind potential sponsors but I do have a few ideas up my sleeve that may or may not pan out.

My real concern is the legality of establishing sponsor relationships while flying with a PPL. I know there is a lot of gray involved there wrt TC, which is why I'm hoping someone has experience.

The only reason I don't have a CPL is that I'm awaiting a medical tribunal review. I'm unable to proceed without the old Cat 1 and I have no idea how long that could take or if it will pass even. So, rather than wait around for beaurocracy to happen, I'm getting the ball rolling.
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Re: Sponsorship Legalities

#8 Post by cgzro » Tue Oct 07, 2014 1:43 pm

Here is a TC interpretation- not very promising I afraid.

Flying for Money!
by the Advisory and Appeals Division, Policy and Regulatory Services, Civil Aviation, Transport Canada
As some of you may know, Canadian aviation law makes an important distinction between private and commercial aviation, the latter being subject to both elevated standards and increased regulatory scrutiny, resulting in an exceptionally high level of aviation safety.
To this end, a definition of “hire or reward” has been created in the legislative framework. That definition is set out in subsection 3(1) of the Aeronautics Act, as follows:
“hire or reward” means any payment, consideration, gratuity or benefit, directly or indirectly charged, demanded, received or collected by any person for the use of an aircraft;
Courts have consistently given a broad, expansive and liberal interpretation to the term “hire or reward”. The scenarios that follow illustrate this point.
In two older court cases, two operators of remote fishing or hunting camps had offered a fly-in service to guests at no extra charge. In other words, the rate charged for accommodations and guide services was the same whether the customers chose to use the fly-in service offered by the camp operators, or whether they decided to pay someone else to transport them to the camps. The hunting camp operators argued that, because they received no additional fee for the offered flights, there was no “hire or reward” situation. The courts in both cases rejected this argument and found that the free flights provided each operator a clear, albeit indirect, benefit. Therefore, the flights in question were “hire or reward” flights and the operators were found to have been operating a commercial air service without the appropriate licence.
In another, more recent, court case, a pilot was the director of Company A and Company B. Company A was the registered owner of the aircraft flown by the pilot. Company A rented the aircraft to Company B, and Company B was paid for bringing equipment, persons or other things to different sites. The Federal Court decided that, since Company A was the registered owner of the aircraft and had received an indirect benefit from the flights, it was required to have an air operator certificate (AOC) as set out in subsection 700.02(1) of the Canadian Aviation Regulations (CARs).
There are situations where a person may operate for “hire or reward” and not require an AOC. One situation is covered by subsection 700.02(3) of the CARs, which allows farmers who own their own planes to use them to spray herbicides within a 25-mi. radius from their farm centre.
Another situation, covered by subsection 700.02(4) of the CARs, concerns sightseeing flights conducted by flight schools. This type of activity is permitted, without the requirement for an AOC, if the various conditions set out in the CARs are met: specifically, the pilot must hold a flight training unit (FTU) operator certificate and a flight instructor rating, the flights must be conducted in accordance with visual flight rules (VFR) in a single-engine aircraft with no more than nine passengers, and for the purpose of sightseeing.
Another situation where someone could conduct an operation for hire or reward without an AOC would be if the Minister issued an exemption. Pursuant to subsection 5.9(2) of the Aeronautics Act, the Minister can issue exemptions from the application of any regulation, should the Minister be of the opinion that such exemptions are in the public interest and not likely to adversely affect aviation safety or security. For example, situations involving charity flights, where pilots have been reimbursed only for fuel costs, have been issued exemptions in the past.
Another twist to the above concepts can be found if we look at section 401.28 of the CARs. This section deals with the reimbursement of costs incurred in respect of certain flights, by private pilots, in very specific circumstances.
Subsection 401.28(2) allows private pilots, who own their own aircraft, to receive reimbursements from passengers towards the operational costs of running the aircraft. Subsection 401.28(3) allows the private pilot to be reimbursed by his employer (who does not normally employ the person as a pilot). Subsection 401.28(4) allows private pilots to receive reimbursement when the flights are conducted for a “charitable, not-for-profit or public security organization”, on a volunteer basis. The three scenarios above are available only when certain specified criteria or conditions are met.
So, as we can see, the term “hire or reward” can be difficult to apply. Each situation must be looked at carefully in light of the case law and regulations that apply.
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Re: Sponsorship Legalities

#9 Post by AirFrame » Tue Oct 07, 2014 6:01 pm

5x5 wrote:I think that it's unfortunate that some people feel that the only time there is value in working to build skills and gain experience is when someone will invest outside money in it. Our material focused society I guess.
I think you're missing the distinction I highlighted. I understand developing your own skills using your own money and time. But that's done for your own benefit, and maybe for the benefit of the others you're practising with. IAC competition is a great way to develop skills, learn from others, and it's all done done at your own cost and not "monetized" for the benefit of others.

