Reprinted by permission from The Air and Space Lawyer, Volume 12, Number 2, Fall 1997, Copyright 1997 American Bar Association, All Rights Reserved.

The New FAA Air Taxi Regulations
Part 119 of the Federal Aviation Regulations

By Frederick C. Woodruff

Introduction
On December 20, 1995, the Federal Aviation Administration (FAA) issued a final rule adopting significant changes to the regulations governing air taxi operators. 60 F.R. 65832. This final rule promulgated a new Part 119 of the Federal Aviation Regulations (FAR) and amended portions of Parts 121 and 135 of the FAR (14 C.F.R. Parts 119, 121 and 135 ). The regulation of air taxi operators has long been a complex area of Federal aviation safety law. This paper will trace the development of this law, analyze the nature and impact of the changes resulting from this new rule and discuss the present regulations governing air taxi operators. In order to understand these complicated regulatory changes, it is necessary to review both the historical development of the FAA’s regulation of the air taxi industry and to understand the FAA air taxi regulations as they existed prior to new Part 119.

Historical Background
Commencing in 1938, the Federal government regulated the air carrier industry on two separate fronts - economic regulation by the Civil Aeronautics Board (CAB) and safety regulation by the Federal Aviation Administration (formerly the Civil Aeronautics Authority)1.  Both the CAB and the FAA were given certification or licensing authority to issue appropriate certificates to air carriers as a legal requirement for their operation. While these two regulatory programs were legally separate and distinct, both programs in fact interacted and affected each other.

The FAA regulation of air carriers consists of two interrelated actions - the requirement for a carrier to obtain an Air Carrier Operating Certificate prior to conducting air carrier operations2 and the promulgation and enforcement of air carrier operating rules governing these operations. The CAB regulations consisted of a requirement that an air carrier operator obtain a Certificate of Public Convenience and Necessity (CPCN) prior to conducting interstate air carrier operations.

Both the CAB and the FAA recognized the existence of different kinds of air carriers by establishing air carrier classifications and relying on these classifications in regulating the carriers. The CAB’s jurisdiction was basically limited to interstate common carriage for compensation or hire as opposed to the FAA jurisdiction which was much broader.3   By necessity, the CAB at an early date distinguished between small and large aircraft in its certification regulations. Small aircraft were defined as those aircraft with a maximum takeoff weight of 12,500 pounds. These small aircraft were exempted from the requirement to obtain a CPCN whereas large aircraft air carrier operations had to be certificated as a condition for their operation.4 The CAB regulations also defined air carriers in terms of common carriage because their jurisdiction only extended to those types of carriers.

The FAA adopted a similar distinction between large and small carriers. Carriers with small aircraft were defined as air taxi operators subject to the requirements of Part 135 of the FAR. Those carriers operating large aircraft were considered air carrier operators subject to either Part 121 or Part 125 of the FAR. Thus, the FAA’s categorization of air carriers was at least in part based on economic as opposed to purely safety considerations. This was most likely done to avoid conflicts between the safety and economic regulations.

Initially this distinction between small and large aircraft functioned fairly well. However, several industry changes raised problems. In the 1960s, aircraft manufacturers started producing small aircraft which could carry more than 10 passengers. Then, in 1978, Congress passed the Airline Deregulation Act, Public Law No. 95-504, § 43, 92 Stat. 1750, which ended economic regulation of the aviation industry. Further, the existing regulations based on such complex legal concepts as common carriage, etc. were difficult to understand for both FAA inspectors and operators alike. As a result of this, the definition of small aircraft was modified to reflect the realities of the new aircraft available to the carriers. Further, the FAA began to reexamine the regulatory scheme which was based on the small aircraft distinction. Starting in 1978, the FAA issued a number of regulatory amendments upgrading the safety requirements for air taxi operators.

FAA Regulatory Framework for Air Carriers/Air Taxis Prior to Part 119
The FAA has traditionally considered three major factors in categorizing the types of air carrier operators - the size of the aircraft, whether the air operations are private or common carriage and whether the operations are scheduled or nonscheduled. The basic approach relied on by the FAA was that those categories of air carrier operations which had the greatest potential safety impact on the public were subject to more stringent safety requirements both in terms of certification requirements and operating rules. Thus, scheduled common carriage of persons for compensation in large aircraft was required to meet a higher standard than nonscheduled private carriers operating in small aircraft.

