Gregory J. Reigel
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August 14, 2017

Certificates Of Insurance In Aircraft Leasing: Are You Covered?

In aircraft lease agreements, insurance coverage for the aircraft lessee's operation of the aircraft is typically handled in one of two ways: (1) the aircraft lessee obtains its own policy insuring its operation of the aircraft, or (2) the aircraft lessor obtains a policy under which it is the "named insured" (e.g. the aircraft lessor owns the policy) and it includes the aircraft lessee as an "additional insured" under the policy. In the first instance, the aircraft lessee is the named insured and the policy specifically insures its operation of the aircraft. The aircraft lessor may also be named as an "additional insured" to make sure it is also covered for the aircraft lessee's operation of the aircraft.

In each scenario, the "additional insured" should receive a certificate of insurance that specifically provides for its coverage under the policy. Unfortunately, it isn't unusual for an underwriter who isn't completely familiar with the parties' leasing arrangement to issue a certificate that does not provide the expected coverage. Although the actual policy language may provide for coverage of the aircraft lessee (e.g. coverage for permissive users of the aircraft etc.), oftentimes the parties don't receive the actual policy until well after the insurance is issued. So, it is critical that the additional insured review the certificate before it operates the aircraft to make sure the certificate states the coverage that party is expecting to receive.

For example, I have seen situations where the insurer issues a certificate to the aircraft lessee, who is an additional insured, providing coverage to the aircraft lessee for operations by the named insured. Depending upon how the policy defines "named insured", the certificate may or may not provide coverage. The same holds true in the situation where the aircraft lessor is the "additional insured." The certificate should state that the policy is providing coverage for operations of the "additional insured" to remove any doubt.

Parties engaging in aircraft leasing, whether lessor or lessee, should provide their insurance underwriter with a copy of the lease agreement to make sure the underwriter (1) understands the relationship, (2) does not object to any of the obligations in the lease for which insurance may be applicable, and (3) issues insurance certificate(s) that are accurate and provide the coverage expected by the parties. Sometimes it may also require a conversation with the underwriter to explain the situation and the language required in the certificate. Most aviation insurers are understanding and accommodating for their aircraft lessee customers.

The moral of the story for aircraft lessors/lessees is, in the absence of the final policy language, to read the insurance certificate to confirm that it provides the coverage required by the lease. You don't want to end up in a situation where you thought you had insurance, now you need it, but you don't actually have coverage. That's a bad, but completely preventable, day.

And, as always, if you are unsure of your aircraft insurance coverage, give me a call and I would be happy to work with you to make sure your insurer is providing the coverage you need and expect.

Posted by Greg

August 02, 2017

What Should You Do When ATC Asks You To Call?

If you ever find yourself in this position, it is important to understand that you do not have to make that call. You are under no legal obligation (regulation or otherwise) to place the call. The request is not an ATC instruction under FAR §91.123. So, if you don't want to call you don't have to. But just because you don't have to call, that doesn't mean you shouldn't call. You need to analyze your situation and understand the pros/cons of making the call before you decide to simply ignore ATC's request.

Why does ATC want you to call?

For starters, ATC wants to obtain your personal information so they know who was flying the aircraft. Although ATC may have the aircraft's registration number, it may not know who was flying the aircraft. This is especially true if the flight was a VFR flight without a flight plan. Also, if the aircraft is a rental or club aircraft available to multiple pilots, ATC won't necessarily know which of those pilots is actually flying the aircraft. So, ATC wants to identify the pilot and obtain his or her information. And if you make the call, you will be providing the FAA with the connection between the aircraft operation and you, the pilot.

ATC may also want to discuss what happened. Depending upon the circumstances, it is possible that providing ATC with an explanation of what happened will resolve the situation. If the situation resulted from a simple mistake or flawed procedure, ATC may provide some informal counseling to ensure that you don't end up in the same situation in the future, and that will be the end of it. Under the FAA's new compliance philosophy, this would be considered a "compliance action." However, if the situation was more complicated or severe (e.g. an intentional deviation that resulted in loss of separation) that isn't the type of situation that would be handled as a compliance action. In that case, you may not want to make the call.

What happens to the information you provide during the call?

If you decide to make the call, you need to understand a couple of key points. First, the call will be recorded. So, the FAA will have a record of what you say during the call. Second, the FAA will use the information you provide to determine how it is going to handle the situation. That could be good for you or it could be bad, depending upon what happened and what you say. If it is bad, the FAA will not hesitate to use the information you provided against you in an enforcement action.

Should you make the call?

If you are asked to contact ATC after a flight you need to answer a number of questions to determine whether it makes sense to make the call:
  • What happened?
  • Why did it happen? Did it result from a simple mistake, flawed procedure etc.?
  • Is ATC able to connect you, the pilot, with the flight operation?
  • Is it the type of situation that the FAA should handle as a "compliance action"?
When you are considering these questions, it may make sense to discuss the matter with an aviation attorney. He or she should be able to help you analyze the situation to determine whether calling ATC will help or hurt you and, if it makes sense, what you should and shouldn't say if you do decide to make the call. You should also make sure to file your ASRS Form with NASA so you can potentially benefit from the FAA's Aviation Safety Reporting Program.

