What's At Stake?
By Stephen P. Prentice
You probably have heard about fractional interests in aircraft ownership by now. It seems like they have bought out all corporate jet production for years to come. Sales are booming, but have you thought anything about the status of employees of the management arms of such companies or what the impact will be in maintenance field? These companies now employ hundreds of technicians and pilots and have a significant impact in the commercial corporate flight environment. Are they here to stay? Will their structure change? Will they be regulated?
Fractional owners don't retain their own technicians, but maybe they should. Current arrangements call for the management company to supply all maintenance. Many companies are closing their flight departments and moving to a fractional arrangement because of the perceived dollar savings. In addition, individual aircraft manufacturers have set out on a plan to provide in-house maintenance services for most of the routine inspection process. This is the area that is of concern to some. Will these arrangements impact the average technician?
What Is Meant By Fractional?
Fractional aircraft operators are essentially time-share operators with a manager. For years, owners of large and small aircraft have attempted to offset the costs of ownership by attempting to operate their aircraft for profit, and usually came face to face with the air carrier certificate requirements. Indeed, they were and still are, sanctioned and fined for such operations by the FAA. The big difference with the fractionals lies in the fact that the paperwork involved makes each participant an "owner" of the particular aircraft they are involved with. Their investment is usually a lump sum initial payment plus a monthly share payment for the total aircraft operating costs including routine and other maintenance. The registration documents for the aircraft should reflect the multiple owners who share the use and not incidentally, the liability, for operations of that aircraft and that they are individually responsible for the operating costs of that aircraft. However, the way it works is simply that any other aircraft in the "fleet" can be used by these "owners" making the whole operation seem very much like an air carrier operating under the rules of Part 91. This is typically accomplished by way of an interchange agreement and is the essence of the argument that this is really a commercial air carrier arrangement that should be regulated. This is the dirty little secret that upsets much of the certificated operation community who have to spend large amounts of their investment on the demands of complying with FAA and FAR 135 and 121 requirements that include duty and flight time limitations and airport restrictions, among others. Needless to say, the air carrier people have some concern that their business is already badly eroded. The fractional operators say their business is in effect, new business and therefore should not take away from the air carrier people. They say they make new jobs for technicians and pilots. The certificated people say, I don't think so!
FAR 121, 135 or 91.501?
True, all of the current fractional operations are conducted under the rules of FAR 91 although the aircraft are usually registered as Part 135 aircraft for a lot of reasons, not the least of which is tax avoidance. FAR 91 does of course provide for time-share arrangements. FAR 91.501 defines and describes managed aircraft rules so long as "common carriage" is not involved. But, there is much to argue that air carrier rules should apply and that this operation is really common carriage. Needless to say, the operators want to remain under the cloak of FAR 91 for quite obvious reasons. Some operators claim they follow air carrier maintenance rules although there is no requirement in the Part 91 scheme. There is no substantial operations surveillance akin to air carrier inspection however, so who knows? Does it make any difference to the average technician? Maybe it should. Let's look.