Justice Department Involvement in FAA's Illegal Charter Case Spotlights Consequences for Aircraft Owners

Washington, DC, October 26, 2018 – The National Air Transportation Association (NATA) and its Illegal Charter Task Force are continuing efforts to increase awareness of the dangers posed by illegal activity and educate aircraft owners, consumers and operators on the importance of compliance with safety regulations. In a move that highlights the serious consequences when aircraft are found to be operated illegally, the Federal Aviation Administration (FAA) has referred a high-profile enforcement action to the Unites States Attorney’s Office (USAO).“Such a referral is not common and speaks to the significance of the violations,” stated NATA’s Director of Regulatory Affairs John McGraw. “The FAA’s decision to involve the Justice Department sends a clear message to aircraft owners and the industry that the government takes noncompliance seriously; particularly when unauthorized air carrier operations occur.”

This summer, the FAA announced a $3.3 million civil penalty against an aircraft owner it found to be conducting commercial flights without proper authorization. The aircraft owner allegedly conducted hundreds of commercial charter flights for third-parties with whom the owner had created multiple timeshare agreements.

While regulations permit certain payments when using timesharing arrangements, this operation was collecting unauthorized payments among other alleged infractions. This month, the FAA referred the case to the USAO for action.

 “This case should give all aircraft owners pause and demonstrates that engaging in illegal timesharing, participating in improper leasing schemes or establishing so-called flight department companies creates significant risk for aircraft owners,” said McGraw. “We are pleased to see the FAA taking action to ensure aircraft are operated in accordance with the applicable safety regulations and we expect to see more in this area as our Task Force continues its outreach efforts.”

The case referred to is United States of America v. The Hinman Company, Case No. 1:18-cv-01140, U.S. District Court, W.D. Michigan (October 4, 2018).