Utah-based SkyWest recently launched its new subsidiary, SkyWest Charter, to operate both on-demand charters for individuals and companies and public charters to provide scheduled air services to underserved markets. The new charter subsidiary plans to operate 30-seat regional jets under the FAA’s Part 135 and DOT’s Part 380 certifications.
The public charter business model has been in existence for more than four decades. Traditional Part 380 operators included companies offering vacation or tour packages to places such as Cancun or Las Vegas. As a public charter operator, these companies would contract or charter a certificated air carrier to fly customers to their destination. Regulations allow a public charter operator authorized under DOT Part 380 to utilize any air carrier, including Part 135 on-demand carriers.
Here is the distinction in the regulations: DOT Part 380 addresses the economic authority to offer a public charter, while the FAA rules govern the operations of the air carrier.
SkyWest’s plan is stuck in a holding pattern due to objections by the Air Line Pilots Association (ALPA) and American Airlines. ALPA is the loudest detractor and has repeatedly objected to the certification of SkyWest Charter. In a letter to U.S. Transportation Secretary Pete Buttigieg, ALPA president Capt. Jason Ambrosi said SkyWest’s strategy would “roll back the clock and skirt aviation safety rules.”
The Part 380 public charter controversy stems from concerns over flight safety, pilot qualifications, and security. ALPA claims that public charter operators are exploiting a “loophole” that allows Part 135 on-demand operators to fly larger aircraft up to 30 seats. These aircraft would normally be flown under Part 121. ALPA contends that this lowers the bar on safety and allows operators to hire less experienced pilots. American Airlines has concerns about security and operators avoiding certain TSA fees.
These protests have had three effects: the DOT approval of the SkyWest Charter Part 380 economic authority has been delayed, public charter operators are under increased scrutiny, and most importantly, the FAA has formally issued a notice of intent (NOI) to revise the regulatory definitions which govern Part 135 carriers conducting Part 380 flights.
The Squeaky Wheel
Announced on August 24, the FAA’s published NOI outlines how the agency will re-examine the requirements for on-demand air carriers operating DOT Part 380 public charter operations and potentially provide revisions to the regulatory definitions of “on-demand operations,” “supplemental operations,” and “scheduled operations.” Accordingly, the agency’s primary motive for a regulatory review was based on the growth in flights conducted under Part 380.
Ambrosi applauded the announcement by stating, “We are grateful to Secretary Buttigieg, acting Administrator [Polly] Trottenberg, and the DOT and FAA teams for upholding the highest standards of aviation safety and security in the world.”
Within days of the FAA announcement, several general aviation groups, including the General Aviation Manufacturers Association (GAMA), Helicopter Association International (HAI), National Air Transportation Association (NATA), and NBAA, began to question the FAA’s rationale for revisiting the rules that govern public charter operations. The agency cited the growth of Part 380 flights over the past decade but failed to provide clarity on its motivation. Under the current regulatory framework, there have been no major incidents or accidents involving Part 380 flights.
“This review must be a data-driven look at the safety record of the current system and a precise delineation of any perceived problems,” said GAMA president Pete Bunce. “If compelling issues are identified that need to be addressed, any policy changes must be designed in a practical and targeted fashion to minimize any negative implications for small and rural communities, transportation efficiency and innovation, and progress on aviation sustainability. This is an issue with much at stake and needs to be based upon safety data and serious regulatory analysis.”
NBAA president and CEO Ed Bolen said, “For more than 45 years, Part 380 public charter regulations have allowed for a broad diversity of safe and secure air service options for U.S. consumers.” He continued, “We remain concerned about any action that may disrupt, or even deprive, air service to smaller communities.”
The effects of these changes could be wide-reaching, impacting Part 135 operators beyond the public charter market, according to NATA president and CEO Curt Castagna. “Regulatory revisions could have ripple effects throughout the entire Part 135 and general aviation ecosystem,” he said. “It is imperative that any changes are driven not by the economic interest of competitors, but rather by an identified safety need.”
SkyWest responded with a statement: “SkyWest Charter (SWC) believes that the operation of Part 380 flights under the current FAA classification is essential for small community air service, today and well into the future. The FAA’s ‘notice of intent' to review its classification of such Part 380 flights clears the path for DOT to approve SWC’s application for a commuter air carrier authorization, consistent with existing law and SWC’s undisputed fitness, since the non-fitness issues will be addressed by the FAA allowing DOT to focus on fitness. Additionally, SWC already exceeds current safety requirements and will transition to any additional requirements that may be adopted by the FAA as part of the rulemaking process.”
Public Charters—The Need
A primary driver for SkyWest’s move to create a charter subsidiary has been the reduction in air service in smaller communities throughout the U.S. The timing of these reductions began as the airline industry reeled from the turbulent effects of the Covid-19 pandemic.
According to statistics from the FAA, 576 airports in the U.S.—including Alaska, Hawaii, Puerto Rico, and other territories—had scheduled airline service in February 2020. Over the next three years, 301 of those airports experienced service reductions; one-third had significant service reductions of more than 50 percent, while 24 airports lost all airline service.
