European agency studies fractional-ownership rules
Ever since the FAA issued its final rule on “Regulation of Fractional Aircraft Ownership Programs and On-demand Operations” known as Part 91, Subpart K [which took effect in the U.S. in February–Ed.] in September 2003, business aviation associations on both sides of the Atlantic have been trying to harmonize regulatory standards for fractional ownership operations.
The European Aviation Safety Agency (EASA) recently outlined its own position on the status of fractional ownership in view of the segment’s growing importance on the continent. The agency proposed that fractional ownership be covered by EU legislation and that fractional operations be treated as non-commercial.
Claude Probst, rulemaking director of the EASA, told AIN, “While we admit that such activities present many of the characteristics of commercial air transport, passengers of aircraft used under fractional ownership contracts themselves define the conditions of their transportation and employ their operator through a management contract.”
A Non-commercial Operation
Probst explained, “We don’t see fractional ownership as a commercial activity but we regard it in the same manner as we do general aviation, be it corporate or private. This means we consider that there is no transport contract between the owner of the aircraft and the carrier but rather a contract between employer and employee.”
The EASA defines a commercial operation as “a remunerated aeronautical activity covered by a contract between an operator and a customer, where the customer is not, directly or indirectly, an owner of the aircraft used for the purpose of this contract and the operator is not, directly or indirectly, an employee of the customer.”
The agency takes into account only the existence of a transport contract and the risk factor (high or low according to aircraft used and its operating environment) to determine the nature of an operation. As a result, it is difficult for the EASA to regulate fractional ownership.
As for other non-commercial activities involving “complex motor-powered aircraft,” the EASA expects to use existing rules such as the JAR-FCL and JAR-OPS 2 as the basis for regulation, implementation of which will normally be carried out at a national level.
The EASA defines a “complex motor-powered aircraft” as an airplane with an mtow of greater than 12,500 pounds, a maximum approved passenger seating configuration of more than nine, certified for operation with a crew of at least two pilots or equipped with a jet engine.
Some national aviation administrations, such as the UK CAA, initially opposed the agency’s position. But an industry observer noted that the majority of state representatives now appear to favor this position. The European Business Aviation Association (EBAA) and the industry also favor the private status of fractional ownership and are therefore quite happy with the EASA’s stated position, even if in some cases commercial status is more advantageous for an operator.
In addition, EBAA, GAMA and NBAA have created the Industry Working Group-Business Aircraft Operations (IWG-BAO) to submit recommendations to the European Civil Aviation Conference (ECAC) task force in charge of reviewing the fractional ownership issue at the European level.
ECAC, which is the political body equivalent to ICAO at the European level, is trying to develop a uniform European position on the treatment of fractional ownership. “These rules should be the closest possible to those of the U.S., allowing for mutual recognition,” Pedro Vicente Azua, EBAA’s new manager of European affairs, told AIN.
EBAA has been encouraging ECAC to develop an interim position that would then support any decision made at the ICAO level. Initial findings of the ECAC task force should be available soon and were expected to be up for discussion at last month’s EBACE gathering in Geneva.
During a recent meeting with Azua and EBAA CEO Brian Humphries, EU Commission officials showed keen interest in hearing the progress of the working group as the Commission’s negotiations with its U.S. counterparts have not been constructive thus far.
Ludolf van Hasselt, head of air transport policy, economic regulation and multilateral relations unit, reported that fractional ownership has been mentioned during the negotiations and that he was interested to follow IWG-BAO future developments.
The legal status of fractional ownership is therefore expected to remain a high priority for European and U.S. officials in the coming months.