FAA Weighs In On Fractional Ownership
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.
NBAA’s 2003 Show Is Here
Big Numbers, History Of Flight Celebrated …
The business aviation event of the year is nearly upon us and organizers are putting the final touches on this year’s show. The NBAA’s 2003 and 56th Annual Meeting & Convention, to be held October 7 to 9 at the Orlando/Orange County Convention Center in Orlando, Fla., will feature close to 30,000 attendees, more than 1,000 exhibitors, 75 informational sessions and 135 aircraft on static display at Orlando Executive Airport. The convention’s opening general session will feature new NBAA President Shelley A. Longmuir, FAA Administrator Marion C. Blakey and U.S. Representative John L. Mica (R-Fla.), chairman of the House Aviation Subcommittee, as keynote speakers.Aside from the latest and greatest of business aviation, this year’s show will celebrate 100 years of powered flight. As with other major events, EAA’s Countdown to Kitty Hawk exhibit will be on display inside Orlando/Orange County Convention Center Exhibit Hall C. Also on display will be vintage aircraft simulators and authentic Wright Flyer artifacts from the Franklin Institute and Wright Again program. In addition, the chief historian and interpreter at the Wright Brothers National Memorial, Darrell M. Collins, will give a special presentation on October 7 during the opening general session. Collins is widely acknowledged as one of the top five authorities on the Wright Brothers and early aviation history.
… Opening Ceremony to Feature Astronauts Armstrong and Cernan …
Astronauts Neil Armstrong and Eugene Cernan will join business aviation legend Harry B. Combs in presenting the first annual Combs Award to photographer Dan Patterson during the opening general session on Tuesday, October 7. This award, sponsored by the National Aviation Hall of Fame (NAHF) and 1996 NAHF enshrinee Combs, honors Patterson for his photographic preservation of America’s air and space heritage.Award presenters Armstrong and Cernan are, respectively, the first and most recent men to set foot on the surface of the moon. Patterson’s submission was selected for the $20,000 research and preservation award by a panel of judges that included not only Combs and Armstrong but also aviation historian and author C.V. Glines; best-selling author and executive director of the Astronaut Scholarship Foundation, Howard Benedict; and executive director of the Whirlybirds International, Jean Tinsley.
… and NBAA Taps Bob Warren As New Exec VP
On September 15, aviation veteran Bob Warren commenced his new role as the NBAA’s Executive Vice President. In this newly created role, Warren will report directly to Shelley A. Longmuir, president of the NBAA, and oversee the association’s departments of finance, human resources, strategic programs, membership, marketing, conventions and seminars, and support services.Warren comes to the NBAA from the Air Transport Association of America (ATA), where he served as senior vice president, general counsel, and corporate secretary. His 30-year career spans considerable experience in aviation, regulatory and legal work via high-ranking positions at several federal government departments, and association management.
Raytheon Aircraft Handles Summer’s Heat
Company Ponders Selling Beech, Hawker…
The rumors about Beechcraft and Hawker being up for sale just might be true. Raytheon’s new CEO William Swanson recently told Bloomberg News he’d consider selling the aircraft division after fixing what ails it. “As soon as the market wakes up and people realize there is a rationalization that needs to take place, we’ll be in the right position to be able to do that,” Swanson said. The aircraft division is being extensively revamped, much to the disappointment of some workers who are seeing in-house jobs being sent to contractors. Raytheon has said that it wants to do only final assembly at its factories, mostly in Wichita. Swanson’s comments might indicate the company is paring operations to make the aircraft division more attractive to potential buyers. It lost $4 million last year compared to $760 million in 2001. “You don’t want to make a decision like that when you have to put your business in the right shape,” he said. One thing is certain: The new CEO doesn’t appear to have much attachment to the airplane business. He told Bloomberg it’s not one of Raytheon’s “core” businesses. Raytheon makes most of its money in electronics, particularly air traffic control and military equipment. Cessna has been rumored to be among the potential buyers and even Mooney Aerospace Group has expressed an interest.
… And Deals With SEC Probe …
Raytheon has also come under the Security and Exchange Commission’s microscope lately, compounding the headaches it’s already enduring in the soft post-9/11 economy. In January, the SEC began to look into how Raytheon Aircraft recognized revenues from 1997 to 2001. The investigation specifically focused on the manufacturer’s regional aircraft business. The SEC’s investigations — the third federal inquiry for Raytheon Co. since 2001– focuses on a transaction in October 2001 in which Raytheon took a $693 million charge on its 19-seat commuter aircraft business. In one of its filings, the SEC wrote, “This matter involves violations of Regulation FD by Raytheon through its Chief Financial Officer, (Frank) Caine. Caine selectively disclosed quarterly and semi-annual earnings guidance — the prototypical disclosures Regulation FD aimed to prohibit — to sell-side equity analysts (collectively, the ‘Street’). Caine’s disclosures concerned Raytheon’s estimate of its expected quarterly distribution of earnings per share (‘EPS’) for 2001 overall, and for the first quarter in particular. Specifically, Caine communicated to the analysts that their first quarter EPS estimates were too high.” Caine resigned from Raytheon in April 2000.
