Some ideas about how to stop Illegal Part 91Charters

dry lease distinction
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 Illegal Part 91 Charters are increasing

 Difficult for FAA to Detect

 Some suggestions as to how to Deter

NATA Appeals To FAA To Take On Illegal Charters

One of the jobs of an association is to listen to your members. NATA did and learned something not immediately apparent to the residents of DC. There is a problem out there in the marketplace. Whether through ignorance or by intent, a significant number of Part 91 airplanes are being “leased” to someone who would like to operate under those less stringent rules. That’s fine so long as the transaction (both in paper and in reality) meets the detailed and stringent rules which differentiate between dry and wet leases.

The transfer of the right to use an airplane under Part 91 simply put involves JUST the airplane. Only a certificated entity may “lease” a plane, maintain operational control, crew the plane with lessor pilots and rely on the certificated operator’s insurance. Such a lease is known as a “wet” lease and the lessor must hold an FAA certificate.

 

The scriveners of the aviation world have learned to write a document which only a legal expert can parse such an ersatz paper and determine that it violates these strictures. {Technically, lease documents must be filed with the local FSDO; many times, the parties “forgot,” thus reducing the likelihood of discovery by the FAA.} In part, the detection of an impermissible deal involves looking beyond the paper.

 

The proof needed to find that the Part 91 flight is an illegal charter include a number of factors requiring active surveillance:

  • the lessor’s pilot(s) always fly the flight
  • the lessee does not buy insurance
  • the lessor exercises control of the operation
  • there are more than two documents which define the rights of the parties
  • many documents appear to comply with the “rules”, but reality differs significantly

 

Even before the FAA adopted its compliance policy, it was difficult to detect these sham Part 91 dry leases. As noted above, a lawyer knowledgeable about the arcane language of leases must be available. Field personnel must be skilled to assess what behaviors constitute operational control and need to observe a pattern of flights to fill in the damning details.

The FAA’s success with its compliance program relies heavily on data submitted by a certificate holder; based on that information, proactive action can be effectively and proactively initiated.  Although lessors, especially commercial, should be aware of the value of SMS, the owners of these Part 91 aircraft either intentionally or through ignorance do not bring the existence of these transactions to the FAA’s attention.

Perhaps there should be an exception to the SMS approach; it might be more effective to create one or more special teams with all of the expertise needed. They could focus on geographical areas where these illegal leases are known to proliferate. A couple of well-publicized enforcement cases would educate and/or deter these attempts to circumvent Part 135. An internet search will create a trove of possible leads.

One would hope that many of the participants in a dry lease are unaware of the requirements and a simple education program may ameliorate the problem. Another important consideration may be even more convincing. MOST INSURANCE POLICIES INCLUDE A TERM THAT RELIEVES THE CARRIER FROM LIABILITY IF THE FLIGHT VIOLATES THE FEDERAL AVIATION REGULATIONS. Maybe if the flight is a couple of ordinary folks, this exclusion would be ignored. If, however, the plane is filled with high value passengers and thus a very high liability, the insurance carrier would inform both parties that the damages will fail to them.

 

Insurance companies may be the best enforcer of the wet lease/dry lease distinction. The private parties may not be deterred by/ knowledgeable about the FAA rules and they may be willing to accept the risk of detection/civil penalties. If informed that an illegal operation could result in the insurer walking away from damages, that level of risk would likely bring this evasion to an immediate halt.


 


 

 

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