Special Federal Aviation Regulation (SFAR) 38-2 determined the category of air carrier operating certificate which was required to conduct a particular air carrier operation.5 Parts 121, 125 and 135 contain certification, operating, maintenance, personnel and equipment requirements for each of the different air carrier categories. Under the present regulations, the FAA issues an Air Carrier Operating Certificate to all of the various types of air carriers with the type of the air carrier activity being controlled by the particular operations specifications issued to that carrier (e.g., air taxi operations specifications are issued to air taxi operators, etc.). The following is a table of air carrier certification requirements:

Prior to the recent amendment, air taxi operations included both scheduled and nonscheduled carriage of persons or property in airplanes with a seating capacity (excluding crew members) of 30 seats or less and a payload of 7,500 pounds or less.6   If the aircraft was larger than 30 seats, then the operation must be conducted pursuant to Part 121. Both the certification requirements and operating rules contained in Part 121 are more demanding than those contained in Part 135.

Air taxi operators were divided into two subcategories - on demand and commuter. Generally speaking, if the air taxi operation was not scheduled, it could be operated as an on demand carrier; if the flights were scheduled, then it was considered a commuter operation. There was one exception to this under which certain scheduled operations were not considered commuter operations. Under paragraph 6(b)(4) of SFAR 38-2, commuter carriers were defined as those carriers who operated at least five round trip scheduled flights per week on at least one of their routes. Under this "frequency" rule, scheduled operations could still be conducted under on demand rules if they were conducted on a frequency of less than five round trips per week on one route. The operating requirements for commuter operators are more stringent than those for on demand air taxis.

Part 119 Regulatory Changes
New Definition of Small Aircraft. The most significant change in Part 119 is its modification of the definition of small aircraft. The new regulation changes this in several important respects. First, the seating capacity for large aircraft is modified from 30 seats or more to 10 seats or more. Secondly, turbojet aircraft operations are no longer considered small aircraft regardless of size of the aircraft.

Under Part 119, Part 135 air taxi operations include the following operations for compensation:

(1) scheduled operations in non-turbojet aircraft with a passenger seating capacity of less than 10 seats;

(2) on demand operations in aircraft with 30 or fewer passenger seats;

(3) cargo operations in aircraft with a maximum gross takeoff weight of 7,500 pounds or less; and

(4) operations in rotorcraft.

All other operations must be conducted in accordance with Parts 121 or 125.

Thus, the safety requirements for a number of operations have been upgraded. Scheduled passenger carrying operations must now comply with Part 121 if there are ten seats or more as opposed to the prior rule where Part 121 only extended to aircraft of 30 seats or more. The only type of commuter operation in non-turbojet aircraft now permitted under Part 135 involves aircraft with seating capacity of nine seats or less. For these operations, the frequency of operation exception was retained to permit on demand operating specifications as opposed to commuter specifications.7  On demand operations can still be conducted in aircraft of 30 seats or less. Turbo jet operations must now be conducted under Part 121 or 125 regardless of the size of the aircraft.

The regulations defined those air taxi operators who were affected by these changes as "Affected Commuters". (60 F.R. 65837) These "Affected Commuters" were given one year to transition to operations under Part 121. The new requirements are applicable to any operator who applies for a new Air Carrier Operating Certificate on or after January 19, 1996 (14 CFR § 119.2(b)).

SFAR 38-2. Part 119 is a new regulation which consolidates the certification and operation specification requirements for Parts 121, 125 and 135 air carriers. In this regard, it replaces SFAR 38-2. However, the operating rules will still remain in Parts 121, 125 and 135 of the FAR.

Air Tour Operators. A number of air tour operators conduct scheduled passenger carrying flights for compensation in aircraft with a seating capacity of between 10 and 30 seats, particularly in the Grand Canyon - Las Vegas area. During the rule making process, these air tour operators unsuccessfully argued that they should not be subject to these new rules because of the differences in their operations from regular commuter operators. Under Part 119, any passenger carrying air tour operation in an aircraft with a seating configuration of 10 or more seats must comply with Part 121 of the FAR. This is so even if the flights originate and return to the same location.8

Age 60 Rule. Section 121.383(c) prohibits a Part 121 carrier from using a pilot if the pilot is 60 years old. Part 135 does not have any such limitation. The new regulation applies the age 60 rule to all Part 121 pilots including those that were previously operating under Part 135 and were affected by this rule change. For those pilots affected by Part 119, the FAA adopted an extended compliance date - the rule would apply to pilots flying for "Affected Commuters" on December 20, 1999. For any newly hired pilots, the age 60 rule went into effect 15 months after the adoption of the new regulation.

