Regulation of Fractional Aircraft Ownership Programs and On-Demand Operations

Federal RegisterSep 17, 2003

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Parts 21, 61, 91, 119, 125, 135, and 142

[Docket No. FAA-2001-10047; Amdt. Nos. 21-84, 61-109, 91-274, 119-7, 125-44, 135-82, 142-5]

RIN 2120-AH06

Regulation of Fractional Aircraft Ownership Programs and On-Demand Operations

AGENCY:

Federal Aviation Administration (FAA), DOT.

ACTION:

Final rule.

SUMMARY:

The Federal Aviation Administration (FAA) is updating and revising the regulations governing operations of aircraft in fractional ownership programs. The FAA has determined that the current regulations do not adequately define fractional ownership programs and do not clearly allocate responsibility and authority for safety and compliance with the regulations. This final rule defines fractional ownership programs and their various participants, allocates responsibility and authority for safety of flight operations for purposes of compliance with the regulations, and ensures that fractional ownership program aircraft operations will maintain a high level of safety. These regulations provide a level of safety for fractional ownership programs equivalent to certain regulations that apply to on-demand operators. The rule also revises some requirements that apply to on-demand operators that meet certain criteria. The revisions permit these operators to follow an alternate means of compliance for certain commercial operations.

EFFECTIVE DATE:

November 17, 2003. A person who conducted flights before November 17, 2003 under a program that meets the definition of a fractional ownership program in § 91.1001 may not conduct such flights after December 17, 2004 unless it has obtained management specifications under this final rule.

FOR FURTHER INFORMATION CONTACT:

Katherine Hakala Perfetti, Flight Standards Service (AFS-200), Federal Aviation Administration, 800 Independence Avenue, SW., Washington, DC 20591, telephone (202) 267-3760, email:

katherine.perfetti@faa.gov.

SUPPLEMENTARY INFORMATION:

General Abbreviations Used in This Preamble

AFM Aircraft Flight Manual

ATC Air Traffic Control

ATP Airline Transport Pilot

CAMP Continuous Airworthiness Maintenance Program

DOM Director of Maintenance

FACA Federal Advisory Committee Act

FL Flight Level

FOARC Fractional Ownership Aviation Rulemaking Committee

FSDO Flight Standards District Office

GPWS Ground Proximity Warning System

ICAO International Civil Aviation Organization

IFR Instrument Flight Rules

IMC Instrument Meteorological Conditions

MEL Minimum Equipment List

NEPA National Environmental Policy Act

NM Nautical Miles

NTSB National Transportation Safety Board

PIC Pilot in Command

RVSM Reduced Vertical Separation Minimum Airspace

SIC Second in Command

STC Supplemental Type Certificate

TCAS Traffic Alert and Collision Avoidance System

VFR Visual Flight Rules

VMC Visual Meteorological Conditions

REF

Designated Landing Approach Speed

History and Background

In 1986, Executive Jet Aviation, Inc. (EJA), created a new program that offered aircraft owners increased flexibility in the ownership and operation of aircraft by individuals and corporations. The program offered shared aircraft ownership (fractional ownership), and provided for the management of the aircraft by an aircraft management company. Aircraft owners participating in the program agreed to share their aircraft with others having an ownership interest in that aircraft, as well as to lease their aircraft to other owners in the program that did not have an interest in that aircraft. The aircraft owners used the common management company to maintain the aircraft and administer the leasing of the aircraft among the owners. An FAA regional determination allowed this fractional ownership program to operate under 14 CFR part 91.

Since that time, the number of companies offering fractional ownership programs has grown. During the 1990s this growth was substantial and sustained. As of early 2000, the leading fractional ownership programs managed approximately 465 aircraft on behalf of 3,446 shareowners. By the end of 2001 there were over 3,500 owners of more than 5,000 shares of 650 aircraft. Growth in fractional ownership programs is expected to continue to increase.

While most fractional ownership programs are conducted under 14 CFR part 91, some are conducted under 14 CFR part 135. Of those operating under part 91, the FAA believes that most follow the “best practices” of corporate aviation. FAA and NTSB accident data for U.S.-registered turbine powered aircraft during the period from 1990—2001 shows that fractional ownership aircraft operations are conducted with a high degree of safety.

As fractional ownership programs have grown in size, complexity and number, there has been much controversy within the aviation community whether the FAA should regulate these programs under part 91 or under part 135 on-demand operations. Also, the FAA has had concerns about accountability and responsibility for compliance and about maintaining a high level of safety. Consequently, the FAA continued its analysis of the appropriate regulatory environment for these programs.

Operational Control and Regulatory Responsibility

The FAA's objective is to establish the appropriate level of regulatory oversight to ensure safe aircraft operations. The FAA regulations have always contained different levels of FAA oversight depending on operational control and compliance responsibility. Airline passengers exercise no control over and bear no responsibility for the airworthiness or operation of the aircraft on which they are passengers. The air carrier exercises control of the operation and bears responsibility for compliance with the regulations. Because the air carrier is a commercial enterprise in the business of air transportation for the public, the FAA imposes on the air carrier stringent regulations and oversight under part 121 or part 135, as appropriate.

In contrast, aircraft owners flying aboard aircraft they own or lease exercise full control over and bear full responsibility for the airworthiness and operation of their aircraft. Under these circumstances, the FAA has determined that the appropriate level of oversight is provided by the regulations in part 91, which are generally less stringent than those of part 121 or part 135. Part 91 regulations cover what is commonly called general aviation, which includes individual pilot/owner operations and corporate owner operations.

Business aviation in large and turbine-powered multiengine airplanes is regulated under part 91, subpart F. In creating subpart F (originally subpart D; 37 FR 14758, July 25, 1972), the FAA continued its long-standing policy that corporations may operate their aircraft under part 91. The FAA allowed for different arrangements in the loan,

exchange, and sharing of the aircraft. Current § 91.501(b)(4) allows a person to operate his or her aircraft “for his personal transportation, or the transportation of his guests when no charge, assessment, or fee is made for the transportation.” Current § 91.501(b)(5) allows for the carriage of “officials, employees, guests, and property of a company on an airplane operated by that company * * * when the carriage is within the scope of, and incidental to, the business of the company * * * Current § 91.501(b)(6) allows for time-sharing arrangements, interchange agreements, and joint ownership arrangements. Some of these arrangements include the use of a management company that provides maintenance and other services to the owners.

