Appendix 2 APPENDIX 2. FRACTIONAL OWNERSHIP VS. 14 CFR PART 135 NOTE: The following is a summary of the key differences between a fractional ownership program and 14 CFR part 135.
Fractional Ownership Part 135 General The program is open only to owners in that program or affiliate programs. An air carrier must conduct leases or subleases of shares less than the minimum size. An owner cannot exceed the number of hours in excess of hours associated with a share. An owner cannot carry people or property for compensation or hire on a program flight.
A certificate holder can hold out to the public to provide transportation. No minimum or maximum hours specified.
Citizenship There is no citizenship requirement for program managers. Fractional owners must consider citizenship in the context of aircraft registration and reimbursement for use.
The certificate holder must be a U.S. citizen.
Contracts Multiple contracts are required defining operational control responsibilities, owner/ program manager responsibilities, dry-lease, etc.
There are no required contracts.
Purchase and Use Hours may not exceed total hours associated with share. Share size may not be smaller than 1/16th for airplanes and 1/32 nd for helicopters.
An air carrier must conduct a sale or sublease of a share less than the minimum size.
There is no maximum or minimum purchase or utilization. Charter can be purchased on a single trip basis or block charter.
Operational Control The owner is in operational control of a program flight when the owner has directed the flight and the aircraft is carrying those persons or property.
The program manager has operational control on administrative flights, sales demos, positioning, ferrying, maintenance or crew training, and no passengers designated by the owner(s) are carried.
If the aircraft is also used under 14 CFR part 121 or 135, that air carrier has operational control.
The owner is ultimately responsible for safe operations and rule compliance.
• Can delegate performance of tasks, but not the responsibility;
Air carrier has all responsibility for operational control.
Appendix 2 Fractional Ownership Part 135
• Can rely on the program manager for aviation expertise and aviation management services;
• Signs acknowledgement of responsibilities;
• Other required contracts; and
• When tasks are delegated to program manager, the owner and program manager are jointly and individually responsible for compliance.
Management Specifications (MSpecs) There is no certificate issued. The program manager receives MSpecs on behalf of the collective owners.
Content similar to air carrier operations specifications (OpSpecs).
Certificate issued (14 CFR part 119). OpSpecs are issued to the air carrier.
Drug and Alcohol Testing Program Drug and alcohol misuse education program required. There is no drug and alcohol testing program required by regulation; however, may have company testing but must disclose differences between Federal Aviation Administration (FAA) and company testing programs to the owners. Must not use Federal forms.
Drug and alcohol testing program required by regulation.
Emergency Maintenance Can use maintenance personnel who have not received drug and alcohol misuse education.
Reporting requirements apply.
Cannot use maintenance personnel who have not received drug and alcohol misuse testing. Reporting requirements apply.
Passenger Briefings Safety briefing similar to part 135. Must include name of pers on who has operational control.
Safety briefing required.
Load Manifest Required for all aircraft. Must also carry a written document that states the name of the entity having operational control on that flight and the part under which the flight is operated.
Required for multiengine aircraft.
Management Personnel There are no required management personnel or qualifications, but must designate points of contact/ people authorized to sign MSpecs.
Certain management personnel are required for a Continuous Airworthiness Maintenance Program (CAMP).
Required management personnel (except for a single-pilot operation)
• Director of Operations.
• Chief Pilot.
• Director of Maintenance.
Pilot Qualifications Must have adequate number of pilots per No set number of pilots.
Appendix 2 Fractional Ownership Part 135 program aircraft to meet program needs.
Two pilots required unless deviation issued.
PIC must have 1,500 hours/second in command (SIC) 500 hours.
Pilot in Command (PIC) for instrument flight rules (IFR) must have 1,200 hours/airline transport pilot (ATP) or Commercial depending on type of aircraft and authorized operation.
Single-pilot operations authorized.
PIC for visual flight rules (VFR) must have 50 hours.
PIC for IFR must have 1,200 hours.
No regulatory time specified for SIC.
“Eligible on-demand operator” must use two pilots— PIC 1,500 hours/SIC 500 hours.
Crew Pairing Crew pairing and operating limits required. Crew pairing and operating limits required for “eligible on-demand operator” only.
Pilot Background Checks Check required. Check required.
Scheduling/Flight Release Must have trained and qualified scheduling/ flight release personnel on duty.
Must have flight locating system. Specific personnel not specified.
Flight Duty/Rest Can use part 91K program or 135 or 121 flight, duty and rest program.
Pilot/flight attendant schedules must be published in advance.
Part 135 flight/duty and rest requirements apply.
Performance Runway performance requirements specified.
Can use “80 percent rule” with approved destination airport analysis program.
