The Problem of Illegal Charter in the On-Demand Air Transportation Industry Aircraft “Damp” Leasing: Operators Who Use Aircraft “Dry” Leases that Aren’t So Dry and Stray into the World of Illegal Charter – or an “Operations under Part 134 1/2” Redux BY DAVID T. NORTON This article follows another that appeared in the First Quarter 2017 edition of the Aviation Business Journal, which discussed the “oper- ational control” of aircraft under the Federal Aviation Administration’s (FAA) federal aviation regulations (the FAR). That article noted a number of problems that can arise from confusion over the concept of operational control, sometimes leading to improper “Part 134 ½” operations, such as using a sole- purpose “flight department com- pany” to be the liability-shielding operator of an aircraft under 14 C.F.R. Part 91 for the benefit of that company’s members when those flights should legally be conducted under 14 C.F.R. Part 135. This cur- rent article focuses on another type of operation that is also intimately intertwined with the concept of operational control—the non-com- mercial, or “dry” leasing, of aircraft. © 2018 All Rights Reserved A ircraft dry leasing can be a tricky subject, but it is not inherently bad. Dry leasing is, in fact, how the vast majority of charter operators flying under Part 135 gain access to most, if not all, of their fleets. They generally don’t own all of their aircraft, but instead obtain them under dry leases from owners who want those aircraft to be oper- ated under Part 135 for any number of valid reasons. Moreover, when set up correctly, dry leasing is also an important tool for the appropriate non-commercial use of aircraft in the business aviation community. The conventional wisdom, how- ever, is that a growing number of individuals or companies are setting up what are purported to be Part 91 dry leases, when they are in fact “wet” leases that should be operated under Part 135. (Continue read- ing for definitions and distinctions between the two types of leases.) Why is this happening? Consider that if your neighbor down hangar row is operating their own flights under a Part 91 dry lease, then that operator does not need to obtain an air carrier certificate and fly the aircraft under Part 135. That operator can instead conduct flights that cost less and are less restrictive than the flights you are conducting under the author- ity of your air carrier certificate and in full compliance with Part 135. Aviation Business Journal | 1st Quarter 2018 So, what is the big deal? Well, if that operator down the tarmac has set up a true dry lease and is flying its own employees and guests as passengers on the aircraft in support of its own busi- ness operations as a legal non-com- mercial operator under Part 91, then it is not a big deal. But, if that opera- tor is instead using what purports to be a dry lease in order to conduct a cheaper, more flexible flight under Part 91, but that flight is, in fact, an illegal charter operation for the benefit of unsuspecting third-party passen- gers that should by conducted under Part 135 instead, then it is a very big deal because: (a) it leads to significant passenger-safety and regulatory non- compliance concerns, and (b) it creates an extremely unfair playing field for those charter operators who do choose to actually comply with the law. “DRY” LEASES, “WET” LEASES, AND “ILLEGAL CHARTER” When you hear that an aircraft operator has a lot of dry leasing going on (or when you want to do your own dry leasing), how do you know whether true non-commercial dry leases are in place, or what is really going on is consistent with illegal charter? The answer to that ques- tion is really based on an analysis of a series of underlying questions. Continued on page 29 27
1Q 2018
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