August 28, 2023

FAA to Review Scope of Authorized On-Demand Air Services

Holland & Knight Aviation Law Blog
Anita M. Mosner | Ben Slocum
Aviation Law Blog

The Federal Aviation Administration (FAA) has issued an advance copy of its Notice of Intent (Notice) to initiate a rulemaking to reconsider the way in which the FAA regulates certain air carriers that perform public charter operations. The Notice is expected to be published in the Federal Register within the next day or so. Once published, interested parties will have 45 days from the date of publication to submit comments regarding the Notice.

In the United States, scheduled air carrier service generally is performed pursuant to the regulations contained in 14 CFR Part 121, which apply rigorous standards to pilot and crew member training and staffing, as well as safety management and oversight. By contrast, the U.S. Department of Transportation (DOT) allows public charter flights using aircraft with 30 or fewer seats to be considered "on-demand operations," enabling them to be conducted under the FAA's less complex regulations contained in 14 CFR Part 135. The last several years, however, have seen a significant increase in the number of public charter flights operated with aircraft with fewer than 30 seats.

Citing the size, scope, frequency and complexity of these public charter operations being conducted as "on demand" under Part 135, the FAA has been pressed by certain labor groups and larger carriers to reconsider its regulatory treatment of these operations on the grounds that some of these services are indistinguishable from scheduled operations. If these regulatory changes are implemented, some carriers operating as public charters would be forced to transition from operating under Part 135 to the more complex operating requirements of Part 121. Accordingly, in order to inform its rulemaking, the FAA is seeking comments on:

  • the potential impacts of regulatory changes on competition, innovation and emerging technologies
  • whether alternative regulatory structures exist that could apply to the provision of commercial passenger services under a separate regime from Parts 121 and 135
  • how much time is reasonably needed to allow affected carriers to obtain the certificates and authorizations needed to transition to Part 121 operations, and
  • any additional topics or information FAA should consider

This issue has drawn close scrutiny in part because of the dramatic growth of the public charter sector in the COVID-19 (and post-COVID-19) environment, as many public charter carriers operate from airport fixed-base operators (FBOs), and not from standard airport terminals, which are subject to Transportation Security Administration (TSA) screening. In the last 12-18 months, large public charter carriers have grown in size, and have begun to compete more directly with the larger scheduled carriers. Moreover, certain labor groups have begun to argue that Part 121 operators are being subjected to "unfair" competition with carriers that are permitted to operate under less costly (and exacting) standards. Countering these arguments is the contention that the current regime enables carriers to serve "niche" markets that may be too small or too seasonal to sustain more conventional scheduled air operations, and that limiting the scope of public charter operations will unduly stifle innovation.

Holland & Knight's Aviation Team will be closely monitoring this issue. Please let us know if you require any additional information regarding this matter, or if you need assistance in drafting comments in response to the FAA Notice.

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