EASA Part-NCC: what do financiers need to know? - Newsletters - International Law Office
A 'commercial operation' is defined as:
"
any operation of an aircraft, in return for remuneration or other valuable consideration, which is available to the public or, when not made available to the public, which is performed under a contract between an operator and a customer, where the latter has no control over the operator".
(5)
The concept of 'valuable consideration' for flights made available to the public is generally well understood – it could be a payment in kind and need not involve a direct exchange of money.
The reference to operations "not made available to the public… where the latter has no control over the operator" is troublesome, because the term 'control' is not defined in the regulatory framework. However, it does serve as a useful guide to carve out those instances where a customer does have some control over the operator, such as in a typical owner-manager-operator scenario, and it would also likely cover fractional ownership schemes. EASA has provided the following guidance:
"the legislator has not further specified the term 'control'. It is therefore EASA's view that it should be understood in a wider sense, i.e. the term is not limited to operational control. In this sense, control could for example also encompass financial control, control of management decisions etc. This notion of the definition is for example particularly valid for managed operations or fractional ownership. These are operations where an aircraft is owned by one or several persons who contract a management company to manage operations and continuing airworthiness. It then depends on the specific contract between the owner(s) and the management company how much control the owner(s) still have over the operation."
Most aircraft that are suitable for conventional or typical business or private luxury use and are operated privately will be affected by the regulation.
Who is the operator?
The operator is the accountable party which needs to comply with the regulation. However, the regulation is not particularly helpful for the purposes of definitively establishing the identity of the operator. The 'operator' is "any legal or natural person, operating or proposing to operate one or more aircraft". To illustrate why this is troublesome, consider an ordinary private jet management scenario in which a high-net-worth individual (who knows nothing about aircraft) is the beneficial owner of an aircraft which is subject to a finance lease from a bank. The high-net-worth individual (or his or her special purpose company) enters into a management agreement for the aircraft with an experienced manager which provides all of the services required to operate the aircraft; however, certain dispatch services are subcontracted to a dispatch agent. The high-net-worth individual uses that aircraft for private business and family use only. This is considered an NCC operation.
At the outset, it is clear that the bank is not the operator (even though it is the legal owner pursuant to the finance lease), as the financier cannot be said to be "operating or proposing to operate" the aircraft.
The experienced manager might be expected to be the operator, as that entity would normally employ the pilots and have the ultimate operational oversight for the aircraft. The definition of 'non-commercial operation' similarly makes a natural distinction in a management agreement-style relationship between the customer and the operator. But what if, for structuring or personal reasons, the high-net-worth individual employs the pilots, the experienced manager employs the remaining crew and provides scheduling support, and a dispatch agent provides dispatch, airworthiness management and maintenance services. Which entity is operating – or proposing to operate – the aircraft? The regulation leaves this question open.
While any of these parties could be the operator, only one party is permitted to be the operator under the regulation. If the experienced manager is an air operator's certificate holder but is acting in a private capacity, then it would be logical (but not necessary) to assume that the regulation would treat it as the operator, as certain exceptions are made for air operator's certificate holders under the regulation. An air operator's certificate holder already has many of the systems and manuals in place to comply with the regulation.
But there is nothing stopping the high-net-worth individual from insisting that he or she is the operator, or from making the declaration to the relevant aviation authority that this is the case.