Being asked to *perform* at an airshow, for the benefit of the airshow owners who collect from the money-paying crowd, with no remuneration, seems rather questionable to me. Pilots agreeing to do it are merely undercutting those who work as airshow pilots. It seems no different to me than low-time pilots who agree to work for peanuts in the middle of nowhere because their employers tell them they are "building experience."
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Re: Sponsorship Legalities

#10 Post by 5x5 » Tue Oct 07, 2014 7:36 pm

AirFrame wrote:I think you're missing the distinction I highlighted.
You are correct, I did not understand completely. It sounds like you have done your time in competition and already earned enough of a reputation to be asked to perform in a commercial/money making airshow. If that is in fact the case, then you should be qualified (CPL) to be remunerated. It sounds like there are some issues getting the CPL and that's unfortunate.
AirFrame wrote:Being asked to *perform* at an airshow, for the benefit of the airshow owners who collect from the money-paying crowd, with no remuneration, seems rather questionable to me.
But getting money from advertisers or anyone else other than the airshow owners doesn't change the basic questionable behaviour does it? From their (the owners) point of view you're still performing and they aren't having to pay you, so how is that better?

But I do not believe there will be any way for you to make money through sponsorship or advertising as a private pilot. Especially since air shows are unfortunately rare enough that you would be fairly obvious to anyone who cared to check. And even it it wasn't a TC person, there are enough envious folks around that, sadly, I think there would be a fair risk of you being ratted out.

But I'm not TC and I don't have experience with the airshow business. I've just seen a lot of other folks try to figure out different ways to benefit and make money with a PPL to no avail. So, good luck to you.
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Re: Sponsorship Legalities

#11 Post by MikeYQM » Wed Oct 08, 2014 3:28 am

Thanks for that write up Peter, I think there is enough distinction to pursue it with TC directly. In each of those cases, passenger carrying is an issue. Since the scope of the regulations center around public safety and there is no increased safety risk to the public whether I fly completely on my dime vs accept sponsorship funding considering there would be absolutely 0 difference in the actions themselves, there may be some leeway.
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Re: Sponsorship Legalities

#12 Post by MikeYQM » Wed Oct 08, 2014 3:31 am

And in that point, I just checked online and now have a Cat 1 medical... Moot point I guess!!!
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Re: Sponsorship Legalities

#13 Post by AirFrame » Wed Oct 08, 2014 11:36 am

5x5 wrote:You are correct, I did not understand completely. It sounds like you have done your time in competition and already earned enough of a reputation to be asked to perform in a commercial/money making airshow.
No, I'm neither a competitor nor a commercial pilot. I fly formation and aerobatics recreationally only, and do not expect remuneration.
AirFrame wrote:Being asked to *perform* at an airshow, for the benefit of the airshow owners who collect from the money-paying crowd, with no remuneration, seems rather questionable to me.
But getting money from advertisers or anyone else other than the airshow owners doesn't change the basic questionable behaviour does it? From their (the owners) point of view you're still performing and they aren't having to pay you, so how is that better?
It's not better in that the airshow owner is having his belief reinforced that talent doesn't need to be paid... True. But it's better in that the performer isn't left completely empty-handed at the end of the day.
But I do not believe there will be any way for you to make money through sponsorship or advertising as a private pilot. Especially since air shows are unfortunately rare enough that you would be fairly obvious to anyone who cared to check. And even it it wasn't a TC person, there are enough envious folks around that, sadly, I think there would be a fair risk of you being ratted out.
There is "getting paid" and there is "getting paid". I have flown flypasts for airshows where I was "paid" by getting my gas tank filled back up at the end of the day. That was a payment offered and accepted knowing that as a PPL I can't take more than my costs anyway. The benefit to me was that I got to fly in an airshow, something I always wanted to do but don't expect to ever do commercially. The benefit to my flying club was exposure for the club as I flew the club airplane and showed it off to potential members.

I think as a PPL the best we can hope for is to minimize how much money we lose while flying. :)

I did know someone with an RV-4 a number of years back, who worked for one of the cell phone companies. When he finished his RV-4, he talked the company into paying to paint it, in exchange for painting it with the cell phone company logo and colours. I don't recall whether he negotiated any ongoing payment for continued use/exposure in an advertising sense. But it was painted on, not a decal, so it was quite permanent... I don't know how that kind of "payment" would be considered by TC, if at all.
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