Acana Outlines Charter Broker Issues

The Air Charter Association of North America (Acana) held a meeting on Wednesday at the 2015 NBAA Schedulers & Dispatchers Conference in San Jose, Calif., to highlight the group’s work developing a best practices document to provide guidance to air charter brokers. The Contract Best Practices (CBP) document was finalized last October and is available on the Acana website.

The target audience for the CBP document is independent brokers that arrange charters, but it also serves air charter certificate holders that provide brokerage services.

“The [U.S.] government agency most relevant for brokers is the Department of Transportation,” said David McCown, senior vice president at brokerage Air Partner and former Acana chairman. “[This is] because, as the economic authority, it has been the chief enforcer of unlawful business practices by brokers, especially those holding out as air carriers.” The DOT is concerned about brokers claiming to be the air carrier and saying they have operational control in their marketing material. “That’s a clear no-no from the DOT’s perspective,” he said.

Another important issue is that brokers have to make clear the capacity in which they are acting, whether as an agent of the customer or the aircraft operator, for example. “If the broker is entering into a binding contract with the air carrier, that should be made clear to the customer,” he added. As well, the contract should address specifically what the charter quote covers, whether or not it is binding, if the quote is for a specific aircraft or a type or size, what happens if there is a mechanical problem or if the managed aircraft's owner decides to take a trip at the last moment, he said, “and who is on the hook financially.”

The CBP document addresses the all-important payment issues. McCown explained, “Payments should be in escrow, but if not, let the customer know.” The customer also might need education about what happens if he fails to make all the agreed-on payments and that this might result in loss of funds paid toward the trip cost.

Another area that causes problems is the collection of the federal excise tax (FET). “It is important to understand what is and isn’t due on FETs. It’s important to know who’s going to pay,” said McCown, “the broker or client, and when it is due.”

During the meeting, the participants discussed the DOT notice of proposed rulemaking that addresses the broker community. While the comment period for the proposed rules ended in late 2013, nothing has since happened to move the new rules forward at the DOT. “We reached out to the DOT,” said Brent Moldowan, former Acana president and marketing manager at Jeppesen. A DOT counsel responded, “I’m sorry, there’s nothing going on. I can’t comment,” according to Moldowan. “That effort has been parked for the time being, so I don’t think we’re in danger of that coming out [soon].”