SBA Office of Advocacy calls for withdrawal of charity/sightseeing NPRM

SBA Office of Advocacy calls for withdrawal of charity/sightseeing NPRM
AOPA data cited as evidence of proposal's shortcomings

Apr. 5, 2004 - The federal Small Business Administration's Office of Advocacy says the FAA's charity/sightseeing notice of proposed rulemaking (NPRM) is filled with incomplete or questionable data and needs to be withdrawn. In formal comments submitted to FAA Administrator Marion Blakey, the Office of Advocacy says the agency failed to accurately account for the economic impact of the proposed rule, formally known as the National Air Tours Standards, or how many small businesses it would force to close.

Early in its investigation, the Office of Advocacy turned to the Aircraft Owners and Pilots Association for solid information about general aviation and a more accurate picture of who operates small sightseeing businesses and how they would be affected.

"AOPA has opposed this proposed rule from the day it was first released and began collecting information to disprove the FAA's basic assertions almost immediately," said AOPA President Phil Boyer. "So when the SBA's Office of Advocacy turned to us for help, we were more than happy to share what we'd discovered."

The Office of Advocacy's strong comments and call for withdrawal are a significant victory for sightseeing operators. The Office of Advocacy operates under the umbrella of, but independently from, the Small Business Administration. Under an executive order signed by President George W. Bush, federal agencies are required to give every appropriate consideration to any comments provided by the office. The agency must also include a response to the comments in any explanation or discussion accompanying the final rule or certify that doing so would not be in the public interest.

FAA admits rule would drive hundreds out of business

The FAA says the proposed charity/sightseeing rule is intended to address alleged safety deficiencies in the air tour industry. AOPA believes even the allegation is suspect, because it is based on an amalgamation of small and large air tour operators flying both fixed-wing aircraft and helicopters.

Currently air tour operators must meet standards set in Federal Aviation Regulations (FAR) Part 135. However, there is an exemption for pilots operating under FAR Part 91 (general operating and flight rules) who offer sightseeing flights that take off from and land at the same airport and stay within 25 statute miles of that airport.

The proposed rule would remove the exemption and require all sightseeing operators to comply with the more stringent and more costly Part 135 regulations. By the FAA's own estimation in the proposal, nearly 700 Part 91 sightseeing operators would be driven out of the business. It would also deplete the number of pilots who can use their skills to aid charities by offering sightseeing flights as fund-raisers because it more than doubles the minimum number of flight hours a pilot must have to make such flights from 200 to 500 hours.

Using AOPA and industry information, Office of Advocacy says estimate is low

The SBA Office of Advocacy says both the FAA's estimate of how many Part 91 sightseeing operators there are and the number who would "choose to exit" the business if the new rule were adopted are inaccurate.

There is currently no requirement that Part 91 operators report their sightseeing business to the FAA, which based its estimate on a number of assumptions about data gathered from a number of sources. In its comments, the Office of Advocacy says it "believes the numerous assumptions in the FAA's economic analysis undermine the quality of the data."

The Office of Advocacy also says the FAA did not accurately calculate the economic impact of the proposed rule on small businesses. It says it's concerned because the FAA "recognizes that the rule could cause hundreds of entities to leave the air tour business, yet the agency seems to have taken no steps to mitigate this result.

"The sightseeing and air tour industries contend that requiring a Part 119 certificate would cause thousands, not hundreds of small operators to go out of business. Because the FAA likely underestimated the number of small Part 91 operators and failed to provide accurate data on Part 91 operations, revenues and costs, Advocacy believes the industry's estimate may be sound. Consequently, the actual incidence of business closure is likely to be significantly higher than estimated" by the FAA.

The Office of Advocacy's comments go on to say, "The agency states that '89 percent of the Part 91 sightseeing aircraft are estimated to log fewer than 50 sightseeing hours per year.' The FAA calculated the revenues for all [original emphasis] operators based on this 50 flight hour figure. The FAA provides little data to explain the 50 flight hour average estimate for Part 91 operators.

"[The Office of] Advocacy's discussions with the sightseeing industry suggest that many operators, perhaps even a majority, conduct in excess of 50 flight hours each year. Further, the AOPA surveyed ... members providing Part 91 flights to ascertain characteristics of their business operations, with 63% responding that they conducted more than 50 hours of Part 91 flights annually."

The Office of Advocacy also says the FAA failed to consider the availability and cost of insurance for those Part 91 businesses that might choose to convert to Part 135 operations, or the loss of revenue during a certification process that the agency admits would likely take longer than the proposed sunset clause. The comments also indicate that the FAA significantly underestimated the costs of additional safety requirements in the proposed rule on existing and converting Part 135 operators.

The Office of Advocacy concludes by saying, "Advocacy encourages the FAA to review the comments provided and withdraw the rule to conduct further outreach with interested parties."

"AOPA has said from the very beginning that this rule is unnecessarily costly and damaging to the industry and that the FAA should talk directly to the pilots involved to better understand the issue," said AOPA's Boyer. "We hope the FAA will take the SBA's comments to heart and pull this proposed rule."

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