We created an online bulletin board where you could see,
in your area, you know, where pilots are going.
You would be able to just reach out to the pilot and, you know, coordinate to meet
at the airport, and then, right from there, you could share expenses directly from the app.
When a Flytenow pilot shares expenses with his or her passengers,
there is no commercial component.
All they're doing is offsetting the costs of the flight and if there's two passengers,
the pilot has to pay a pro rata share — 50 percent.
If there's three passengers, they have to pay 33 percent.
The way we started was the way every company starts, right?
We walked out to local airports.
You know, we actually grew, our, the pilot base and
we had a lot more enthusiasts interested in going flying.
So, from there, we actually applied to Y Combinator, and what happens at the end
of three months is you end up pitching your business
to the "who's who" of Silicon Valley.
And, it's not uncommon for companies, you know, to leave demo day with at least, you
know, with around one to two million dollars in a seed round committed.
You know, three days before we're actually going to pitch our business at demo day
to all the big investors, the "who's who," we actually get this letter.
So, to back up here and kind of explain that, so we had been, we had learned
that the FAA had reached out to several of our pilot members and was essentially
telling them not to post on Flytenow.
I reached out to them and just wanted to get confirmation
that what we were doing was correct.
From our viewpoint, nothing's changed here.
We literally took a physical practice and just made it way easier online.
The crux of the FAA letter was that a pilot could not communicate his travel plans online.
The FAA takes a look at this, looks and says, "My best analogy is:
this looks like how airlines advertise ticket prices.
Therefore, these Flytenow people are basically operating an airline.
They have not gone through any of the regulatory process,
they don't have permission from us to do this."
And because they've communicated to such a broad segment of the population, they were
then common carriers, and common carriers have to have a regulation, regulatory
compliance that has a whole host of requirements attached to it
that simply wouldn't make this model feasible.
The rules on the books are very clear.
We're expense sharing, and there's nothing wrong with that.
It's been happening since the beginning of general aviation.
The only thing that's changed here is we took that from a physical bulletin board
and put it on an online bulletin board.
We couldn't ethically pitch to investors with this letter out there, obviously.
So, we had to kind of re-group and think about what the next steps were.
They were either, obviously, shut down, or, you know,
Option B: can we fight this letter and can we win?
Case Number 14--1168: Flytenow Inc. petitioner versus Federal Aviation Administration Administrator.
Mr. Riches for the petitioner.
Ms. Foster for the respondent.
Right, we heard from the FAA that, you know, at oral argument, if you had 50 friends
on Facebook and communicated a flight to them, that would be fine.
But if you have 150 or maybe 500 friends, then it would begin to get a little bit more grey.
We have to look to see whether or not someone is a common carrier and that requires
an analysis of whether that person is holding out.
So, if somebody has Facebook, and they're, and anybody who sends them a friend request,
they say yes, you can be my Facebook friend, that would be impermissible but if
they, you know, limited themselves to only ten friends at a time or 50 friends at a time,
then they wouldn't be holding out to the public?
I'm trying to understand what the rationale is here.
The position is that it is a context-specific kind of analysis.
There may be some cases where it's a close call whether something is public or not.
We believe it's a fundamental threshold question.
Unlike Airbnb, these pilots can't pursue a profit.
They're just sharing expenses, which has been permitted since the beginning of flight.
The agency reasonably concluded that there was holding out to the public because,
these flights are posted on the website that are accessible to any member
of the public who simply applies for a membership.
You know, so we went into the case thinking we had very strong arguments, but
when we actually got the opinion back from the court, we were pretty shocked to realize
that we were not able to have the merits of the case be addressed by the court.
That comes down to an aspect of the law, doctrine of the law, called regulatory deference.
And what regulatory deference says is that when an agency, like the FAA, makes an interpretation
of its own regulations, then the court really can't take a deep look at it.
Flytenow takes the, takes it to the Supreme Court.
The Supreme Court decides not to hear the case,
which then puts Flytenow in a position where they have no other legal recourse.
So, once you redefine the term "common carrier," and you say that Flytenow falls under this
common carrier burdens, this air carrier burdens, you've now triggered, you know, dozens if
not hundreds of pages of new FAA regulations.
But the real question is: how do we make regulation work for innovation better, right?
How do we pair the regulator with the innovator?
I think regulation has to exist and it has to have its place in business.
So, I think, you know, if we can come together as regulator and innovator and
think about what are the best ways to solve those problems, everybody wins.
What's also happening to consumer choice and the ability to be able to connect to somebody
and, you know, live life the way you want to live it?