Common carriage and private carriage are two legal categories for transporting people or goods, and the difference decides which federal rulebook, insurance floor, tax bill, and liability standard applies to an operation. A common carrier holds itself out to move people or property for anyone willing to pay. A private carrier moves people or property for a narrow, selected group under individually negotiated contracts and keeps the right to turn everyone else away. That single distinction — public availability versus selective service — pulls in everything else.
Getting the label wrong is not a paperwork issue. It can cost an FAA certificate, trigger six-figure civil penalties, and strip an operator’s authority to keep working.
The Four-Part Test That Defines a Common Carrier
Federal regulators use the same four-element framework across aviation and ground transportation. Under FAA Advisory Circular 120-12A, a common carrier is any entity that (1) holds itself out as willing to (2) transport persons or property (3) from place to place (4) for compensation.1Federal Aviation Administration. Advisory Circular 120-12A – Private Carriage Versus Common Carriage of Persons or Property All four elements must be present. If any one is missing, the operation falls outside common carriage.
The Department of Transportation and the Federal Motor Carrier Safety Administration apply the same conceptual framework to trucking. A motor carrier that hauls freight for the general public for compensation must register with the Secretary of Transportation and show it is willing and able to meet applicable safety, financial responsibility, and operational rules.2Office of the Law Revision Counsel. 49 USC 13902 – Registration of Carriers
The middle two elements rarely cause fights. Almost any operation moves something from place to place. The disputes live in the first and fourth: what counts as holding out, and what counts as compensation. Both are read far more broadly than operators expect.
Holding Out: The Element That Catches Most Operators
Holding out happens whenever a business communicates, directly or indirectly, that its transportation services are available for hire. Online ads, social media posts, broker listings, and published rate sheets all count as express holding out. So does a website that names prices.
Implied holding out is the trap. An operator who never formally advertises can still be treated as a common carrier if a pattern of accepting business from nearly anyone signals a willingness to serve the public generally. FAA guidance is direct on this point: an operator running 18 to 24 separate contracts has been held to be a common carrier because the sheer volume shows public availability.1Federal Aviation Administration. Advisory Circular 120-12A – Private Carriage Versus Common Carriage of Persons or Property Regulators look at the totality of the circumstances: how many customers, whether anyone gets turned away, and whether the operator is actively trying to fill capacity with diverse clients.
The label on the paperwork does not decide the question. A charter flight service or trucking company that calls itself private but takes nearly every contract it sees is functionally holding itself out to the public, and regulators can issue cease-and-desist orders and pursue enforcement when the operation exceeds the boundaries of its certificate.
Published Tariffs as a Tell
For motor carriers, keeping a published tariff — a document listing all rates, charges, and terms — is a hallmark of common carriage. Interstate moving companies, for example, must establish and maintain a tariff and make it available for customer review.3Surface Transportation Board. HHG Tariff Guidance A uniform price list open to all comers is strong evidence of holding out. Private carriers negotiate each contract separately, with no standard schedule.
Private Pilots and Expense Sharing
The holding out line is especially tight for private pilots who share flights with friends or acquaintances. Under FAA rules, a private pilot may share certain operating expenses — fuel, oil, airport fees, and rental costs — with passengers, but only on a pro rata basis, and the pilot must pay at least an equal share.4Federal Aviation Administration. Sharing Aircraft Operating Expenses in Accordance with 14 CFR 61.113(c) The pilot also needs a genuine reason to travel to the destination beyond transporting the passengers.
Even legitimate expense sharing becomes illegal common carriage the moment the pilot solicits passengers beyond a small circle of people with whom they already have a relationship. Posting on apps, forums, or social media looking for someone to split costs is holding out, full stop.4Federal Aviation Administration. Sharing Aircraft Operating Expenses in Accordance with 14 CFR 61.113(c) Maintenance, insurance, and depreciation costs can never be shared with passengers under any circumstances.
What Counts as Compensation
Compensation is not limited to profit or cash. Any transfer of value in exchange for transportation qualifies. Reimbursement for fuel, maintenance, or insurance counts. So does trading professional favors, building business goodwill, or receiving any other economic benefit connected to providing the flight or the haul.
