This NATA news (which is reprinted in full on the read more link) is big news to air charter operators, but more importantly, it affects those air charter co.'s that operate large tubine equipment that no normal human being can really afford. Without climbing onto said soapbox and putting everyone to sleep with the added weight of air charter turkey in your belly, let's just remind ourselves of one critical element of our industry: We don't own our equipment, because we aren't a "real" industry yet. Ok, before the bottles come whizzing to the stage, let me explain why this is true and why it is nothing to be ashamed of.

The fact is that no one in their right mind would buy an aircraft worth more than your house or a building to start a business, unless they could easily see 1000 hours or more of revenue on the aircraft. Why you ask? Simple, because if you want to make money, then you can invest that same cash in a McDonald's franchise and do a lot better. Or better yet, a bar anywhere in Fort Lauderdale.

Having established that we don't get into this business for monetary reasons, it is quite easy to see that babysitting other people's toys is what we really do. If we can do some charter (heck, maybe even 800 hours a year!) then great, but basically we exist to feed the egos of those who ride in back. And look out when they want to ride in front with you, which is the subject of another long and emotional post.

This NATA and FAA flap only exists because of the severe conflicts of interest that arise out of the simple fact that we cannot own most of our equipment and therefore inherit the insanity that comes with all the different shades of owners. When was the last time you ordered a limo, and they confirmed your reservation subject to owner approval?

This news simply comes back to one simple premise of the current Part 135 industry: The status quo must die, before we can become a big boy industry.

Reprint of NATA News:

November 23, 2005



What's at Issue



NATA has submitted comments to the FAA on proposed policy guidance that could significantly impact all air charter operators. Members that have not already done so should submit comments now.







November 23, 2005



Docket Management Facility

U.S. Department of Transportation

400 Seventh Street, S.W.

Nassif Building

Room PL-401

Washington, DC 20590



RE: FAA-2005-22765, WET LEASE POLICY GUIDANCE, REQUEST FOR COMMENTS



The National Air Transportation Association (NATA), the voice of aviation business, is the public policy group representing the interests of aviation businesses before Congress, federal agencies and state governments. NATA’s 2,000 member companies own, operate, and service aircraft. These companies provide for the needs of the traveling public by offering services and products to aircraft air carriers and others such as fuel sales, aircraft maintenance, parts sales, storage, rental, airline servicing, flight training, Part 135 on-demand air transportation, fractional aircraft program management and scheduled commuter operations in smaller aircraft. NATA members are a vital link in the aviation industry providing services to the general public, airlines, general aviation, and the military.



NATA appreciates the opportunity to comment on this ruling on behalf of our members conducting Part 135 on-demand operations. The Wet Lease Policy Guidance recently issued by the Federal Aviation Administration (FAA) is deeply troubling to NATA and our members. Although NATA agrees that clarification of operational control issues for Part 135 operations is appropriate, the association feels the notice and proposed guidance does little to improve operational control and safety, or clarify their attributes. If the concepts articulated in the notice are acted upon, they would establish new requirements under Part 135 that do not address the true safety issues and demonstrate a troubling misunderstanding of the complex Part 135 on-demand industry by the agency.



Therefore, NATA requests that the FAA withdraw the proposed guidance and instead work with industry representatives to develop cohesive operational control guidance that furthers safety at air charter operations.



Diversity of the Industry



The Part 135 industry is an incredibly diverse environment. Operations range from single-pilot, single-aircraft, to operations with over one thousand pilots and a few hundred aircraft. A one-size-fits-all solution is not acceptable in this industry, which is the very reason that Part 135 has so many requirements that can be met in a variety of ways. For example, in a single-pilot operation, the single pilot has the Docket Management Facility authority to delay, cancel, or divert a flight, because there is most likely no one at “home base” with whom to coordinate decisions as the notice instructs. Where in a much larger operation with an intricate network of continuous operations, pilots may be required by the certificate holder to be in contact with regular frequency so decisions regarding delayed, canceled, or diverted flights can be quickly inputted into the operator’s overall operational plan for the day so aircraft and pilots can be reassigned to cover all of the operator’s flights. It is our hope that we can continue to work with the FAA to develop guidance and regulations that provide for an adequate level of safety, and give operators the flexibility to meet this level of safety while continuing to provide their valuable services to the public.



