The FAA today published a Notice requesting comments on proposed policy guidance regarding permissible/impermissible “wet-lease” commercial arrangements. According to the FAA, the proposed policy guidance identifies “those commercial arrangements that would be considered to be unlawful wet lease arrangements under these regulations as well as those that would be permissible.” The FAA is also seeking comment on its proposed treatement of certain “other” commercial arrangements that are not illegal wet leases, but may still result “in the air carrier impermissibly ceding operational control of flight to non-certificated entities.”
This guidance is intended to clarify the FAA’s position regarding business arrangements betwee on-demand air carriers and owners of aircraft operated by the air carrier to ensure that the air carrier maintains operational control over all operations conducted pursuant to the air carrier’s certificate. It comes in the wake of the Darby case and others in which the FAA determined that the holder of the air carrier certificate had surrendered operational control to non-certificated operators. At the end of the Notice, the FAA then advises air carriers to review their leasing and business arrangements with aircraft owners to ensure compliance with the regulations and to make sure they have sufficient controls in place to answer the following questions:
1. What is the actual location of each aircraft listed on the carrier’s operations specifications?
2. Who has the carrier authorized to fly the aircraft?
3. Does the carrier have mechanisms in place to prevent unauthorized use of the aircraft?
4. Who or what is being transported on the aircraft?
5. Is a given flight for compensation or hire?
6. If the flight is for compensation or hire, are the crewmembers properly certificated and trained?
7. Are the crewmembers loyal to the air carrier (as opposed to the aircraft owner or some other entity) so that they will adhere to the carrier’s instructions not to fly or to delay a flight or to divert a flight?
8. What procedures and mechanisms are in place so that the carrier can fulfill its duty to ensure that the aircraft is airworthy and meets all of the carrier’s maintenance programs?
The Notice does a good job of describing the background of the situation, setting forth the FAA’s position regarding these issues and even includes examples of arrangements the FAA considers to be impermissible wet-leases. The Notice doesn’t come as a suprise nor does it include any views or interpretations that the FAA hasn’t held for quite some time. However, it does provide some clarification on the issues. Hopefully the guidance will assist certificate holders in reviewing existing, as well as structuring prospective, leasing and business arrangements with aircraft owners.
Comments are due no later than November 25, 2005. If you would like further information, please contact Kent Stephens, Aviation Safety Inspector, Air Transportation Division, Flight Standards Service, Room 831, 800 Independence Avenue, SW., Washington, DC 20591, telephone: (202) 267-8166.