A consideration for applicability under part 91 in any of these arrangements is that the corporation cannot be established solely for the purpose of providing transportation to a parent corporation, subsidiary, or other corporation. In such a case, the corporation operating the aircraft would be in the business of transportation and would have to hold an air carrier certificate under part 121 or part 135, as appropriate.

Fractional ownership programs have some of the elements of traditional management services companies, but because of the size and complexity of today's fractional ownership programs, the part 91 rules are not adequate. The part 121 and part 135 rules are not appropriate either because those rules are directed at air carriers and other entities that hold themselves out to provide transportation to the general public.

Fractional Ownership Aviation Rulemaking Committee

In October 1999, the FAA convened a special aviation rulemaking committee, the Fractional Ownership Aviation Rulemaking Committee (FOARC), pursuant to the Administrator's authority under 49 U.S.C. 106(p)(5), to address the issues surrounding the regulation of fractional ownership program operations. Pursuant to the order of October 6, 1999, that established the FOARC, the committee's objective was to “propose such revisions to the Federal Aviation Regulations and associated guidance material as may be appropriate with respect to fractional ownership programs.”

The FOARC was comprised of 27 members selected by the FAA as representative of the various constituencies interested in regulation of fractional ownership program operations. Designated advisers and counsel assisted the FOARC.

FOARC members represented on-demand charter operators, fractional ownership program managers and owners, aircraft manufacturers, corporate flight departments, traditional aircraft management companies, aircraft financing and insurance companies, and industry trade associations. Representatives of the FAA, the U.S. Department of Transportation and foreign civil aviation authorities were also included.

The FOARC met for nine days in November and December 1999. Within the FOARC's meeting schedule, two days were set aside for public hearings to provide the public an opportunity to comment or present positions on this issue. Notice of these public meetings was provided in the

Federal Register

(64 FR 66229, November 24, 1999) and through the media. The FAA reviewed and considered all material presented by participants at the public meetings. The FOARC presented its initial recommendations to the FAA on February 23, 2000. Those recommendations provided the basis of the FAA's NPRM, published in the

Federal Register

on July 18, 2001 (66 FR 37520). The comment period for the NPRM ended on November 16, 2001. The FAA is issuing this final rule, based on the recommendations of the FOARC committee and the FAA's consideration of the public comments received on the NPRM.

Summary of Final Rule

This rule establishes a new subpart K in part 91 to cover fractional ownership operations. The new Subpart K clarifies what qualifies as a fractional ownership program, clarifies who has operational control, defines operational control responsibilities, codifies many of the “best practices” now being used voluntarily in fractional ownership programs, and incorporates many of the safety standards of part 121 and part 135. By this rulemaking, the FAA establishes safety standards to maintain the safety record of current fractional ownership programs and to ensure that new fractional ownership programs will also meet a high level of safety.

In brief, new subpart K accomplishes the following:

(1) It establishes the criteria for qualifying as a fractional ownership program.

(2) It establishes that fractional owners and the management company share operational control of the aircraft and delineates operational control responsibilities.

(3) It establishes regulatory safety standards for operations under fractional ownership programs, including management operations, maintenance, training, crewmember flight and duty requirements, and others.

This rulemaking also revises certain requirements in part 135 on-demand operations. Many of the requirements in new subpart K of part 91 are based on requirements for on-demand operations in part 135. In the process of reviewing part 135 requirements, the committee and the FAA determined that some of the current part 135 requirements needed to be updated in accordance with new technology and other changes. The FOARC studied the best practices of the fractional ownership programs to determine under what circumstances part 135 operations could use those practices as an alternate means of compliance with part 135 standards. For example, FOARC recommended that on-demand operators be allowed to land at airports without weather reporting facilities, provided the flight plan includes an alternate airport that has such facilities and they carry additional fuel to fly to that alternate airport. Further, this eligible on-demand operation must provide a 2-pilot crew with increased pilot experience and that meets crew pairing standards. In addition proving test requirements for both fractional ownership programs and part 135 on-demand operations were reviewed and amended. A proving test requirement was added for fractional ownership programs and the requirement for multiple proving tests for part 135 operations was amended.

Specific requirements in subpart K and revisions to part 135 are discussed in detail in the public comment discussion that follows.

Discussion of Public Comment

The FAA received approximately 230 comments in response to the NPRM. Approximately 60 comments specifically address a concern related to noise and environmental issues at Santa Monica airport, 30 comments are from aircraft dispatchers, and 28 comments are from individual pilots. The rest of the comments are from major industry associations, aviation companies and interested individuals. The comments can be reviewed on the Internet at

http://dms.dot.gov.

Commenter Abbreviations Used in This Preamble

ADF Airline Dispatchers Federation

AOPA Aircraft Owners and Pilots Association

Avex The New Avex, Inc.

CAA Civil Aviation Authority of the United Kingdom

EHANAC East Hampton Airport Noise Abatement Committee

EJA Executive Jet Aviation, Inc.

Flexjet Bombardier Business Jet Solutions, Inc.

GAMA General Aviation Manufacturers Association

GM General Motors Air Transportation Section

IBT International Brotherhood of Teamsters, AFL-CIO

NATA National Air Transportation Association

NBAA National Business Aviation Association

NWJ New World Jet Corporation

PASS Professional Airways Systems Specialists

SAMA Small Aircraft Manufacturers Association

Teamsters Teamsters Miscellaneous and Industrial Workers Union, Local No. 284

General Support

Several commenters express general support for the NPRM and for the work of the FOARC. Aviation Resources Management states that it fully supports the proposed rules and that the process used in their development was not only fair and impartial but was a remarkable example of accomplishment through cooperation between industry and government. Eclipse Aviation states that as a manufacturer of an aircraft that will be used extensively in fractional ownership programs, Eclipse strongly endorses the safety measures provided to the fractional customer by proposed subpart K to part 91. General Aviation Manufacturers Association (GAMA) states that as fractionally owned aircraft programs have already demonstrated their safety and efficiency while operating under part 91, it strongly supports the new rule. GAMA adds that these programs benefit the traveling public by dramatically increasing their options for air transportation and that the growth of these programs should not be hindered.