Managed Charter Aircraft



In the United States, the vast majority of turbine aircraft held out for charter under Part 135 are not owned by the Part 135 certificate holders. These aircraft are instead owned by other companies and individuals that may have very little aviation expertise and, in realizing this lack of expertise, contract with Part 135 operators to manage and, on occasion, operate their aircraft. This aircraft owner/Part 135 operator relationship provides valuable safety benefits for both parties, and is critical to the continued viability of the on-demand air charter industry. Aircraft owners generally purchase an aircraft for use as a tool in their trade or business, and/or for personal transportation. However, upon making the decision to acquire an aircraft many owners quickly come to the realization that they do not have the expertise and/or resources to safely and effectively manage and operate their new aircraft. These owners often turn to Part 135 operators as entities with the experience and skill to maintain and operate aircraft to the higher standards of Part 135. Part 135 operators bring these aircraft into compliance with the higher equipment and maintenance standards of Part 135, train the crewmembers to the higher standards of Part 135, and provide the flight planning, scheduling, and other administrative functions necessary to ensure a safe and efficient operational structure for the owners’ aircraft. In addition, these aircraft and the crewmembers that operate the aircraft are subject to additional FAA safety oversight as a result of being a part of a commercial operation.



This type of arrangement gives the aircraft owner an avenue for obtaining a higher level of expertise in management of its aircraft. In addition, the owners’ aircraft and crew are safer by virtue of being maintained to Part 135 standards, and operated by flight crewmembers trained and checked to Part 135 standards. Part 135 operators also benefit from these scenarios by obtaining access to newer, low-time, high performance aircraft to offer to the public for charter. But most importantly, the public benefits by having management companies with decades of aviation and safety experience offering on-demand transportation in new, very well equipped aircraft that would otherwise be unaffordable, with operations regularly overseen by FAA inspectors.



By providing vital safety benefits to aircraft owners, Part 135 operators, and the public, these arrangements help all parties involved to exceed the minimum safety requirements found in the Federal Aviation Regulations, which is the goal towards which the FAA and industry groups like NATA are constantly striving. We understand it is the FAA’s desire to promote these safety benefits, and that the wet lease policy guidance was intended to clarify the operational control structure in a manner so as to promote safety. However, as written wet lease policy guidance does not adequately provide clarification on operational control or help to improve safety; instead, it poses significant ramifications for the air charter industry that will have a negative impact on safety.



Focus Should be on Safety



NATA agrees that every contract between an aircraft owner and a Part 135 Certificate holder must clearly demonstrate which party has operational control of each particular flight in order to ensure that the parties understand which entity will have the ultimate responsibility for safety on each flight. However, the vastly more important parts of operational control are the systems and processes applied to the daily activities of every Part 135 certificate holder. It is these operational control systems and processes developed and implemented by Part 135 operators that serve the safety goal behind the operational control concept. The contracts entered into by owners and Part 135 operators are meant only to be a simple acknowledgement of the basic regulatory concepts and economic aspects of the managed charter relationship. However, this guidance seems to focus solely on the mundane economic aspects of these agreements, such as owner-provided crews and economic arrangements, and does little to address that which the FAA is obligated to pursue: safety.



We agree with the FAA position that the operational control concept is key to safety by ensuring that a party is designated as the party responsible for safety and regulatory compliance. Without this designation, parties may become confused as to who bears this responsibility on a particular flight, which could lead to certain safety critical items being missed. We also agree with the FAA that this concept is not being accurately implemented by some operators. However, it is NATA’s belief that this goal can only be achieved through education for both operators and inspectors, and through FAA enforcement of the implementation of the operational control concept. We are certain that the FAA understands that operational control does not boil down to a few lines in a contract, and that a comprehensive look at the entire operational structure is necessary for any inquiry into the effective exercise of operational control. However, the most recent policy guidance and Notice 8400.83 are being construed by several FSDOs and some FAA regional offices to mean that a review of the contracts and their economic terms can support enforcement actions for loss of operational control, regardless of how well developed or implemented an operator’s processes and systems are.