… As New Key Personnel Are Named
Raytheon Aircraft Services has named two executives to its leadership team. Harold (Skip) Madsen is Vice President/General Manager of Raytheon Aircraft Services, and Chuck Curry is the General Manager-RAS San Antonio. Madsen — a former president and chief operating officer of Executive Aircraft Corp. of Wichita — assumes all responsibility for the company’s 12 fixed-base operations. Curry — former co-owner of McKinney, Texas-based Curry & Curry Consulting, Inc.– will be responsible for overall management and growing San Antonio’s service and modification business.
Biz Flyers Get The VIP Treatment
Embraer Sells Five Exec Jets to India …
Brazilian aircraft manufacturer Empresa Brasileira de Aeronautica (Embraer) announced on Sept. 19 that it had signed a contract to sell India’s government five of its midsize twin-engine Legacy executive jets. The Mach .80 aircraft, which will total about $158 million, will be used to transport the country’s top brass and dignitaries. Four of the Legacy jets, which boast a range of 3,250 nm, will be used to replace aging Avro aircraft in the Indian air force’s VIP fleet operated by the Air HQ Communication Squadron of the Indian Air Force. India’s Border Security Force will use the fifth. All five aircraft will be specially configured for authorities and government officials’ transportation. The jets will feature 14 seats, two separate compartments for senior authorities and their staff, and will be fitted with special self-protection suites.
… And London City Joins The Club
Speaking of the VIP treatment, the world’s first members-only airline, Club Airways of Switzerland, opened a new link with London City Airport on Sept. 22, flying top executives from Geneva on board a Cessna Citation II jet. This latest addition to the Club Airways schedule is operating between the private aviation terminal at Geneva Airport, Switzerland, and the Jet Centre at London City Airport. Club Airways has been operational since February and now has more than 450 members. The airline’s schedule is currently two flights each weekday between Geneva and Paris and two between Geneva and London. Flights to Basel, Milan, Munich and Moscow will be added during October and November this year.
The Ongoing Battles In Naples
Authority, Tenants Argue Over Fuel Fee Increases …
The Naples Municipal Airport (KAPF) — which has recently been associated with Stage 2 aircraft restrictions and political bickering — is now adding some additional salt to this aeronautical wound. The Naples Airport Authority says it is setting aside $600,000 for legal fees for the next budget year, but airport tenants argue the fees are costing them money. On Sept. 18, the five-member board unanimously approved the $10.3 million 2003-2004 budget, which includes a fuel flowage fee increase from 35 cents to 40 cents a gallon. In 2000, the flowage fee was 25 cents per gallon and was increased to 35 cents in 2002. Gail Cureton, director of communications for the authority, told the Naples News this fee is charged per gallon to tenants on the airfield who have permits to dispense fuel into their aircraft. Jet 1 Chief Executive J. Scott Phillips said the authority should get out of the fueling business and stick to government operations.”They keep raising these rates to pay for this Stage 2 thing, and it’s costing us a fortune,” Phillips said. “The users of the airport have been totally ripped off.”
… While Stage 2 Debate Continues
Naples Airport Authority Executive Director Ted Soliday said the flowage fee increase is caused by an increase in operating costs, such as fire services, but no mention of the large litigation costs on the tiring Stage 2 issue were mentioned in the authority’s statement. The authority has spent more than $3 million in legal fees and studies while battling the Federal Aviation Administration over the Stage 2 jet ban at the city airport. As a result of that ban, the FAA is withholding grants, something the county government doesn’t want to lose. The FAA ruled in the spring that the airport’s refusal to allow the Stage 2 jets to fly in and out of the Naples airport is discriminatory and violates federal law. The jets, which were made primarily between 1975 and 1983, are noisier than jets made in subsequent years. The federal government has banned all Stage 2 jets weighing more than 75,000 pounds, but Naples is the first airport in the country to ban Stage 2 jets that weigh less than 75,000 pounds. The battle between the authority and the Federal Aviation Administration could now move to a federal appellate court, which is only one notch below the U.S. Supreme Court.
Bombardier Claims Recent Successes
Posts Higher Q2 Airplane Deliveries …
Amidst a struggling market, Bombardier Aerospace saw its airplane deliveries climb in the second quarter 2003, according to the Canadian airplane maker’s recently released quarterly financial results. For the quarter, the company delivered 85 airplanes: 66 regional jets and 19 business jets. Bombardier Aerospace’s revenues for the quarter were $2.8 billion, up slightly from $2.7 billion in the same quarter a year ago. Its backlog stood at $16 billion, down from $18.7 billion at the end of the first quarter.In a conference call with reporters earlier this month, Paul Tellier, CEO of the manufacturer’s parent company, Bombardier Inc., said he was pleased with the results Bombardier Aerospace and the company’s other divisions turned in for the quarter. Tellier says despite a weak business jet market and major restructuring by the nation’s airlines — major customers of its regional jets — he expects year-end airplane deliveries to remain at or near last year’s total of 298.