Some commenters identified specific parts of the proposed rules that they believe will be particularly effective. Robert E. Breiling Associates believes the proposed landing requirements, weather criteria for approach and departure and more realistic night operation requirements would give new flexibility to part 135 operators. These proposed requirements would not only allow them to operate to and from many other airports and runways previously not available to them. The proposed requirements would also help reduce traffic at some of the more congested airports. Alpha Flying, Inc. strongly supports the flight and duty time requirements, and runway length and weather reporting requirements in the proposed rule. Alpha believes the proposed requirements could provide relief to charter operators who have been unnecessarily burdened operationally and economically by rules that are out-of-date. Alpha believes that weather reporting services now available, vast aircraft equipment improvements and aircraft certification rule changes that have been put in place since the runway length and weather reporting rules were written justify the proposed changes.

A flight operations manager comments that it is important that the people who developed the proposed rule actively work with the FAA to develop Handbook guidance for compliance when the proposal becomes a final rule.

FAA Response:

The FAA appreciates the support of these commenters. In the final rule the FAA has tried to achieve the goals of FOARC, while carefully considering the comments from both supporters and those who oppose the FOARC proposals. After considering all the comments on the specific proposals and further research by FAA experts, the FAA has made some changes in the final rule. These changes and the reasons for each are discussed below under the specific topics.

In regard to implementation of the final rule, the FAA has set up an implementation team to plan for development of guidance material, inspector training, inspector assignment, and oversight and surveillance policies. The FAA plans to complete these products by the effective date of this rule. The FAA is committed to working closely with industry to implement this final rule.

General Opposition

Most of the commenters who state general opposition to the proposed rule take the position that fractional ownership programs are essentially on-demand operations that the FAA should regulate under part 135. Generally, these commenters believe that the Committee and the FAA fail to recognize that the program manager of a fractional ownership program is essentially promoting on-demand service. In the NPRM, the program manager is the entity that sets up a fractional ownership program and that hires an individual to run the program.

Approximately 28 commenters identify themselves as pilots with fractional ownership programs, of whom at least 10 are with EJA. Most of the pilots oppose the proposed inclusion of fractional ownership in part 91. They believe the FAA should require fractional ownership programs to operate under part 135. In addition to general opposition, some pilots made specific comments that the FAA addresses under the appropriate issue or section.

The Civil Aviation Authority of the United Kingdom (CAA) states that “. . .the proposal appears to be contrary to the provisions of the Chicago Convention which defines a commercial transport operation as an aircraft operation involving transport of passengers, cargo or mail for remuneration or hire.” The French Direction Générale de l'Aviation Civile submitted a similar comment.

One commenter cites a U.S. Federal Circuit court ruling that held a fractional ownership program to be a “commercial operation” for certain tax purposes and questions how the FAA can ignore this ruling.

Jet Sales & Services, Inc., states that the preamble states no justification to require increased regulation. This commenter states that a group of aircraft owners should have the same rights and privileges as those who can afford total and individual ownership.

While not opposing the entire NPRM, the National Transportation Safety Board (NTSB) states its concern for any part 135 changes in this rulemaking. The NTSB states that it will withhold judgment about the adequacy and appropriateness of the proposed subpart K requirements until it has had the opportunity to monitor accidents, incidents, and other developments related to fractional ownership.

Some commenters state that the FAA should issue another NPRM before issuing a final rule on fractional ownership. Commenters think this is necessary for various reasons, including the size of the NPRM and the lack of balance of the FOARC.

FAA Response:

The FAA carefully considered the question of where to place the rules governing fractional ownership programs. It studied current fractional ownership programs, finding that this segment of aviation has a very high safety record through compliance with voluntary safety standards that in many cases exceed the regulatory standards. It is the FAA's goal in this rulemaking to maintain this safety record.

In determining the appropriate regulatory part for fractional ownership programs, the FAA recognizes that fractional ownership programs contain elements of private ownership and use of a management company that are similar to a traditional management company operation under part 91. The

role of the management company is to provide aviation expertise and services to the owner and the program manager does not hold out to the public to provide air transportation. Fractional ownership programs differ from the traditional management company model in the size and complexity of the program operations, reducing the individual owner's ability to exercise operational control. Therefore, the FAA determined that the appropriate approach is to regulate fractional ownership programs under part 91, but to define operational control responsibilities and procedures and to prescribe added safety requirements appropriate to the size and complexity of those operations. These standards mirror corporate best practices, the voluntary standards used by existing fractional ownership programs, and the regulatory standards of part 121 and 135, as appropriate. In response to the CAA and the French Direction Generale de l'Aviation Civile comments, the FAA views fractional ownership programs to be private operations and therefore not subject to the commercial transport standards and definition. A U.S. federal circuit court determined fractional ownership programs are commercial operations for tax purposes.

See Executive Jet Aviation, Inc.

U.S.,

125 F.2d 1463 (Fed. Cir. 1997). Tax law does not govern safety rules. The FAA considers fractional ownership programs private operations for safety and operational control purposes.

The changes made to part 135 in this rulemaking are based on a comparison of current part 135 requirements to part 91 fractional ownership and corporate programs. Part 135 was amended where safety could be maintained while offering an alternative method to achieve the same safety goal. These procedures and amendments were based in part on the best practices and demonstrated safety record of corporate aviation and fractional ownership programs.

Like the NTSB, the FAA intends to closely monitor both part 91, subpart K, and part 135 operations following the implementation of this rule to identify any trends or safety concerns related to the requirements of this rule.

Some commenters encouraged the FAA to issue a supplemental NPRM. The FAA is issuing a final rule because the changes made to the rule language are within the scope of what the FAA proposed in the NPRM. Commenters made many helpful suggestions, including suggested technical edits and cross-references, some of which the FAA has incorporated into the rule. Comments that are beyond the scope of the NPRM, would result in a substantive change to the rules, or identify new issues are being considered for future rulemaking. The FAA has determined that it is in the public interest to publish a final rule now to establish and maintain a safety standard for fractional ownership programs.

Extension of Comment Period

Several commenters asked the FAA to extend the comment period to allow more time for public input. NTSB stated that the September 11, 2001, events have raised public concern about the security of air carrier operations and will likely further increase the demand for fractional ownership and the potential for safety issues associated with expanded operations. The NTSB asked for a 90-day extension of time to evaluate the proposed changes and the related safety issues. The National Business Aviation Association (NBAA) and the National Air Transportation Association (NATA) noted that since September 11, the Nation, and the aviation community in particular, have directed many resources to restore our air transportation system. NBAA and NATA requested an extra 30 days to allow all interested parties more time to prepare well-developed, thoughtful comments on the proposed regulation. An individual sought a nine-month time extension to allow the pilots affected by these proposed changes, but excluded from FOARC, to adequately review the safety implications of this NPRM and suggest changes.