Proposed Guidance Effectively Establishes New Dispatch and Communication Regulations



NATA strongly opposes several concepts outlined in the notice, which if taken to their extreme by FAA inspectors create new and unjustified regulatory burdens. For example, the FAA states that a certificate holder lacks operational control if it lacks timely knowledge of the flight and duty status of its pilots, or the means to communicate an order to the crew to delay, cancel, or divert a flight. This statement can be read to establish Part 121-like “dispatch functions,” and an operator-to-pilot communication requirement that do not exist in current Part 135 regulations. The implications of this dispatch requirement for all Part 135 air carriers would require significant investment in new staff and equipment, without a significant impact on safety. Further, “the means to communicate an order to the crew” has no limits. It can be read to require not only continuous ground communication with the crew, but also continuous in-flight communications, neither of which are required by current Part 135 regulations and which would be impossible to implement in certain operational environments. With limited radar and voice communication coverage even in many areas of the continental United States, it is difficult to imagine that the FAA is attempting to place a demand on operators as small as single-pilot, single-aircraft, that the FAA itself cannot meet.



This type of continuous communication would not only impose new regulation without going through the required rulemaking process, but is simply impossible to comply with due to the nature of many Part 135 air carriers. First, the dispatch requirement described above does not take into account very small Part 135 air carriers, especially single-pilot operators. It can be read to mean that the pilot, who, by the terms of his or her own operations specifications is the only operator of the aircraft, cannot solely have the authority to delay, cancel, or divert a flight. Second, the dispatch requirement does not account for the lack of communications available in remote locations, over international waters, and in remote foreign countries. These types of operations are not only the main source of revenue for many small Part 135 air carriers, but also the very operations for which Part 135 was created. In these types of situations, safety requires that the decisions to initiate, divert, or cancel a flight, be delegated to the crew.



The dispatch and continuous communication requirements referred to in the notice are not a part of the current regulations, and are simply not possible for many operators. Although we know that the FAA was not attempting to skirt the required rulemaking process, it is clear that certain statements in the notice could be read by inspectors to be new regulatory requirements. These statements should be withdrawn.



Pilot Loyalty



One of the main themes in both the Federal Register notice and Notice 8400.83 is pilot loyalty to the certificate holder. The notices seem to suggest that the only proper method of controlling one’s pilots is to give them a W-2 and ensure that they have no ability to make determinations regarding their own compliance with the regulations. On both of these issues we feel that the FAA’s concern could be met with a simple two-sentence regulation reading:



When acting as a crewmember on a flight operated under this Part, the individual is an agent of the certificate holder, regardless of the employment law or employment tax status of such individual.



Delegation of Operational Control



In the notice, the FAA suggests that an air carrier may not legally delegate operational control to a pilot, and that a pilot may not determine whether the pilot-in-command or other crew members are qualified for a specific flight. This restriction does not address the true issue, and for many operators may be impossible. As discussed above, there are many instances where the pilot may be the only individual capable of making a determination as to these issues (for example: single-pilot operations where the pilot-in-command and operator are one and the same, and operations out of remote locations where the pilot may not be able to get into contact with the certificate holder and, therefore, must make these decisions). The concern behind this suggestion appears to be that the pilots, especially those employed by an aircraft owner, may not know which master to serve in such situations. The suggested rule language above meets this concern, and makes it clear to pilots and aircraft owners that pilots are under the direction and control of the certificate holder on all Part 135 flights and, therefore, should be able to act on behalf of the certificate holder including making certain decisions regarding regulatory compliance.



Employment Status of Pilots



The notice places unnecessary emphasis on the aircraft owner choosing, recommending, or vetoing a particular pilot. The notice could be read to suggest that any situation where the owner provides his own pilot is an example of an illegal wet lease. Further, when the owner chooses his own pilot, the certificate holder is delegating away his operational control to the owner and pilot. These two declarations are simply not true.



In a Part 135 operational structure, the certificate holder is the final authority as to which pilots are qualified and assigned to Part 135 flights. The operator is responsible for training and checking the pilot prior to any Part 135 flights, and ensuring on a flight-by-flight basis if such pilot is qualified to take the particular flight. The safety concern that each of the pilot requirements in Part 135 are designed to meet is that only qualified and capable individuals are assigned to Part 135 flight crews. As long as the operator is conducting the proper training and checking, oversight of rest and duty, and meeting all other Part 135 requirements applicable to the pilot, the operator is meeting its duty to ensure that a properly qualified and capable individual is assigned to each Part 135 flight, period.



