FAA Dragnet on the Gray Market

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Press Release – FAA Proposes $624,000 Civil Penalty Against Steele Aviation of Beverly Hills, Calif.

Gray Market involves Charters without authority

NATA sees this as major threat to legal operations

Hard to Detect, FAA Dragnet

Major Actions send messages

The FAA’s issuance of a Civil Penalty for $624,000, in the past, would not have received much attention because the dollar amount demanded as a penalty would have been dwarfed by the money cited in other FAA letters. In these days of compliance and cooperation, any request for payment is unusual and news worthy.

The aspect of the FAA Press release which moves this case to a headline is the allegation that Steele Aviation of Beverly Hills and Van Nuys Airport, CA [1]has been operating “gray market” charters. That issue has been a hot button item for the National Air Transportation Association, which represents members that meet the requirements of Part 135;so, this action is significant for this organization because it sends a message that these rules will be strictly enforced.

This is a second major FAA action involving uncertificated entities offering flight for compensation or hire. The first entailed a civil penalty letter which the complainant did not accept and the matter is now before a US District Court for resolution.

There has been some concern that a recent statement by a senior FAA executive asked somewhat obliquely “Of late there’s been a reexamination of how much regulation is appropriate.”

Part of the reason that this practice has been labeled “gray market” is that it is difficult to detect. The transactions are between two private entities, sometimes between a friend who owns a plane and a friend who wants to fly on it. The aircraft owner or occasionally an “agent” is smart enough not to publicize or advertise the availability of these uncertificated operations. Generally, the unregulated flights avoid safety regulations and thus are cheaper.

To detect these illegal operations, the FAA must have created an aviation dragnet like that which was used in WWII to interdict enemy aircraft.

Increased detection and subsequent enforcement will be appreciated by all of the Part 135 operators which are complying.

[1] “All charter flights are operated on our 10 or more worldwide FAA air carrier certificate M2GA869Y. Since being issued in 1995 there has not been one violation, incident, or accident.”. https://www.steeleaviation.com/aircraft-safety/


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