Proposed Rulemaking Clarifies Regulation of Fractional Aircraft Ownership Programs

WASHINGTON -- The Federal Aviation Administration (FAA) has
issued a Notice of Proposed Rulemaking (NPRM) that provides
federal standards for safety and oversight of Fractionally Owned
Aircraft Programs. The FAA's proposed rulemaking also provides
for the first time an official definition of a fractional ownership
operation and specific owner and management company
responsibilities.

Fractional ownership programs began in the mid 1980s. The
programs allow individuals to purchase a "share" of an aircraft
while a management company provides maintenance and other
aviation services. Since its inception, fractional ownership
programs have expanded to the point that some companies
provide management services for hundreds of aircraft and
owners.

To meet this growing area of aviation, FAA Administrator Jane F.
Garvey called for formation of a Fractional Ownership Aviation
Rulemaking Committee in October 1999 to develop regulations
and policies relating to fractional ownership programs. The
27-member panel was made up of aircraft operators,
manufacturers, associations, the general aviation community, as
well as FAA officials. The committee reached a consensus on
various issues and the proposed rulemaking reflects the panel's
recommendations.

According to the newly proposed definition, a "Fractional
Ownership Program," is possible when an individual or corporation
purchases at least 1/16th share of an airplane. The aircraft is
then placed in a "pool" to share with other owners of aircraft. The
pooled aircraft are managed by a company that provides aviation
expertise and management services for those owners.

While Fractional Ownership Programs have consistently achieved
one of the safest records in aviation, the proposed rulemaking is
aimed at maintaining the safety of these programs. In addition,
the NPRM also provides charter operators with alternate means of
compliance with certain regulations provided they meet additional
safety requirements. The rulemaking is based on many of the
best practices existing in corporate and commercial aviation, as
well as air carrier regulatory standards.

Upon review of the public comments, the final rulemaking is
scheduled for the summer of 2002.