Runway performance requirements specified— Eligible on-demand operator can use “80 percent rule.”
Proving/Validation Testing Proving and validation tests if applicable to aircraft and authorizations. Part 135 experience can justify deviations from proving and validation requirements.
Proving and validation tests if applicable to aircraft and authorizations. Fractional ownership experience can justify deviations from proving and validation requirements.
Maintenance Programs Will use part 135 program if aircraft also used in part 135 operation.
Aircraft inspection program must be FAA approved.
CAMP may be authorized.
Maintenance training required.
Maintenance program.
Minimum Equipment List (MEL) Approved MEL required. If aircraft also used in part 135, must use that MEL.
Approved MEL required.
Appendix 2 Fractional Ownership Part 135 Manuals Manuals are required. If aircraft also used in part 135, can use part 135 manual if any differences are noted.
Manuals are required (except for single-pilot operation).
Flight Crewmember Training and Testing Training and testing program—can use a part 135 qualification program in lieu of part 91K program.
Competency and proficiency checks (PIC and SIC).
If simulator available, at least one training session per year must be in simulator.
Training program required (except for single-pilot operation).
Competency (PIC and SIC).
Proficiency and line checks (PIC only).
Aircraft There is no aircraft size limit. Aircraft size or type does not affect the minimum ownership share, but the share remains at 1/16 th for airplanes and 1/32nd for helicopters.
On demand:
Airplanes 30 or fewer passenger seats and 7,500 lb payload or less, and helicopters.
Scheduled:
Airplanes, except turbojets, 9 or fewer passenger seats and helicopters.
Equipment Applicable to aircraft size and seating capacity.
Refer to air carrier rule for specific applicability requirements.
If more than 30 seats or payload capacity more than 7,500 lb:
Cockpit voice recorder (CVR)—Same requirement as part 121, § 121.359.
Flight data recorder (FDR)—Same requirement as part 121, §§ 121.343 or 121.344.
Terrain Awareness and Warning Systems (TAWS)—Same requirement as part 121, § 121.354.
Traffic Alert and Collision Avoidance System (TCAS)—Same requirement as part 121, § 121.356.
Weather radar—Same requirement as part 121, § 121.357.
Aircraft with 30 pax seats or fewer and 7,500 lb or less payload:
CVR—Same requirement as part 135, § 135.151.
See noted rules in part 91K column for air carrier requirements.
Appendix 2 Fractional Ownership Part 135 FDR—Same requirement as part 135, § 135.152.
TAWS—Same requirement as part 135, § 135.154.
TCAS—Same requirement as part 135, § 135.180.
Thunderstorm detection—Same requirement as part 135, § 135.173.
Weather radar—Same requirement as part 135, § 135.175.
FAA Oversight Assigned principal inspectors. Subject to inspections except for line checks and en route inspections.
Assigned principal inspectors and inspection program.
Subject to all types of FAA inspections.
Appendix 3 APPENDIX 3. CERTIFICATION OF THE EXECUTION OF AGREEMENTS I, ____________________, an officer of ______________________ (the program manager), which manages the ___________ fractional ownership program (the Program), certify that the program satisfies the eligibility requirements of Title 14 of the Code of Federal Regulations (14 CFR) part 91 subpart K (part 91K), and that the agreements required under part 91K have been executed. These agreements include (1) a Dry Lease Exchange Agreement; (2) a Management Contract; and (3) statements of Acknowledgement of Fractional Owner’s Operational Control Responsibilities. The owners and I understand that the Federal Aviation Administration (FAA) has the right to inspect all contracts.
1. DRY LEASE EXCHANGE AGREEMENT. The Dry Lease Exchange Agreement or other program agreements between the program manager and owners related to aircraft exchange address the following:
a. Mandate that two or more airworthy aircraft be available in the long term.
b. Allow the fractional owners of an aircraft to use (through the program manager) aircraft owned by other fractional owners within the same program.
c. Clarify that the program manager will schedule the aircraft from within the dry lease exchange pool and provide other aviation expertise and services to the owners.
d. Specify this is a multiyear program agreement.
2. MANAGEMENT CONTRACT. The management contract or other agreements between the program manager and the owners related to program management services address the following:
a. Specify this is a multiyear program contract.
b. Require the program manager to ensure that the program conforms to all applicable requirements of part 91K.
c. Provide the owner or owner’s designee the right to inspect and to audit the records of the program manager that related to the operational safety of the program and those records required to show compliance with the management specifications and all applicable regulations.
d. Designate the program manager as the owner’s agent to receive service of notices from the FAA.
e. Acknowledge the FAA’s right to contact the owner directly.
f. Prohibit an owner from carrying persons or property for compensation or hire on a program flight except if such operations are carried out in compliance with 14 CFR parts 135 or 121.
g. Limit the flight hours used during the term of the multiyear agreement to the total hours associated with the owner’s share of ownership.
