IBAC to propose int’l frax regs

 - March 15, 2007, 8:01 AM

When the ICAO Assembly meets in Montreal late this month, the International Business Aircraft Council (IBAC) will propose standardization of international regulations governing fractional ownership operations. At present, the U.S. recognizes fractional operations as non-commercial; other nations are not yet enforcing commercial rules on the industry, but several European administrations, led by the UK, are leaning strongly in that direction.

For frax owners, the distinction is important. Under a non-commercial classification, a U.S. or other foreign operator could fly to the UK and land at, say, Manchester, and then decide at short notice the following morning to fly to London. But if the operation were classed as commercial, such a flight would not be allowed without government approval, since it would break the cabotage rules imposed by essentially all states based on the ICAO Convention. These rules prohibit, among other things, unrestricted carriage of passengers on commercial flights between two points within a country outside one’s own. And government approval here would not simply mean ATC approval of one’s flight plan: the operator would have to formally seek the approval from the nation’s aviation legislators.

In certain countries, obtaining approval could be lengthy, and possibly costly. As IBAC director general Donald Spruston pointed out to AIN, “Classifying fractional operations as commercial endeavors would obviously seriously hamper the effectiveness of business aircraft operations.” Spruston added that commercial status would also require frax operators to obtain an entry permit for each visit to a foreign country, which can also be a lengthy process. Also, the FAA would have to provide an aircraft operating certificate for each U.S. aircraft likely to be used overseas, a fairly straightforward but lengthy procedure.

The crux of the issue lies in defining the legal owner of a fractional airplane. For example, an airplane owned outright by a company and used exclusively by that company is internationally, and unquestionably, regarded as non-commercial. But frax ownership is a gray area, and since owners of frax shares do not always fly in the particular airplane that they partially own, the distinction between frax, charter and air-taxi operations gets blurred, and some overseas authorities view the fractional agreement as a form of charter.

This is particularly the case in the UK, where some clearly commercial companies have established themselves as “business executive charter” firms, offering various types of airplanes, with advertised fees between points. Unfortunately, noted Spruston, European legislators appear to be concentrating on that extreme end of what they perceive to be “business aviation,” without reviewing the many other, non-commercial fractional arrangements worldwide, where remuneration for “hire and reward” does not enter the equation.

The timing of IBAC’s submission to the ICAO Assembly this month is also fairly critical. At the urging of the UK, the European Union has charged the European Civil Aviation Conference (ECAC) with resolving this issue for European States, and an ECAC Task Force is currently considering the question, with its conclusions expected early next year. NBAA, GAMA and EBAA are task force participants but are understood to be facing significant issues from aviation regulators and charter and air-taxi companies. IBAC’s approach is a well reasoned proposal that the whole issue requires a broader examination, with perhaps wider national involvement, before firm policies are established. There was also opposition from the charter and air-taxi industry when frax operations were first mooted in the U.S. in the 1990s; the differences were ironed out after negotiations with the FAA and the fractional proponents. IBAC hopes its initiative will produce the same result.

IBAC’s ICAO Working Paper is recommended reading for fractional operators, and can be reviewed at: www.ibac.org/Library/ElectF/ iass/A35WP.pdf