Unauthorized individual seat sales and the inadvertent risks to part
135 on-demand air carriers

On-demand air charter flights under Federal Aviation Regulations (FAR) Part 135 offer tailored, flexible air transportation services. Yet, the rising popularity of seat-sharing platforms and passenger peer to peer arrangements have introduced increasing potential for legal exposure to operators. What happens when charter clients—or even their individual passengers—seek to monetize, offset the cost, or simply recoup their investment in a trip by selling individual seats?

For part 135 on-demand carriers, allowing—or inadvertently facilitating—unauthorized individual seat sales can plunge the operator into a regulatory, contractual, and tort quagmire of risks. Even when operating under FAR Part 91 (“private”) operations, the lines quickly blur if compensation of any type—including non-cash compensation—or common carriage is involved. And to make things more complicated, individual seats can lawfully be sold in limited circumstances when certain DOT (as opposed to FAA) economic regulatory requirements are met, e.g. part 380 public charter. This article unpacks those legal risks and offers practical strategies for on demand air carriers to mitigate these risks. 

1. Part 135 vs. Part 91: Fundamental Legal Distinctions 

14 CFR Part 135 of the FARs applies to OnDemand Air Carriers and Commercial Operators. It contains a common carriage element, meaning offering transportation to the public or a segment thereof for compensation or hire, thereby establishing an obligation to serve whoever applies. This commercial conduct must fully comply with rigorous requirements to meet safety standards including training, operational and maintenance protocols, pilot duty and rest time, and many other responsibilities. 

On the other hand, 14 CFR Part 91 rules are “non-commercial.” They generally don’t contemplate that compensation of any kind, even reimbursement, will be paid for carriage of passengers or cargo. Offering air transportation to the public for compensation requires that the provider hold an air carrier certificate issued by the FAA and comply with the rigorous requirements mentioned above. 

2. When Charter Customers or Passengers Sell Individual Seats 

Customers purchasing on-demand charter air transportation typically do not hold their own air carrier authority from the FAA. As a result, they don’t have authority to sell, i.e. “provide,” that transportation to the public. Moreover, on-demand air carriers are authorized to sell whole aircraft charter—not individual seats. 

3. What are the risks? 

A charter client or passenger who sells seats independently—even informally through peer platforms or word-of-mouth—likely engaged in “common carriage.” The operator is simultaneously subject to scrutiny for inadequate oversight of its certificate, which can lead to FAA safety enforcement action for mismanaging the certificate and for conducting unauthorized operations. Enforcement can include significant civil penalties, though the greater risk is revocation of the operator’s air carrier certificate. Part 91 operators face the risk of transforming an innocuous private flight into an illegal common carrier operation, which can result in both meaningful civil penalties and pilot certificate action. The passenger selling the seat(s) is similarly at risk for substantial civil penalties. 

In addition to the federal regulatory risks, tort liability can attach when involved in the unauthorized sale of individual seat charter. The violation of a statute or regulation is considered negligence per se, automatically establishing the “breach of duty” element required to support a negligence claim. If an accident or incident occurs on board, even a hot coffee spill resulting in burns, a key element of negligence is automatically established.

Insurance coverage is another challenging area. An individual who sells a seat is unlikely to have—no less be able to obtain—insurance coverage, leaving them to fend for themselves in litigation. While the operator will have a policy covering its lawful operations, coverage under that policy is likely to be questioned when facts supporting unlawful activity exist. As a result, the operator may find itself believing it has insurance coverage when it doesn’t. 

Often overlooked are risks to reputation and branding. The operator’s brand hinges on safety, trust, compliance, and privacy. Ad hoc seat sales—unvetted and unmanaged—jeopardize that reputation and brand. This risk most often manifests itself in the aftermath of an accident or incident, when it is too late to mitigate. The seller of the seat also risks litigation related to cross claims from the operator post-accident/incident grounded in fraud and misrepresentation associated with the unlawful sale. 

4. What can an operator do? 

Advances in technology make it easier than ever for increasingly robust shadow marketplaces selling individual seats to flourish. When was the last time that you reviewed the contracts that you use to engage with charter customers? Reviewing and updating those contracts periodically is key. Then importantly, implement those updates by developing and using policies to mitigate these risks. For example: 

• Do your contracts expressly state that the customer, and any passengers, shall not solicit, arrange, or accept compensation for carriage of any person on the aircraft unless expressly authorized in writing by the operator in advance? • Does the admonition apply to client affiliates, employees, guests, or any third parties the client invites onboard?
• Do you have representations and warranties providing that the customer has not—and will not—offer seats for sale or promotion over peer platforms, social media, mobile apps, or informal networks absent operator approval? • And that the customer agrees to notify each of the passengers that they are prohibited from selling their seat as described above? 
• Is the customer obligated to indemnify the operator, its affiliates, pilots, cabin crew, and insurers from any claims related to unauthorized individual seat selling, regulatory enforcement, and liability stemming from third-party passengers improperly boarded?
• Does the operator give itself the right to approve all passengers, collect relevant identification, question passengers at boarding about their relationship to the customer, and delay the flight and deny boarding if unauthorized seat-sale behavior is suspected?
• Do you describe your preflight passenger manifest review process, including last minute changes, so that expectations are managed, particularly where time is of the essence?
• Do you state that immediate flight cancellation and fee forfeiture is at the operator’s sole discretion if unauthorized seat selling is uncovered?
• Have you reviewed your insurance policies to verify that the contractual updates do not impact coverage under your policy or policies?
• Do you provide for audit rights in multi-flight arrangements or routine clients, noting and periodically reminding them of the need to verify adherence to prohibitions on their selling or seeking reimbursement for their seats? 

Once you have updated your contracts, educate your team on the importance of these issues and equip them with the tools necessary to effectively communicate with customers. Consider the following: 

• Have you educated flight operations personnel, dispatchers, and charter sales personnel on ways to identify unlawful individual seat sales on your aircraft and provide them with questions to ask passengers at each interaction?
• Do you monitor online listings of the niche marketplaces where passengers advertise individual seats for sale? (You may find—as some already have—that seats being offered for sale match one or more of your planned flights.)
• Have you prepared template wording for customers to use with their individual passengers so that those customers can easily fulfil their obligations to notify individual passengers that selling seats is not permitted?

Operators under FAR Part 135 must remain vigilant—and proactive—regarding unauthorized seat sales by customers and their passengers. Unchecked, such sales too easily prompt regulatory enforcement, civil liability, reputational harm, and gaps in insurance coverage. Updated and well-crafted contracts, notably placing customers on notice of the issue and its prohibition, are the frontline defense. By coupling legal safeguards with policies and operational diligence, part 135 air carriers can preserve the safety, compliance, and business integrity of their operations while discouraging unauthorized seat monetization schemes. The stakes are high—so let no “seat swap” go unchecked