The good news is that the FAA's new compliance philosophy is resulting in fewer enforcement actions in cases of simple pilot deviations where the pilot does decide to make the call. The bad news is that you now have more to consider before you decide whether you should or should not make the call. If you find yourself in this situation, make sure you think things through and get the advice you need BEFORE you make the call.

Posted by Greg

July 06, 2017

What Are "Maintenance Instructions" And Why Should You Care?

If you are an air carrier operating aircraft with nine passenger seats or less under 14 C.F.R. Part 135, you know that §135.421(a) requires you to comply with either (a) the manufacturer's recommended maintenance program, or (b) a program approved by the Administrator, for the aircraft and its engine(s), propeller(s), rotor(s), etc. And when we look at §135.421(b) we see that the manufacturer's maintenance program is one which is contained in the maintenance manual or "maintenance instructions." Most of us know what a maintenance manual looks like - usually it says "manual" right on it. But what does the regulation mean when it references "maintenance instructions"?

Fortunately, the FAA answered this question in a recent Legal Interpretation. According to the Interpretation, "maintenance instructions" include manufacturer's (aircraft, engine, propeller, rotor, and each item of emergency equipment) service bulletins, service letters, service instructions, etc., that specifically address a maintenance task or procedure and instruct or teach how to perform that task or procedure. And this is important, because when an air carrier chooses the manufacturer's maintenance program under §135.421(a), the air carrier must then comply with that program and the maintenance instructions included within that program.

The Interpretation points out that the air carrier is only required to follow "the maintenance procedures contained in those manufacturer's documents that were in effect on the date the certificate holder adopted the maintenance program." Although a manufacturer may make revisions to its recommended maintenance programs, including issuing future service bulletins, service letters or service instructions, the air carrier is not obligated to follow those later-issued procedures.

However, the Interpretation also notes that an exception to this rule would be if the maintenance program selected by the air carrier included a clause stating that the program, if selected, necessarily includes all future-issued service bulletins, service letters and service instructions, etc. And it goes on to observe that an air carrier would be bound by later-issued procedures if it adopted a manufacturer's maintenance program without a specified date, unless the air carrier later rejects that program and adopts a program of a specified date.

This Interpretation is consistent with previously issued legal interpretations addressing adoption of a manufacturer's "current" maintenance program. It also reiterates the FAA's position that a manufacturer's labeling of its service bulletins as "mandatory" has no regulatory effect unless they are already included in the maintenance program as adopted by the air carrier, or if the service bulletin is incorporated into an Airworthiness Directive or other rule by reference.

The Interpretation concludes by stating "[we] note that, although the procedures in the bulletin may not be mandatory from an FAA regulatory perspective, following them would be an acceptable means of addressing the damage at issue. Doing nothing after one of the listed damage events would not be acceptable to the FAA, and doing something else would run the risk that the FAA would find the attempted maintenance unacceptable."

So, at the end of the day it is important for air carriers to understand not only what maintenance program they have adopted, but also what is and is not included in that maintenance program. This knowledge will help air carriers comply with their programs and avoid unnecessary scrutiny and/or legal enforcement by the FAA.

Posted by Greg

June 30, 2017

What You Need To Know About Letters Of Authorization

Do you fly in RVSM airspace? Or do you manage aircraft that fly in RVSM airspace? Do you fly air tours under § 91.147?

If your answer to any of the above-questions is "yes", then you should be familiar with letters of authorization ("LOAs"). But do you understand who actually needs to apply for and be issued an LOA? Many aircraft owners and operators aren't sure. The short answer is that the operator of the aircraft must apply for and be issued an LOA. But if you would like a more detailed explanation of why that is the right answer, please read my latest article on the topic: Whose Letter of Authorization Is It Anyway?.

Posted by Greg

May 10, 2017

Are You Fit For Duty?

If you are a flightcrew member for an air carrier operating under 14 C.F.R. Part 121 you know that 14 C.F.R. Part 117 contains flight, duty, and rest regulations that apply to all Part 121 passenger operations. One specific regulation, Section 117.5(d), requires a flightcrew member to “affirmatively state that he or she is fit for duty prior to commencing flight.” Section 117.3 defines “fit for duty” as “physiologically and mentally prepared and capable of performing assigned duties at the highest degree of safety.” What does that mean?

Unfortunately, no objective science-based standard currently exists for measuring fatigue levels. As a result, Section 117.5 doesn’t say just how fatigued a flightcrew member must be in order for him or her to be “unfit for duty.” Rather, the regulation simply states that an individual flightcrew member is “fit for duty” if he or she is capable of safely performing his or her assigned duties. According to the FAA, this determination must be made by each individual flightcrew member based upon a variety of factors, such as the length and difficulty of the flight duty assignment, time of day, and the flightcrew member's self-knowledge of how he or she deals with different levels of fatigue.

