A matter of attitude

 - March 29, 2007, 7:09 AM

Those who operate N-registered business aircraft in Europe know how well off we are in the U.S. Aside from a multitude of flight information regions under the jurisdiction of different countries, Eurocontrol charges and airport restrictions, there is simply a different attitude toward business aviation in Europe compared with the U.S. Europeans seem hesitant to embrace the use of general aviation aircraft flown noncommercially in support of a company’s business activities as an integral part of a nation’s air-transportation system. There is reluctance on the part of government, as well as business, to encourage the use of company-owned aircraft as industrial tools.

This difference manifests itself in philosophically different rules governing private operations of business aircraft in the U.S. compared with Europe. The FARs, specifically FAR Part 91 Subpart F, encourage private operations by allowing an individual or a company to purchase expertise from professionals without losing the status of being a private operator. A company is allowed to hire a management firm to provide services, such as salaried pilots and expert advise, without the transfer of fees for such services moving the private operator into a commercial classification.

Europe, however, appears to be struggling with what actions constitute commercial air service. During the deliberations that led to the fractional-ownership rule, FAR Part 91 Subpart K, an invited guest from the British CAA stated that any item of value that transferred between parties, even if it were as harmless as the promise to provide dinner at a fine restaurant in return for a ride on the company aircraft, deemed that operation as commercial. The ramifications of such an attitude are significant.

Currently that “transfer of an item of value” is the center of a controversy surrounding how the Europeans regard flight operations by U.S. companies that own a fractional share. Because fractional ownership involves the use of a management company, for which a management fee is paid, the British CAA insists that such flights are commercial and should be subject to all the special economic licensing requirements imposed on charter flights. For example, the CAA wants U.S. operators to give prior notification and obtain special operating permits, which usually require several days to process, whenever a flight is planned to the UK in a fractionally owned aircraft. The British are adamant that aircraft operating in accordance with Part 91 Subpart K but without permits that apply to charter flights will be impounded if they land on British soil.

Since operators have a grace period before all fractionals must comply with Subpart K, there was some flexibility in just when the British authorities would take such harsh measures. Thus, there was time for a contingent from the U.S., including FAA officials, to engage the British in discussions before a confrontation that would result in the impounding of a fractionally owned company aircraft that landed in the UK. Unfortunately, the issue was not resolved in those meetings and only moved to a larger arena. Now it has surfaced within the European Civil Aviation Conference (ECAC), which is an informal council of leaders from European civil aviation authorities.

The broader debate could have profound consequences. If the management fee charged by a fractional provider is deemed to make the operation commercial, should not the many private business aircraft in Europe that use the services of a management company also be subject to commercial regulations? As in the U.S., about 80 percent of companies that use a business aircraft for noncommercial transportation pay a management firm for some level of service.

British reaction to Subpart K brought the issue of what constitutes private operations to a boil. Where does it go from here? If transfer of any funds makes an operation commercial, does the use of a salaried pilot also force commercial operating rules to prevail? With such logic, eventually only a pilot flying an aircraft that he or she owns or rents would be considered private. Everything else would be commercial.

Perhaps European operators of company aircraft are somewhat indifferent to the “private rights” issue since some have an air operators certificate (AOC) and fly as commercial operators in Europe. In addition, air-taxi operators constitute a large segment of business aviation in Europe. But many AOC holders fly the company aircraft as private operators when they enter U.S. airspace. If FAR Part 91 operators receive questionable treatment in Europe, can reciprocal impositions by U.S. authorities be far behind? Such action and reaction benefits no one.

Also, consider the decades-long efforts to achieve harmonization between our FARs and European regulations. Our nation benefits from a transportation system that is facilitated and in many ways encouraged by FAR Part 91 Subpart F and now Subpart K. Our favorable regulatory environment is a key reason why more than two-thirds of all the world’s turbine-powered general aviation aircraft carry N-registrations and most are based in the U.S. Would business aviation be as robust in the U.S. if we adopted the regulations favored by European authorities? I doubt it.

The appropriateness of aviation regulations should be measured by two overriding considerations: safety and economic benefits. By such measures, the rules governing business aviation in the U.S. are a great success. Turbine-powered general aviation aircraft flown by two salaried pilots for the private use of U.S. companies have the best safety record of all aviation segments. Operations involving fractional ownership have an outstanding safety record. U.S. companies that use business aviation routinely return more dividends and increased share value to stockholders than companies that do not use business aviation. All forms of transportation, including business aviation, help our country produce its high economic standard and quality of life.

Such impressive benefits should be compelling to regulators and government leaders everywhere.