A trip provided at cost still meets the compensation element. An operator who claims to be doing someone a favor but receives something of value in return, tangible or not, is operating for hire in the eyes of federal regulators. Failure to track these indirect exchanges in operational logs can lead to audits and retroactive enforcement of the stricter common-carriage rules.
What Makes a Carrier Genuinely Private
A private carrier transports goods or people for hire but restricts service to a small, carefully selected group of clients rather than the general public. The operator keeps full discretion over whom to serve and can refuse outside business for any reason. Contracts are individually negotiated. Terms vary from client to client. Arrangements often involve specialized equipment or long-term exclusive relationships.
Regulators treat private carriers as posing less risk to public safety because fewer people depend on them and clients can negotiate safety terms directly. The regulatory load is correspondingly lighter: fewer reporting requirements, lower insurance mandates outside hazardous materials, and less prescriptive operating rules.
The catch is that a private carrier has to stay private in practice. If contract counts creep up, if the operator starts accepting business from unfamiliar parties, or if the service begins to look like a general offering, regulators will reclassify the operation as common carriage and apply the compliance obligations retroactively.
Corporate Flight Departments
The clearest example of private carriage is a corporation flying its own employees and guests on a company-owned aircraft. Under 14 CFR Part 91 Subpart F, a company may carry its officials, employees, guests, and property on a company-operated airplane so long as the transportation is incidental to the company’s primary business and no charge exceeds the cost of owning, operating, and maintaining the aircraft.5eCFR. 14 CFR Part 91 Subpart F – Large and Turbine-Powered Multiengine Airplanes and Fractional Ownership Program Aircraft No charge of any kind may be assessed for carrying a guest when the flight falls outside the scope of the company’s business. Time-sharing, interchange, and joint ownership arrangements between companies are also allowed under this framework, but carrying paying passengers outside those narrow categories crosses into common carriage.
How the Rules Diverge in Practice
The classification decides which certificate an operator holds, how much insurance is required, which taxes apply, and how much liability attaches when something goes wrong.
Certificates and Operating Rules
In aviation, common carriers operating aircraft for hire fall under 14 CFR Part 121 (scheduled airlines, including domestic, flag, and supplemental operations) or 14 CFR Part 135 (commuter and on-demand charter operations).6Federal Aviation Administration. AC 120-49A – Certification of Air Carriers Both parts impose FAA-approved pilot training with initial, recurrent, and upgrade phases; formal maintenance programs; crew duty-time limits; and detailed operational documentation.7eCFR. 14 CFR Part 135 Subpart H – Training
Private operations sit under 14 CFR Part 91, which governs general operating and flight rules for all aircraft in U.S. airspace but imposes far fewer prescriptive obligations on operators.8eCFR. 14 CFR Part 91 – General Operating and Flight Rules Part 91 operators do not need FAA-approved training programs, formal maintenance tracking systems, or many of the safety management structures required of Part 121 and 135 certificate holders.
In trucking, for-hire common carriers must register with the FMCSA, obtain a USDOT number and motor carrier operating authority, and meet safety fitness and financial responsibility requirements before hauling their first load.2Office of the Law Revision Counsel. 49 USC 13902 – Registration of Carriers Private motor carriers still need a USDOT number and must comply with federal safety rules on hours of service, vehicle maintenance, and driver qualifications, but they do not have to obtain for-hire operating authority.
Insurance Minimums
Insurance floors are one of the starkest practical gaps. The FMCSA requires for-hire property carriers operating vehicles over 10,001 pounds to carry at least $750,000 in bodily injury and property damage liability coverage. Smaller for-hire vehicles under 10,001 pounds must carry at least $300,000.9Federal Motor Carrier Safety Administration. Insurance Filing Requirements The numbers climb steeply for specialized operations:
- Hazardous materials carriers: $1,000,000 minimum
- Carriers of explosives, poison gas, or radioactive materials: $5,000,000 minimum, which applies to both for-hire and private carriers
- Passenger carriers with 15 or fewer passengers: $1,500,000 minimum
- Passenger carriers with 16 or more passengers: $5,000,000 minimum
Household goods carriers face the same $750,000 liability minimum as general freight carriers, plus $5,000 in cargo insurance.9Federal Motor Carrier Safety Administration. Insurance Filing Requirements Private carriers that do not haul hazardous materials generally have no federally mandated minimum insurance filing with the FMCSA, though they remain subject to state insurance laws and to whatever their client contracts require. Premium costs follow the floors: for-hire operators often pay annual premiums several times higher than comparable private operations.
