NBAA, NATA to clarify Part 91/135 'piggybacking'

 - October 11, 2006, 12:04 PM

NBAA and NATA are collaborating on a series of white papers to clarify use of Part 91 aircraft by Part 135 aircraft charter management companies.

Staffers from the two associations and other industry representatives met with the Department of Transportation (DOT) and the FAA in mid-July to help federal officials better understand what has been called “piggy-backing,” although the industry is trying to discourage that description.

The issue first came to the DOT’s attention as the result of deliberations by the Aviation Rulemaking Committee (ARC), which has been reworking FAR Part 135/125 for more than two years. Questions arose over the practice of Part 91 operators providing aircraft for charter operations.

A DOT representative thought that arrangement was tantamount to a wet-lease and therefore was subject to DOT oversight. Such an arrangement would not be permissible without the requisite DOT approval. At the time, the ARC’s applicability working group was able to satisfy the department’s concerns, but the subject remained on the department’s radar screen.

Then earlier this year, the DOT handed down three enforcement actions against Part 91 operators who were on Raytheon Aircraft Management’s charter certificate. In those cases, the Part 91 operators were providing air charter services on their own although they were not registered as air carriers with the DOT and neither did they hold the required Part 135 certificates.

This prompted the DOT to renew its concern that there is nothing to deter other Part 91 operators who are listed on someone else’s Part 135 certificate from doing the same thing. It further questioned whether, when the Part 91 operator provides the aircraft and crew for a Part 135 flight, the Part 91 operator should really be the one with the 135 certificate.

Mike Nichols, NBAA manager of tax and finance, said the DOT then asked what measures were in place–from an industry perspective–to prevent this from happening, and that led to the decision by NBAA and NATA to come up with a set of guidelines for Part 91 operators and Part 135 aircraft charter management companies.

He estimated that more than 90 percent of passenger flying in chartered turbine aircraft is under such a “piggyback” type of relationship because of economics. A charter operator just could not afford to purchase the aircraft and then be able to charge enough to amortize the aircraft and pay the other costs of running the business.

“The whole charter industry hinges upon this type of relationship,” Nichols explained to AIN. “When the DOT was raising questions about this, it indicated it wanted to look at this in more detail. From a similar perspective, this [practice] came on the FAA’s radar screen because there were some operations where the FAA [questioned] whether the Part 135 certificate holder really did have operational control over the flight.”

The DOT and the FAA asked for the meeting because they wanted to find out how the large, well established charter providers operate. So in addition to NBAA and NATA, a number of those companies also attended the meeting, along with a smaller charter operator.

“It was a really good discussion,” Nichols said, with the FAA and the DOT laying out their concerns. “The DOT’s primary concern was that if you are putting the aircraft and the crew on the 135 certificate, then the 135 operator should have exclusive command and control of the aircraft.”

But that begs the question of whether, if the Part 135 company has exclusive command and control of the Part 91 aircraft, it could supersede a trip the aircraft owner wants to fly in favor of a lucrative charter. If that were the case, there would be little or no incentive to own the aircraft outright in the first place.

Nichols said that at the end of that discussion, the DOT turned 180 degrees and agreed that the Part 91 operator really had the aircraft for its own business and that the 135 operator should have command and operational control only when the flight is flown as a Part 135 trip.

“We agreed on some issues from a conceptual basis,” said Nichols, “and now the industry has the task of putting those thoughts down in a series of white papers.” He said the highest priority issue is operational control, and that will be submitted to various NBAA and NATA committees before it goes to the FAA and DOT, probably not before the end of next month.