Operators, Charter, Leasing and Rental

Trying to figure out the rules for commercial charter in the UK.

For a summary of cost-sharing, see A Reminder of the Rules: Cost-Sharing Flights.

The Sala case

The flight that resulted in the Sala accident in 2019 was said to “bear the hallmarks of an illegal or grey charter operation”.

Under European regulations, if a flight is operated for hire and reward, it is classified as an air-taxi service and must be approved by the relevant aviation authority to carry paying passengers. The aircraft must also be approved for this role and piloted by a professionally trained crew under an air operator certificate (AOC).

The UK’s Air Accidents Investigation Branch (AAIB) concluded that the non-commercial PPL holder received a fee to transport Sala, and that he had been paid on numerous occasions.

The CAA launched a (rare) prosecution against “the person believed to be responsible for arranging Sala’s flight” who was not the owner in this case. Such a breach of Article 250, under Schedule 13 of the Air Navigation Order legislation can incur a fine and imprisonment.

The Air Safety Alliance stated: “An AOC holder takes all of the operational risk of public transport and is responsible if something goes wrong. For private owners [Helipaddy notes here that the owner of the Sala aircraft was not charged] who allow their aircraft to be used for illegal public charter, that risk and liability remain with them—and if a flight is performed illegally, it could invalidate any otherwise applicable insurance coverage, including the passenger’s own life insurance.”

Passengers on an irregular charter “think they have scored a great deal without realizing that they are being flown by a pilot who is generally not qualified for the type of flight being conducted,” said EBAA COO Robert Baltus. “The aircraft is maintained to a different standard and less flight preparation has been conducted than for flights under an AOC. In short, they have no idea of the risk and consequences of being flown to lower standards.”

Baltic splits the law flouters into three groups: the clueless, the careless, and the criminal. “The first two parties either don’t understand that they operate illegally or are not paying attention to the specificities of their flight,” Baltus explained. “This is the group that we [in the industry] try to educate on an ongoing basis.”

Dry Leasing

The Air Charter Association have done some good articles that explain leasing. Dry Leasing or Day Leasing, as it is often referred to for clarity, is the act of an owner (Lessor) leasing an aircraft without crew or fuel, to an individual or company (Lessee). During the period of any such lease, the lessee becomes the operator of the aircraft and all responsibilities and accountabilities of being in control of that aircraft pass across to the lessee. The lessee is quite possibly unaware of the extent of their obligations and often does not understand the true implications of the difference between a Day/Dry Lease and a charter using an aircraft operated on an AOC. An independent commercial pilot is hired under a separate contract, but generally from an approved list provided by the Owner/Lessor, at the same time as the Lease is signed.

Technically legal

Whilst technically legal, the ACA is “deeply concerned” that the end-users of such arrangements may not be fully aware of the differences between flying on an aircraft which is commercially registered and operated by a licensed air carrier, and flying on one which is leased for a day, both in terms of safety and in terms of accountability.

When an aircraft is legally chartered, the responsibilities remain with the aircraft operator; they undertake all the planning, safety, compliance and operational requirements.

When leased, the aircraft operator is the person leasing that aircraft and they are now ultimately responsible for planning, safety, compliance and operations – whilst these tasks can be delegated to the pilot they have hired, the accountability in the event of an accident or incident remains with the lessee. This could give rise to litigation and criminal charges in the event any shortcuts or illegalities have taken place.

Unfair expectations

The ACA believe that unless the lessee is fully aware of the different level of oversight that a day leased aircraft operates under and the full responsibility and accountability that being an operator involves, then it is unfair of aircraft owners to put them into that position and would simply recommend using a straightforward, competitive commercially licensed air carrier and aircraft for their flight requirements. Companies and individuals providing Day Leasing to non-commercial air transport operators are not accepted as Association members. You can view the ACA’s full paper on the subject here

We wanted a bit of clarity on this as our blog piece on cost-sharing triggered questions about what payments can and cannot be made in the case of non-AOC aircraft. So we went straight to the CAA’s legal department to get some clarity. We also noticed that Haywards’ (now Gallagher) has policy wording that is potentially confusing as regards rental.

Our basic scenario

For example, let’s say I am a PPL(H) and own an under-utilised R44. Haywards’ policy includes “rental to a third party outside your control”.

This means that, under the policy wording, a third-party could rent my aircraft at any price I determine.  The third-party may then hire a pilot at market prices, or perhaps he is a PPL himself, at any price they wish to charge.  As per the wording “the operation of the aircraft is not under the control of the Insured”.

So let’s say that I rent the aircraft to a friend (on a completely one-off private basis) for say £100.  He will then hire a pilot for say £300 who will fly him to Cheltenham for the races.

Commercial charter flights

He is very happy to have avoided the pricing of commercial flights providers, probably 90% cheaper (notwithstanding warnings above).  I am happy to have my aircraft used for an hour. The pilot gets his usual fee.

For avoidance of doubt, I do not plan to advertise the aircraft (like Wingly).  But the renter could in theory be someone I don’t know personally.

The CAA state that in the case of the friend hiring a pilot to take him to the races, then the flight would not be regarded as CAT provided that the friend or pilot do not sell any spare seats on the aircraft to other third parties. I need to be cautious if the friend suggests that he/she will be using the aircraft for cost sharing because the rules are prescriptive and must be followed (this covers all forms of ‘valuable consideration’, not just money changing hands). The same rules apply if I don’t know the hirer.

The CAA asked us to make it clear that they only offer a general response to the information presented by us and not legal opinion. 

Helipaddy trawled their article as we are aware of the cost-sharing article, even though this is a rare occurrence in the helicopter community (we only know of one active helicopter supplier in the UK).  The problem with that CAA guidance is that it addresses a particular form of non-commercial charter which is not applicable in our sample scenario.

Let’s get specific

Our scenario is rather a simple one eg. my father wants to use my helicopter to fly him to Goodwood but naturally he wants to contribute towards it and tip the pilot.  In this scenario, I will find him a PPL who is happy to do that trip, but I have no subsequent control on if and how much the pilot wants to charge my father for his time.  It seems perfectly reasonable, and does not sound like a commercial charter, but nor is it cost-sharing.  We asked the CAA if this crossed the line to commercial air transport.

The CAA confirmed their view that this would would not be CAT provided that any spare seats are not sold to other passengers (i.e. by my father or his pilot).   However, our specific scenario introduces an issue which we hadn’t referred to previously.  By hiring a pilot and the pilot getting his usual fee, the pilot must now be a commercial pilot. It would be illegal for the holder of a PPL to charge a fee, or receive a tip, for undertaking such a flight.

We asked for further clarification on pilot payments and received the following advice from the CAA.

The pilot’s role

Either the pilot is PPL in which case he mustn’t receive anything, but he doesn’t need to contribute to any costs. Or he is a commercial pilot in which case he can charge a fee, even thought the aircraft itself is not on an AOC.

Hope this helps! If you have any doubts then you should seek independent legal advice.