FAA Weighs In On Fractional Ownership

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Fractional Ownership Rules Set ...

It's been 18 years since Executive Jet revolutionized business-jet ownership, and now the FAA has caught up to the fractional ownership industry with a set of specific regulations designed to maintain some uniformity. The agency recently published a final rule titled Regulation of Fractional Aircraft Ownership Programs and On-Demand Operations in the Federal Register. The rule, which is section K of Part 91, codifies the basic structure of the industry as it has evolved by establishing criteria for fractional ownership companies and laying out the rights and responsibilities of the owners and the companies. It also establishes safety standards, including maintenance, training and crew flight and duty requirements. The new rule recognizes the enviable safety and maintenance record that has evolved in the fractional ownership industry. "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," the rule reads. The rule also allows the application of fractional ownership standards to Part 135 on-demand operations under specific circumstances. The rule has been in the works for about five years and more than 200 comments were received on it.

... With GAMA's Support ...

The General Aviation Manufacturers Association ( GAMA ) hailed the new rule on fractional ownership as "an important milestone in the evolution of business aviation." According to organization, the most positive aspect of the new rule is that it recognizes fractional programs as private rather than commercial operations. The association also praised the new rule for clearly defining fractional ownership, clarifying and assigning operational control responsibilities, and codifying many of the "best practices" now being voluntarily used by fractional ownership programs.

According to GAMA President and CEO Ed Bolen, "Over the past decade, fractional ownership programs have grown to become a very important part of the general aviation industry. This rule treats them as such."

GAMA's enthusiasm for the new rule was tempered by restrictions on fractional programs in areas related to required runway lengths and aircrew flight and duty times that differed from the rule the FAA initially proposed in 2001. GAMA served on the FAA Fractional Ownership Aviation Rulemaking Committee that established the philosophical and regulatory framework of the new rule and is continuing its technical review of the rule.

... And NBAA's Thumbs-Up ...

The NBAA welcomed the release of the FAA's final rule: "By updating and revising its regulations governing operations of aircraft in fractional ownership programs, the FAA recognizes the demonstrated safety record of this important segment of business aviation.

"We applaud the FAA's effort on the creation of Subpart K and we look forward to working with the Agency on the implementation of the rule," said NBAA President Shelley A. Longmuir. Longmuir thanked FAA Administrator Marion Blakey and FAA National Resource Specialist for Part 135 Kathy Perfetti for their leadership and for shepherding this rule to completion.

While the rule is not completely what the NBAA expected, the organization appreciated the official recognition of fractional aircraft ownership operations and the expected help new companies seeking to operate or provide this type of service could receive. The NBAA says it is continuing to review the details of the final rule and soon will release a detailed analysis of its impact.

... With Special Seminars to Dissect The Rule

To help operators fully understand the implications of this new rule, a new regulatory seminar sponsored by the NBAA and facilitated by the industry's leading regulatory experts is being offered at several locations nationwide:

December 2003 -- New York, N.Y.
January 2004 -- Los Angeles, Calif.
February 2004 -- Dallas, Texas
June 2004 -- Chicago, Ill. (with an NBAA Business Aviation Regional Forum)

This seminar will review in detail the revisions to the FARs, ownership and operator roles and responsibilities, tax implications and finance options, international operations, and aircraft registration considerations.