TRANSITIONING OF PREVIOUSLY OWNED AIRCRAFT MAY BENEFIT FROM RELIANCE ON EXPERTS IN THE REGULATORY PROCESS

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ARTICLE:  Embraer Banks on US Sales Surge for Regional Jets

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Airlines “cascading” their equipment is a repeated phenomena in the decades of aviation history. DC-3s were passed down from the majors to the secondary airlines. The regional carriers were the product of the trunklines’ upgrading their fleets and the subsequent use of the Convair aircraft by these companies seeking to serve smaller markets. Typically the original operator depreciated the value of the vehicles and the cost to the downstream owner/lessee was drastically lower than the OEM’s initial sticker price. This financial cascading allowed the secondary user to position this equipment in new markets.

The RJs are being subjected to the same transformation. The hub carriers paid a premium for these new airplanes that could overfly competitors’ hubs and steal traffic from distant traffic sources. These new aircraft were compelled to fly long hauls to cover the economics of their purchase price.

Embraer’s announcement that it expects to market its returned RJs in the US may engender this same phenomena. Local entrepreneurs may acquire these still serviceable vehicles in innovative ways. The domestic travel markets may be stimulated by these new endeavors.

Money plus aircraft does not equal an authorized carrier. There are substantial regulatory hurdles to meet before a new airline receives the privilege to sell seats (the DoT grants certificates as a prerequisite) and the ability to operate their aircraft (the FAA must approve the company, its people, fleet and procedures). The government severely scrutinizes the application and requires submission of substantial information about the finances, management, airworthiness of the planes, safety of their procedures and more. The process is iterative with each set of data causing the regulators to ask more.

This is not a procedure for the faint of heart and unsure responses will likely cause further delays. The FAA has recognized that their labyrinth is laborious and recommends that an applicant consider seeking help from organizations which have demonstrated competence to assist in the certification process. JDA is one of several companies which the FAA has found to be qualified for such support (http://jdasolutions.aero/services/faa-certification.php).

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