POGO is no go, but no surprise there (and other thoughts)

I'm back and wanted to comment on a few things as I wait to get home from a business trip to New York. First, no surprise that Crandall's Pogo is a no go. There was a lot of over promising related to Pogo from the start combined with a criticism of operating air taxi platforms, a change in their proposed aircraft and a little arrogance, so I was not surprised about the announcement. However, let's not blame the failure of Pogo on the air taxi model or the failure of Eclipse.

On the FAA side, my hope is that a new FAA Administrator and DOT Secretary will bring some much needed common sense to the state of enforcement actions against Part 135 operators and other certificated pilots, mechanics, repair stations and operators. Right now, it's out of control, unreasonable and a great example of abuse of the power of governmental agents many of whom from what I have seen are not adequately trained in the matters over which they have enforcement responsibility. That's not good and quite scary . . . I have indeed represented (and am representing) a number of operators, mechanics and pilots in FAA enforcement actions to have personal knowledge about this.

The criminal action against Platinum Jet for its Teterboro accident is moving forward. Quite frankly, I do not understand how how the FAA is not able to revoke certificates for that accident, but the New Jersey US Attorney believes those operations warrant criminal conspiracy indictments and jail time. Yes, jail time and federal convictions. I am pleased to be representing one of those individuals.

The outcome of the Eclipse bankruptcy remains a mystery. My personal opinion is that the Eclipse jet is just too good of a platform to fail completely in spite of Vern (who you have to go give some credit to), so someone has to pick it up out of bankruptcy.

The SR-22 continues to enjoy successful chute saves rendering continued credence to my continued support of that airframe as a great air taxi platform.

Happy Mothers Day to all. Put Mom on an air taxi.

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Glimmers of Good News

Over a year ago when I started this blog, I declared last year would be the Year of the Air Taxi. Ok, I was wrong in some respects. I admit that I fell into the trap of excited exuberance about vljs and the air taxi concept. However, I have been correct in repeatedly saying we have a long way to go, that we are simply crawling now and have yet to walk and run and that it will take years to determine the best platforms and business models for air taxis. In March of last year, I further stated that as with any disruptive technology, it would get worse before it gets better and it would take take time, money, vision and patience. That post is worth revisiting. It will also take years to educate the travelling public on the value proposition of air taxi travel. But, I remain confident it will occur. I am encouraged by some of the recent positive news from SATSAir, Linear Air and ImagineAir on this side of the Atlantic and Blink on the other side. I am also encouraged by word of mouth endorsements and affirmations.

About a year ago, I talked to a lawyer who was extremely frustrated in enduring the short hop commercial air travel from the upper part of South Carolina to Atlanta. While simply a short 30 minute or less commercial flight, the whole door to door travel saga was taking hours. The drive was not much better on crowded interstates in desperate need of repair with choking rush hour traffic. Since their main office was in SATSAir's backyard, I told him to call SATSAir. I ran into another attorney in that same firm last week. He stated that there were several lawyers there who had been flying SATSAir exclusively since I passed on the recommendation. That's good news and an affirmation of the value proposition even in very rough economic times.

SATSAir just announced some very impressive numbers for air travel. The press release of March 17 stated: "SATSair ended the year with over eleven (11) million revenue passenger miles flown since the company's inception in November 2004, flying more than 14,000 flights and landing at over 500 airports in 24 states during 2008." Fourteen thousand flights!

ImagineAir, another Cirrus operator, reported positively in some articles the first week of this month. As AvWeb reported about ImagineAir, "Founded in 2005 and operating five Cirrus SR22 GTS aircraft with 15 employees, the Atlanta-based company saw 117 percent more flights year over year from 2007 to 2008. Company president Ben Hamilton, 25, told the Atlanta Business Chronicle ImagineAir will follow that initial success by doubling its fleet in 2009, spacing planes throughout the Southeast and expanding service to Texas by 2010. The company reportedly lists its 2008 revenue at about $800,000 but has a goal to operate 50 aircraft and employ 100 pilots within five years."

