Despite all that is going on in the world, we have noticed in the past few months an uptick in the Federal Aviation Administration (the “FAA”)’s scrutiny of aircraft operations, specifically those operations that cross the border from legal Part 91 operations into “sham” dry lease or illegal charter territory. Because of the FAA’s noticeably increased interest in aircraft leasing schemes and operational structures, a few of our clients have asked us to confirm the compliance of their aircraft operations, and it may be wise for you to do the same.
Warning to Pilots
Teeing off its recent campaign against air carriage for hire without proper commercial certification under Part 119, the FAA issued an Informational Letter to Pilots on May 22, 2020, reminding pilots not to fly planes for compensation or hire without proper commercial certification and cautioning pilots against their participation in a non-compliant dry lease and flight-sharing structures. The Letter serves as a clear warning to pilots that their participation in any operation that does not pass muster under current FAA regulations will not be taken lightly. In some instances, pilots will be deemed by the FAA to be acting in concert with aircraft owners and operators to circumvent FAA regulations, subjecting pilots to the possible suspension or revocation of their pilot’s license and other sanctions, such as a monetary civil penalty.
In the Letter, the FAA shines a light on the current trend in the transportation industry of connecting passengers directly with private operators and cutting out the middlemen (think UberJets). This trend has only exacerbated the FAA’s concerns with uncertificated air transportation for compensation. The provision of both an aircraft and a pilot to a customer seeking and willing to pay for air transportation has never been easier as a result of the connectivity provided by mobile phones and the internet.
Recent Penalties
The letter follows the FAA’s levy of $5.89 million civil penalties against Humes McCoy Aviation of Atlanta, GA, on May 20, 2020, for allegedly conducting hundreds of illegal charter flights from 2017 to 2019 without the proper commercial operating certificate. Just prior to that, on April 3, 2020, the FAA levied a $1.5 million civil penalty against B E L Aviation of Odessa, TX, for allegedly conducting just over a hundred flights without the commercial operating certificate it should have had for its operations. Clearly, the FAA is ramping up its efforts to spotlight illegal aircraft operations, including but not limited to so-called “sham” dry lease, in order to ensure that pilots and aircraft operators are properly certificated under FAA regulations to conduct the operations they are, as a matter of fact, conducting.
For the reasons stated above, any party involved in the operation of an aircraft under a dry lease, fractional ownership, or time sharing arrangement, whether that party is the owner, manager, pilot of the aircraft, or otherwise, would be wise to have legal counsel review the aircraft’s current operation to confirm it complies with the FAA’s regulations and guidance thereunder.
If you have any questions or would like to discuss the structure of your current aircraft operation, including whether it is compliant with FAA regulations, please do not hesitate to reach out to Brennan Block.
This blog is for general informational purposes only and should not be construed or relied upon for legal advice.
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