The Federal Aviation Administration (FAA) has announced plans to close a loophole that could mean that “public charter” operators have to make major changes to their business model.
The basics of the “public charter” loophole
Before we talk about what the FAA is planning on changing, let me provide some background, and that’s probably easiest done in the form of an example (since this is kind of technical).
JSX is a public charter airline, and I’ve written in the past about the company’s controversial business model. The airline has nearly 50 Embraer jets, each of which has exactly 30 seats. The airline isn’t subjected to the same regulations as larger carriers — it’s able to operate from private terminals without standard TSA screening, and can hire pilots with fewer than 1,500 flight hours.
Why is the airline able to do this? Well, under FAA regulations, most airlines are Part 121 operators, which are the regulations governing scheduled air carriers. This is why airlines are required to have pilots with 1,500 hours, passengers need to be screened by TSA, etc.
JSX, meanwhile, is a Part 135 operator, as these are the rules governing commuter and on-demand operations. How are commuter and on-demand operations defined for these purposes?
- On-demand operations can be conducted on aircraft with up to 30 seats; the key is that as an on-demand operator, your primary business model can’t be operating scheduled flights, so this could include private jet operators
- Scheduled commuter operations can also be conducted under Part 135 operations, but only on aircraft with up to nine seats; for example, Mokulele Airlines operates Cessna 208B Grand Caravans in Hawaii, each with nine seats
As you can see, airlines are able to operate scheduled flights as a Part 135 operator, but only if planes have under 10 seats. So how is JSX able to do this with 30-seat aircraft? It’s because JSX claims that it’s not a scheduled operator, but rather that it’s an on-demand operator.
How is that possible, when JSX has a clearly published schedule? It’s because there are actually two companies involved — JSX sells scheduled flights, while a company named Delux Public Charter operates JSX’s flights.
Unsurprisingly, many of the major airlines have been trying to campaign to stop JSX, given the loophole the company is taking advantage of. It looks like they’re now having some luck…
FAA finally plans to address airlines like JSX
The FAA has today announced that it’s taking action to address the public charter flight loophole. The FAA explains that there has been a huge increase in the frequency of services that are operated like scheduled airlines, but with less rigorous safety regulations, a fact that’s often not transparent to the flying public.
The FAA intends to initiate a rule making to amend the definitions of “scheduled,” “on demand,” and “supplemental” operations. If finalized, the effect of this proposed rule change would be that public charters will be subject to operating rules based on the same safety paramaters as other non-public charter operations.
The FAA will issue a notice of proposed rule making expeditiously, and then there will be a commenting period. So don’t expect anything to change overnight. Here’s what FAA Administrator Mike Whitaker had to say:
“Part of the safety mission of the FAA is identifying risk early on, and that’s exactly what we’re doing on public charters as usage expands. If a company is effectively operating as a scheduled airline, the FAA needs to determine whether those operations should follow the same stringent rules as scheduled airlines.”
“At the same time, we want to look at how future innovation might cause us to think differently. Safe air travel options should be available to everyone, not limited to only those living near a major airport. We want to put a safety lens over the options of future innovation, as we work to further connect small and rural communities to open up more options for everyone at the same high level of safety.”
We’ll see how this all plays out. If public charters are treated the same as regularly scheduled airlines, this would mean that JSX flights would need to leave from terminals with TSA screening, pilots would need at least 1,500 hours, and some other safety related changes would need to be made.
My take on the FAA cracking down on this
Personally, I agree with the FAA here. Before I share why, let me acknowledge several points:
- From a safety perspective, I’d have absolutely no qualms flying with JSX
- I appreciate the innovation that JSX brings to the market in terms of its passenger experience
- I don’t blame JSX for taking advantage of a loophole, as the company is following the current rules, as published
- I think the 1,500-hour rule for pilots of Part 121 operators makes absolutely no sense (for reasons I explained here)
- I do think airlines campaigning against JSX are largely doing so for competitive reasons, rather than because they have actual safety concerns about a competitor
- The FAA should have thought more carefully when initially publishing rules about what defines a Part 135 operator, because it seems like this kind of a “trick” should have been anticipated
All that being said, I think it’s rational for the FAA to update its policies and definitions of things, when companies take advantage of loopholes. The spirit of Part 121 operators is that they’re flying non-scheduled service, meaning that they’re typically operating as charter airlines.
That’s simply not the way that JSX is operating in practice, even if the airline can claim so on paper. The company has a clearly published schedule, and the only reason it’s technically not a scheduled operator is because one subsidiary sells the seats, and another subsidiary operates the flights.
I think it’s logical for the government to address the fundamental question of whether this operating model is acceptable or not. Perhaps it’s not a huge issue now, but if we see more airline startups try to operate on this basis, I think it’s useful to settle this one way or another, sooner rather than later.
Heck, I’d have no problem with the FAA saying that scheduled airlines with planes that have up to 30 seats should be allowed to operate under Part 135 rules. I also think the FAA should lower the 1,500-hour rule, which doesn’t do much to improve safety in aviation.
But in general, I don’t like when the government creates a system whereby airlines are essentially incentivized to find loopholes, as JSX has. I’d much rather that airlines are incentivized to market and operate their flights, as it creates more accountability.
Bottom line
The FAA will finally be cracking down on the public charter loophole, which has allowed carriers like JSX to operate as Part 135 operators, rather than as Part 121 carriers. It’s not that I have safety concerns with JSX, but rather I just don’t think it makes sense for government regulations to essentially incentivize this kind of behavior. As far as I’m concerned, allow all planes with up to 30 seats to have the option of being Part 135 operators. So it’s not that I’m against the concept, I’m just against the obvious loophole.
While the FAA has officially stated that it will crack down on public charter operators, we don’t yet know what this will look like, so I’m sure we’ll find out soon.
What do you make of the FAA addressing public charter operations?
Membership is free and takes no more information than commenting as a guest. Earn status points for good contributions, and see fewer ads as your status grows.