FAA Alleges Illegal Charters by Hincojet

The FAA is proposing a $3.3 million civil penalty against The Hinman Co. of Portage, Michigan, for “conducting hundreds of commercial aircraft operations in violation of the Federal Aviation Regulations, including failing to hold the required operator certificate for the flights being performed.” The flights were flown by the company’s Hincojet LLC subsidiary, which operated a Beechjet 400A and Hawker 900XP in timeshare arrangements. The Hinman Co. is a commercial real estate management company.

The FAA explained that Hincojet flew 850 flights where it charged timeshare owners in its two jets for more than the allowable amount to cover expenses allowed in Part 91. The allowable expenses include the cost for “fuel, oil, lubricants, and other additives, and an additional charge equal to 100 percent of the costs for fuel, oil, lubricants, and other additives used for each flight.” Because it charged too much, the FAA alleged, the company “was required to conduct such flights in accordance with regulations applicable to commercial operations.”

The FAA also claimed that “Hinman double-billed timeshare clients for various legs of trips.” In one case on Sept. 30, 2015, the company billed the client for a trip and another client for a different trip, both on the same aircraft on the same day. “The FAA alleges the aircraft was incapable of conducting all of those flights in a single day.”

According to the FAA, “The FAA alleges that because it was charging more than the expenses allowed under Part 91, Hinman should have been operating these flights under Part 135, which applies to commercial operations. As a result, Hinman failed to meet the FAA’s Part 135 requirements for record keeping, including pilot records and load manifests, for each flight. The company also had no Part 135 training program in place, and the pilots operating the flights were not authorized to conduct the flights under Part 135, the FAA alleges.

The Hinman Co. did not respond to AIN’s questions by press time. The company has 30 days from issuance of the FAA civil penalty proposal to respond to the FAA.

Scrutiny Welcome

For the National Air Transportation Association, the proposed penalty gives encouragement that the FAA is stepping up its scrutiny of illegal charter activity as the association works with the agency to highlight the issue. “This penalty brings to light the ramifications for operating an illegal charter business, and it’s expected that more will come,” the association said.

NATA in recent years has been meeting with the FAA over the issue, as illegal charter has been a long-standing concern. These concerns culminated in the formation of the Illegal Charter Task Force, which held its first meeting during NATA's annual meeting and aviation business conference in June.

During that meeting, the task force focused on defining illegal charter and distinguishing between intentional and unintentional non-compliance. “Illegal charters bypass the FAA’s safety standards in order to undercut the pricing of legitimate businesses by creating a potential safety hazard, putting legitimate operators at a competitive disadvantage, and dodging the payment of appropriate federal excise taxes,” NATA said. “The goal of the task force is to work in conjunction with industry and the FAA to identify operators that attempt to evade the rules and regulations that constitute a legal charter operation, and ensure the protection, safety, and integrity of an industry held to a very high standard.”

The issue also has captured the attention in Europe. BACA-The Air Charter Association recently teamed up with the European Business Aviation Association (EBAA) to fight illegal practices. Under their joint effort, the organizations will collect data on the breadth and scope of gray charter.