GRAY CHARTER MARKET HARD TO DETECT AND DETER
EDUCATION EFFORTS NUMEROUS; CIVIL PENALTIES ADEQUATE PR?
UNSURE ABOUT YOUR OPS? AUDIT AND/OR UPGRADE?
Below is the singular press coverage of a quarter million dollar civil penalty judgment against illegal dry leases. Neither the FAA nor Fly Smarter issued a national press release as a red flag for those willing to risk such penalties for such hidden transactions. There have been a number of actions (perhaps not a large enough numbers and/or adequate exposure) against what is known as gray market charters (click on the images to reach the full stories) :
In contrast, the FAA has issued frequent press releases about unruly behavior civil penalties!!!
This nefarious market is a virtually invisible practice. Usually there are no signs hung on the aircraft signifying that a flight is for revenue. Ramp talk does not usually include such admissions. The below text, drawn from the website of the company assessed the $239,872 fine, inaptly recites the distinction between legal and illegal. Yet, the facts as proved in court showed that the company did not come close to complying with any of the tests.
The owner of the sanctioned entity had 35 years of experience and he still chose to take the shortcut.
These efforts at educating the malfeasants do not appear to have had significant impact (this guarded opinion reflects that the illegal activities are difficult to detect).
- The FAA’s Press Office should consider a Gray Market campaign of a magnitude equal to the unruly passengers messaging. Publicizing massive civil penalties are likely to get the attention of these (mostly wealthy) potential perpetrators.
- Anyone, owning a capital asset of the value of these aircraft, should consider an audit of the terms and practices used in “leasing” plane(s). If added revenue better fits your business model, it may be worthwhile to upgrade your organization to a higher level of safety.
Ascent Aviation Solutions LLC and its owner have been ordered to pay nearly $240,000 in penalties for violating safety regulations, announced acting U.S. Attorney Jennifer B. Lowery.
Michael King had been operating the Webster-based company as a direct air carrier without the necessary FAA certification. A direct air carrier is
one who provides, or offers to provide, air transportation
who maintains control over the operational functions performed in providing the transportation.
In order to operate as a direct air carrier, one must hold an FAA-issued certificate after demonstrating they meet the requisite requirements.
The jury heard that Ascent used what is known in the industry as a “dry lease” to circumvent the FAA requirements for direct air carriers. Under such lease, the lessee simply leases the equipment and is responsible for all aspects of operational control of the plane.
Authorities learned of the illegal charter operation and checked one of the flights. At that time, they found evidence of a sham lease agreement between themselves and an unsuspecting third party.
That party did not have operational control of the plane. Testimony revealed he only paid Ascent to fly him from one city to another. The jury heard Ascent retained operational control of the aircraft meaning Ascent, not the passenger, handled all flight logistics including hiring the pilots.
Further investigation revealed King and Ascent had operated 14 unregulated charter flights which all had the potential to endanger public safety. The jury ultimately found King and his company liable for violating 14 FAA regulations, including one for the careless and reckless operation of a plane. They were ordered to pay $239,872.
The FAA conducted the investigation. Assistant U.S. Attorneys Ariel N. Wiley, Julie Redlinger and Keith Wyatt represented the United States during the proceedings.
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