Linear Air announced it is taking its Eclipse aircraft to the Bahamas and also continues to try to set up a management program for Eclipse owners. There is a great article about both Linear Air and European Blink (flying the Cessna Citation Mustang to the right) in the March edition of the Harvard Business School Alumni Bulletin.

The fact that these companies are even surviving in these extremely challenging times is a tribute to their leadership teams and the air taxi concept. While I was indeed over-exuberant a year ago, I am still a believer.

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FAA "Emergency" Suspension and Revocation

Here is a good post for Friday the 13th. The FAA has instituted a large number of "emergency" suspensions and revocations of Part 135 certificate holders and other certificate holders (repair stations, pilots and mechanics) in the past year. Having just finished a four and a half month defense of an "emergency" suspension of the operating certificate of one of nation's largest Part 135 helicopter operators, the emergency procedure is draconian and severe. In my opinion, it is mostly stacked against the aviation certificate holder and potentially lacking in due process protections. Fred George has just published a great article entitled "Presumed Guilty" in March's edition of Business & Commercial Aviation that discusses such enforcement actions. I believe there are indeed a number of well intentioned, very professional and hard working FAA employees concerned like all of us about safety. I just do not like the manner in which emergency actions appear to the rule for a suspension or revocation rather than the exception.

Emergency suspensions and revocations can mean the end of your business. The time and money to defend the case and the lost revenue can put you out of business while your company's operations are completely shut down. The same is true for a pilot or mechanic whose sole livelihood depends on the privileges of being a certificate holder. For a business, even though the allegations of the FAA are merely that - just unproven allegations - the black cloud and adverse inferences of the emergency action and the negative press and public perception related to it can put your aviation business in a death spin. The rules related to emergency action are contained in 49 CFR 821.52 to 821.57. While the rules provide for an immediate review of the FAA's emergency characterization of the action by an administrative law judge, the standard of such review in my opinion is quite insurmountable. Based on the research we did, a reversal of the FAA's initial "emergency" determination is rarely, if ever granted. Here are my thoughts:

While all FAA actions allegedly involve violations of air safety, clearly not every suspension or revocation action is an emergency. If such were the case, there would not be any need to distinguish between a "normal" suspension or revocation action and an "emergency" one. Emergency actions should be limited to severe violations for which the potential for an accident, loss of life or injury is extreme.

The current standard for appeal of the emergency determination needs to be revised. The rules state that if the a petition for review of the initial emergency determination is filed within 2 days of the receipt of the action, "the chief law judge (or, if the case has been assigned to a law judge, the law judge to whom the case is assigned) shall dispose of the petition by written order, and, in so doing, shall consider whether, based on the acts and omissions alleged in the Administrator's order, and assuming the truth of such factual allegations, the Administrator's emergency determination was appropriate under the circumstances, in that it supports a finding that aviation safety would likely be compromised by a stay of the effectiveness of the order during the pendency of the respondent's appeal." 49 CFR 821.54. Therefore, the FAA alleges a number of violations and for the purposes of the review of the emergency characterization, the judge must assume the truth of those allegations. The certificate holder can present no evidence to rebut those allegations. Sorry, I am not sure how even the best aviation lawyer wins that contested matter with such a one-way standard.


The other interesting concept is that a significant time delay of many months in instituting the legal action is not typically considered as evidence that there really is no emergency. For example, the FAA inspectors can conclude their investigation, forward it to the respective FAA region's legal department where it is further reviewed and then wait six months before institution of the emergency legal action - all the while not communicating to the certificate holder anything further about the Agency's concern related to its flight operations. It would appear to me that if it really is an emergency warranting an emergency revocation or suspension, it would be instituted in a matter of days after the FSDO completes its inspection. A six month delay in instituting an emergency action is quite counter-intuitive to an emergency characterization and make no sense to me.


