Included in the FARs are rules that govern the conduct of airmen in both commercial and private aviation operations. There is no statutory language that provides a clear demarcation between commercial and purely private operations and it has been left to the FAA to craft regulations to distinguish between the two and to prescribe privileges and limitations of airmen engaged in these operations. In doing so, a number of proxy characteristics have been defined in the regulations to provide a distinction between commercial and private operations because it is nearly universally agreed that such a distinction is in the public interest.
Among the distinguishing characteristics that are used to test whether an operation is commercial or purely private is the question of “holding out” to the public to provide air transport in a quid pro quo economic transaction in the free market. Other tests are designed to determine if such operations are incidental to a business activity of the airmen or whether it is an aviation related business activity itself. It is clearly in the public interest to ensure that commercial operations are conducted within a strict regulatory framework that is designed to maximize the safety of all involved in them as the public has no other way to acquire the necessary information needed to adequately assess the risk of the operations to their person or property.
Code of Federal Regulations
Title 14: Aeronautics and Space
PART 1—DEFINITIONS AND ABBREVIATIONS
§ 1.1 General definitions.
Commercial operator means a person who, for compensation or hire, engages in the carriage by aircraft in air commerce of persons or property, other than as an air carrier or foreign air carrier or under the authority of Part 375 of this title. Where it is doubtful that an operation is for “compensation or hire”, the test applied is whether the carriage by air is merely incidental to the person's other business or is, in itself, a major enterprise for profit.
If an operation is deemed to be commercial in nature, FARs in Parts 119, 121 and 135 regulate those operations. These regulations function quite well and the safety record of US commercial aviation provides prima facie evidence of that fact.
Commercial regulations are a great success, so how did we get it so wrong for private aviation?