Grey Market

[mutt]

Gray market in business aircraft charter occupies the center stage in most of the business aviation forums in recent times. It is believed around 50 percent of the charter operations are taken away by this unscrupulous sector of industry.
Reasons like uninformed customers attracted by immediate gains of lower rates, fly by night charter operators out to make a quick buck and indifferent aircraft owners who are unaware of the misuse of their equipment are often quoted for the growth of gray market, especially in times of economic downturn that afflicted the entire globe recently.
However, the complete picture concerning consequences of this part of business is yet to be understood by all the players in business aviation since no major incident has occurred so far to focus on this and realize the hidden risks in such operation. So far gray market operation has remained as illegal but not unsafe, but it may not remain so for ever.
While a lot of talk has taken place about the dangers of this style (gray market) operation, no major breakthrough concerning the steps for arresting its growth is in place. However, all industry professionals are unanimous in their assessment that eliminating this illegal practice is a complex task.
It is my opinion that in such complex cases a collective effort by one and all in the industry need to be mobilized and channelized to the right quarters at the right time and place to act. Here comes the role of business associations like MEBAA to focus the attention of all players under its membership to create a situation that would make it difficult for the growth of gray market.
The first step in this endeavor needs to start from the passengers who knowingly or otherwise promote this market.
In the recently concluded EBACE2011 in May 2011, European Business Aviation Association (EBAA) took the major initiative of taking this message of illegal flights to all the passengers throughout a brochure titled “Is my flight legal? Your rights as business aircraft charter passenger.”
This brochure explains in simple terms important aspects like Air Operation Certificate (AOC), fight permits to regions, flight plan, safety aspects, crew qualification, etc., all those meant to educate a passenger as to what he should expect from the operators as a matter of right and not as an add on part of customer service. Also it highlights consequences of illegal flights on their personal insurance as well claims on other legitimate parties in case of accident or indents that can be denied by the insurers just because the flight taken by the passenger is illegal. More such initiatives are needed to educate naive as well semi-informed passengers in all parts of globe and we in MEBAA desire to commence this shortly. I am sure many more associations will follow suit to cover their regions.
Apart from passenger education at one end, there need to be some methodology to identify an illegal flight. Right now it is restricted to few ramp checks mostly based on the information provided by some whistle blowers within such illegal operation. Hence such checks are able to address a very insignificant portion of this area of malpractice.
One of the areas that can be considered as potential contributor to this effort could be the Air Traffic Control (ATC) of respective nations who clear such flight operations. A careful watch on the movements of aircraft from such infrequent operators with unknown credentials needs to be monitored as a potential illegal flight. Exchange of information between the ATC authorities on such operators and their patterns of operation could throw some light on such illegal activities. Based on such leads from ATC, ramp checks at right places could be a way of detecting and further legal action as a deterrent measure is to be in place. Over the period of time, collectively we may be creating a massive and meaningful database that can be accessed by many connected in this effort to eliminate this illegal activity.
Intelligence is the key to arrest and eliminate any illegal activity and so is its importance here. Trade associations like MEBAA with its membership drawn from various branches of business aviation like operators, maintenance and repair agencies, fixed base operators (FBO), airworthiness authorities, airport authorities, equipment manufacturers, training agencies, etc., could be the nodal agency for collection of such relevant data from all their members analyze, collate into meaningful information and disseminate to concerned agencies to initiate action on the ramp in case of such suspicious operation. Such an effort would call for resources but in the interest and welfare of business aviation it could be a worthwhile effort. This is an area of further research and I am sure many genuine operators may welcome such initiative.
Before I sign off, one strange thought on passenger education from the economic parameters of aircraft operation comes to mind. We could calculate and publish a basic cost band per flight hour of operation of commonly used aircraft and stress that anything lower than this band is indicative of an illegal flight. Many operators could be averse to this suggestion but please note and be assured we are talking of cost and not the price of operation. If we believe nothing drives the message more than the money terms, this approach could be viable. However, I am open to corrections as well disagreements.

— Ali Ahmed Al Naqbi, president of Private Aviation Union in the Middle East.

First time that i have heard of the Private Aviation Union in the Middle East, a google search found nothing about them....

But its good that people are starting to realize that there is a grey market and its unsafe....

Mutt

[merlinxx]

Does MEBAA not have any info ? This subject is still high on EBAA & IBACs calender.

[merlinxx]

Does MEBAA not have any info on this Union ? This subject is still high on EBAA & IBACs calender.

[Globalstream]

Corporate aviation, and the airline sector for that matter, is sleepwalking towards a high profile accident that will, eventually, end this and other questionable practices, of that I`m sure.