Defending emergency actions is difficult. Once instituted, they shut your business down for at least 30 days. Assuming you do not waive an expedited hearing and can get your certificate back at a trial within 30 days, it can still be devastating. If you opt not to have an expedited hearing, it will likely take at least 4-6 months unless you have already been working with the FAA on a proposed solution before the action is instituted.


Bottom line is that if you receive a Letter of Investigation or your company is subject to a higher than normal level of FAA surveillance or a special investigation and you do not think the inspection went well, engage the FAA early and often. Consider retaining legal counsel to assist you perhaps providing "behind the scenes" advice and insuring that written documentation and communication with the FAA is appropriate. Once the emergency action is instituted, legal counsel must provide you a strong and aggressive defense demonstrating your resolve to engage in pre-trial discovery, take depositions of FAA inspectors and ultimately, to go to trial. At the same time you are preparing for a potential trial, you need to be working hard with the FAA in answering their concerns to see if the matter can be settled without a trial. Proceeding in both regards down parallel tracks simultaneously is essential and requires a high level of coordination and communication.



Unfortunately, I don't see the emergency rules changing anytime soon, but I think it is important for all certificate holders to know that once the FAA commences an emergency action, it is very serious. Obviously, the best advice is to maintain the highest levels of regulatory compliance and do not get in the position for such an action to be instituted. However, if it looks like you may be the potential subject of an emergency action, be proactive! It is much cheaper to be proactive before the action rather than defending the action under the current rules in terms of the potential catastrophic impact of the shut down of your business, loss of revenue, and the reality of much more aggressive legal fees and costs once the case is brought.

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More on Eclipse's International Impact

The Bankruptcy Court has approved the conversion of the Eclipse case to a Chapter 7 case. While many groups are trying to determine how to save the product, Kate Sarsfield of Flight International has published a great entitled "Eclipse Owners Aim for Rescue Act." The article shows just how far reaching the demise of Eclipse could be and the impact of the financial loss on a number of European start up air taxi operators who had deposits for the aircraft. I had the opportunity to share my thoughts with her last week early one morning in a telephone interview.

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What Next for Eclipse?

Friday afternoon when I was returning from the SMU Air Law Symposium (a great conference!), the FAA issued a Special Airworthiness Information Bulletin ("SAIB") and a set of Frequently Asked Questions for existing Eclipse owners that can be found here. I really do not know what is next for Eclipse, but the FAA summary page for SAIB CE-09-14 states as follows:

This Special Airworthiness Information Bulletin (SAIB) advises you, the owners and operators of Eclipse Model EA500 aircraft, of the current status of Eclipse Aviation Corporation and requests that owners and operators inform the FAA of any unsafe condition involving the EA500.At this time, this airworthiness concern is not an unsafe condition that would warrant AD action under Title 14 of the Code of Federal Aviation Regulations (14 CFR) part 39.

Background: Eclipse Aircraft Corporation filed Chapter 11 bankruptcy in November 25, 2008. The creditors for Eclipse Aviation have now petitioned the court to move from Chapter 11 to Chapter 7 bankruptcy proceedings. The hearing is set for March 4, 2009. All Eclipse operations (including certification, production, service centers, training centers and dealers) are closed.

Recommendations: In the interim the FAA requests that owners and operators report to the FAA all unsafe conditions that may exist on Eclipse EA500 Aircraft to the Airplane Certification Office in Fort Worth, TX.

I do have a couple thoughts. First, there is and will be a market out there to service the existing 250+ jets already flying. I see where Bill Herp of Linear Air has proposed an arrangement to take care of the same. Second, Eclipse faced the same issue any new aircraft make, design and model faces - it takes a lot of time, a lot of money and a lot of patience to design, test and perfect a new aircraft. They ran out of the first and second. They probably get a less than satisfactory grade in the third related to the service issues with the aircraft and what I thought was a well below average grade in handling current and future customers (and that's putting it gently.)