FAA Response:

In response to the commenter requests, the FAA extended the comment period to November 16, 2001 (66 FR 52878, October 18, 2001).

FOARC's Membership Balance

Many commenters state that the Committee did not represent all potentially interested parties. They specifically mentioned pilots, fractional owners, airports and airport community interest groups. They also wrote that publication of a Notice of Proposed Rulemaking by itself did not overcome the built in bias of the Committee.

One commenter states that the FOARC was not “fairly balanced” as required by 14 CFR 11.27 and the Federal Advisory Committee Act (FACA) because pilots did not participate in the process.

The Teamsters state that the FOARC consisted essentially of three groups. First, fractional providers who feared that they would be regulated under part 135. Second, on-demand part 135 operators that see fractional owners as running a similar operation but under less stringent, and therefore less costly, rules. Third, corporate flight departments and their trade organizations that feared negative consequences for them if the FAA were to choose to regulate fractional operators under part 135. This commenter suggests there would have been no committee consensus without the proposed changes to part 135 that benefited persons currently operating under that part. This commenter also questions why a committee set up to address the issue of fractional ownership would have anything to do with part 135 operations. Other commenters make the same point.

NATA states that a notice of public meetings was published in the

Federal Register.

NATA also states that inferences made by some commenters to this rulemaking about “backroom” deals are misleading. The commenter points out that such inferences ignore the opportunity for public involvement in the process and the presence of DOT and FAA representatives at all FOARC meetings.

FAA Response:

The Fractional Ownership Aviation Rulemaking Committee was established by an order issued by the FAA Administrator on October 6, 1999, pursuant to the Administrator's authority under 49 U.S.C. 106(p)(5). This section states that “The Federal Advisory Committee Act (5 U.S.C. App.) does not apply to the Council or such aviation rulemaking committees as the Administrator shall designate.” Therefore the activities of the FOARC were not subject to the requirements of the Federal Advisory Committee Act. Nevertheless, the FAA balanced the makeup of the committee so that the FAA could learn the various perspectives of persons involved in fractional ownership operations and other segments of the aviation community that the proposed regulations may affect. This included part 135 operators, aircraft manufacturers, corporate flight departments, aircraft financing and insurance companies, and industry trade associations. About the issue of pilot representation, to the FAA's knowledge, only one fractional ownership program has union representatives for a portion of its pilots. Therefore, there is no single, recognized organization that could speak for fractional ownership pilots across-the-board. Nevertheless, there were individual pilots on the FOARC, representing both fractional ownership programs and part 135 operators.

In addition, as described earlier in this preamble, the FAA held a public meeting to invite the views of other interested parties. Finally, the FAA

published the NPRM and provided a public comment period in accordance with the Administrative Procedure Act. This comment period allowed all interested parties, whether they were FOARC members or not, to provide added insight, comments, and suggestions for changes to the proposal. The FAA received over 230 public comments and has carefully reviewed the many views and suggestions provided in those comments. Therefore, the FAA does not agree that this rulemaking suffered from a lack of balance or a lack of opportunity for all interested parties to express their views.

Environment and Noise

Many commenters are concerned about the environmental and noise impacts of this proposed rule on local airports. Most of these comments (approximately 60) are from organizations and individuals in the neighborhood of the Santa Monica, CA, Airport. Commenters from the vicinity of Flying Cloud Airport in Minnesota and East Hampton Airport in New York also address this issue.

Most of these commenters state that the FAA must comply with the National Environmental Policy Act (NEPA) before proceeding to a final rule. An individual asks that the FAA conduct “an environmental assessment or environmental impact statement to fully and fairly define and disclose the environmental impacts that will flow” from the proposed rule. Santa Monica Airport, the North Westdale Neighborhood Association, the East Hampton Airport Noise Abatement Committee (EHANAC), and Friends of Sunset Park Neighborhood Association believe that the FAA should study the impact of fractional ownership on communities and schools that are near general aviation airports. Residents of Sunset Park are concerned that altering the 60 percent rule and creating subpart K will significantly increase the volume of business jet traffic, bringing with it an increase in air and noise pollution. The Los Angeles Unified School District is concerned about regulatory changes that may increase noise levels and air emissions at several of their schools underlying the approach to Santa Monica Airport.

An individual states that relaxing an existing limit on runway use and requirement for instrument flight rules (IFR) destination airport weather reporting would authorize a whole new class of airports to be opened to a new class of aircraft. This would increase noise and adversely impact the quality of the human environment for unknown numbers of individuals. This commenter does not believe that this rulemaking qualifies for a “categorical exclusion” from the requirements of NEPA, stating that “The FAA has an affirmative obligation to disclose adverse environmental impacts that will flow from an agency action.”

NATA submitted a comment in response to these comments stating that the FAA was not obligated to do an environmental assessment or prepare an environmental impact statement in situations where the FAA is promulgating safety rules that are not likely to have a significant impact on the environment. The commenter points out that the FAA is not responsible for the growth of fractional ownership programs. According to the commenter, if the rulemaking results in a greater use of small airports, this may have a positive effect because of a more efficient allocation of aircraft activity among large and small airports.

FAA Response:

The FAA understands its obligations under NEPA and takes its responsibilities seriously. The FAA based its determination that this rulemaking qualifies for a categorical exclusion from the requirement to prepare an Environmental Assessment under NEPA on the instructions in FAA Order 1050.1D, Policies and Procedures for Considering Environmental Impacts. Appendix 4, section 4, lists issuance of “regulations, standards, and exemptions” as one of the categorically excluded actions that the FAA's Associate Administrator for Regulation and Certification may take. As with most of FAA's operating rules, any environmental impact would come not from issuing the rule, but from approving specific operations under the rules. For example, Order 1050.1D spells out how the FAA considers environmental impacts when issuing operations specifications for part 121 and part 135 operators. The FAA normally prepares an environmental assessment before issuing operations specifications for scheduled operations. For on-demand operations, an environmental assessment would not be prepared unless the proposed operation would significantly change the operating environment of the airport that serves as the home base for the operator. NEPA requires the FAA to consider the “foreseeable environmental impacts” of its actions. Therefore it is difficult for the FAA to assess impacts on destination airports for particular on-demand operators, because those destinations are unknown at the time of the approval. Similarly, for fractional ownership programs, it would be difficult to identify destination airports, since fractional owners may choose to go to any airport. Again, the FAA can only look at the potential impacts on the home base airports. It has been determined that management specifications will be treated the same as operations specifications for NEPA purposes. Therefore, the same principles will apply.