The mere fact that an aircraft owner suggests the name of a particular pilot does not impact the operator’s duty to ensure that capable and qualified crews are assigned to a Part 135 flight. The owner may prefer this pilot for purely customer service reasons, or a myriad of other personal taste reasons; however, in all instances under the current regulations the operator is still required to train, check, and provide enough oversight of each pilot to ensure that he or she is qualified and capable to serve as a crewmember on a Part 135 flight. The concern seems to be that the owner may pressure the operator into using an unqualified pilot on a Part 135, which may be a very valid concern. However, this concern can be easily met under the current regulations with an enforcement action against the operator and potentially the pilot for violations of the specific regulations under which the pilot is not qualified.



If the certificate holder is properly meeting its duty to ensure that such flight crew members are capable and qualified, then the use of an aircraft owner’s pilots is likely to have a safety benefit. The aircraft owner’s pilots likely operate the aircraft for all of the owner’s Part 91 flights, and may have done so for many years prior to the aircraft being placed on the operator’s operations specifications. These pilots likely know the owner’s specific aircraft better than any other pilots.



Owner’s Continued Operation of the Aircraft under Part 91



When owners place their aircraft on the operations specifications of a Part 135 operator, there is almost always the expectation that the owner will still need the use of the aircraft. These owner flights often may be conducted legally under Part 91. However, recognizing the safety benefits provided by many of the operational rules in Part 135, many owners elect to comply with the higher operational standards of Part 135, even though they are still operating under Part 91 for tax, international law, or other reasons. These owners view Part 91 as the minimum level of safety and choose to use higher standards in operational areas modeled after those found in Part 135.



However, exactly what the owner does with the aircraft during Part 91 flights is typically unknown to the operator, which is a perfectly legal, acceptable aspect of the industry. The FAA appears to be seeking to change that, by requiring that “an air carrier must clearly retain operational control of all its flights” (emphasis added). In reality, the certificate holder is not responsible for maintaining operational control of owner-flown Part 91 flights; operational control is the responsibility of the owner.



The ability for an aircraft to operate under both Parts 91 and 135 is crucial to this industry. The ability to operate under Part 91 eases the administrative tasks associated with international flights, while the requirements of Part 135 offer a substantial safety benefit. If this flexibility is denied by this guidance, two significant and likely unintended consequences face the Part 135 industry. Many owners that need the operational flexibility of Part 91 to comply with other bodies of law will be forced to remove their aircraft from the Part 135 operator’s operations specifications, which will result in 1) the newest and most well-equipped aircraft leaving the industry fleet, which is a detriment to public safety, and 2) these aircraft being operated and maintained in an accordance with the lower standards of Part 91, by entities that may not have the same level of expertise as a Part 135 operator, which is a detriment not only to the aircraft owner, but also to any individual who boards the aircraft.



The safety issue the FAA seems to be addressing with this language is that some unsavory owners may attempt to conduct their own illegal charter operations under the guise of Part 91, while the aircraft is on the operations specifications of the Part 135 operator. While this is always a possibility, it is even more of a possibility if the owner’s aircraft is not on an operator’s operations specifications and may only operate under Part 91. In these instances, the owner may have no legal option to seek reimbursement from an acquaintance that would like to use the aircraft. If, however, the aircraft is Part 135-capable, the owner can be reimbursed for such use by having the acquaintance charter the aircraft from the operator.



The issue with the FAA suggestion is that it appears to delegate the FAA responsibility of enforcement to the certificate holder, by holding the certificate holder responsible for an unrelated third party’s non-compliance with the regulations. The certificate holder cannot be held responsible for an owner illegally operating his own commercial flights while presenting those flights to the certificate holder as personal Part 91 operations. The certificate holder has no legal authority to know who the passengers are on an owner Part 91 flight. This information is certainly private, and may be privileged and confidential. NATA supports the FAA stance that illegal charters should be stopped, and enforcement actions taken against the parties involved in the transaction, which may include a Part 135 operator if such operator actively participated in the illegal charter. However, Part 135 operators should not be given the affirmative duty to investigate and enforce the requirements of Part 135 on third parties.



