Regulatory Brief -- Fractional Ownership Final Rule

Regulatory Brief

Fractional Ownership Final Rule

The issue

The Federal Aviation Administration (FAA) published its final rule establishing new regulations for Fractional Aircraft Ownership programs; the rule takes effect on November 17, 2003. A fractional ownership program is created by individuals and corporations that share ownership of aircraft that are scheduled and maintained by a management company, and furnished trained flight crews. According to the FAA, the number of fractional programs has increased in the last 16 years, and the agency felt the new regulations were needed to establish an "appropriate" regulatory environment for this type of ownership scenario.

The importance to our members

Thanks to the work of AOPA, and other interest groups, flying clubs and other joint ownership and traditional management companies are not subject to the new regulations.

An important difference from a flying club, is that to be considered a Fractional Ownership scheme, it must include the furnishing and training of flight crews, in addition to meeting all of the defined requirements, such as dry-lease exchange arrangements, management services, and other elements. Based on AOPA's comments to the proposed rule, the FAA amended the Fractional Aircraft Ownership Final Rule to exclude the regulation of flying clubs and shared ownership of aircraft.

The FAA recognizes and states in the final rule that "some entities have marketed or otherwise referred to themselves as 'fractional ownership' programs prior to this rulemaking, but do not meet all of the elements of the new regulatory definition. The FAA recommends that such programs discontinue the use of the term 'fractional ownership' to avoid confusion." In other words, if you are not in the business of furnishing the flight crews you are exempt from this rule and should stop referring to your operation as a "fractional ownership" program.

Members who are participating as owners in a fractional ownership program operating per Part 91 Subpart K and choose to serve as pilot or crew in place of the provided crew must meet the new standards of part 91 subpart K.

Significant provisions

AOPA proposed that criteria be added to the applicability section of the rule to state the requirement that professional flight crew services must be provided by the program manager. The FAA agreed that the proposed applicability section and definitions do not adequately delineate fractional ownership programs intended to be covered by subpart K from other shared aircraft programs or aircraft management programs conducted under part 91.

  • These include operations such as traditional management companies providing services to aircraft owners absent the dry lease exchange provision of subpart K; joint ownership, time-share, or interchange operations under 91.501; flying clubs; or other shared ownership options.
  • The FAA amended 91.1001 to more clearly define the elements of fractional ownership programs and the aviation services provided under those programs. This includes the provision, furnishing, or contracting of crews and the training and qualification of crews and other personnel.

The FAA established new standards for any person piloting a fractionally owned aircraft, whether they are a professional pilot or a fractional owner/pilot.

  • Total flight time for all pilots
    • PIC - 1500 hours
    • SIC - 500 hours
  • For multi-engine turbine-powered aircraft
    • PIC - ATP and applicable type rating
    • SIC - Commercial and instrument rating

The FAA determined that a fractional owner who desires to act as a flight crewmember on a program flight may do so only if the owner meets the pilot experience and qualification requirements of subpart K and is designated for that flight. The FAA says that the pilot requirements are necessary to maintain the safety and integrity of the fractional ownership programs and protect the property interests of all owners in the program.

AOPA's position

AOPA is pleased that the FAA accepted the association's recommendation to exclude from the rule those aircraft multiple ownership programs that do not provide for professional pilot services but otherwise meet the remaining elements that define a subpart K fractional ownership program.

Status

The FAA's new Fractional Aircraft Ownership rule takes effect November 17, 2003. Programs meeting the definition of "fractional ownership" may not conduct flights after December 17, 2004 unless management specifications under subpart K are obtained.


Updated Friday, October 03, 2003 4:53:06 PM