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Part 125 "Airlines" - Should Come with a Black Box Warning


Part 125 Operator, Part 125 Operations, Part 125 Airline

Your Student Athlete May Not Be Flying on a Commercial Airline

Despite the disparity between FAR Part 125 air charter and the much more robust regulatory standards of FAR Part 121 air charter, we continue to see aircraft being used for large group air charter that are not operated under the commercial gold standard of Part 121 regulations. The differences between Part 125 air charter operations and Part 121 air charter operations are a subject that has been addressed several times on our site. Here is a link to one such blog that is the perfect quick read to learn what those differences are.


A number of corporations, motorsports groups, and collegiate and professional teams utilize aircraft operated under the private and noncommercial Part 125 regulations. For private sector entities, their ownership has made the decision to place the aircraft on a (much) less robust 125 certificate. But what about the passengers? Don't they deserve the commercial aviation standard that all passengers in the U.S. enjoy? Especially student athletes that aren't being paid, and have no say as to what aircraft their teams fly on.


The Black Box Problem with Part 125 "Airline" Operators

A common rationale the Part 125 air charter camp employs is that the operator voluntarily adheres to the same safety, pilot training, and maintenance as a Part 121 air carrier. "We do the same stuff as Delta and JetBlue; we just have a different certificate." Such claims are nearly impossible to verify as regulators are not applying the same scrutiny to Part 125 operators as they are to their Part 121 counterparts - it's a black box that doesn't have a third-party regulator verifying the standards that a 125 operator may claim that they are maintaining.


Part 125 Airline

While in theory, it's possible that a Part 125 operator could mirror Part 121 commercial operations for maintenance and pilot training, there isn't anyone outside of the organization verifying this. Passengers have to take operators at their word, without the benefit of independent federal oversight and regulation of the Part 121 standards that are purportedly being followed voluntarily. It is akin to playing a sport without any officiating -nobody is there to determine if all of the rules are being followed. Part 125 operators are not supposed to be engaged in the profit-making enterprise of commercial air transportation, therefore they aren't regulated as such.


Why does Part 125 Exist?

The regulatory rationale for Part 125 was well-intended and serves a useful purpose - "Part 125 provides for the operation of large airplanes that are not conducting operations in common carriage" (U.S. Department of Transportation Federal Aviation Administration, 2016). Therefore these operators can avoid the significant capital expenditures associated with commercial airlines while operating large aircraft privately.


This approach is fine for the owners of companies' professional sports teams (although this practice is becoming much less common among pro teams) that want to haul around their employees under the less restrictive Part 125 regulations - to each their own. Part 125 operators are also sometimes authorized to have a small number of long-term clients to defray the cost of operating the certificate, sometimes referred to as the nebulous "rule of three". However, the Department of Transportation (DOT) has taken enforcement action against Part 125 operators that they determined were in violation of DOT regulations. The issue has always been a matter of degree; when does a Part 125 operator cross the line from defraying costs to illegally engaging in common carriage? More importantly, why does this ability to defray costs exist in the first place, especially when it can often involve the carriage of unwitting passengers who no idea they aren't flying on a commercially certificated airline?


What's the Problem with Sports Air Charter Flights that fly on Part 125?

Let's do a thought experiment and assume that all FAR Part 125 operators are following are not engaging in common carriage when they make their aircraft available to unrelated parties for charter. The disparity in regulatory oversight and safety margins between Part 125 and Part 121 does not disappear. The passengers on aircraft operated under Part 125, many of which are student-athletes, have no idea that they are not flying on a commercial airline. None. The paint is nice, the seats are luxe, what's not to love? What would their parents think?


While we agree that Part 125 is entirely appropriate for operating large aircraft for private purposes, we believe that every air charter passenger deserves the same commercial standard applied to all U.S. Part 121 airlines when they are on a charter flight. No exceptions. Yet, many athletic and purchasing departments continue to put cost savings ahead of these standards. "If it's good enough for famous team XYZ, then it's good enough for me" is an argument that replaces standards with assurances. This rationale has no place in collegiate sports or anywhere else in the air charter industry for that matter.


The NCAA has done an excellent job making it clear that it opposes the utilization of Part 125 operators:


"...we believe that carriers only having Part 125 certifications are specifically prohibited by FAA regulations from use for team travel. Further, we believe that there are increased risks and exposures associated with transportation by Part 125 certified carriers. We know that you place the safety of your student-athletes, coaches, and administrators as the highest priority, and it is in that spirit that the NCAA national office provides this resource information to you. We urge you to work with your insurance and risk personnel to conduct due diligence of all your transportation carriers."


An Unfair Playing Field

There are likely some Part 125 operators that are operating in close adherence to Part 125 regulations. Others are out in the marketplace competing against Part 121 operators, and the business that they are deriving would otherwise be awarded to commercially certificated air carriers. Publicly available data indicates that this is a growing revenue source for 125 operators that compete with their heavily regulated commercial counterparts who have exponentially higher costs. One such operator was shut down by the DOT. The commercial standards of a Part 121 airline cost a lot of money to maintain. A Part 125 operator has much lower costs and can offer pricing that undercuts what a commercial carrier can operate for. This not only isn't fair; it is arguably less safe, and it can be illegal.


After all, a private Part 125 operator is not supposed to be out in the marketplace (DOT's term of art is "holding out") looking for an air charter business. DOT has previously applied the following test to determine if a certificate holder is engaging in common carriage: “Where it is doubtful that an operation is for 'compensation or hire,' the test applied is whether the carriage by air is merely incidental to the person’s other business or is, in itself, a major enterprise for profit” (US DOT, 2016). When we see the type of growth in the use of Part 125 operators by collegiate team air charter that we have in past years, one has to ask if these operations are "incidental" to their business, or if it is their business.


If You Skimmed this Blog - Here's the Point!

If you are involved with air charter procurement, ask for the certificate type and air carrier name. If the aircraft is not operating under Part 121 (or for smaller groups Part 135) or a foreign equivalent for international flights, you need to consider whether the cost savings outweigh the benefits of utilizing aircraft operating on a commercial certificate. You should also determine if your charter flights can be operated legally under Part 125 and ask your risk and insurance department to weigh in. Our view is that no amount of cost savings can be justified by not having the benefit of a commercially certificated air carrier and the safety standards that apply.



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