On the weather reporting issue, the FAA does not expect a significant impact because the number of part 135 operators who can do this will be limited. The rule applies only if the airport has no weather reporting but has instrument approach procedures, the operator is authorized to conduct IFR operations, the weather is instrument meteorological conditions, and the operator meets the eligible on-demand conditions. Therefore the FAA cannot make an estimate of the number of operations that would be increased. Fractional ownership programs can currently operate into airports without weather reporting. This rulemaking imposes extra restrictions that could limit some operations.

The requirements for performance planning could potentially increase the number of airports that part 135 operators could use, but would impose limits on some part 91 fractional operations that can currently use any suitable airport runway. Under the final rule, only eligible on-demand operators under part 135 would be able to take advantage of reduced runway requirements and only under certain conditions. The changes to the performance rules will restrict some fractional ownership operations, which currently have no regulatory limits. The FAA cannot estimate the number of airports or operations that would be affected, as performance planning incorporates many variables and, because of the on-demand nature of these operations.

FAA Oversight and Staffing

Professional Airways System Specialists (PASS) is concerned that the proposed rule would not require the necessary oversight and surveillance by FAA safety inspectors to ensure the level of safety desired. The management specifications, training manual and program managers operating manual need to be clear and approved by the Administrator so there is little controversy on what the program managers, flightcrews, maintenance personnel and fractional owners are required to do to ensure compliance with the regulations. Similarly, Style Air comments that the FAA currently does not have sufficient staff to service part 135 operators efficiently. This commenter believes that the addition of

trained inspectors should be addressed before any implementation of new regulations, and that specific procedures for FAA oversight and enforcement should be provided in the new regulations. An FAA inspector expresses concern over “how the field inspection will make a determination as to the type of operator he/she is conducting a surveillance on * * *”

FAA Response:

The FAA agrees that the success of these regulations is dependent on the quality of the oversight and surveillance provided by FAA inspectors and local Flight Standards District Offices (FSDO's). Therefore the FAA has established an implementation team that is developing standards and guidance for the use of both Headquarters and field personnel who will be responsible for reviewing fractional ownership programs policies and procedures, approving training programs, and issuing management specifications. The implementation team has reviewed staffing levels and qualification standards for aviation safety inspectors and made recommendations to ensure that inspectors have the necessary knowledge, skills, and abilities to oversee fractional ownership programs. The implementation team is working with PASS on assessing these staffing needs. In addition, the team is drafting specific guidance for field offices and inspectors to provide instructions and criteria for conducting the reviews and approvals required before fractional ownership programs may operate under subpart K. The level of oversight and surveillance and inspection activities provided to specific companies will be appropriate to the size and complexity of the operations being conducted and will be comparable to that provided to part 135 on-demand operations. The FAA believes that these implementation plans and products fully address the concerns expressed by the commenters.

Owner-Piloted Multiple-Owner Aircraft (

See

also § 91.1001)

Several comments focus on how the rule would affect co-ownership arrangements of aircraft by pilots, and owner/pilot operation of aircraft.

Four commenters (Aircraft Owners and Pilots Association (AOPA), GAMA, Lawyer Pilots Bar Assoc. and NATA), state that the rule or the preamble should clearly distinguish between the multiple owner/pilot and similar arrangements that would continue to be regulated under the existing part 91 and those arrangements that would be considered fractional ownership programs and be regulated under the proposed subpart K.

NBAA states that the FAA should account for aircraft ownership mechanisms other than fractional ownership programs in the final rule. NBAA believes that any programs that do not precisely fall within the definition of fractional ownership should be subject to regulations other than subpart K. An example would be a company that provides aircraft management services for aircraft that are flown solely by the owner. NBAA is concerned that the qualifications under § 91.1001(b) would inadvertently require owner-flown shared aircraft programs that use a management company to schedule aircraft among owners to comply with subpart K, when they would be better addressed as flying clubs. NBAA provides regulatory changes that would further clarify the types of operations subject to subpart K and prevent the inadvertent application of this regulation on other ownership and service options such as flying clubs, joint ownerships, time-shares and traditional aircraft management.

Another commenter, the Small Aircraft Manufacturers Association (SAMA), notes that the proposed subpart K defines a fractional ownership program in a way that would include owner-pilot shared ownership programs in which the program manager does not offer or provide the flightcrews. According to the commenter, owner-pilot shared ownership programs that would technically meet the proposed definition of a fractional ownership program under § 91.1001(b) did not exist when the FOARC made its recommendations to FAA in early 2000. The FOARC did not hypothesize their formation and therefore did not consider their appropriate regulation. These owner-pilot shared ownership programs have since been established, generally providing piston-powered single engine airplanes, and currently are appropriately regulated under part 91, without reference to subpart F. It appears that neither the FOARC nor the FAA intended to regulate these programs under subpart K. According to the commenter, these programs are similar to flying clubs, partnerships and management services arrangements, but do not exactly match any of these traditional forms of shared aircraft ownership.

The goal of this commenter's proposed amendment is to avoid changing the regulation of owner-pilot shared ownership programs that are permissible today under part 91. Because these programs provide safety benefits, the FAA should facilitate the emergence of these forms of small aircraft ownership and operation by clearly describing in the rule and in related guidance materials activities under such programs. This commenter suggests specific final rule preamble language that would clarify that the intent of the rule is not to cover the types of operations described by the commenter. In contrast, The New Avex, Inc., (AVEX) states that the proposal is short sighted because it excludes the opportunity for individuals to share ownership of light, single-engine turboprops.

