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September 30, 2019

Illegal Charter Doesn't Just Happen In Business Jets

As you may know, the FAA has recently increased its investigations into illegal charter activities and is vigorously pursuing enforcement against operators conducting illegal charter flights. Many of the publicized cases have involved owners and operators of business jets with civil penalty assessments in excess of a million dollars. However, the FAA doesn't just pursue enforcement actions against illegal charter involving jets. It will go after any operator conducting illegal charter whether the operator is using jets or single-engine, piston aircraft.

A case in point is a recent civil penalty case, In the Matter of: Robert M. Riter d/b/a Riter Aviation. In Riter, the Respondent was the co-owner of a Cessna 172. According to the FAA, the Respondent authorized the use of his aircraft and arranged a pilot to fly two passengers on a round-trip from Torrance, CA to Las Vegas, NV in exchange for $660.00. The FAA found out about the arrangement during its investigation after the aircraft crashed shortly after departing for the return trip to California.

Since the Respondent did not hold an air carrier or operator certificate authorizing him to operate as an air carrier or commercial operator, the FAA alleged that the Respondent's carriage of passengers for hire violated 14 C.F.R. 119.5(g). The FAA assessed a civil penalty of $11,000 for the two flights, even though it could have assessed a civil penalty of up to $22,000 ($11,000 for each flight).

On appeal to the Department of Transportation Administrative Law Judge ("ALJ"), the ALJ confirmed the violation of 119.5(g) but reduced the sanction to $5,700. The FAA then appealed to the FAA Administrator where the issues revolved around the amount of the sanction, and the Administrator ultimately reinstated the $11,000 civil penalty originally imposed against the Respondent.

This case is instructive not only for its discussion of how a civil penalty should be calculated in a case alleging violations of 119.5(g), but also as an example of the the FAA pursuing claims against an operator for illegal charter in aircraft as small as a single-engine Cessna 172. The FAA will impose civil penalties against aircraft owners and/or operators who conduct illegal charter using their aircraft. And although this case doesn't mention it, I suspect the pilot also faced a certificate action for the flights which could have resulted in suspension or revocation of the pilot's airman certificates.

The moral of the story: If any money is going to be changing hands in exchange for flights in an aircraft, it is important that the aircraft owner and operator/pilot make sure the proposed operation is structured correctly in compliance with all regulations. Failure to properly structure ownership and operation of aircraft, even single-engine, piston aircraft, can result in both civil penalty and certificate actions.

Posted by Greg

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