As far as the impact on the air taxi marketplace, it is indeed a disappointment to the extent that many operators took DayJet's lead and jumped on the Eclipse bandwagon long before the aircraft proved itself as a reliable air taxi platform. Contrast that with the Cirrus SR-22 whose performance, reliability and cost structure has been superb as an air taxi platform.

The Eclipse was not designed as a air taxi. In fact, it was designed as a personal jet. To equate Eclipse with air taxi is wrong. To equate Eclipse's potential demise with the demise and failure of the air taxi model is likewise misplaced. It's going to take 5 to 10 years for this market to mature and we are indeed a long way from there in the midst of one of the worst financial environments we have experienced in our lives. There will be successes and failures. While I hope Eclipse as a model makes it and a group purchases the assets out of Chapter 7, the ultimate success or failure of air taxis is not tied to the hip of Eclipse.

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Last Day for TSA New Security Program Comments

There has been a significant amount of discussion in the general aviation world with respect to the new TSA Large Aircraft Security Program ("LASP"). There are number of great resources to review summaries of the proposed new regulations including the NBAA's website. There have also been a large number of comments posted on proposed rule on the federal docket. In fact, as of today, over 3800 comments have been received by the government for review of the proposed new program.

The proposed new rules would be rather costly and significantly impact air taxis and charter operations. It is not my purpose to discuss all those potential impacts, because it is late, there are many implications and quite frankly, many have already been adequately addressed by the thousands of comments posted to the federal docket. However, one of the most absurd potential requirements is that the TSA's current Prohibited Items List would apply to all aircraft including "corporate and private operations, with aircraft with a maximum certified takeoff weight (MTOW) above 12,500 pounds." Here's what is included:

That Prohibited Items List includes a number of "Sporting Goods" that would have to be "checked." For vacation and leisure travelers utilizing corporate charter or air taxis, you could not bring baseball bats, bows and arrows, cricket bats, golf clubs, hockey sticks, lacrosse sticks, pool cues, ski poles, and spear guns. They cannot be brought in the aircraft cabin. They have to be checked. Not sure where they would be "checked" and rather nonsensical (as my colleague commented to me) to tell Tiger he can't bring his clubs on board and no skis for the Tahoe trip.

No guns, no ammunition, no BB guns and no pellet guns for the weekend hunting junket. Congress is helping anyway in this regard attacking corporate flight departments and all those wasteful flights anyway. Why should a CEO of a multi-billion dollar company be able to entertain clients, make business deals and go on nice trips in a corporate jet? Get in coach buddy with the rest of us and check your golf clubs and guns, mister!

It just took me 12 hours to get from Charleston to Dallas on commercial air after a series of unfortunate mechanical issues this week. The air carrier did a great job of accommodating us. Regardless, current public policy appears to be everyone needs to experience the same mode of "slugging it out travel," except Congress of course and perhaps the Speaker of the House. Oh and no hammers, no screwdrivers greater than 7 inches and no cordless drill to fix up the aircraft or the condo.

My hope is that the TSA will indeed review the thousands of comments that have been posted and adopt a program that makes sense, is truly tailored to the general aviation circumstances and does not put the air taxi and charter industry further out of business. And enhances security!

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SATSair and PDK

I was in Atlanta on business most of last week and noticed that SATSair had announced a new business travelers program out of one of my favorite general aviation airports, Peachtree Dekalb or "PDK." The SATSair program allows for a great hourly rate out of PDK for business travelers who want to make a quick and highly efficient day trip from Atlanta and return within 12 hours - much more efficient and less stressful than flying out of Hartsfield. The SATSair "Business Day Travelers Program" allows for a $495 hourly rate for these trips. That's hard to beat when you consider the time saved by flying to a destination in the Southeast for a day trip and a day meeting, especially when you can arrive 15 minutes before the takeoff time. SATSair states that it flew 875 flights our of PDK last year. Great price from a very convenient airport!