Similarly, NATA and Bombardier Business Jet Solutions, Inc., (Flexjet) understand that some systems of aircraft ownership and use have been created, or soon will be created, that involve only owners that intend to act as the pilot during the owner's use of the aircraft. Some of these programs may include elements commonly found in fractional ownership programs, such as multiple owners of an individual aircraft, a single aircraft manager, and a dry-lease pool of multiple aircraft. Although these programs may technically fit the applicability requirements of subpart K, these commenters do not believe that such programs should be subject to subpart K. According to the commenters, a program that consists solely of owners that will always be the pilots when they use their aircraft is likely to appeal to a far different owner than would the fractional ownership programs that were the focus of FOARC's and FAA's review. Such a program does not require the enhanced provisions of subpart K and would more appropriately be regulated under existing regulations.

SAMA, NATA and Flexjet believe that the fundamental difference between a pilot-owner program and fractional programs as envisioned by subpart K is that the program manager in a pilot-owner program is not responsible for providing any pilots. One of these commenters recommends excluding exclusively pilot-owner programs from subpart K by revising the definition of fractional ownership program management services in proposed § 91.1001(b)(7). Under this recommended definition, subpart K would apply if the manager provided even a single pilot to any aircraft owner. However, if one of the owners served as the pilot in all program operations, the program would not be subject to subpart K. Another commenter recommends amending § 91.1001(b)(7) to include “the offering or provision of flight crews” as well as providing related guidance material that would apply subpart K only to shared ownership programs where the program manager offers or provides the flight crew.

Similarly, AOPA states that, while there is a presumption that subpart K operations include or require a professional flight crew provided by the program manager, this is not specifically stated in the regulation. Therefore, AOPA proposes that a sixth criteria be added under § 91.1001(b)(1) to state the requirement that professional flight crew services must be provided by the program manager. In support of this sixth criteria, AOPA also proposes that § 91.1001(b)(7) be further defined to include a provision for a professional flight crew. AOPA believes that the development of subpart K did not envision or intend to regulate smaller piston powered single- and multi-engine aircraft that otherwise meet the five criteria of § 91.1001, but do not use professional program pilots and that providing a flight crew is an important distinction between a multiple aircraft ownership arrangement versus a fractional ownership program.

The Lawyer Pilots Bar Association states that the NPRM clearly intends to apply to fractional programs in which paid professional crews are employed to fly the aircraft. This Association says that the NPRM was not intended to apply to limited co-ownership arrangements of small aircraft that do not involve a management company and in which one or more of the co-owners are commercial-pilots and provide the piloting. According to this commenter, the rule is not clear whether pilots may participate as owners-pilots in subpart K fractional programs without being subject to the increased crew requirements while they are piloting their co-owned aircraft for their own personal and business transportation. The commenter urges the FAA to make the final rules of subpart K clear so that a pilot co-owner may participate in a fractional ownership program without having to meet the additional crew requirements.

Eclipse Aviation mentions that proposed subpart K sets forth very specific crew pairing, experience, flight, duty and rest time requirements, and that for the owner-pilot, many of whom will be qualified to conduct single-pilot operations, the crew pairing requirements of proposed § 91.1055 are unnecessary. Further, for the single-pilot operator, or one who chooses to utilize a second in command (SIC), either by insurance or regulatory necessity, or simply for the sake of added safety, the experience, training and testing, proficiency, flight, duty, and rest time provisions of proposed §§ 91.1053, 91.1057, 91.1059, 91.1063, 91.1065, 91.1069, 91.1081, and other related sections are overly burdensome. Clearly, these safety provisions are appropriate for true fractional program operations. The traditional experience, training, testing, proficiency, flight, duty and rest time provisions, as well as the other safety related provisions of part 91 are sufficient for owner-operated personal or business flights.

FAA Response:

The FAA agrees that the proposed applicability section and definitions do not adequately delineate fractional ownership programs intended to be covered by subpart K from other shared aircraft programs or aircraft management programs conducted under part 91. These include operations such as traditional management companies providing services to aircraft owners absent the dry lease exchange provision of subpart K; joint ownership, time-share, or interchange operations under § 91.501; flying clubs; or other shared aircraft ownership options. Each shared ownership arrangement should be reviewed on a case by case basis to determine the appropriate regulatory requirements.

The FAA has amended § 91.1001 to more clearly define the elements of fractional ownership programs and the aviation services provided under those programs. This includes the provision, furnishing, or contracting of crews and the training and qualification of crews and other personnel, as suggested by some of the commenters.

The FAA disagrees with comments that a pilot co-owner should be allowed to participate in a fractional ownership program without having to meet the additional crew requirements. A fractional owner who desires to act as a flight crewmember on a program flight may do so only if the owner meets the pilot experience and qualification requirements of subpart K and is designated as a crewmember for that flight. These pilot requirements are necessary to maintain the safety and integrity of the fractional ownership programs and protect the property interests of all owners in the program.

Some of the commenters on this issue address a situation in a shared aircraft arrangement where the owners do pilot their own aircraft and may use management services for scheduling and maintaining the aircraft or providing occasional pilot services such as flight instruction. These types of programs might more appropriately fit the definition of a flying club or other ownership option not subject to this rule. Likewise, traditional management companies and other management arrangements may not meet all of the definitional elements of a fractional program under subpart K, i.e., dry lease aircraft exchange arrangement, provision of pilots and other crewmembers, etc., and therefore would not be subject to regulation under subpart K.

The FAA recognizes that some entities have marketed or otherwise referred to themselves as “fractional ownership” programs prior to this rulemaking, but do not meet all of the elements of the new regulatory definition. The FAA recommends that such programs discontinue the use of the term “fractional ownership” to avoid confusion.

Runway Length Required for Landing (§§ 91.1037 and 135.385)

GAMA, NATA, Flexjet and an individual support the proposed rule changes, stating that they would not reduce the margin of safety for operations of fractionally owned aircraft under part 91 or operations under part 135. The proposed runway length requirements provide an adequate margin of safety for the reasons stated in the NPRM.

Spirit Aviation and NATA support the change from requiring the airplane to be capable of landing within 60 percent of the available runway length to 85 percent of the available runway length because of the advancements in technology. Spirit Aviation states that § 135.385 was promulgated before the development of pavement standards at airports and landing strips. In addition, the development of aircraft braking and other performance systems have made the 60 percent factored landing distance requirement antiquated and unnecessary. As reasons to change the requirement from 60 to 85 percent, NATA also mentions improvements in brake certification, changes in the method of calculating Aircraft Flight Manual (AFM) landing distances, and changes in landing distance information for different runway conditions contained in the AFM.

