AVIATION ADVICE: GRAY CHARTER
Written by Nick Hughes & Gordon Gardiner; Holman Fenwick Willan
Private business can become all too public in the event that an incident and/or investigation or audit uncovers unlawful conduct. This has been thrown into sharp focus by two cases this year in the UK. The situation also falls to be looked at in terms of the need for continuing vigilance over market arrangements applying in the Asia Pacific region.
In March 2019 a UK businessman, Robert Murgatroyd, trading as flybpl.com, was convicted and imprisoned for three years and six months on seven charges arising out of an accident in course of what was an illegal charter flight carried out in September 2017. The aircraft effected a forced landing and was badly damaged although happily all occupants survived.
This was a case of illegal public transport in the sense of passengers paying for a flight within the UK that was effected by Mr. Murgatroyd as the pilot when he had only a PPL.
There were many other aspects of non-compliance with safety regulations such that Mr. Murgatroyd was convicted on charges of endangering the safety of an aircraft, endangering the safety of a person, illegal public transport, flying otherwise than in accordance with a licence, flying otherwise than in accordance with any condition / limitation contained in an airplane flight manual, failing to comply with applicable insurance regulations and flying without the airplane flight manual. It was held to be a reckless operation. It might be thought to be at the lower end of the market involving a PA28 type aircraft, but the principles apply across the board.
Secondly, investigations continue into the cause of an accident that caused the death of nascent English Premiership footballer, Emiliano Sala (who was being flown to join his new club as their big new signing) and of the pilot, the late David Ibbotson, whose aircraft crashed into the sea near Guernsey, Channel Islands, on a flight between France and UK in January 2019. The flight was conducted using an aircraft on the N register. The ownership interests were structured so to facilitate operation outside of the US and involved an owner trust arrangement, such that beneficial ownership rested in a UK company whereas title was held by a US entity. The tragic accident, in apparent bad weather, came about when an aircraft under the command of a pilot with a PPL conducted a VFR flight which encountered meteorological conditions that must have been at or towards VMC limits.
The event has triggered an investigation into the regulations applicable to the operation of the flight including airworthiness requirements, flight crew licensing and, of course, the carriage of passengers.
The combination of an N registration for the aircraft and operations in Europe of course create a need to comply with regulations applicable in both US and EASA jurisdictions.
In this case, there is no record of an application for permission to operate the aircraft commercially, according to the AAIB — the UK air accident investigation authority. The pilot, as was required, did hold both an FAA licence and an EASA licence (albeit they were PPL). And, as was one aspect of the Murgatroyd case (above), if it is found that reward was given for the flight, a PPL is incompatible with requirements for the carriage of passengers (for reward). The details of the applicable arrangements, for this and (triggered by the accident) possibly other related flights, will be revealed in due course.
The underlying regulatory requirement in Europe is that if, for example, carriage was being performed with some "cost sharing" arrangement as between pilot and passenger, there is again a need to comply with regulations applicable not only in Europe but also in the USA. Many jurisdictions may allow "cost sharing" as a form of relaxation / exemption from regulation otherwise applicable to what would be commercial flights. The rules are often the subject of guidance relating both to the operation of aircraft on the registry concerned and also to aircraft registered in a foreign State. As may be well known, in the USA, legal interpretations issued by the FAA are that there must be a "pro rata share" of operating expenses as between pilot and passenger. So, in the case of two occupants, in the Emiliano Sala case, for compliance, the pilot should have borne half the operating expenses. Moreover, as the AAIB state, the US rules require that the flight must not have been made for the purpose of merely transporting the passenger but instead for the common purpose of pilot and passenger. It cannot be a charter for the passenger.
Although those two cases are in Europe, similar facts could arise anywhere. They could also arise in the operation of far more complex aircraft and in the case of aircraft owned by more complex structures. Moreover, they illustrate the need for continued vigilance, for some education compliance, and for persons to be assured of compliance, in aircraft charter operations.
Once non-compliance with applicable aviation regulation is established, the bedrock of other compliance, including with contracts, for all parties concerned, in all their arrangements touching upon the aircraft and their use of it, is put in jeopardy.
For example, aviation insurance is underwritten on the basis that, with certain special caveats, the aircraft is operated in accordance with aviation law. The existence of the insurance may itself be a legal requirement and the non-availability of the insurance, by reason of breach of policy conditions, has only two obvious consequences in terms of the value invested in the asset and the contingent liabilities in case of accident or incident. Any invalidity affecting a passenger's insurances, arising out of the event, will only redouble the problems.
These cases have focused attention on owner / operators compliance with applicable regulations. However, we must also not be blind to the need also to have regard to the use for which the aircraft may be put in any charter and to assure that the customer's use is lawful. Cases of aircraft being seized and possibly forfeited and sold, over the ownership interests, by authorities in case of illegal use, are not unheard of. At best there may be a protracted legal period involving considerable loss of use as well as insurance and maintenance complications arising from the process.
All arrangements should be vetted not only for commercial success but also for legal compliance.