I like PDK for a number of reasons. Not only is it one of the nation's busiest and most successful general aviation airports serving air taxi, private, charter and corporate aircraft , it has a lot of history and is also the former Atlanta Naval Air Station that served as a base for a large number of active and reserve Navy squadrons. And, it is the home of what I would rate as one of the best "airport restaurants," the Downwind Restaurant and Lounge conveniently located on the second deck of the airport administration building and overlooking the runway with a great outdoor deck. It boasts one of Atlanta's best burgers and you can't beat the scenery of a constant stream of aircraft large and small on approach, landing and takeoff roll. Casual setting and great food reminiscent of the small officers' club lounges when I was in the Navy that always guaranteed a good burger and a cold beverage of choice within earshot of the sound of freedom - jet engines. I stopped by there last week and indeed saw a SATSair Cirrus on take-off roll.

This week I am off to the premier aviation lawyer symposium in Dallas, Texas. To the small niche of us whose law practice is primarily devoted to aviation matters, it is a great conference to discuss emerging legal issues and see old friends. The 43rd Annual SMU Air Law Symposium is a fine three day event where most of the nation's real aviation lawyers get together. There will be enough to talk about with the recent USAir Hudson River landing and the very unfortunate New York accident. I have not seen any lawsuits related to either yet, but my sense is that they are coming. There has also been a lot of enforcement activity nationwide by the FAA and there will likely be some discussion about the new proposed TSA rules for general aviation aircraft.

Anyway, enough rambling for now. The SATSair program is a great deal our of PDK and you can't beat it if you combine it with a stop at the Downwind Restaurant for lunch or dinner or glass of sweet tea to watch the aircraft arriving and departing PDK.

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Hopskotch is Up!

I got an email from Andrew Schmertz, President and CEO of Hopskotch Air, letting me know that they are indeed up and running and have their Part 135 certificate. Congratulations! Hopskotch is another full plane air taxi service using the Cirrus SR-22 aircraft. Hopskotch is claiming the Northeast as its territory for operations. Andrew has assembled a fine team and is an avid aviator, veteran of the communications and broadcasting industry and a lawyer who has chosen to be an entrepreneur. Hopskotch does not appear to be charging by the hour, but rather provides guaranteed pricing for the flight at the time of booking. I talked about Hopskotch almost a year ago here when DayJet was still adding DayPorts. It's good to see someone succeeding and moving forward. They are not the only ones moving forward when many are failing or have already failed. Next, I will talk about JetSuite, who took delivery this past week of the first of over 100 Phenom 100s it has on order. I last talked about JetSuite a little less than a year ago here. Small rays of sunshine and hope in an otherwise dismal economy and less than exuberant marketplace!

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Aviation Week Story on Indictments & Congress

Here's the Aviation Week web story on the indictments. It's well written by Fred George and Benet Wilson and entitled "Indictments on Willful Violations." I met Fred at the last Aviation Week VLJ Forum last year, which was always one of my favorite high energy conferences. He's a passionate and well informed aviation enthusiast. I have told both him and Editor-in-Chief Bill Garvey that I truly enjoy my highly informative issues of Business & Commerical Aviation and cannot imagine anyone in the industry not subscribing to it. Heres more:
Also, as noted by Ms. Wilson, Bill just wrote an excellent article in defense of commercial and general aviation use by corporate executives which was published in The New York Times. I am all for limiting greed and corporate excess, but I agree with Bill that there is incredible value in the ability to get quickly from Point A to Point B without having to take a day to get there and without going through the hub and spoke system. Ironically, that's the benefit also of an air taxi. It might cost a little more, but the comparative analysis is flawed if there is no valuation put on the time saved and the efficiency in travel.

I also find it quite ironic that the criticism is coming from Capitol Hill where in spite of allegedly tougher ethics rules, excess and give aways are common. Our elected representatives have historically been the biggest users (and private requesters) of corporate aircraft before the recent ethics rules changed and they and their staffers have gone on a number of "fact finding" trips at the taxpayers' expense on government jets. Also, at most airports, they have a reserved parking spot up front in a paid parking lot, not to mention they were the ones pushing hardest to reopen National Airport after 9/11 when they all had to fly into Dulles. Finally, do they go through the standard TSA security screening checkpoints like the rest of us or or they provided private screening? Just curious.