Operator Evaluation Questions Overly Subjective



The FAA closes the proposed guidance with a list of questions, a litmus test of sorts, for air carriers to self-evaluate their operations. The entire list is unclear and subjective, making it nearly useless. The first question refers to the actual location of each aircraft on the carrier’s certificate. While the Part 135 certificate holder must have an awareness of the status of all aircraft, the FAA seems to be again referring to a standard in excess of the current flight following requirement. Additionally, the air carrier is not responsible for owner flights operating under Part 91. Therefore, particularly when the owner has taken his/her aircraft for personal use, the air carrier has no need or requirement to know the exact location of each aircraft at every moment. Importantly, NATA recognizes that the owner must be aware of the fact that all maintenance must be conducted in accordance with the certificate holder’s maintenance program at all times and the Part 135 owner and the operator’s agreements should reflect the process for obtaining approved maintenance while the aircraft is under the owner’s operational control.



Question four requires that the air carrier know who or what is being transported. A detailed passenger manifest requirement does not currently exist for Part 135 operators. Certainly, the owner need not disclose to the certificate holder who is on board the aircraft when it is under his or her operational control.



Question seven is by far the most subjective. It asks the air carrier whether the crewmembers are “loyal” to the carrier. Certainly, there is no existing regulation requiring “loyalty” of crewmembers, nor does the FAA provide any examples of how said loyalty is to be demonstrated. In fact, an overly loyal crewmember could actually pose a safety concern. A pilot eager to please could conduct a flight out of loyalty to the air carrier that otherwise would have been canceled due to weather, fatigue, or a minor mechanical problem.



The one question in this list that is of some use is Question eight: “What procedures and mechanisms are in place so that the carrier can fulfill its duty to ensure that the aircraft is airworthy and meets all of the carrier’s maintenance programs?” This question addresses one of the four aspects of operational control and should be expanded to read: “What procedures and mechanisms are in place so the carrier can fulfill its duty to ensure that the aircraft, crew, flight, and passengers on each Part 135 flight meet the requirements of Part 135? Fundamentally this is the question around which the operational control concept was built. If the operator does not have these procedures and mechanisms, they are not in operational control and are likely in violation of many other regulations under Part 135. The eight questions should be replaced with the following guidance to inspectors:



The operational control concept is a certificate-specific evaluation of whether the operator has the procedures and mechanisms in place to ensure that on every Part 135 flight the operator has complied with the specific Part 135 requirements for the aircraft, crew, flight and passengers. These procedures and mechanisms will be different for every operator, but if the operator can demonstrate to the inspector that they can consistently comply with the requirements for the aircraft, crew, flight and passengers on each Part 135 flight, then that operator has demonstrated that it has operational control.



Suggested Actions



NATA respectfully suggests several means to achieve the FAA’s true goal: more definitive demonstration of operational control for Part 135 certificate holders. As stated earlier, as a reasonable means to clarify the pilot’s obligations the following should be added as a regulation under Part 135:



When acting as a crewmember on a flight operated under this Part, the individual is an agent of the certificate holder, regardless of the employment law or employment tax status of such individual.



To give additional guidance to POIs regarding operational control determinations, the FAA should include the following in a new notice regarding the issue, the Airworthiness Inspector’s Handbook, or other POI guidance:



The operational control concept is a certificate-specific evaluation of whether the operator has the procedures and mechanisms in place to ensure that on every Part 135 flight the operator has complied with the specific Part 135 requirements for the aircraft, crew, flight and passengers. These procedures and mechanisms will be different for every operator, but if the operator can demonstrate to the inspector that they can consistently comply with the requirements for the aircraft, crew, flight and passengers on each Part 135 flight, then that operator has demonstrated that it has operational control.



Finally, the Federal Register notice should be rescinded and Order 8400.83 rewritten to provide FAA inspectors with simple guidance that considers a Part 135 certificate holder’s entire operational procedure, not a few isolated aspects of the written agreement.



NATA appreciates the opportunity to present these comments. The association and our members look forward to working with the FAA to achieve more acceptable, reasonable guidance for the complex Part 135 industry. We are confident that a less stringent alternative can provide the same safety benefits without the negative ramifications of this proposed rule.



Sincerely,



James K. Coyne

President



Staff Contact:





Lindsey McFarren

Manager, Research and Special Projects

lmcfarren@nata.aero



Jacqueline E. Rosser

Senior Manager, Regulatory Affairs

NATA

jrosser@nata.aero