NBAA Convention News

NATA Fires Latest Salvo in War on Illegal Charter

 - October 16, 2019, 3:00 PM
With the proliferation of new business models designed to increase access to business aviation for more passengers, the lines of what is legal have blurred dangerously. NATA’s upgraded “Avoid Illegal Charter” website attacks the problem, head on.

The National Air Transportation Association (NATA) has deployed an upgraded weapon in an industry-wide effort to combat illegal charter, a practice business aviation leaders say threatens passenger safety and gives legitimate providers a bad name while undermining their financial viability.

The association unveiled in August a revamped “Avoid Illegal Charter” website with new tools to “empower” consumers with the ability to look up charter operators, access fact sheets, and report questionable operations.

Rolling out the refreshed site, NATA executives highlighted a need to ensure safer skies, as new models push boundaries of what is legal.

In the past, new models have come to fruition—from the advent of aircraft management more than 50 years ago to fractional ownership, and more recently, jet cards, charter empty legs, and per-seat models—noted Jacqueline Rosser, senior advisor of regulatory affairs–air charter, for NATA. “In each of those cases, the boundary…has been more between 'when are we crossing the line from the on-demand framework into the scheduled realm?” Rosser said. “We’ve managed to address all of those issues within the industry and get clarity on how you can do certain things where other certifications are required.”

But, she added: that focus now appears to be shifting to what defines a private operation and a commercial operation. “Our primary goal from the organizational standpoint, the air charter standpoint, is to establish clarity,” she said.

Entities are “popping up, commercializing the [Part] 91 space,” Ryan Waguespack, v-p of aircraft management, air charter services, and MROs, agreed, adding, “It is a real concern, because the general flying public does not truly understand the risks they are getting into. You are not getting into an Uber when you get into an aircraft.”

Compounding the concern is a lack of clarity on not only the definition of an illegal charter but on who is actually operating the flights.

Unreported Incidents

NATA recently surveyed operators about their encounters with illegal operations and how it is affecting their business, Waguespack said, noting that one clear trend stands out: some 70 percent of operators do not report their encounters with illegal operations. “That was kind of staggering to me,” he said. Those respondents listed a number of reasons for this, but mostly out of concerns that the activity is in their backyard and, being in a small industry, they know it is going to come back on the legal entity. "They are concerned about losing their consumer, they are concerned about the FAA, and they don’t want to be the squeaky wheel.”

The survey, which ran through August, received a “tremendous” response, he said. NATA plans to share the data with the FAA and the Department of Transportation to provide a picture of what is happening. “The effort really needs to be 'we want to keep our skies safe.' We are all about innovation. We’re all about change,” he said, but added, “We are a firm believer you can be innovative and still adhere to the regs.”

This comes back to education and resources, he said. The association a little more than a year ago established a task force focused on education about illegal charter. And the illegal charter website is designed to build on that. “You can look up a charter operator, you can submit a questionable operation—we’ve had a number of those—or you can call the illegal charter hotline,” he said. “We’re trying really to push out there how charter brokers, other operators, and end-users can look up and see if the aircraft they are engaging is on a charter certificate.”

The website aggregates numerous FAA lists to enable a search, by operator or tail number, of legal operations. That list is updated quarterly, but NATA’s goal is to update it monthly. Operators further are able to fill out a form through the website to report potential illegal charter activity. In addition, the website houses fact sheets with data on operations and provides operators with templates they can show to prospective customers that explain the complexities of the industry.

Partnering with the FAA

NATA further took over the illegal charter hotline (888-SKY-FLT1), which it is using to gather data and pass along to the FAA’s special investigative team in Fort Worth, Texas. Noting that calls in the past have been somewhat vague, he said, “The biggest challenge is to gather as much data as possible.”

Another key component of this effort is working with the FAA. What started as a group of a little more than a dozen Flight Standards District Office (FSDO) officials has now swelled to close to 90 who are actively engaged and speaking regularly. NATA has collaborated with the FAA on gatherings between FSDO officials and operators to discuss what has been happening. These have taken place in South Carolina, Indiana, Tennessee, and Florida. Several more are in the works, with meetings targeted to possibly take place in Texas, California, and Iowa, among other locations. The FSDO managers also are discussing holding a larger event next year to bring all interested parties together.

“The operators are really enjoying getting that one-on-one time with their inspectors and the leadership within the FSDOs,” Waguespack said. “But also, it is a good opportunity for the FSDOs to truly learn what is happening in the 91 space—what is behind these doors.”

Additionally, at the behest of Congress, the FAA has nearly completed guidance on one area that has been blurring the lines of commercial and private operations, flight-sharing, Rosser said. The Government Accountability Office further has been working on a report on this activity.

“As long as we continue to see cases of suspected illegal charter, more must be done to sound the alarm and educate the industry and public, at all levels, of the inherent risks and dangers of these activities,” added Waguespack. “We are pleased to partner with more and more FAA field offices in supporting events designed to highlight these potentially life-saving messages in their particular region. Together we will make a greater impact.”

NATA formed its Illegal Charter Task Force in May 2018 in response to growing complaints about the extent and impact of illegal charter activity heard at its ongoing nationwide town hall-style meetings. Europe’s Air Charter Association (formerly BACA, the Baltic Air Charter Association) teamed with the European Business Aviation Association that same month in a complementary initiative.

No one knows the extent of the illegal activity or its economic impact, but the consensus is that it’s increasing, spurred by the burgeoning variety of access schemes and lack of regulatory enforcement. Savvy consumers can spot clear warning signs, said John McGraw, the association’s director of regulatory affairs: “When people book a charter flight and see a price that’s unbelievably low, that should raise a red flag.”

In addition to the industry’s longstanding concern about the safety threat illegal charter represents, today the industry’s economic survival is also front and center. Ignoring Part 135’s operational, crewing, maintenance, and other regulatory requirements gives an unfair pricing advantage to rule-breakers, stress industry spokespersons.

“If we’re just going to accept this is allowed to happen, what’s the point of having an AOC [Aircraft Operator Certificate]?,” asked Dave Edwards, the Air Charter Association’s CEO. “There isn’t any benefit if people are just able to get away with” operating illegally.

Industry authorities believe both providers and consumers of illegal charter fall into three categories: “The careless, the clueless, and the criminal,” said McGraw, with most in the first two ranks. “We think customers are not sure what requirements [charter providers] are meeting or ignoring,” he said. As for providers, “The majority of [illegal] operators are in the careless and clueless categories. They aren’t completely aware of the requirements and don’t dig in [to the regulations] as far as they should.”

Given the dizzying profusion of new access plans, even professionals “can’t always tell” whether a novel low-cost offering is legal, McGraw said. “It’s complicated.”

“This is why we call it gray-market charter,” Edwards added. “Sometimes there isn’t a clear description [of questionable activity] for regulators” to determine their legality, the kind of information gap NATA hopes to fill with its enhanced reporting site.

Aircraft owners face danger, as well: Those who lease or otherwise provide an aircraft subsequently deployed for illegal charters—a not uncommon source of such lift, according to authorities—may be liable for financial and other penalties, including uncollected Federal Excise Tax, and liability in the event of an accident.

Meanwhile, the FAA has begun using its enforcement powers, and in its own salvo, in July 2018 hit a Michigan-based real estate firm with a proposed $3.3 million fine for charging passengers more than the expense-sharing allowed on its Part 91 flights.