Spirit Aviation and NATA also state that the proposed changes to § 135.385 would enable part 135 operators to better compete with part 91 operators. Spirit Aviation, a part 135 operator, comments that the proposed changes would enable it to more effectively serve its clientele, as well as compete fairly with part 91 competitors. This operator argues that the experience of its pilots, as well as the quality of its training is equal if not superior to that of the corporate aviation community. Spirit Aviation claims that all aviation safety data covering the previous decade show that accident rates under part 91 and part 135 have been nearly identical.

NATA, a FOARC member, (as well as Flexjet) supports the justification

provided in the preamble for the proposed change in runway length. This commenter states that the proposed 85 percent runway length dispatch rule provides a comfortable safety margin for 91 subpart K operations and much needed relief from a redundant and unnecessary restriction for eligible part 135 on-demand operators.

NBAA and New World Jet Corporation (NWJ) support the 85 percent margin, but only under certain conditions. NBAA, a FOARC member, supports the proposal as an available planning option only under optimum conditions for both fractional aircraft ownership operations and for qualified commercial on-demand operations conducted under part 135.

NWJ notes that daylight operations, an experienced crew, and glide slope guidance on the landing runway are examples of conditions meriting the 85 percent runway margin. To maintain an even playing field and level of risk, specific guidance should be provided to the FSDO Inspectors on how to qualify operators according to these conditions. This commenter believes that without such conditions some operators may be too aggressive when applying this rule.

The Teamsters quote from the NPRM, “Aviation safety data indicate that the landing accident rates under part 91 and part 135 during the previous twelve-year period were nearly identical.” The commenter asserts that the NPRM in effect provides no justification for changing the 60 percent rule, arguing that the quoted data, if true, argues more for the safety record of part 91 operators than of part 135 operators.

One commenter states that the FOARC's proposed change to runway length does not respect the existing industry best practices regarding the use of thrust reversers. An Aircraft Flight Manual (AFM) typically determines landing distance without the use of thrust reversers. An operator under current part 91, attempting to meet minimum compliance, could land within 85 percent of the effective runway without thrust reversers installed or with the thrust reversers deferred in accordance with an MEL. But this would not be in accordance with the best practices of the fractional program industry. According to the commenter, a reputable fractional program operator would never think of dispatching a pilot into a runway with only a 15 percent margin of error without operable thrust reversers. However, the proposed rule would allow this under subpart K of part 91 and under part 135. The commenter states that several on demand air taxi operators that do not have thrust reversers installed might require pilots to land at the minimum allowed by regulation. If air taxi operators want to land on such runways, this commenter suggests that they have the aircraft manufacturers include reverse thrust in the AFM landing data as long as such data can comply with the provisions in 14 CFR 25.125. These provisions state that aircraft manufacturers may use reverse thrust to calculate landing data if “[reverse thrust] is safe and reliable; is used so that consistent results can be expected in service; and is such that exceptional skill is not required to control the airplane.”

The commenter also offers the following example: “* * * when I land at KHXD I can typically stop the Cessna Citation Excel I fly in 2400 feet using reverse thrust. The AFM data indicates that the landing distance should have been 3090 feet.” The commenter attributes the difference to the use of reverse thrust because he duplicated all other conditions that the AFM specifies.

Two neighborhood associations, EHANAC and Friends of Sunset Park Neighborhood Assoc., submitted comments stating that they oppose the proposed 85 percent rule for part 135 operations because they believe it will create a grave safety hazard at East Hampton Airport, which does not have runway safety areas.

Similar concerns were raised by other commenters. North Westdale Neighborhood Association and Santa Monica Airport worried about the impact of increased traffic at the Santa Monica airport and other similar small airports if the proposed changes to part 135 are imposed. These commenters state that the reduction of the landing runway length required under the 60 percent runway rule will increase access by part 135 business aircraft to thousands of additional airports and increase the weight/size capacity of existing aircraft at many general aviation airports.

One commenter states that the proposed 85 percent rule would carry a great risk because it would allow large jets to land at airports where homes and businesses, including gas stations, are only 100 feet from the runway. Another commenter states that this broad change in the regulation is being proposed without considering the environmental impact or the opinions of the general public. For example, Santa Monica Airport (SMO) has a runway with no safety areas and the runway is no more than 5,000 feet long. Under the proposed change, larger jets requiring more runway length will now be allowed to land. Even though the airport has noise restrictions, any jets that meet the noise abatement requirements will be allowed to fly over nearby homes and businesses, stretching the parameters of safety to the limit.

PASS, an EJA pilot, and an individual mention the existence of several overruns while using a 60 percent margin as a reason to oppose the change to an 85 percent margin. One individual commenter states that currently several fractional operators utilize part 135 landing requirements (60 percent). To the best of this commenter's knowledge, each of the fractional operators and many part 135 operators have had overrun incidents utilizing the current 60 percent rule. Based upon this history, the commenter does not believe it is wise to further reduce the safety margins for required runway lengths.

An EJA pilot states that regardless of FOARC's assumptions of pilot techniques and brake wear, there are pilots who fly the airplane at speeds above V

REF

(which is the designated landing approach speed) across the landing threshold with worn brakes. This causes a dramatic increase in landing distances, well beyond that recommended by the FOARC. The commenter concludes that there is not enough safety margin available using the 85 percent rule and recommends that the 60 percent rule be applied to fractional operators.

A pilot states that while he can fully appreciate the evidence presented by the FOARC committee for changing the “60 percent rule” to 85 percent, he has serious reservations about allowing a reduction below 85 percent as proposed §§ 135.23(r) and 135.385(g) would allow. The commenter believes that even with the stipulated Destination Airport Analysis procedures, the human factor for error will remain and is not quantifiable. Recent part 121 accidents show that landing accidents still happen under what is supposed to be more stringent regulations. The commenter states, “Let's not deny our passengers, whether he/she is a charter customer or fractional owner, the extra margin of safety that 15 percent affords.”

Executive Jet Aviation, Inc., (EJA) states that the proposed rule needs to be clarified to ensure that while the Destination Airport Analysis program contained in the operations manual must be approved, the operations manual itself does not require approval in that it is an accepted document. Additionally, EJA states that the method of approval (operations specifications) should be indicated.

