Part 125 Vs Part 121 Operations
In this blog we’ll help you navigate through the differences between Part 121 certification and Part 125 certification for air carriers, and why it matters in terms of private air charter. If you oversee purchasing or arranging air charter transportation, especially for a public entity such as a college or university, it is important to understand this issue. So let’s dive in!
Why Does Part 125 Exist?
Part 125 regulations were established to provide a uniform set of rules for the operation of large aircraft having a seating capacity of 20 or more passengers, or a maximum payload of 6,000 pounds or more when these aircraft are being operated for non-common carriage purposes (private charter). This regulatory framework enabled corporations, including a number of professional sports teams, to utilize these larger aircraft for private flight purposes, thereby significantly reducing the costs associated with operating the same aircraft under the commercial airline standards of Part 121.
The gist was that corporations that owned large aircraft were only going to fly around their employees. They would not be full-on selling these birds for hire. So these corporations said to the FAA, “Hey dude, do we need the same regulations as an airline if we are only using our planes for private use?” The FAA said “Brah, that makes so much sense, let’s do it.” In actuality, it took a long time, lots of thoughtful input, and an army of lawyers, but the deal got done and Part 125 certification was born.
So What Are The Differences And Why Do They Matter?
For starters, Part 125 operations do not require a formal written training program for crewmembers. This significantly reduces record keeping requirements and training costs associated with the formal training programs required under Part 121 operations for crewmembers. DOT / FAA drug testing program required? Yes for 121, no for 125. Mandatory rest requirements based on flight hours flown? Yes for 121, no for 125. Type rating, meaning a certification to fly a particular aircraft type, for both pilots? You guessed it – yes for 121, no for 125. Maximum flight hour restrictions within 16 hours of duty time? Yes for 121, no for 125. Does 125 have escrow protections? Appropriate insurance to engage in air transportation for hire? DOT economic authority? Uh, no, no, and no. Not to mention the significant difference in how aircraft are maintained. Without getting all wrenchy on you, aircraft maintenance regulations are much more robust for Part 121 operations.
The rationale for this less restrictive set of regulations is that they are not necessary for what are essentially private air charter flights for the ownership entity, thus allowing the aircraft owner to avoid the significantly higher cost burden associated with Part 121 operations. In other words, the private operator has much more latitude because they would not be potentially placing others at risk under the less restrictive regulatory oversight of Part 125 regulations. Makes sense, until Part 125 operators start flying for hire.
Prohibitions Against Part 125 Air Charter Operations
The simplicity and savings derived via Part 125 operations comes with a trade-off, which is the prohibition against marketing, or “holding out” services, to engage in the common carriage of persons, as well as engaging in common carriage in its own right. The U.S. DOT Advisory Circular AC 125-1A states, "Part 125 provides for the operation of large airplanes that are not conducting operations in common carriage." The advisory defines common carriage as, "A person is considered to be engaged in common carriage when holding out to the general public or to a segment of the public as willing to furnish transportation within the limits of its facilities to any person who wants it." (U.S. Department of Transportation Federal Aviation Administration, 2016).
In brief, Part 125 certification is intended for private carriage. While this may include private jet charters for a sports team with an ownership interest in the aircraft, it does not permit the expansion of business relationships for deriving profit.
The Department of Transportation (DOT) applies the following test to determine if a certificate holder is engaging in common carriage: “Where it is doubtful that an operation is for “compensation or hire,” the test applied is whether the carriage by air is merely incidental to the person’s other business or is, in itself, a major enterprise for profit” (USDOT, 2016).
Note that DOT makes a clear distinction between incidental carriage and carriage that is engaged in for the purpose of generating revenue.
DOT Enforcement Action Against Part 125 Certificate Holders
Several Part 125 operators have sought to benefit from the savings from Part 125 operations while simultaneously deriving revenue from common carriage activities. In a number of cases, DOT has taken enforcement action against these entities. The action taken by DOT against Part 125 Operator Sky King is a good example of DOT enforcement action.
