If "flight time is compensation", how can a PPL holder legally fly at all?
Flight time is only considered compensation when the pilot is not paying all the costs associated with the flight.  If the costs are to be shared the following advice is recommended.

A private pilot can be compensated, up to a pro-rata share, of the cost of that specific flight.  This would include rental fees, fuel, oil and such.  It does not include items like insurance and annual inspection fees.

The overall regulation is found in §61.113(b &amp; c).


  (b) A private pilot may, for compensation or hire, act as pilot in command of an aircraft in connection with any business or employment if: 
  
  
    (1) The flight is only incidental to that business or employment; and
    
    (2) The aircraft does not carry passengers or property for compensation or hire. 
  
  
  (c) A private pilot may not pay less than the pro rata share of the operating expenses of a flight with passengers, provided the expenses involve only fuel, oil, airport expenditures, or rental fees. 




You should be able to see pretty quickly that you are allowed to transport yourself by private airplane to a business meeting.  There is good reason to fly to; depending on the distance, it could be quicker to fly a private airplane than it is to drive saving you time and money.  However, the moment the company decides that you should fly to all of your meetings it is no longer incidental to that business and operations must cease.



If you want to fly passengers, and also want them to pay their pro-rata share.  There are three things that must be considered.  


There must be a bona-fide purpose for the PIC to make the flight.  The reason cannot be that the passenger has a business meeting at the destination and you want to get lunch.  You, as the pilot, must have a reason to make the trip, whether or not the passenger(s) come along.
The PIC must dictate where the flight is going to go.  Again, you cannot make a flight with passengers where you drop them off at one airport while you fly to a different airport.  Why would you land at the first airport, if you have no need to land there?
You cannot "hold out" or advertise that you are going somewhere and wait to see if other passengers are interested in going to the same location.  There are websites that have been shut down by the FAA for doing just that.




The Lamb Interpretation

The Mangiamele Interpretation

The Chero Interpretation


  December 26, 1985
  
  Thomas H. Chero
  Vice President - Legal
  AVEMCO Insurance Company
  Frederick Municipal Airport
  411 Aviation Way
  Frederick, MD 21701
  
  Dear Mr. Chero:
  
  Thank you for your letters to this office, dated September 9, 1985, and October 23, 1985, respectively, concerning the actions of the Pilots and Passengers Association (PPA).
  
  You are correct in stating that Section 61.118 of the Federal Aviation Regulations (FAR) prohibits private pilots from participating in PPA's operations. Section 61.118 provides that a private pilot cannot act as pilot in command of an aircraft that is carrying passengers for compensation or hire unless the flight falls within one of the four listed exceptions in 61.118(a) - (d).
  
  Section 61.118(b) allows a private pilot to share the operating expenses of a flight with his or her passengers. Additionally, the FAA has interpreted 61.118(b) so that the only allowable share-the-costs operations are those which are bona fide, that is, joint ventures for a common purpose with the expenses being defrayed by all passengers and the pilot. Nor does Section 61.118 permit pilots who want to build up time toward their commercial pilot certificates to carry expense sharing passengers to a destination at which they have no particular business. (emphasis added)
  
  PPA pilots apparently would not share in the expenses of the flights they would undertake. It also appears that PPA pilots could be flying to destinations at which they had no particular business. The PPA system is not a casual one of an individual pilot wishing to take some friends or acquaintances with him on a trip. The PPA system would violate the letter, as well as the spirit, of Section 61.118.
  
  Even if the pilot bears an equal share of the expenses with his or her passengers and indeed has his or her own need to fly to a particular destination, yet another problem arises. Since PPA's passengers would be solicited for flights by PPA from a broad segment of the general public, we conclude that each pilot carrying paying passengers from PPA would probably be engaged in common carriage. This means that each pilot would become an air carrier subject to the certification and operating rules of Part 135 of the FAR.
  
  We appreciate your calling our attention to this matter.
  
  Sincerely,
  
  John H. Cassady
  Assistant Chief Counsel
  Regulations and Enforcement Division