Federal Excise Tax
Common carriers in aviation owe federal excise tax that private operators avoid entirely. For 2026, the tax on transporting passengers by air is 7.5% of the amount paid, plus a $5.30 domestic segment fee per passenger per segment. Transporting property by air carries a 6.25% excise tax on amounts paid.10Internal Revenue Service. Instructions for Form 720 (Rev. March 2026) A company flying its own employees on its own aircraft under Part 91 owes no federal transportation excise tax because no amount is “paid” for taxable transportation. The moment that aircraft carries paying passengers for hire, excise tax liability begins.
Duty of Care and Cargo Liability
Common carriers owe a legal duty to serve any reasonable request. Under federal law, a carrier subject to the Department of Transportation’s jurisdiction must provide transportation on reasonable request and must furnish safe and adequate service, equipment, and facilities.11GovInfo. 49 USC 14101 – Providing Transportation and Service Refusing without a valid reason exposes the carrier to regulatory enforcement and lawsuits. Private carriers face no such duty and can decline any request.
Courts have held common carriers to the highest degree of care for passengers, described in federal case law as the “utmost care and diligence.” Private carriers generally owe ordinary reasonable care, a lower standard.
For freight, the Carmack Amendment creates near-strict liability for common motor carriers. A common carrier is liable for actual loss or injury to property from the moment it takes possession until delivery, regardless of fault. The only defenses are narrow common-law exceptions: acts of God, acts of the shipper, the inherent nature of the goods, public enemy, or public authority.12Office of the Law Revision Counsel. 49 USC 14706 – Liability of Carriers Under Receipts and Bills of Lading Private carriers generally fall outside the Carmack Amendment. Their liability for cargo loss follows their individual contracts and applicable state law, which typically requires the shipper to prove negligence.
The Dry Lease Trap
The most expensive misclassifications in aviation come from aircraft leases. The structure of the lease decides whether the arrangement is legal private carriage or an illegal charter.
Under a dry lease, the owner provides only the airplane. The lessee supplies the crew, manages the flight, and holds full operational control, and operates under Part 91. Under a wet lease, the owner provides both the aircraft and at least one crewmember and keeps operational control. That arrangement is legally a charter flight and requires a Part 135 certificate.13Federal Aviation Administration. Advisory Circular 91-37B – Truth in Leasing
The FAA does not defer to what the lease paperwork says. It looks at how the operation actually runs. If a lease is labeled “dry” but the owner is still choosing pilots, scheduling flights, arranging fuel and maintenance, and paying airport fees, the FAA treats it as a wet lease no matter the contract language. The agency asks practical questions to identify who really controls the operation: Who assigns the crew? Who decides whether a flight happens? Who directly pays for fuel and maintenance? Answers pointing to the owner rather than the lessee make the “dry lease” a sham and the flights illegal charters.13Federal Aviation Administration. Advisory Circular 91-37B – Truth in Leasing
What Enforcement Looks Like
Civil penalties for operating without proper certification can reach $75,000 per violation for companies and other entities that are not small businesses, or up to $17,062 per violation for individuals and small businesses.14eCFR. 14 CFR 13.301 – Inflation Adjustments of Civil Monetary Penalties The FAA regularly proposes penalties well into six and seven figures for illegal charter operations, with documented enforcement actions ranging from roughly $100,000 to nearly $6 million, and it has revoked operating certificates outright for operators found running unauthorized charters.15Federal Aviation Administration. Rogue Operators in the News and Enforcement Actions
Pilots share the exposure. Flying an illegal charter puts the pilot’s certificate on the line alongside the operator’s authority. The FAA’s Special Emphasis Investigations Team actively looks for these arrangements, and consequences reach everyone involved, not only the person who signed the lease.