… Holds Off On Additional Layoffs
Tellier also stated there is no current need to cut additional jobs within the company’s divisions. Since 2001 the company has cut thousands of jobs, including in Wichita where it manufactures the Learjet 60 and assembles the Challenger 300, Learjet 40 and Learjet 45. Employment at Bombardier’s Wichita plant has dropped from a summer 2001 high of 4,000 to about 2,200.
Clay Lacy To Be Honored At Aero Club’s Banquet
Clay H. Lacy, legendary military, racing and airline pilot, aerial cinematographer and pioneer charter jet FBO operator, will receive the Aero Club of Northern California’s prestigious Crystal Eagle Award during the Club’s annual awards banquet Oct. 18, at the Hiller Aviation Institute in San Carlos. As president of Clay Lacy Aviation headquartered at Van Nuys Airport, he manages his successful 30-jet executive aircraft charter and management operation. Lacy has logged almost 50,000 hours of flight time, more flying time in jets than any other human on the planet. Lacy, who holds 30 type ratings, has conducted over 2500 air-to-air photography flights and devoted his lifelong efforts to airplanes and the aviation industry and has set world records in private, military, air race, airline and experimental aviation.The Aero Club will also present National Aeronautic Association Special Certificate of Honor awards to Steve and Nancy Sullivan, Founders of ARIS Helicopters; Marge Frenzel, air race pilot, WASP and flight instructor for Amelia Reid Aviation; and Gerry Shreve, former military helicopter pilot and longtime aviation educator with San Jose State University.
Biz AV’s AD Watch
AVweb’s coverage of Airworthiness Directives (ADs) includes links to the complete text of the documents.
Cessna Model 680 Sovereign
The FAA has issued Final Special Conditions for the Cessna Model 680 Sovereign airplane. The agency claims this airplane will have a novel or unusual design feature associated with side-facing single-occupant seats. The FAA states its applicable airworthiness regulations do not contain adequate or appropriate safety standards for this design feature. These special conditions, which become effective October 14, contain the additional safety standards that the agency considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.
Gulfstream Model G-V
The FAA has issued a final rule for certain Gulfstream Model G-V series airplanes. This amendment, which became effective on Sept. 26, adopts a new Airworthiness Directive (AD) that is applicable to some of these business jets and requires a one-time inspection of the balance weight installation of the left and right ailerons for correctly installed attachment components, and corrective action if necessary. The FAA claims this action is necessary to prevent separation of the balance weights of the aileron, which could result in jamming of the pilot’s aileron control system, subsequent loss of aileron control, and consequent reduced controllability of the airplane.
Sabreliner Model NA-265
The FAA has issued final special conditions for the Sabreliner Model NA-265, as these modified airplanes will have a novel or unusual design feature when compared to the state of technology envisioned in the airworthiness standards for transport category airplanes. The modification incorporates the installation of Air Data systems that perform critical functions by providing altitude, airspeed, or other critical data. The FAA claims the applicable airworthiness regulations do not contain adequate or appropriate safety standards for the protection of these systems from the effects of high-intensity radiated fields (HIRF).
The FAA has issued a final rule for Eurocopter France (Eurocopter) Model AS 365 N3 and EC 155B helicopters. This amendment, which becomes effective Oct. 23, adopts a new Airworthiness Directive (AD) that requires replacing each Fenestron pitch change control rod (control rod) with an improved reinforced steel airworthy control rod. The FAA states this amendment is prompted by a failure of a control rod on a prototype helicopter and by the manufacturer making available a newly designed reinforced steel control rod. The agency claims the actions specified by this AD are intended to prevent failure of the control rod, loss of control of the tail rotor, and subsequent loss of control of the helicopter.
Upcoming Biz Av Events
The following business aviation events will be held within the next few months:Professional Development Program (PDP) Course
“Developing a High-Performance Flight Department Team”
Oct. 5, Orlando, Fla.Emergency Response Workshop
Oct. 5-6, Orlando, Fla.Management Fundamentals For Flight Departments Workshop
Oct. 5-6, Orlando, Fla.Human Factors-Fatigue Management Workshop
Oct. 5-6, Orlando, Fla.Professional Development Program (PDP) Course
“Legal Issues in Aviation Management”
Oct. 6, Orlando, Fla.Inspection Authorization (IA) Renewal Course
Oct. 6, Orlando, Fla.NBAA 56th Annual Meeting & Convention
Oct. 7-9, Orlando, Fla.
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