Appendix 3
h. Prohibit the sale or lease of aircraft interest that is lesser than the “minimum fractional ownership interest” unless the flights associated with that interest are operated under part 121 or 135 and are conducted by an air carrier or commercial operator certificated under 14 CFR part 119.
i. State that the program manager will provide the owner the following operating services and functions:
(1) Establishment and implementation of safety program guidelines.
(2) Employment, furnishing, or contracting of pilots and other crewmembers.
(3) Training and qualification of pilots and other crewmembers and personnel.
(4) Scheduling and coordination of the program aircraft and crews.
(5) Maintenance of program aircraft under the terms of this agreement.
(6) Satisfaction of record keeping requirements.
(7) Development and use of a program operations manual and procedures.
(8) Application for and maintenance of management specifications and other authorizations and approvals from the FAA.
(9) Training in the recognition of hazardous materials.
3. ACKNOWLEDGMENT OF OWNER’S OPERATIONAL CONTROL RESPONSIBILITIES. Each owner in the fractional ownership program has signed an Acknowledgment of Owner’s Operational Control Responsibilities, and under the acknowledgment:
a. The owner understands that he or she is in operational control of a program aircraft and must operate it in accordance with part 91K when: (1) the owner has the rights and is subject to the limitations applicable to the owner as set forth under part 91, §§ 91.1003 through 91.1013;
(2) the owner has directed that a program aircraft carry passengers or property he or she designates; and (3) the program aircraft is carrying those passengers or property.
b. The owner understands that he or she is in operational control of a program aircraft, even where he or she leases the program aircraft from another owner through the Dry Lease Aircraft Exchange (or Interchange) arrangement.
c. The owner understands and agrees to the responsibilities and potential liabilities described below. When the owner is in operational control, the following apply:
(1) The owner is responsible for safe operations, for complying with all applicable laws and regulations, and the management specifications (MSpecs) issued to program manager.
Appendix 3
(2) Even though the owner may delegate to the program manager performance of some or all of the tasks associated with carrying out owner’s responsibilities, the owner continues to be jointly and individually responsible, along with the program manager, for performance of these tasks and for compliance with applicable requirements.
(3) The owner may have liability risks in connection with the operation of the program aircraft, including possible liability risks for at least enforcement actions for any noncompliance, and liability if a flight-related occurrence causes personal injury or property damage.
______________________________ _____________________________ Name Title ______________________________ _____________________________ S i g n a t u r e D a t e Page 3 (and 4)
Appendix 4 APPENDIX 4. FIVE PHASES OF APPLICATION AND REQUIREMENTS OF THE GATE SYSTEM FOR PART 91K Phase 1 Preapplication •Flight Standards District Office (FSDO) Manager-Assign the application project manager *FSDO -Conduct Applicant Orientation and Preliminary Discussion
•FSDO-Provide applicant with application package
•Applicant Submit completed FAA statement of intent (SOI)
•Applicant-Submit proposed schedule of events
•Applicant-Identify management representatives Gate I •Applicant-Identify locations for training, maintenance, and principal base of operations
•Applicant-Submit documentation to substantiate a fractional ownership or business plan
•FSDO-Review and accept SOI
•FSDO Advise regional Flight Standards division Phase 2 Formal •FSDO-Complete Program Tracking and Reporting Subsystem for initial Application contact Applicant-Submit formal letter of application to FSDO
•Applicant-Submit schedule of events to FSDO
•Applicant-Submit all required manuals, programs, and materials to FSDO Gate II •FSDO-Accept or reject formal application
•FSDO-Obtain company identifier through OPSS Phase 3 Document Compliance FSDO -Monitor training/checking Phase 4 Demonstration •FSDO Conduct aircraft conformity and Inspection inspections FSDO-Conduct facility inspections
•FSDO-Review, approve, or accept all manuals, programs, and documents, as required Applicant-Correct manual/program discrepancies, as required Gate I|I •Applicant-Train sufficient personnel *Applicant/FSDO-Complete conformity checks
•Applicant-Submit proving/validation test schedule, as required
•FSDO Evaluate all facilities FSDO conducts the following:
• Inflight and/or tabletop demonstrations
•Operational control inspections Proving/Validation • Maintenance procedures inspections Testing •Passenger-handling procedures
• Inspects adequacy of systems, manuals, and procedures
• Recordkeeping inspections Phase 5 Documentation Page 1 (and 2)