FAA Implementing New Policy on Operational Control for Charter Operators
The FAA has begun implementing a new policy to closely scrutinize the business arrangements between business aircraft owners and charter managers that operate aircraft under Part 135 of the Federal Aviation Regulations (FAR). While the basic policy should not have been a surprise to Part 135 operators, the guidance issued with the policy has caused concerns in the industry. The early stages of implementation have caused significant problems for some operators and the owners whose aircraft they operate.
The New Policy on Operational Control
In late December 2006, the Flight Standards Service at FAA headquarters issued guidance to the field, which included a final form for OPSPEC A008, dealing with operational control. Subsequently, Flight Standards District Offices (FSDO) responsible for overseeing Part 135 operators issued notices to the operators regarding compliance with the new OPSPEC A008 within 60 days.
While the new OPSPEC A008 was not unexpected, the accompanying guidance differs in some significant respects from what the charter management industry expected, and makes questionable certain common practices believed to be acceptable. For example, the guidance leaves considerable uncertainty as to whether or under what conditions an aircraft owner can employ pilots or pay the wages of designated pilots employed by a Part 135 operator. It implies that certain restrictions commonly found in insurance and lien documents may cause an operator not to have “operational control” of an aircraft. Further, given the considerable dialogue between the FAA and industry prior to issuance, notably absent are examples of relationships that would be acceptable in the context of charter management arrangements.
A related notice issued in mid-December 2006 requires that FAA headquarters sign-off on any addition of a new aircraft to any Part 135 operator’s certificate. While it appears that headquarters sign-off was intended to provide consistent and fair review, at least initially, this has caused delays for some charter operators seeking to add aircraft to their certificates.
In January 2007, FSDOs began actively reviewing the OPSPEC with their operators. This may include a detailed review of existing charter management arrangements. And given the language in OPSPEC A008 and accompanying guidance, some operators are being asked to revise their relationships with customers. The National Business Aviation Association (NBAA) requested that the OPSPEC and guidance be rescinded, pending revision of the guidance. While this is unlikely, the FAA will probably issue additional clarifications to this policy in the near future.
Until and unless further guidance comes down from FAA headquarters, charter operators need to work diligently to comply with OPSPEC A008. In particular, lease and charter management agreements between owners and managers should be carefully written to comply with A008, and existing arrangements may need to be amended or renegotiated.