Scheduled vs. On-demand Operations

I was sitting among 300 of our peers when I was brought to a level of frustration that I have not experienced in recent years. As we sat and listened in the second session at the 2007 NATA Charter Summit, the panel consisting of FAA legal representatives as well as industry attorneys, the discussion point was “Scheduled Operation or On-Demand Operation.” The picture became so clear to me, and unfortunately it was a rerun from days gone by. Snap judgment, knee-jerk reaction, going off half cocked, whatever you want to call it, it’s what happens when a zealous FAA employee, who knows the regulations inside and out but has no applicative experience to help them to apply it, starts interpreting the regulations.

We had just finished listening to FAA’s top dogs, Nick Sabatini, Jim Ballough, and Hooper Harris, all of which I have a great deal of respect for, along with the leadership of the National Air Transportation Association, explain that by working cooperatively (NATA/industry with the FAA), a plan was devised to properly handle the operational control issue that the FAA developed some concern for almost two years ago.

A look back
Over the years, let’s say since 1958, when the old Civil Aviation Regulations were converted/superseded by the current Federal Aviation Regulations structure, things have changed. A lot more has changed in the real world that we live in compared to the regulations that help to govern our society, in this case, our industry.

Back in 1958 a clear distinction was established between scheduled air carriers and on-demand charter operations. The general purpose of scheduled air carrier services was to move people within an organized and structured air carrier system. Scheduled air carrier service was/is most like a modern metropolitan busing system. If a person needs to go from point A to point B they enter into that system by purchasing a ticket and receiving a boarding pass; and if every thing goes as planned they get to their destination fairly efficiently.

The on-demand charter segment of our industry however has an entirely different purpose. Those who utilize on-demand charter need to move from point A to point B quickly, direct, and often back the same day, and sometimes with the utmost discretion. The ability to travel using air charter carries a lot of weight with certain types of passengers (i.e. corporate America, professional entertainers, sports figures, and high-level political figures). Enough so that such passengers are willing to pay a significant premium for the privilege. Sometimes as much as 20 times the cost of a ticket to enter into the “scheduled” air carrier network of transportation.

Those of us who choose the less expensive scheduled air carrier service, are moved through the security check point along with all of the other “cattle,” are required to depart and arrive at a specific time scheduled by the air carrier months out, and most times have to stop to change planes somewhere in the middle of their journey.

Impact of today’s technology
It’s impossible not to have noticed that the technology boom has been on a near vertical trajectory for several years now and is constantly changing how our world lives, including how we do business. Arguably, the single largest influence of the technology boom we are experiencing is the portability of information. The availability of information via the Internet and email, the ease of communication with others via cellular telephone, the clarity of pictures from across the world we see on the new high-definition televisions that almost appear better than what the naked eye could see in person.

These are just a few examples of technology revolutionizing communication.

An attack on charter
How does all of this apply to the situation at hand? Well, while sitting there among my colleagues at the NATA Air Charter Summit this summer in Virginia, I witnessed what I believe to be a significant FAA blunder. Joseph Conte, manager of the Operations Law Branch in the FAA’s Office of the Chief Counsel, delivered an interpretation of “scheduled flight” that was derived by applying 14 CFR Part 119.3 Definitions:

Scheduled operation means any common carriage passenger-carrying operation for compensation or hire conducted by an air carrier or commercial operator for which the certificate holder or its representative offers in advance the departure location, departure time, and arrival location. It does not include any passenger-carrying operation that is conducted as a public charter operation under Part 380 of this title.

So, the official definition according to Conte has three elements that must be considered to determine if the flight is scheduled.

  1. Departure location
  2. Departure time
  3. Arrival location

If these three elements are “offered in advance” then Conte contends that the flight is a scheduled flight.

