Avoid Illegal Charter Continued from page 25 “The insurance underwriters in particular are starting to pay attention to illegal charter activity. It’s been a very fluid, soft market and they’ve had to be competitive with their quotes. Now it’s hardened up, and they’re getting very strict on pilot requirements, how many leases are on an aircraft, who’s flying it, and taking a closer look at what’s happening to an aircraft.” Perhaps most importantly, the AvoidIllegalCharter.com site includes a What FAA Inspectors Need to Know about Illegal Charter fact sheet specifically outlining red flag scenarios. They include aircraft operators with multiple interchange agreements among a significant number of clients and aircraft, numerous short-term dry lease agreements, failure to submit aircraft lease agreements to the FSDO in accordance with truth-in-leasing requirements, for- hire flights on an aircraft an operator is not authorized to fly commercially, and failure to collect and remit Federal Excise Taxes for charter operations. “One focus has been on educating the FAA on what’s been taking place out in the market, the abuses that have been happening, and the risks involved in it, to bring them up to snuff on what’s been going on,” Waguespack said. “And it’s not just the FAA. It’s been a multipronged approach with the FAA and other agen- cies including the Department of Transportation and Department of Homeland Security, as well as the local FSDOs. We’ve been getting information out to consum- ers and at the same time educating these agencies to understand how dry leasing has been taken advantage of and built to scale while no one was watching. In fairness to the FAA, they didn’t see this as being a huge problem as it was developing. Over 10 years, they had around 120 reports to the hotline; that’s nothing. It’s really in the last few years that we’ve seen a big rise in illegal charter activity and really come to understand some of the risks around it. We’re seeing a rise in the hotline calls and we know we’re only getting a fraction of the calls, because the rest are going to the FSDOs. All of these challenges are truly an opportunity for this industry to step up, work better with the regulators, and protect consumers. It’s not easy, but I think it’s a great opportunity, and the FAA is listening.” Waguespack said he pushes back against the sugges- tion that illegal charter activity is merely the result of innovation in the market. “A lot of people say, ‘Oh, this is going to stifle growth if we crack down on this.’ No. Getting into a question- able operation doesn’t always mean happy customers, just because one guy is saving a buck or making a buck,” Waguespack said. “People tend to think, by playing within the regulations, you can’t be innovative. You absolutely can be, and that’s why I continue to challenge operators to step up and give the consumers what they’re looking for, within the framework of the Part 135 space. Just look at how the FAA has worked to incorporate and approve drone package delivery operations under Part 135. I’m all about transitioning into new times and not being the old-school medallion taxi cabs that get replaced by some new model, but I’m also interested in not having fatalities. I think it’s a gross miscalculation to think that you can have willy-nilly innovation without a regulatory framework that is equitably applied, or that the aviation market should be wild and untamed. I don’t believe that. I want to keep it wide open—you can do that, be innova- tive—just adhere to the regulations.” AvoidIllegalCharter.com 26 Aviation Business Journal | Winter 2019/2020