Which means flightcrew members’ fit for duty determinations are subjective. But, according to the FAA, this subjectivity “is mitigated by the fact that flightcrew members will undergo fatigue education and awareness training, which will increase each flightcrew member's ability to self-assess his or her fatigue levels.”

So, how does this apply in specific situations? For example, what if the flightcrew member is slightly fatigued at the end of a flight duty period (“FDP”)? Does that mean the flightcrew member should not have accepted the flight assignment? The FAA says “no.” Given the various individual factors that go into a fitness for duty determination, the FAA will not categorically say that a slight amount of fatigue that appears at the end of an FDP would always render a flightcrew member unfit for duty. As long as the flightcrew member is able to affirmatively state at the beginning of the FDP that he or she is fit for duty, then the flightcrew member may accept the assigned flight duty.

What about when the flightcrew member has been awake for 16, 18 or even 24 continuous hours prior to accepting the assigned flight duty? If the flightcrew member certifies that he or she is fit for duty in that situation is that a violation of the regulation? Here again, the FAA says “not necessarily.” Although it is significantly more likely that a person who has been awake for such an extended period of time will not be fit for duty, the regulations do not necessarily preclude the flightcrew member from accepting an assigned flight duty under those circumstances. The flightcrew member must still make an individualized determination and consider, as one factor along with others, the amount of time that the flightcrew member has been continuously awake.

Another common situation arises when an FDP involves more than one flight segment. If the flightcrew member is fit for duty at the beginning of the first flight segment but later determines he or she is not fit for duty before starting a subsequent flight segment during that FDP, then what? Since Section 117.5(d) requires a flightcrew member to reassess whether he or she is fit for duty prior to each flight segment, in that situation the flightcrew member would not be permitted to fly the subsequent flight segment. Similarly, if a flightcrew member reports for an FDP and is fit for duty at that time but that FDP is later extended, the flightcrew member must then reassess whether he or she can continue to serve on the extended FDP.

Thus, in order to be “fit for duty”, flightcrew members must decide, both at the beginning of an FDP and during that FDP that they are mentally and physically prepared and capable of safely performing their assigned duties and then take any necessary steps to comply with the rule. Flightcrew members should use their best judgment to make that determination and then act accordingly.

Posted by Greg

May 04, 2017

How To Decide Whether To Conduct A Reasonable Cause/Suspicion Drug or Alcohol Test

If you are an aviation employer who employs safety sensitive employees, you know 14 C.F.R. § 120.109(d) requires that you drug test an employee when you reasonably suspect that employee of having used a prohibited drug. Similarly, 14 C.F.R. § 120.217 requires an employee to submit to an alcohol test when the employer reasonably suspects the employee of misusing alcohol contrary to 14 C.F.R. § 120.37. In order to make that decision, you must have a reasonable and articulable belief that the employee is using a prohibited drug. To do that, you need to look at the employee's specific contemporaneous physical, behavioral, or performance indicators of probable drug or alcohol use. But what does this really mean? Well, fortunately, the FAA has a form for that!

The FAA has a "Reasonable Cause/Reasonable Suspicion Testing Form" employers may use to not only assist with making the reasonable cause/suspicion determination, but also to document that determination once made for the employer's file. The Form includes a number of categories for the types of observations an employer must make in order to determine whether reasonable cause/suspicion exists for the employer to require an employee to submit to a drug or alcohol test. The categories include:
  • Appearance;
  • Behavior/Demeanor;
  • Motor Skills;
  • Speech; and
  • Odor.
Within each of these categories, the Form also provides a number of "check the box" choices for characteristics/behaviors that are indicative of drug or alcohol use. The employer simply needs to make the observations, check the corresponding boxes, and then make the decision whether sufficient indicia are present to support conducting a test. The Form includes 48 different observations an employer may make that would support conducting a reasonable cause/suspicion drug or alcohol test.

Employers are not required to use the Form. However, the Form provides an easy way to not only make the determination, but also to document and record the basis for the determination. And, as we all know, keeping appropriate drug and alcohol testing program records is both required and necessary to keep the FAA happy if/when it decides to audit your program.

Posted by Greg

April 25, 2017

How To Choose Between Operating A Business Aircraft Under Part 91 Versus Part 135

If you own a business aircraft, you may be wondering whether you should operate that aircraft under Part 91 or Part 135 of the Federal Aviation Regulations. In order to make that decision, you need to consider the benefits and limitations of each set of regulations. The decision can be complicated and usually requires a detailed analysis of the facts of your situation.

For a discussion of the restrictions and regulatory requirements for operating under each part, as well as the risk management perspective associated with each, please read my latest article on the topic: What Is The Difference Between Owning And Operating An Aircraft Under Part 91 Versus Part 135?

Posted by Greg

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