Sky King was issued a consent order in 2002 in relation to the operation of charter flights on behalf of other professional sports teams. A consent order is a formal process whereby the air carrier is ordered to cease and desist from certain activities and is usually fined. Initially, the Sacramento Kings’ ownership sought to utilize 737 aircraft to transport their player and coaching personnel to away games, giving the team complete control over aircraft interior design as well as their team transportation. Invariably, other teams showed interest in the aircraft. Sky King subsequently began operating charter flights for numerous professional teams. In a 2002 Consent Order issued by DOT, the Department found that Sky King was engaging in commercial carriage:
The primary issue in this case, is whether the carrier is “holding out” or providing service to the public. Although Sky King apparently did not engage in any direct advertising of its services to the general public, it has engaged in common carriage by availing itself of the services of various “aviation consultants” and brokers who solicited business for it, and by operating under contracts for an air carrier which held out service to the public. In so doing, it gained a reputation for a willingness to provide transportation by air to at least a class or segment of the public while operating without an effective certificate issued under 49 U.S.C. § 41101. The Office of Aviation Enforcement and Proceedings (AEP) therefore, believes that Sky King has engaged in common carriage without the appropriate economic authority. Holding out service without requisite authority is also an unfair and deceptive business practice and unfair method of competition prohibited by 49 U.S.C. § 41712 (U.S. Department of Transportation Aviation Enforcement Division, 2002).
This ruling is consistent with subsequent enforcement action taken by DOT relative to Part 125 operators offering and engaging in common carriage. Note that the very act of solicitation by the certificate holder or any other entity is a violation of DOT regulation. This includes solicitation via email, phone, and/or attending tradeshows, meetings, and or events with the goal of securing air charter business from third parties. These activities create a reputation (a demonstrated willingness to engage in carriage for third-parties) of holding out. Holding out via reputation has resulted in enforcement action in previous cases. While one might assume that the risk resides solely with the certificate holder, DOT enforcement actions have often targeted other entities that would benefit from such a transaction, including parent companies or other related parties.
If I Shouldn’t Use a Part 125 Operator, Why Has This Been Allowed?
Part 125 operations can in fact voluntarily comply with many of the Part 121 standards and regulations to achieve a higher level of operational proficiency and safety than is required for private operations. Where many such operations run afoul with regulators is when they attempt to defray the prohibitive cost of operating larger and more expensive aircraft by engaging in revenue-generating private jet air charter activities. The key is that there may or may not be voluntary compliance with the more restrictive rules of Part 121. You just cannot know for sure, and that creates a huge risk.
Keep in mind that DOT enforcement personnel are small in numbers and are responsible for covering a vast industry. Just because Part 125 operations are not resulting in enforcement action does not mean that they are legal. Think of it as speeding, you are relying on a limited number of people in cars with blue lights waiting to catch you. You are still speeding nonetheless.
The Grayest of Gray Areas
While there has been some guidance to enable Part 125 certificate holders under certain circumstances to operate private air charter flights for a subset of unrelated entities, this has historically been limited to no more than three. Such operations fall squarely into the industry’s grayest of gray areas. Sometimes they are approved and sometimes not. This however ignores a much more critical issue - while a private entity can decide to utilize the less robust regulatory standards of Part 125 to transport its own passengers via private jet, it is our view that all other passengers assume and expect that they are being transported with the same level of safety derived from a commercial Part 121 airline and not the less restrictive standards of Part 125. We also believe that they deserve to benefit from the highest degree of aviation safety and operational standards possible, the same standards under which U.S. scheduled service airlines operate.
Conclusion
We cannot stress enough that putting cost savings ahead of aviation safety has no place in our industry. For those flight departments that elect to operate aircraft under Part 125, our recommendation is to avoid pursuing revenue to offset costs. For those of you that play a part in purchasing or arranging private air charter transportation, Part 121 commercial airline certification is the premier safety and operating standard worldwide. You have an obligation to ensure that the operators that you select are adhering to this standard.
References
U.S. Department of Transportation Aviation Enforcement Division. (2002). Consent Order Sky King Inc. Violations of 49 USC Section 41101 and 41712. Washington, D.C.: U.S. Department of Transportation.
U.S. Department of Transportation Federal Aviation Administration. (2016). Operations of Large Airplanes Subject to 14 CFR Part
125. Washington, D.C.: USDOT.
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