Scheduled On-Demand Charter

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Charter by the Seat?

You find a complex variety of buying options within the FAR Part 135 charter. Some of the variations seem to cross over into scheduled operations. For example, if you buy an “empty leg” of an existing charter, is that a scheduled flight? How can you possibly buy a seat on an “on-demand flight”?

Black & White or Gray?

The clearest example of the gray areas is the sale of “empty legs.” Charter operators that know that they have a long repositioning flight would like to have some portion of the flight earn revenue. As long any or all the elements of departure time, departure location and arrival location are negotiated with the customer, the flight is “on-demand.”

But the FAA is wary of empty leg sales that only appear to be negotiated. The FAA has stated in a Legal Interpretation:

Again, we would caution [the charter operator] that a scheduled operation is one where three elements are offered in advance by a certificate holder or its representative. To the extent that [the charter operator] holds out these elements, even if the holding out is through different medium, i.e. two elements are published in electronic or pager form, and the third is communicated by telephone, we would find this to be scheduled service. To the extent that [the charter operator] simply notifies the public that it has an aircraft in a particular city available for hire, we might consider this an on-demand operation. However, this departure window ranged from several days to as little as 36 minutes, i.e. an airplane is scheduled to travel from point A to point B and is available to depart between 1:24 pm and 2:00 pm. The shorter the departure window or in this case availability window, the more it looks as though this is a scheduled operation. We view these proposed operations as scheduled operations and not authorized by your operations specifications. One example we found on your website was a light jet available in a small airport in Utah for a total of 30 minutes. Such a short window indicates that the aircraft must be in route or in a certain location, once the window expires and therefore, the aircraft is not idle. In fact, to the extent that [the charter operator] needs to move the aircraft to point B after the 30 minute window and to the extent [the charter operator] verbally tells a client where the aircraft is traveling, we would consider such communication to be a holding out of the destination airport. Such a holding out, in addition to a holding out of the departure airport and a time by which an aircraft must depart, is a scheduled operation.

While empty leg sales may not seem to be black & white, putting on-demand passengers together on the same flight is sublimely gray.

Defining “On Demand”

By definition, “On Demand” as defined by FAR § 110.2, allows some scheduled flights for some aircraft. Rotorcraft and airplanes, other than turbojet powered airplanes, with 9 or fewer passenger seats, and a maximum payload capacity of 7,500 pounds or less, are allowed to conduct scheduled passenger operations up to four trips per week on at least one route between two or more points. This definition is not new, and “on demand scheduled operations” have always been available in Alaska. They have also gained great popularity in the lower 48 in both helicopters and small airplanes.

The definition of “On Demand” as defined by FAR § 110.2, also allows passenger-carrying operations conducted as a public charter under FAR Part 380. Part 380 allows a broker to offer seats for sale on a chartered flight. Part 380 is a source of confusion in the industry, in part because the rule refers to the broker as a “public charter operator” even though the broker does not operate aircraft.

The DOT’s new “charter broker” rules also provide new by-the-seat options. FAR § 295.5(h) defines a single entity charter as “a charter for the entire capacity of the aircraft, the cost of which is borne by the charterer and not directly or indirectly by individual passengers, except when individual passengers self-aggregate to form a single entity for flights to be operated using small aircraft.” The rule later defines a “small aircraft” as “any aircraft originally designed to have a maximum passenger capacity of 60 seats or fewer or a maximum payload capacity of 18,000 pounds or less.” This means that groups can “self-aggregate” and charter aircraft without the aid of FAR Part 380. “Scheduled on-demand” operations are legally complex, but increasingly popular. Sometimes gray is the color of money.

This article appeared in the August, 2019 issue of Business & Commercial Aviation as a Point of Law article.

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