Operators are now criminally culpable in EASA land, that is folks will be going to jail for poor/illegal operations and it will probably take the death of a major celeb or VIP to get the ball rolling.

I`m surprised AF447 and the Turkish accident haven`t put greater scrutiny on experience and training, but again, I suppose there will have to be a much bigger accident for this to happen.

For the past 15 years, technology has masked (in some cases promted) declines in other areas of safety, but at some point I`m sad to say that will end - if I were a lawyer, I would be locked and loaded.

[Daifly]

That is from MEBAA, it's probably translated from the Arabic version - Ali Al Naqbi is the Chairman.

[Flying Mechanic]

look at Vistajet based in Hong Kong, offering charters out of HK. HK CAD should investigate them.

[4144r]

Ali Al Naqbi is the chairman of MEBAA, he was also, back in 2009, the chairman of the charter company I was flying for. All the 50 staff people of this charter company are still waiting for salary after the fake bankruptcy !!!! So it's good to looking for illegal charter, but you know all what I means.:D

[Pace]

Mutt

It is not UNSAFE it is illegal! AOC ops have a far worse accident rate with small jets than do corporate private jets! FACT!

However, data supplied by [IBAC] revealed that there is a large variation for different types of business jet operation. Corporate operations achieved a fatal accident rate of 0.2 (per million hours flown) for the period 2003 to 2007, which is comparable to large western built aeroplanes, whereas air taxi operations, as a whole, had a far higher rate of 3.5 (per million hours flown).

From the CAAs own report

So the UNSAFE claim is a load of B+ls
If the cost difference is so huge as to attract people to as you put it grey operations then you have to ask why?
Maybe it is needless over regulation, needless interference in AOC ops and an industry weighed down by excessive and needless cost ?

Get rid of your percieved enemy everything in the garden will then be rosy and everyone will flock to pay over bloated prices to AOC ops is far from the truth and not the problem.

No I do not support illegal operations for one second but think you are attacking the wrong enemy in getting a healthy business environment for AOC ops!
Lastly your clue lies in the title to this thread "Grey Markets" In every corner of society grey areas are legally exploited from a trip to the accountant to minimise your tax bills to items you buy on offers in supermarkets.
What is or is not illegal should not be so Grey and if it is dont blame people for exploiting those areas it is not the fault of them but the law!

Pace

[Veneno]

Quote: It is not UNSAFE it is illegal! AOC ops have a far worse accident rate with small jets than do corporate private jets! FACT

Pace, would you care to explain where did you get that one from?
The first time I ever heard about such a thing... :confused:

[Pace]

Veneno

CAA Paper 2009/03: Business Jet Safety Research: A Statistical Review and Questionnaire Study of Safety Issues gives some helpful analysis, and is available online, here: CAA Paper 2009/03: Business Jet Safety Research: A Statistical Review and Questionnaire Study of Safety Issues | Publications | CAA

One paragraph states (and I had to re-type this because, unhelpfully, the downloadable document is copy protected):

The CAA does not hold data that allows the fatal accident rate for business jets to be broken down into individual operation types.

This might prompt the curious to ask how a regulator hopes to do its work when it cannot even analyse its industry effectively...

That aside, it goes on:

However, data supplied by [IBAC] revealed that there is a large variation for different types of business jet operation. Corporate operations achieved a fatal accident rate of 0.2 (per million hours flown) for the period 2003 to 2007, which is comparable to large western built aeroplanes, whereas air taxi operations, as a whole, had a far higher rate of 3.5 (per million hours flown).

The IBAC report is here: http://www.ibac.org/Files/Safety/Bus...0Issue%207.pdf

The IBAC report breaks the community down like this:

2.4 Organization of the Community
Business Aircraft operations are classified into three (3) separate categories:
1. Business Aviation Commercial
Aircraft flown for business purposes by an operator having a commercial operating certificate
(generally on-demand charters).
2. Corporate
Non-commercial operations with professional crews employed to fly the aircraft.
3. Owner Operated
Aircraft flown for business purposes by the owner of the business.

and it goes on to say:

4.2 Accident Rate by Operator Type
Global data for the numbers of aircraft in each of the business aviation operational categories (commercial, corporate and owner-operated) proved difficult to obtain as few States collect this information. Similarly, flight hours by type of operation are not available. Due to the lack of
good exposure data, it was not possible to calculate, without some error, the rate of each category of operation. Additionally, the operational status of a single airframe may legally vary from flight to flight (i.e., an aircraft may be commercial on one flight and private on a flight made later
on the same day or vice versa).

Nevertheless, by applying US data relevant to the division between categories of operator, and by making the assumption that the division is relatively similar for the rest of the world, an estimate of the rate by operator type can be made. Given that the North American data represents approximately 67% of the global total, it is unlikely that the distortion generated by the assumption will be very large.


