To: Parties Interested in VNY Noise
From: Gerald A. Silver, Pres. Homeowners of Encino,
Stop the Noise! Coalition
RE: FRACTIONAL OWNERSHIP = MORE GA JETS!
As many of you know, there has been a big push by jet
manufacturers to sell
"fractional ownership" in new jets. This allows
many small business to buy
an interest in a jet and fly it part time. The result of this
"scheme" is to
enable many more firms/people to fly jets in and out of
airports such as Van
Nuys Airport (VNY). This of course means more noise, air
traffic and
congestion for local residents.
Now it appears that the FAA is on to this mechanism to bypass
usual FAA
rules and regulations. The Washington Post story (August 7,
2001), explains
the entire issue in detail. It is worth careful reading.
If you wish to voice your concerns, please contact:
Federal Aviation Administration
Kathy Perfetti
Program manager-Fractional Aircraft
800 Independence Ave. S.W.
Washington, DC 20591
Thank you
Jerry Silver
***********************************************************************
Tuesday, August 7, 2001
FAA Targets 'Fractional Ownership'
By Cindy Skrzycki
The Washington (DC) Post
Think of them as flying time shares for the business
community.
Fractional ownership of business aircraft -- as the Federal
Aviation
Administration and the growing industry prefer to call it --
is about to get
its own set of regulatory directives.
Because the planes were operating in a kind of regulatory
netherworld --
these are not "on-demand" air charters, nor are
they simple ownership of
business planes -- the agency proposed a set of rules and
enforcement
policies July 18 that would create a new category of
regulated business
aircraft.
Fractional ownership is an alternative to owning a business
plane, an
expenditure that is seen as excessive by some companies.
Under a
fractional-ownership plan, clients buy a portion of a pool of
planes --
typically an eighth of a share -- which entitles them to a
certain amount of
flying time each year. Owners pay a management company to
take care of
operational chores such as maintenance and crew training.
They also pay for
"occupied time" -- when the owner or his passengers
are actually using the
plane.
The benefit to those who can afford fractional ownership is
being able to
fly anywhere without connections on modern business aircraft.
An owner may
not always fly on the plane he "owns" but instead
may take a trip on another
plane in the fractional fleet.
The concept hasn't been hard to market to companies and
wealthy individuals
who are fed up with commercial airline delays and poor
service. There are
about 3,000 owners of fractional aircraft who have plunked
down anywhere
from $400,000 for the smallest share of a turbojet to, say,
$20 million for
a half share of a fancy Gulfstream. For their money, they get
luxury,
convenience, and a plane at their beck and call.
But the industry's growth has posed a problem for the FAA: It
was difficult
to determine who had "operational responsibility"
for the aircraft -- the
fractional-share owners or the flight-management company.
"There was confusion within the industry and
government," said Kathy
Perfetti, the FAA's program manager for fractional aircraft.
"Fractional
ownership didn't fit neatly into private or commercial
aviation. And this
was becoming a very important segment of business
aviation."
The industry's growth and the confusion over the rules
governing fractional
aircraft spurred the FAA in 1999 to create the Fractional
Ownership Aviation
Rulemaking Committee -- with representatives from competing
industries,
owners, regulators and anyone else with an interest in the
outcome.
Though the industry has an excellent safety record, owners
realized it might
be in their interest to standardize some of the "best
practices" they
already were following.
"Most fractional-ownership companies just complied with
the regulations for
general aviation," Perfetti said, "though most of
them at a higher standard
than required."
The committee came up with recommendations that everyone
could live with and
presented them to the FAA, which used them as the basis for a
proposed rule.
The FAA will take comments on the proposal until October and
then issue a
final rule.
The proposal would place responsibility for the operation of
the aircraft
and the safety of the passengers on both the fractional
owners and the
fractional program managers.
The industry also decided it was important to have an
operations manual and
training programs that are FAA approved. The owners and
managers will follow
flight and rest provisions for crews that are similar to
those for
commercial aviation. There are instances in the industry, a
source said, in
which pilots were awake for 20 hours, a situation that
worried owners and
the FAA.
"It's a very comprehensive regulation that provides a
standard similar to
those for air carriers," Perfetti said. "It's not
an inexpensive rule, and a
higher level of regulation is required."
The fractional-ownership business began in 1984, when a
mathematician named
Richard Santulli bought Executive Jet, a business-charter
service. Two years
later, Santulli launched a fractional-ownership program with
eight aircraft.
One of his customers happened to be billionaire investor
Warren E. Buffett,
chief executive of Berkshire HathawayInc., who liked the
service so much he
bought the company in 1998.
Since then, Executive Jet has been the success story in the
fractional-ownership industry and the template for others,
such as
Bombardier's FlexJet and Raytheon Travel Air Co.
Altogether, there are 625 aircraft in the industry that are
owned and
managed as fractional aircraft, and many more are on order. A
further
competitive boost will be the entry of United and its Bizjet
service, which
is supposed to be available in 2002 with 200 planes.
The fractional industry's ability to offer virtually instant
service has
posed a competitive challenge to charter companies that offer
on-demand
service to businesses. They operate under more-stringent
rules than
fractional aircraft, and they wanted the FAA to level the
regulatory playing
field.
For example, there are places where fractional jets can land
but charters
are not allowed because the runways are deemed not suitable.
"They were getting a free ride, if you will," said
Clif Stroud, spokesman
for the National Air Transportation Association, which
represents on-demand
charter operators. He said the proposed rule will eliminate
the disparities.
The new rule also will provide a definition for those who
wonder just what
fractional-aircraft ownership is. A leasing arrangement? A
time share? A
pseudo-charter?
According to the proposed rule, it's none of the above. To be
"fractional,"
the operation has to have a program manager, more than one
owner per
aircraft accounting for at least a one-sixteenths interest,
and an agreement
among owners to use one another's planes.