Dispatch Rules. Prior to new Part 119, both Parts 121 and 135 required holders of Air Carrier Operating Certificates to exercise operational control over their flights. However, Part 121 required aircraft dispatch for domestic and flag carriers and a flight following system for supplemental operations. Part 135 requires a flight locating system for any flight for which a flight plan has not been filed. The Part 121 dispatch requirements are more detailed and stringent than the Part 135 requirements. The new rule applies the Part 121 dispatch requirements to all "Affected Commuters".

Flight Time Limits and Rest Requirements. Under the notice of proposed rule making, Part 121 flight time limits and rest requirements would apply to "Affected Commuters". However, in issuing new Part 119 the FAA deferred its final decision on this issue pending further review and disposition of public comments.9

Airport Requirements. Section 121.590 of the FAR prohibits Part 121 operators from operating to airports that are not certificated under Part 139 of the FAR. The FAR statutory authority for Part 139 was limited to aircraft with more than 30 seats and thus did not extend to "Affected Commuter" operators with aircraft with a seating capacity between 10 and 30 seats (49 U.S.C. § 44706(a)). The Department of Transportation has requested legislation which would authorize the FAA to certificate any airport served by aircraft with 10 seats or more. Accordingly, the rule allows "Affected Commuters" to operate into airports not certificated under Part 139.10  There were no changes to Parts 107 and 108 of the FAR (security regulations) as those Parts had already been changed to cover the smaller aircraft.

Inclusion of Definitions. For years, the public as well as FAA personnel had to depend upon agency legal opinions and case law in order to ascertain the meaning of numerous significant terms, i.e., common carriage, scheduled operations, on demand operations, etc. SFAR 38-2 did provide some guidance in this area. Section 119.3 contains official FAA definitions of a number of significant terms and phrases used in conjunction with the air carrier regulations. This should help the public in understanding these complex regulations. It should also be a primary resource tool for attorneys and operators in the future.11

Compliance Date. The general compliance date is 15 months after the date of publication of the rule. However, there are delayed or extended compliance dates ranging from two to four years for specific requirements (e.g., age 60 rule, equipment requirements, etc.). Therefore, the regulations should be reviewed to determine the exact compliance date for a particular requirement.

Conclusion
New Part 119 represents another step in the FAA’s ongoing process of eliminating the differences in safety requirements between large and small aircraft. This has resulted in the FAA extending the more stringent Part 121 safety requirements to an increasing number of air taxi operations for compensation. The bottom line is that the category of air taxi operators has been reduced to passenger carrying operations in nonturbo aircraft with nine seats or less and to rotor-craft operations. For some time, the public and media have been concerned with a higher accident rate for air taxi flights than for Part 121 air carrier operations. The new rules should alleviate some of those concerns.

Notes

1. Both the Civil Aeronautics Act of 1938 and the Federal Aviation Act of 1958, as amended, Public Law 103-273, 49 U.S.C. § 40101, et seq., provided for economic and safety regulation of aviation.
2. The certification of air carrier operators is one of the three principal aviation activities licensed by the FAA - the other two being airmen and aircraft.
3. FAA jurisdiction includes any operation within any Federal airway or which may "endanger safety in interstate, overseas or foreign air commerce." 49 U.S.C. § 40101.
4. This was contained in former Part 298 of the CAB’s economic regulations.
5. A SFAR is a regulation of limited time duration which expires as of a certain published date. As discussed later, this SFAR is replaced by new Part 119.
6. The 30 seats and 7,500 pounds represented the most recent definition of a small aircraft.
7. The frequency exception is included in the definitions of "commuter operation" and "on demand operation" in § 119.3.
8. Section 119.1(b)(2) does exempt non-stop sightseeing operation from and to the same airport from the requirements of Parts 121 and 135 as long as the flight is conducted within twenty-five (25) miles of the airport.
9. The flight time limits and rest requirements were not included in Part 119 but were left in the operating rules in Parts 121 and 135. There is a separate FAA rule making action to amend the flight and duty time requirements. (Notice No. 95-18.)
10. The Federal Aviation Reauthorization Act of 1996 (Public Law No. 104-264) gave the FAA direction to develop a regulation to cover this area. The FAA is presently reviewing this issue and will submit a proposed regulation to Congress.
11. Among the legal terms defined in § 119.3 are: commuter operations, non-common carriage, on demand operations, passenger carrying operations and scheduled operations.