My first thought was what does “offered in advance” mean? I would contend that the intention of this definition was to offer the aircraft in advance of having any passengers; holding the flight out there hoping that someone will want to go. What is completely different in the charter business is that there are no “scheduled” flights until a passenger has called and asked for one. This means that the schedule was created “on-demand” which is also defined in CFR Part 119.3:

On-demand operation means any operation for compensation or hire that is one of the following: (1) Passenger-carrying operations conducted as a public charter under Part 380 of this title or any operations in which the departure time, departure location, and arrival location are specifically negotiated with the customer or the customer’s representative that are any of the following types of operations: ………

You see it seems so clear to us who actually work in the field day to day. In all cases, a charter flight is scheduled on-demand. When the FAA discovered that many 135 charter operators were taking advantage of the technology that has evolved with the Internet, to make others aware of flights that have been scheduled on-demand and the possibility to join (accompany) whoever chartered the flight, or utilize the return “dead leg,” the reaction was “they can’t do that.”

If the age-old regulation should be modified slightly to satisfy the FAA concern, then let’s do that, even if it is a more difficult solution. But knee-jerk reactions to action by business owners in the charter community, without a threat of safety, are uncalled for and are opposite to what we have been experiencing recently under the current FAA administration.

I’m obviously speculating here, but I suggest that there was absolutely no thought within the FAA organization that pointed out that the use of the Internet was simply a natural evolution of the charter industry, just as it has been for our entire society. Having blinders on, the FAA went into the regulations intending to prove that this practice was illegal. Conte derived his interpretations without an effort to understand the significant difference between holding out scheduled air carrier flights compared to the filling of empty seats and empty legs available in on-demand charter flight, which has been practiced in the charter community for several years. Utilization of the Internet has simply made it easier.

Several comments made by Conte during his presentation at the Charter Summit referred to the reduced pricing of charter flights and comparison to the airlines. Why would the FAA have any interest in the pricing or business elements of any operation? One can’t help but wonder if their action might even be a result of significant political pressure from airline interests in Washington. Particularly on the heels of what I think has been the most progressive thinking FAA administration in recent times.

Cooperative efforts
Through a cooperative effort with the current FAA, we have been able to put in place a safety net for industry to push back on safety inspectors that are out of line in their dealings with us without retribution — Customer Service Initiative (CSI). We have worked together to redefine operational control in a way that is clearer and more understandable (another issue that I think was born of the technology boom). Just to name a couple successful examples of working together with the FAA.

If you have never heard the term “subject matter expert,” often referred to simply as “SME,” it is an individual who has a deep working knowledge of a particular concern or issue. The success that we have enjoyed in cooperation with the FAA over the last few years is a result of the leadership of the FAA searching out industry SME’s to help them define the needs of an issue as well as devise a plan for resolution.

In the case of the issue at hand, the Manager of the Operations Law Branch in the FAA’s Office of the Chief Counsel presented the problem at the Charter Summit in Virginia as a warning, not an issue in need of collaborative resolution. Fact is it is just not as simple as Conte would like to believe. Consider the following questions.

Does a chartered aircraft take off without any idea where it is going? No, all flights governed by the FAA are scheduled flights at some point.
If an airline schedule changes from what was published (we all know this never happens) is it no longer a scheduled flight? I can’t tell you how many times I have sat in the airport for hours waiting for the scheduled aircraft to actually take off.

If the passenger of a chartered aircraft calls all his buddies after he has chartered an aircraft to see if they will join him, is he now an illegal broker of a scheduled air carrier?

Is the flight any less safe if more passengers are added after the aircraft has been chartered?

To pigeon hole the on-demand segment of our industry which is feeding our growing economy is a reckless move that carries with it absolutely no benefit. It is my sincere hope that the FAA will reconsider its interpretation of “scheduled” as it pertains to on-demand operations and schedule, post-haste a meeting to discuss and cooperatively resolve their concerns. The cooperative efforts we have enjoyed with Sabatini, Ballough, and Harris and their team seem to be the perfect forum for resolution.

Joe Hertzler is the CEO and co-founder of Avtrak Inc., provider of the industry’s first Internet-based and compliance-focused maintenance tracking service — Avtrak GlobalNet. Avtrak has announced, within the past two years, alliances with Gulfstream, Raytheon, and Sikorsky that have each selected Avtrak’s GlobalNet technology for the next generation of their factory-provided maintenance tracking services, Gulfstream, Raytheon FACTS, and Sikorsky Helotrac II.