Kaiser Air, Inc. suggests that § 135.385 (f) (1) and (2) be amended to use consistent terminology (for example,

“still air” vs. “probable wind” and “most favorable” vs. “most suitable.”)

FAA Response:

The FAA has studied the discussion in the NPRM preamble, the comments received on proposed § 91.1037 and the proposed changes to § 135.385, the background of the runway limitations for various types of operations, and the relationship between the performance rules in the certification standards and the landing and takeoff requirements in the operating rules. Based on this review, the FAA has decided to modify the proposed 85 percent requirement and to withdraw the proposal to allow a higher takeoff weight than would be permitted under the 85 percent standard if the operator prepares an approved Destination Airport Analysis.

The FAA has determined that the arguments presented in the NPRM preamble for reducing the current part 135 safety margins indicate a misconception regarding the basis and evolution of the current landing distance requirements. The landing distance margin requirements contained in the operating rules applicable to large transport category airplanes are intended to take into account those items that are not included or are not fully addressed in the part 25 airplane type certification landing distance requirements used to determine the landing distances provided in Airplane Flight Manuals. These factors include steady-state variables that are not required to be taken into account in the landing distances determined under part 25, differences in operational procedures and techniques used in actual operations from those used in determining the part 25 landing distances, non steady-state variables, and differences in the conditions forecast at dispatch and those existing at the time of landing. Examples of each of these categories include:

Steady-state variables

Non steady-state variables

Actual operations vs. flight test

Actual vs. forecast conditions

Runway slope

Wind gusts/turbulence

Flare technique

Runway or direction (affecting slope).

Temperature

Flight path deviations

Time to activate deceleration devices

Airplane weight.

Runway surface condition (dry, wet, icy, texture)

Flight path angle

Approach speed.

Brake/tire condition

Rate of descent at touchdown

Environmental conditions (for example, temperature, wind, pressure altitude).

Speed additives

Approach/touchdown speed

Engine failure.

Crosswinds

Height at threshold

Speed control.

Although this is not intended to be an exhaustive list of variables to be considered, any program to reduce the current landing distance margins, for example, through the use of a Destination Airport Analysis, should address at least these items, and should be substantiated by actual operational landing data.

No evidence exists to show that the current landing distance margin required by § 135.385 was established to compensate for deficiencies in predicting landing performance in the 1930's and 1940's that have since been rectified. One of the primary difficulties in establishing a safe landing distance margin, both now and at the time the landing distance limitations were originally developed, is that it depends on forecasting the landing conditions at the time of dispatch. The landing conditions must be forecast at the time of dispatch because the landing distance limitation is applied as a limitation on the allowable takeoff weight at the time of dispatch such that a safe landing can be made at either the destination or alternate airport. Safety margins are necessary to allow for differences between the conditions forecast at the time of dispatch and the conditions existing at the time of landing.

In addition, since the actual landing distance achieved depends on pilot technique and environmental conditions (for example, crosswinds, gusts), the safety margins must allow for variations in these parameters. Lastly, the procedures and techniques used in flight tests of transport category airplanes to determine AFM landing distances differ from those used operationally (notwithstanding the requirement in § 25.101(f) that states that “changes in the airplane's configuration, speed, power, and thrust, must be made in accordance with procedures established * * * for operation in service”). The flight tests to determine landing distances under § 25.125 are generally treated as demonstrations of the maximum performance (

i.e.,

minimum landing distance) that can possibly be obtained within the constraints of the certification requirements. Especially for large transport category airplanes, but also for many smaller transport category airplanes, the landing distance safety margins required by parts 121 and 135 are relied upon to provide realistic landing distances for use in the operating environment.

FAA policy does not permit consideration of the effect of thrust reverse in calculating landing distances. Part 25 allows means other than wheel brakes to be taken into account if that means is safe and reliable, is used so that consistent results can be expected in service, and is such that exceptional skill is not required to control the airplane. Nevertheless, the FAA has not found thrust reversers reliable enough to allow landing distances to be based on their use. This policy provides some additional safety margin for airplanes with reversers that are operable and used in combination with (not in lieu of) maximum braking from wheel brakes and spoilers. If the FAA were to allow the use of reverse thrust as a condition for using, for example, an 85 percent factor for calculating landing distances, the result would be to assign an arbitrary performance capability to reverse thrust, which may or may not be met by different airplane/engine/reverse thrust combinations. Also, it would be inconsistent with the treatment of reverse thrust by the FAA for airplane type certification purposes, which has not allowed landing distances to be based on the use of reverse thrust.

In regard to the NPRM discussion of improved airplane certification guidelines, many of the guidelines referenced as improvements either date back to the era when the 60 percent rule was implemented or were put in place to limit the use of potentially hazardous flight test techniques to demonstrate short landing distances. For example, the limitations on approach angles and touchdown rates of descent were instituted in response to the steep approaches and hard landings used to

obtain shorter landing distances. Although that type of flight test demonstration of maximum performance is no longer considered acceptable, the methods of determining the resulting landing distance parameters used to calculate the AFM landing distances still result in the same distances as had been obtained with that type of demonstration. Therefore, although the risk in flight testing has been reduced and any further deterioration in safety margin prevented, landing distances atypical of actual operations are still being achieved under part 25. This holds true for all part 25 airplanes, independent of size or intended type of operation.

The claim that improvements in certification guidelines have reduced the need for the current part 135 (or part 121) safety margin is incorrect. The current certification guidelines for transport category airplanes were established assuming the use of the 60 percent rule, which ensures a margin of safety consistent with the number of variables and the degree of variation that might occur in actual operations. For example, in certification of one large transport category airplane, data showed that the safety margin would only allow for either a rate of sink at touchdown of no less than 3 ft/sec, a glideslope of no less than 2 degrees, or a speed no more than about 10 percent higher than the designated approach speed. In this case, the 60 percent margin would be entirely used up for a rate of descent at touchdown of 4 ft/sec, a glideslope of 2.5 degrees, and an approach speed 5 knots higher than the no wind approach speed, all of which may be reasonably expected to occur in operational landings.

A table similar to that shown in the NPRM, but highlighting issues that may result in longer landing distances, illustrates the necessity of an adequate operational safety margin:

Certification criteria

Operational consideration

Effect on safety margin

3.5 degree glideslope angle

2.5 to 3 degrees typical