The percentage of flight hours based on FAA published statistical data for each of the three categories in the USA is as follows:

Commercial (Air Taxi) 30.4%
Corporate 55.3%
Owner-operated 14.3%

Two interesting tables are presented on page 7, which I can't copy quickly here, after which the data is analysed:

Analysis
The majority of business aircraft accidents occur in the commercial category, where operations are governed by commercial regulations (such as FAA Part 135 and JAR OPS 1). The next most frequent number of accidents occurs with aircraft flown by business persons. Accidents of corporate aircraft remain rare.

CAA doc here
So its a false rumor to suggest that there is a safety issue to drag us all private ops and AOC ops into the same costly highly regulated world as over regulation does not equal safety but purely equals the safety of the regulators jobs.
You have the wrong enemy!!!

CAA Paper 2009/03: Business Jet Safety Research: A Statistical Review and Questionnaire Study of Safety Issues | Publications | About the CAA (http://www.caa.co.uk/application.aspx?catid=33&pagetype=65&appid=11&mode=detail&id=3486)

[Veneno]

Thanks Pace.

I must say that this strikes me as a surprise.

I can think some possible reasons for it, but still, very interesting.

[Pace]

Veneno

I can think some possible reasons for it, but still, very interesting.

I am sure you are right but the facts which no one in the regulatory side want known is that corporate aircraft flown by a professional crew have standards of safety akin to the airlines while AOC OPS have a pretty poor record!
That could be due to the fact that the company jet is newer. The crews less stressed and more consistent on one aircraft etc etc etc???

Pace

[what next]

Hello!

etc etc etc???

We've discussed this before several times. The main problem lies in the fact that these statistics are derived from very small numbers and therefore are almost meaningless in a purely scientific sense. We are talking about one corporate accident and two AOC accidents over a period of five years. Over the next five year period it can be other way round and the statistics will be reversed.

I have experienced both sides (or all three including owner-flown aircraft) and feel unable to give an explanation why one or the other kind of operation might be safer than the other. Especially within the totally unregulated corporate aviation there are enormous differences to be observed. There is the kind of "high end operator" who will hire 5000+ hour ex airline captains and have all their aircraft flown by two captains only, and then there are the PC12, KingAir or CJ operators who put a 300 hour newbie in the left hand seat to fly their aircraft single handedly (we have both types on our home base!). Compare that to the AOC operator who pairs a 3000 hour captain with a 500 hour co-pilot and forces approach bans and factored landing distances upon them. Any statistics can produce nothing but random numbers here.

regards
max

[Pace]

Max

The fact is that had these stats been in reverse they would have been heralded as living proof that private ops needed to be pulled into line and dragged into the gloomy depths of costs and restrictions as AOC ops?
It is rumored that the CAA conducted the study to prove a case and the results were a surprise!
With the advent of EASA who need to justify their expensive existence, their costly wine bar accounts and gold plated pensions do not expect anything more than an attack on private jets to drag everyone into the EASA pit of gloom! and to open up a new line of revenue for their own benefits?
I feel sorry for AOC ops yet i think they are fighting the wrong enemy and choosing the wrong friends.

Pace

[mutt]

If the cost difference is so huge as to attract people to as you put it grey operations then you have to ask why? When all of the indirect costs of an aircraft are covered by the owner, then its extremely easy to see how operators can charge lower prices for their services. Many cases of someone approaching an owner and saying, "hey i can make you some money with your aircraft"...... owner agrees.

Your view appears to be based on the highly regulated European environment, mine is from a less regulated part of the world.

So the UNSAFE claim is a load of B+ls Whats the saying, lies, damn lies and statistics! Once again you are looking at this from a regulated environment.

If you dont like the term Gray Market, lets change it to Black Market.....

I dont think that its coincidental that the French authorities question passengers on flights from this part of the world about how they happened to be on the aircraft, and did they pay for it. They are making a concerted effort to stop these flights from operating into Europe.

The grey/black market exists in this part of the world, it might not be in your part :)


Mutt

[Flaymy]

PACE

We are not talking about corporate aviation in general, unless you are making a claim that a large proportion of corporate operators are willing to be involved in illegal charters. I don't think that is the case.

We are talking about a small proportion of companies that are willing, in some cases it seems very keen, to operate illegally.

Look at history. I think you will find that a lot of accidents in GA aircraft were being operated illegally (in whatever capacity, private, corporate or charter). Often it is seemingly trivial: some major piece of paperwork that was invalid or incorrect. Pilot's licence out of date, aircraft not registered, C of A out of date etc. Paperwork does not cause an accident, but a cavalier attitude to having the paperwork straight and operating legally seems indicative of an unsafe attitude to aviation.

