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Air Charter - Understand the Procurement Risks

Updated: Apr 13, 2020

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The Liability Risks of Arranging Private Air Charter

Many professionals across a wide swath of disciplines find themselves in the position of arranging air charter for third parties, be it for a corporate client, family office, or an air charter for a large group that they are associated with. While booking a private jet may be common for many professionals, often this may be done as a courtesy and not as part of your core services. What is less widely appreciated is the liability risk you may be taking on for your company or even you personally. Read on to learn how you can reduce your risk and avoid liability associated with air charter as much as possible.

I'm Covered -- or am I?

Getting your company named as an additional insured on the air carrier's insurance policy is a standard industry practice. If your air charter company or air charter broker is not making this happen, you may need a new provider. While being named as an additional insured may afford some coverage (keeping in mind that the air carrier is first in line for coverage) should there be an insurable event, what it does not protect you from is being sued for selecting or arranging services with the private jet operator or charter airline in the first place.

Break the Air Charter Transaction Chain

What to do? The most effective way to reduce or outright eliminate liability associated with recommending or selecting an air charter provider is to remove yourself from the transaction chain. For this very reason, many companies will refer their clients to an air charter broker or private jet operator to handle their private air charter needs. If you are removed from the process, you have taken a significant step toward reducing or eliminating liability risk. Established air charter brokers will carry non-owned aircraft liability insurance. This coverage insures them against the liability associated with selecting and arranging air charter flights as an agent. Keep in mind that in most cases this insurance cannot be transferred. If you have any role in selecting or arranging private air charter, you should have your own coverage, or avoid being a part of these transactions altogether.

Due Diligence Reduces Risk

Private aviation is a complex market. Often it is difficult to cut through the marketing and get to what really matters - safety and operational reliability. Both require a careful analysis of past performance, the aircraft offered, the operator, and the crew. For this process we recommend utilizing recognized third-party audit resources. Ask your air charter broker which audit protocols that they utilize to vet their private jet vendors and charter airlines. Effective audit tools will give you, among other things, the operator's incident and accident history, FAA enforcement actions, aircraft age and history, pilot experience and certifications, and pilot medical status. Your air charter broker can also give you the type of market insight that you can't find in records, such as customer service, reputation in the marketplace, and reliability.

Certification is Critical

This should go without saying, but all operators should be appropriately certified for commercial operations to carry passengers. While this seems obvious, we cannot tell you how many times we see private not-for-hire aircraft being "donated" or "borrowed" for private jet travel. The certification of these operators, their aircraft, and their crews is not even close to what is required for the commercial operation of a private jet under a commercial Part 135 certificate. This is even more important for anyone that arranges large group air charter. As we have said in our other blog, there are a number of private operators that are offering their aircraft for large group air charter in order to defray costs. This dubious practice has been a gray area in the regulations for decades, and one that we believe deserves more attention. The standards under which these aircraft are operated (such as no drug testing and no crew rest requirements) are nowhere close to what the flying public enjoys on a properly certificated air charter airline - which are the identical standards that are applied to major airlines.

Differences between part 91 and part 135
Not-for-Hire (91) versus Commercial Air Charter Operators (135)

Understanding the Air Charter Market

The best thing that you can do for your clients is to make sure that they understand that the air charter market is complex, and what looks like a safe bet is not always the case. Recommend that they get professional guidance in selecting an air charter company. Most importantly, recommend against "borrowing" a private aircraft not certified for commercial air charter operations. In such cases there is often a relationship between the passengers and the owner, and the cost to your client is very low or sometimes zero. However, the risks can be huge. Accidents occur on these privately owned aircraft far more often than on commercially operated aircraft. They are also not appropriately insured for commercial carriage. Knowledge is power.


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