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Teterboro Indictment - Part 2: Are You Running an Illegal Charter?

As an aviation lawyer who provides advice to a lot of folks who run or want to run charter operations, I continue to be fascinated by the Teterboro Indictment of Platinum Jet Management that I discussed in Part 1 a few days ago. I have before advised some inquirers and potential clients what it takes to do so legally and they say they just don't want to do that. Not my rules, but the federal governments. Running a compliant Part 135 operation is a costly proposition because of the regulatory requirements. Those who are running for-profit charter operations in a Part 91 aircraft in exchange for compensation or cost sharing and without operational control should take heed of the risk of criminal prosecution if there is an accident or otherwise. The indictment for Platinum included not only its two founders, but also the "Director of Charters," the "Director of Maintenance," and the first officer pilot, all of whom were alleged participants in the alleged "conspiracy." While it is important to remember, the indicted individuals are innocent until proven guilty, this move by a federal prosecutor is noteworthy for the following reasons:

As a followup, here are some quotes from the Indictment:

"Part 135 operators were required to obtain a Part 135 certificate. The FAA issued Part 135 certificates to operators only after a rigorous application process, which required operators, among other things, to develop comprehensive operating, training, and maintenance manuals that would govern their charter operations."

"Part 135 operators were also subject to stringent record-keeping., maintenance, training and safety requirements. . . ."

"From at least as early as in or about November 2002 through in or about March 2005, defendants . . . did knowingly and willfully conspire and agree with one another and others

a. to commit an offense against the United States, that is, to devise a scheme and artifice to defraud charter flight customers, jet charter brokers, the FAA, and others, and to obtain money and property by means of materially false and fraudulent pretenses, representations, and promises concerning Platinum Jet's compliance with the FAA's safety and other regulations relating to the operation of commercial aircraft in the United States . . . and to use interstate wire communications for the purposes of executing such scheme and artifice . . ."

"b. to defraud the United States by impeding, impairing, obstructing, and defeating the lawful governmental functions of the FAA to regulate the operation of commercial aircraft in the United States."

"The object of the conspiracy was for the conspirators to enrich themselves by repeatedly violating airline safety and regulatory requirements while operating Platinum Jet as an on-demand jet charter company."

They flew "in excess of 85 commercial charter flights without a Part 135 certificate in exchange for more than $1 million in compensation."

In summary, the Indictment would maintain that:

• Every commercial flight they flew without a Part 135 certificate was illegal and in furtherance of a criminal conspiracy.


• Faxing the illegal contracts across state lines constituted wire fraud.


• Every flight log that indicated the commercial flights were Part 91 flights were deemed knowingly false and fraudulent documents.

And finally, here are some of the federal criminal statutes alleged as having been violated:

18 USC 371 - Conspiracy to commit offense or to defraud United States

18 USC 1001 - False and fraudulent statements

18 USC 32 - Endangering the life of those on an aircraft

18 USC 2 - Commission of an offense as a principal

Most notable, "[t]he single conspiracy count and 21 false statement counts each carry a maximum statutory penalty of five years in prison and a maximum fine of $250,000. The endangering the safety of aircraft count . . . carries a statutory maximum penalty of 20 years and a fine of $250,000."

If you want to engage in charter sales, charter brokering, air taxis or run some type of a commercial aviation operation and want to do so in conjunction with the Part 135 certificate of someone else, make sure you are doing it legally. If there is doubt about what you are doing, there is no doubt about what you should do: seek legal counsel from an aviation attorney. I know that costs money, but so does getting a Part 135 certificate and for that matter, hiring a good criminal defense attorney after the fact. That's just the cost of doing business right in a highly regulated, high risk environment. Risk that now includes not only that of an FAA civil penalty, an FAA certificate action and an unfortunate accident, but also jail time in a federal prison for conspiracy and wire fraud.

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