Operational control scrutiny could extend beyond charter operations

 - February 26, 2008, 5:43 AM

Aviation industry experts believe that the FAA’s next operational control focus will be on Part 91 operators, specifically management companies that manage Part 91 aircraft for owners. However, the FAA didn’t respond to AIN’s queries about whether the agency is focusing on Part 91 operational control or if it is interested in writing new regulations covering aircraft management companies.

The operational control concept is prominent in Part 121 and 135 regulations and is defined by the FAA as follows: “Operational control, with respect to a flight, means the exercise of authority over initiating, conducting or terminating a flight.” In Part 91, however, the regulations mention operational control only in the truth-in-leasing rules for large or turbine-powered aircraft (91.23) and in Subpart K, the fractional-share regulations.

In FAR 91.23, there is no formal requirement that anyone exercise operational control, only that the lease language include “the name and address (printed or typed) and the signature of the person responsible for operational control of the aircraft under the lease or contract of conditional sale, and certification that each person understands that person’s responsibilities for compliance with applicable Federal Aviation Regulations.”

Subpart K is more specific, assigning operational control responsibility to aircraft owners but allowing them to delegate “performance of the tasks associated with carrying out this responsibility to the program manager.” The regulation (91.1011) goes on to say, “When the owner delegates performance of tasks to the program manager or relies on the program manager’s expertise, the owner and the program manager are jointly and individually responsible for compliance.”

For any other Part 91 operators, including those of large and turbine-powered airplanes that aren’t required to submit a copy of a lease agreement to the FAA, there is no mention of any operational control requirement. FAR 91.403 does require the owner or operator to be responsible for keeping the aircraft airworthy, and 91.7 assigns pilots the responsibility for determining whether the aircraft is safe to fly.

Where the issue gets challenging is when an aircraft operator is conducting an operation that could be questionable in terms of whether it is a Part 91 or Part 135 flight. According to attorney Joe Lamonaca, who teaches a class about regulatory issues at FlightSafety International’s Wilmington, Del. learning center, a large number of Part 91 operators are risking running afoul of FAA requirements in the way that they operate.

Lamonaca points to Operations Specification A008, which applies to Part 135 charter operators. A careful reading of the OpSpec shows how some Part 91 operations might be considered a Part 135 operation, he explained. Consider a traditional Part 91 operation where a company owns a jet and has its own flight department. It would be questionable if that company were to accept money for flying someone outside the company, as would be the acceptance of money for lending the airplane to another company. “You leave the realm of [Part] 91,” he said, “and say, ‘Should this be [Part] 135. Are they using [Part] 91 to shield themselves?’”

Lamonaca recently had a client with a Learjet 55 who wanted to lease the airplane to another company, but using the client’s pilots. Not only are there liability questions because the second company doesn’t have insurance, but the leased operation wouldn’t be Part 91, according to Lamonaca.

Those operators that are required to submit leasing documents to the FAA should be careful, Lamonaca warned, because the agency is reviewing those leases to see if operators are complying with regulations. The best way to prevent the possibility of flying illegal charters is to use the guidance in A008 to avoid potential problems. “Read the OpSpec,” he said. “You’ve got to know what 135 is and what’s required and work backwards.”

Aviation consultant Bill Quinn is also monitoring these issues to keep his clients safe and compliant, but mostly for owners who choose to have their aircraft managed. “The issue of a fully managed airplane to me is something that has a little bit of gray in it,” he said.

Quinn recommends that owners of managed aircraft conduct all of their flights under Part 135. “It’s cheap insurance.” The added cost for a management client is just the 7.5-percent federal excise tax for Part 135 flights.

FAA interest in operational control for Part 91 does not surprise Quinn. For an aircraft owner, he said, “I think there is a cavernous gap. Who is in operational control?” Do owners of managed aircraft, or any aircraft, understand their responsibilities and know the difference between who has operational control when a flight is flown under Part 135 versus 91?

The issue gets confusing for the flight crew, too. If the aircraft is used for both Part 91 and 135 flights, he said, “now you’ve burdened the crew with maintaining awareness of the difference in the regulatory format. If the crew is not employed by the management company, that makes it even more complicated.”

Quinn isn’t worried that the FAA will focus on traditional Part 91 flight departments that don’t have a relationship with a management company. “Part 91 operations are pretty simple,” he said, “and the operational control issues are pretty implicit. In the [Part] 91 world, if you fly for your own company [your employer], you’ll be fine. There’s no format for the FAA to do anything. If anybody is concerned about FAA people showing up in hangars, don’t worry. They have enough to deal with.”

Ambiguous Operations
Owners’ relationships with management companies are changing, Quinn said. “In the past, management companies wanted to be careful not to take on operational control because it’s a liability. But today we say we prefer them to have complete operational control. It is a benefit to the owner.”

To clarify this situation, the FAA could add another tier to operational control, extending the requirements of Part 91 Subpart K to management companies, under a new set of regulations. “In my opinion,” Quinn said, “the FAA will probably use much, if not all, of the language in 91.1009, 91.1011 and 91.1013 to cast the basic framework for defining operational control responsibilities for aircraft operated under the auspices of Part 91, which would not be a bad thing. It basically delineates who has operational control. And it allows the FAA to have a foundation of who to turn to.”

Asked if these regulations could form a new subpart of Part 91 covering management companies, Quinn said, “Absolutely. The handwriting is on the wall.”
An industry expert with long experience in the charter/management business said that he asked the FAA if his company could “lead an industry effort to bring large management companies under greater regulation, similar to what Subpart K did for the fractional industry. The FAA never showed any interest in this concept,” he said.
“What the management industry really needs is a ‘Subpart K’ for management companies, which would allow the company to perform certain functions on behalf of the owner and not face the risk of being deemed to have assumed operational control. If you read the existing Subpart K carefully, this is exactly what it was intended to do for the fractional industry, which was then operating under Part 91.”

Mike Nichols, NBAA vice president of operations, education and economics, agrees that the FAA might have some concerns about aircraft management companies and emphasizes that the owner has an obligation to learn and understand the rules. He wonders whether, if an FAA inspector asks an aircraft owner whose airplane is used for Part 135 and 91 flights who has operational control over a specific flight, the owner knows that the Part 135 operator is responsible during charter flights and that the owner is responsible for Part 91 flights.

“If you’re an owner and have your airplane under management,” he said, “you have to be an educated consumer.” Even if the owner delegates many responsibilities of the operation of the aircraft to the management company, that owner should be aware of how the manager is complying with the regulations, making sure the airplane is airworthy, pilots are properly trained with valid medicals and current line checks. “As an owner you can delegate,” he said, “but a good consumer would make sure it’s actually happening.”

Nichols added, however, that the FAA has indicated that it doesn’t plan to pursue regulation of management companies. In a statement provided to AIN, NBAA recommended the following to help operators steer clear of problems with the FAA:
“NBAA urges all aircraft owners and aircraft management companies to ensure compliance with all regulations and to ensure adequate operational control procedures are in place. NBAA also urges that aircraft owners be fully aware of their responsibilities and liabilities when the aircraft is under a management company arrangement. The FAA can and may take enforcement action against an aircraft owner if a flight is conducted illegally, and the FAA can and may take action against an aircraft management company that should be operating flights (even aircraft owner flights) under Part 135, but is not.”

Concluded Nichols, “It’s really an education issue.” To that end, the association offers a two-day tax and regulatory seminar that covers regulatory topics that help attendees understand these issues. The seminar is also available as a video series on CD-ROM.