A good, solid corporate operation that is flying without the need to charter out the aircraft is also probably properly-funded, and with luck headed by a sound character with knowledge of aviation.

An operation that is willing to operate illegally to help pay the bills, headed by a shady character with no respect for the regulations is unlikely to be safe.

[Pace]

The grey/black market exists in this part of the world, it might not be in your part

Mutt

I am sure it exists in this part of the world too ;) If its grey it is legally unclear or close to a dividing line between legal charter and illegal charter.
If its as you put it black then it should be easy to take these people to court and get them charged and convicted with illegal charter.
My point is whichever part of the world you fly from people will exploit the laws to operate within the laws while infact operating out of those laws and hence cheaper.
That is the fault of the laws for allowing grey areas.
Black is fine :E

Pace

[Flaymy]

PACE

Generally the grey area is proof. There is no doubt from what the operator knows that the charter is illegal, but he is not telling the CAA.

[flynowpaylater]

Nothing Grey about it. It's the black market. This BS about "grey charters" is just that. BS.

It's illegal, therefore its black.

[Pace]

FlyNowPayLater

In that case you don't have a problem ? Report. Charge convict but there are very few convictions which makes you think the grey areas are not so black ?

Pace

[His dudeness]

Or the presumably 'white' guys have so much 'dirt' on themselves that they are rather grey themselves?

There is no doubt from what the operator knows that the charter is illegal, but he is not telling the CAA.

Does that make sense? If that charter is illegal and he reports it, the CAA are obliged to check that out, aren`t they? Or is there maybe a little bit of doubt?

[Pace]

An operation that is willing to operate illegally to help pay the bills, headed by a shady character with no respect for the regulations is unlikely to be safe

Agreed but I will add some AOC ops are like that!
Since the recession many are struggling

Pace

[Flaymy]

Pace

I have already answered the comment about greyness above.

[flynowpaylater]

Ah Pace - agree with alot of what you say, but disagree with a lot too!

Lack of convictions is simply down to CAA resources and weak law. Putting any safety issues to one side for a moment, the fact is that the main document you require in order to perform flights for hire or reward is in fact an Operating Licence, not an AOC. The Operating Licence in essence is a commercial right to operate CAT. How do you get an OL? - One of the mandatory qualifying aspects is an AOC!!

It's the OL that is amended should you choose to operate scheduled services, operate larger aircraft etc...it then ramps up the financial fitness and CAA bond accordingly.

There has been such a massive surge in operations of small jets and turbo props, both CAT, corporate, private and of course unregulated illegal CAT that the CAA have simply been caught wanting, and now have mountain to climb to tidy it all up. It's a mucking fuddle.

Re AOC's - Alas you are quite right. There are operators that are under par, under resourced and under performing I'm sure. One would hope that the audits from the CAA picks up on that, and ultimatley said operators shape up or ship out. The current financial situation is hurting more for some than others, and its where the wheat is seperated from the chaff. Darwinism in action!

Unfortunately, in grey land (black land) those operators that are below par, and not performing well are simply not picked up on, and it's the passengers in the back that are unprotected and at the mercy of one or two individuals that think they are beyond the law, and perhaps don't even realise themselves that they are operating under par.

We all have a responsibility to raise the bar, and not just sit idly by while a few spoil it for the many.

[Flaymy]

His Dudeness

My point is that some charters are certainly illegal. The operator of the charter knows it is illegal, he knows that the passengers have paid him for the flight in a way that legally constitutes a charter, which he cannot legally operate. He is not likely to report himself to the CAA for illegal operations though, is he?

[fractional]

An air operator's certificate (AOC) is the approval granted from a national aviation authority to an aircraft operator to allow it to use aircraft for commercial purposes
You either have and AOC or not. If you don't, you must not operate anything commercially. If CAAs around the world wanted to (really) re-enforce the concept, all they should do is to spot-check aircraft documentation such as asking for the AOC.
AOC = commercial permit. ATC FPLs filed as G with pax? Are they all admin flights (non-revenue)? How many G coded flights are flying around with revenue involved? There isn't really a proper 91K outside the US to my knowledge. I accept corrections.
The French and Italians are on the right track, but they should also expedite the proceedings and above all be available to approve requests during weekends and holidays for short-notice landing permits (for non-EU27 countries).
We all need to make money fairly/squarely, CAAs, Airports, FBOs, Operators, Chaterer Brokers, etc..

[Gulfstreamaviator]

many such charters are reported, with 100% proof, but the regulators refuse to action.

so until there is a realistic penalty, these charters will continue.

lastly, do you know how much my brother pays for his flights on my other brothers aircraft...;).

glf