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Commercial operation?

Old 29th Jan 2018, 17:44
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Commercial operation?

The EU BR defines commercial operation as:

'Commercial operation' shall mean 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.'

What does the last bit mean in practical terms? Control of...?
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Old 29th Jan 2018, 18:25
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Interesting question - just about every authority just parrots the exact definition without explantaion

https://mckechnie-aviation.eu/2016/0...ft-operations/

punts as follows:-

Clearly managed operations of private aircraft are ‘not available to the public’, but they are ‘performed under a contract between an operator and a customer’ so they will fall within the definition of a commercial operation if the second half of that sentence applies ‘where the [customer] has no control over the operator’. I guess that the rule makers thought the meaning of this sentence was clear when they agreed the text, but it does cause a lot of confusion. To clarify the meaning imagine a large corporation that operates a fleet of jets to fly executives around the world. The corporation will typically have a ‘corporate flight department’ to manage the aircraft and this may be established as a separate legal entity (e.g. a limited company) within the overall corporate structure. When an executive uses one of the company aircraft to travel to a meeting there will be an internal charge within the corporation for the cost of the flight. In this instance the aircraft operator (corporate flight department) is under control of the customer (large corporation) so the flight falls outside the definition of ‘commercial operation’, Corporate aviation can be considered ‘non-commercial’. This type of operation needs to comply with the organisational rules of Part-ORO and the operational rules of Part-NCC.
If the company that operates the jet is not part of the same corporation, but is an external company operating aircraft as a business then clearly the operation is commercial; but that doesn’t necessarily mean that the rules are the same as for charter operators or airlines. The Air Operations Regulation (Regulation 965) provides a definition of commercial air transport:
commercial air transport (CAT) operation’ means an aircraft operation to transport passengers, cargo or mail for remuneration or other valuable consideration’
In the case of managed aircraft operations there typically isn’t any remuneration or valuable consideration for a specific flight. The owner will pay a management charge and cover the costs of the operation but these payments will be due whether the aircraft flies or stays in the hanger, so managed aircraft operations typically do not fall within the definition of commercial air transport and the operators do not need to comply with the commercial air transport operating rules (e.g. Part-CAT).


BUT


While the intention of the rule makers was that managed aircraft operations should fall under the rules for commercial specialised operations there is no guarantee that a particular aviation authority or national court will not interpret the rules differently. The lack of clarity in the rules means that there is endless scope for lawyers to argue over the definitions of ‘operator’ and other relevant terms so an aircraft owner would be well advised to take legal advice before committing to a particular course of action. If you are an aircraft owner choosing a management company then you’ll want to be sure that the company you choose has a good grasp of the regulatory requirements. Not all of them do!
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Old 29th Jan 2018, 18:28
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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.
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Old 29th Jan 2018, 19:30
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Article 2 of Reg. 965/2012:

commercial air transport (CAT) operation means an aircraft operation to transport passengers, cargo or mail for remuneration or other valuable consideration.

No mention of control.

"Valuable" is not defined either.
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Old 29th Jan 2018, 21:24
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Thank you all, to add to the mix...

How about non-Euro OPR, who has an AOC, and their contract with an industrial company to provide a jet exclusively for company use? Let's say 500hrs a year.

Do they file IN and operate commercially? Require commercial permissions when visiting Europe?

Applying commercial permit rules on this flight - which are designed to protect home markets - is surely folly as the OPR has the exclusive deal with the end user, irrespective of the actual financial deal.
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Old 29th Jan 2018, 22:10
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Depends on local rules... you REALLY need legal advice on this from

a) the country you operate from

b) the country you operate to

All the advice seems to be there are no clear,overarching, rules

I hate to say it but lawyers advice is a lot cheaper than getting it wrong - just because YOU think it's one rule doesn''t mean the courts will agree.....
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Old 29th Jan 2018, 22:17
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Cliches apart, it's for a friend...who just got ramp checked
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Old 30th Jan 2018, 09:30
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Originally Posted by dallas View Post
Cliches apart, it's for a friend...who just got ramp checked
A valuable data point coming up then!!
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Old 30th Jan 2018, 21:50
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I hate to say it but lawyers advice is a lot cheaper than getting it wrong - just because YOU think it's one rule doesn''t mean the courts will agree.....
We had three different law firms saying three different things about the subject.

Fukc the EU, I say.
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Old 31st Jan 2018, 20:20
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Lawyers write the laws and who benifits.........
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Old 1st Feb 2018, 07:00
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There was numerous cases of insurance claims after hull loss, and most of them are going in the same direction. Ultimate Beneficial Owner.
Then two cases. Either a corporation is advertising for selling flights - > AOC
Either they are carrying "Shareholders" or "Staff" but only to the requirements of the latest ( no advertisement or sale in between) -> NCC
The registration of the plane does not matter much, even a N registered can be on ( and shall be) on Part NCC if operating from regularly ( based, even not on the papers) from an Airport in Europe.
Example : Let's imagine that VAG is an american company, but needs to operate from germany due to historical reasons. They can have their plane registered in the USA, put them at the disposition of the German entity, and operate from there, BUT if the airframe stays more than 185 days in the year or more than 12 months within 3 years, they will have to pay VAT, AND they will have to operate under NCC.

AOC : Within EASA land, to date, anybody can do anything intra states or else, does not matter (Switzerland Not), as long as they have an EASA Part CAT certificate.
FAR 135 : They can stop from/to USA, drop pax, carry on etc.. But they cannot take NEW people within EASA. For this you need prior authorization from all states overflown and of course departure arrival . (It is exactly the same when you will fly EASA AOC to the USA, and except if you apply for a FAR 129, you are limited to a finite number of flights per year)

So who has the ultimate control ? well this is the company that hold the NCC / AOC certificate for the said operation, when it is not clear, who is paying eurocontrol charges ?
Then of course if it is still muddy, Lawyers will strip down everything to the bone in order to find a whois "accountable manager".

In the case of @Dallas, This company(USA ?) is putting a plane at the disposal of an European Company for them to use within europe for a fair amount of hours, the ONLY legal way is to file an NCC ops, and transfer the authority and crews to this company for the duration of the contract. OR for every flight seek permission.
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