Smaller communities were disproportionately affected, and even those routes with guaranteed subsidies from Essential Air Service (EAS) legislation lost service.
“Subsidies have increased despite the introduction of smaller and more fuel-efficient aircraft, which should help drive down operating costs,” said Alton Aviation Consultancy managing director Adam Cowburn. “But that hasn’t stopped airlines from pulling out of EAS markets.”
For example, Cowburn noted, SkyWest (the Part 121 airline) cut nearly 30 destinations covered by EAS in 2022. “In many instances, however, [reduced] service to airports, including those supported by EAS, has been driven by regional airline pilot shortages,” he stressed.
By May 2023, EAS contracts awarded in the U.S. amounted to $394.2 million per year. The bulk of these contracts are held by Cape Air, Southern Express, and Contour Airways.
Cape Air and Southern Express are Part 135 commuter airlines regulated by the FAA and limited to the operation of non-turbojet aircraft with nine seats or less and a payload of less than 7,500 pounds. Aircraft operated by these airlines include the Cessna 208 Caravan, Cessna 402C, Pilatus PC-12, and Tecnam P2012 Traveller. Passengers purchase tickets directly from these commuter airlines.
Public Charters—Explained
Contour Air is a public charter operator (Part 380) or an “indirect air carrier.” As such, the DOT grants economic authority to a public charter operator. This ensures compliance with consumer protection rules.
As an example, when a passenger purchases a ticket for a flight from a public charter operator, those funds are held in an escrow account until the completion of that flight. Additionally, a public charter operator must comply with a DOT-approved charter prospectus and other regulatory requirements.
As a public charter operator, Contour Air does not operate aircraft but engages with an appropriately FAA-certified “direct air carrier” (either a Part 121 airline or Part 135 on-demand or commuter carrier) to provide the actual air transportation.
In the case of Contour Air, it charters a 30-seat Embraer regional jet operated by subsidiary “Contour Airways”—a direct air carrier operating under Part 135 (on-demand)—and then resells seats on that aircraft to the public as a public charter operator. This arrangement is common. There are no restrictions on the same company holding air carrier certification from the FAA and indirect air carrier authority from the DOT.
Contour Air has been a Part 380 operator operating EAS routes since 2016. It operates a fleet of 16 Embraer ERJ 135/140/145 aircraft each with 30 seats. On-demand Part 135 carriers are limited to aircraft with 30 seats. Four additional aircraft are on order.
The business model, as proposed by SkyWest Charters, is nearly identical to that of Contour Air. SkyWest Charter plans to fly up to 25 EAS routes with a fleet of 18 Bombardier CRJ200 aircraft reconfigured with 30 seats. Tickets on these flights will be sold as a public charter under DOT Part 380, and the aircraft will be operated by the subsidiary, the FAA Part 135 on-demand operator.
SkyWest has identified an opportunity, and these EAS routes can be profitable. SkyWest Leasing owns the Bombardier CRJ200s and will lease the jets to SkyWest Charter. These aircraft are being withdrawn from use with the company’s code-share partners and replaced by larger regional airliners.
Pilot Qualifications
In an earlier DOT filing, ALPA summarized its complaint against SkyWest Charter and its ambitions to operate EAS routes by stating, “The line between scheduled service and on-demand charter has been blurred beyond recognition.” ALPA argued that SkyWest is exploiting “a complicated regulatory loophole allowing charter flights to run so frequently that enterprising carriers can market them as scheduled services but be free from the Part 121 safety regime that governs most scheduled flights.”
ALPA contended that “SkyWest Inc. should not be permitted to degrade the margin of safety of our air transportation system by using its new alter-ego company, SkyWest Charter, to shift its current EAS small-community flying from itself to its surrogate to operate high-performance jet aircraft under public charter rules with lesser experienced, lesser qualified first officers on the flight deck.”
ALPA’s belief is that SkyWest Charter, as a Part 135 operator, is an attempt to circumvent the first officer qualification (FOQ) rules as enacted in 2010 by the FAA. Those rules require Part 121 first officers to have an airline transport pilot (ATP) or restricted-ATP (R-ATP) license. ALPA believes that by operating under Part 135, SkyWest Charter can employ first officers with as little as 250 hours, a commercial pilot certificate, and a multi-engine instrument rating.
The assumption by ALPA is that SkyWest Charter would employ first officers without an ATP or R-ATP license. SkyWest Inc. responded to these allegations, by saying, “Indeed, SkyWest Charter plans to launch operations with dual captains on its flight decks.”
Targeting “A Duck”
ALPA later targeted another Part 380 operator—JSX. Dallas-based JSX (formerly known as JetSuiteX) operates 37 Embraer 135/145 aircraft throughout the U.S. and Mexico, describing itself as a “hop-on jet service.” JSX sells tickets on its flights as a public charter, and flights are operated under Part 135 by subsidiary Delux Public Charter (dba JSX Air).
