NCO.GEN.102(b): other costs are paid by the pilot

Under NCO.GEN.102(b), every cost that isn't a direct cost is yours alone, and passengers can contribute nothing towards it. Direct costs are only fuel, oil, airfield charges and aircraft rental at the current market rate, so insurance, hangarage, maintenance, membership fees and every other annual cost stay with you.

The text

NCO.GEN.102(b):

(b) All costs other than direct costs must be paid by the pilot with no contribution from the passengers.

ANO 2016 art. 13(2)(b):

(b) all costs other than direct costs are paid by the pilot with no contribution from the passengers;

The wording differs only in "must be paid" and "are paid"; the effect is the same. Both rely on a closed definition of direct costs. Article 2(12) of Regulation 965/2012 reads, and ANO Schedule 1 says the same:

‘direct costs’ means the costs only directly incurred for a flight and include only: (a) fuel; (b) oil; (c) airfield charges; and (d) aircraft rental fees at current market rate

What it means in practice

Point (b) is the other side of the direct cost definition. Because the list says "include only", anything not on it falls under point (b), and you pay it.

CAP 1590 (guidance), para 29, explains the main category:

‘Annual costs’ are not a direct cost and therefore cannot be included in the costs shared between pilots and passengers for a flight. ‘Annual costs’ are the cost of keeping, maintaining, insuring and operating the aircraft over a period of one calendar year. These costs are required to be paid by the pilot/operator of the aircraft with no contribution from passengers.

The CAA's cost sharing web page adds "(including items like club membership fees for renters)".

Worked example. You fly a group-owned aircraft at a group rate of £150 an hour and pay a monthly standing charge. GM1 NCO.GEN.102(c) treats "the hourly rate, normally payable by a joint owner, for use of their aircraft" as a direct cost, provided it is no more than the average market rental price. So the hourly rate can go into the shared total, but the monthly standing charge cannot. If a passenger offers to pay part of it as thanks, decline.

Annual costs are excluded only for cost-shared flights. Article 6(4a)(b) lets competition flights and flying displays recover "a proportionate contribution to annual costs"; see the Article 6(4a) page.

Grey areas

• What "airfield charges" covers. The term isn't defined further. A landing fee charged by the airfield for your visit is the obvious example. Parking, approach and en-route or navigation charges are less clear. The cautious approach is to share only charges levied by the airfield for this flight and to pay anything else yourself.
• Sole owners. GM1 NCO.GEN.102(c) addresses joint owners only. Whether a sole owner may charge a notional hourly rate isn't settled. The cautious approach is to share only fuel, oil and airfield charges.
• Wet hire. If your club's hourly rate includes fuel, don't add fuel again. The rental fee itself is capped at the market rate.

What counts as a direct cost goes through these items in more depth.

How to comply

• List the flight's costs and sort them into direct costs and everything else.
• Pay all non-direct costs yourself, and don't accept money, gifts or favours towards them.
• Cap any rental or group hourly rate at the average market rental price for the type.
• Divide only the direct costs, following point (c); the cost-sharing calculator does the arithmetic, and who pays what has more examples.