According to ALPA, JSX exploits the same loopholes as SkyWest Charter but serves the “affluent” market. ALPA wrote, “JSX is simply wrong. If it looks, swims, and quacks like a duck, it is a duck.” The pilot association firmly believes that JSX provides scheduled services and “unequivocally holds out to the public scheduled service” with advertisements that detail schedules well out into the future.
According to ALPA, the size of an operation matters. “The scale of JSX’s operation confirms that its use of FAA’s charter carveout is untenable, blurring what it means to be scheduled service," ALPA said, adding that “JSX operated 110,305 scheduled departures in 2022”—a figure that eclipses the operations of Commutair and Piedmont, two Part 121 regional airlines.
Furthermore, ALPA contends “JSX’s security protocols constitute a glaring loophole requiring immediate and comprehensive closure.” The association further adds that without proper security screening and advertising its flight schedules, JSX provides a security risk, like 9/11, since its aircraft could be used as a “missile” against targets in the U.S.
American Airlines, in a letter to the DOT, also had concerns about JSX’s security protocols. “The JSX model depends on exploiting a 'public charter' loophole to fly a published schedule with 30-seat turbojet aircraft under Part 135,” said Molly Wilkerson, American Airlines v-p of regulatory and international affairs.
American identified a number of shortcomings with the Part 135 charter model, such as TSA screening, less stringent regulatory requirements, and reduced fees. “American Airlines believes that the 'scheduled charter' model as leveraged by JSX degrades our nation’s aviation system and distorts competition, [and the] DOT should end this misuse,” Wilkerson added.
In JSX's defense, company CEO Alex Wilcox wrote, “For cynical reasons, however, American and ALPA are abusing the SkyWest Charter docket as a forum in which to advocate for unprecedented and wholly unjustifiable governmental action to do nothing less than put JSX and other innovated and reliable Part 380 operators out of business and leave many small communities nationwide without air service.”
JSX also pushed back on ALPA’s claim that Part 380 operators lower safety standards. The company pointed out that it operates above and beyond Part 135 mandates by proactively establishing a safety management system and other voluntary safety programs such as the FAA's FOQA and Aviation Safety Action Program. JSX also routinely passes the IATA safety audit, which is considered a gold standard in aviation. In the same vein, JSX trains its pilots on Level D simulators, uses realistic line-oriented flight training scenarios, and requires 25 hours of initial operating experience for captains and first officers.
Define Scheduled Services
NATA supports the existing regulatory oversight system for the licensing and conduct of public charter operations. The association believes “long-standing FAA regulations related to the operation of public charter flights by on-demand carriers are also expressly authorized and further supported by several legal interpretations issued by the FAA Office of the Chief Counsel.”
According to a NATA white paper on public charter flights, from an FAA perspective, a public charter flight is no different than other operations conducted under a charter contract. A charter flight involves the entire capacity of the aircraft being hired out—details such as departure and arrival airports and times are negotiated between the air carrier and charterer. In the case of a public charter, the Part 380 operator sets the operational parameters of the flight in its contract with the direct air carrier.
NATA noted, “Scheduled flights are defined by the FAA as ones where the air carrier (Part 135 commuter or on-demand) determines in advance the departure airport, departure time, and destination airport.” As such, “by definition (14 CFR 110.2) public charter flights under part 380 are not scheduled flights.”
Another point of contention with ALPA is that EAS routes must be operated by “scheduled air transportation.” ALPA wrote, “Public charter operations are not, by definition, scheduled service.” It cites a case where the DOT rejected charter service as a substitute for EAS scheduled service in Ironwood, Michigan (EAS at Ironwood, MI, et al, DO-OST-1996-1266 & 1711, Order 2010-9-26).
According to ALPA, SkyWest Charter would not be permitted to offer charter services to EAS communities without a waiver. “We are not able to allow communities to rewrite the framework of the EAS program by exempting them from the basic requirement that all essential air service be provided by scheduled operations.”
ALPA also believes that shifting Part 121 flying to a Part 135 carrier “rolls back time” and introduces unnecessary risk to the passengers and the national aviation system. It cites the FAA’s commitment to “one level of safety” codified into law in 1995 after a series of Part 135 commuter accidents. As a result of this rulemaking, scheduled operations in airplanes with 10 seats or more and any passenger operations in turbojet aircraft, regardless of seating capacity, were and are required to be operated under Part 121. According to ALPA, the ability to operate a 30-seat jet under Part 135 carrying passengers uses a loophole in the current regulations.
HAI president and CEO James Viola sums up the issue. “Part 380 public charter regulations have been in operation for more than four decades. Merely witnessing an uptick in Part 380 operations over the past decade is insufficient grounds for a sweeping overhaul of regulations, particularly when such changes carry far-reaching implications for the entire general aviation community,” he said.
HAI’s Viola adds, “The absence of safety concerns raised by industry experts during this period suggests that the existing Part 380 regulations are robust and effective. In contemplating any regulatory modifications, it is paramount to prioritize safety, efficiency, innovation, and sustainability as guiding principles throughout the decision-making process.”