Fractional ownership operations began in 1986 with the creation of a program that offered aircraft owners increased flexibility in the ownership and operation of aircraft. This program used current aircraft acquisition concepts, including shared or joint aircraft ownership, and provided for the management of the aircraft by an aircraft management company.
The aircraft owners participating in the program agreed not only to share their own aircraft with others having a shared interest in that aircraft, but also to lease their aircraft to other owners in the program (dry lease exchange program). The aircraft owners used the common management company to provide aviation management services including maintenance of the aircraft, pilot training and assignment, and administration of the leasing of the aircraft among the owners.
During the 1990’s the growth of fractional ownership programs was substantial. As these programs grew in size, complexity and number, there was considerable controversy within the aviation community as to their appropriate regulatory structure. Additionally, the FAA had evolving concerns regarding issues of accountability and responsibility for compliance (operational control).
The FAA created the Fractional Ownership Aviation Rulemaking Committee through an order dated Oct. 6, 1999. The objective of the FOARC was to “propose such revisions to the Federal Aviation Regulations and associated guidance material as may be appropriate with respect to fractional ownership programs.” On Feb. 23, 2000, the FOARC presented its recommendations to the FAA in the format of a Notice of Proposed Rulemaking.
Presentations
- Overview of Fractional Rule & Part 135 Changes (84 KB, PowerPoint), Katherine Perfetti, Federal Aviation Administration
- The New World of Subpart K Compared with Part 135 (2.9 MB, PowerPoint), Aaron Goerlich, Garofalo Goerlich Hainbach PC, and Craig Weller, Galland, Kharasch, Greenberg, Fellman & Swirsky, PC
- Fractional Contracts (256 KB, PowerPoint), Kent Jackson, Jackson and Wade, L.L.C.
- Financial Considerations: Is Fractional Ownership the Right Choice for You? (443 KB, PowerPoint), Phil Crowther, Law Offices of Phil Crowther
- Is Fractional Ownership the Right Choice for You? Tax and Financing Ramifications of Fractional Aircraft Ownership (555 KB, PowerPoint), Ed Kammerer, Edwards & Angell, LLP
- Managing Aircraft Fractional Ownership Under FAR Part 91, Subpart K: Ten Reasons Not To Charter (328 KB, PowerPoint), Gary Arber, Arber, Lannik & Badolato, LLP
- International Operation Considerations (38 KB, PowerPoint), Douglas Carr, NBAA
- Fractional Ownership: Understanding the Insurance (72 KB, PowerPoint), Melissa Harder
- Operator and Management Company Responsibilities: Business Effects of Adoption of Part 91, Subpart K (385 KB, PowerPoint), Stephen Hofer, Bailey and Partners
Regulatory History
FAA Amends Regulatory Compliance Date for Fractional Operations
On Dec. 14, 2004 the FAA issued a notice that corrects the date by which all fractional operations must be in compliance with FAR Part 91, Subpart K. NBAA was expecting the correction that changes an incorrect Dec. 17, 2004, compliance date to Feb. 17, 2005. All fractional operations will be in compliance with the new rule by the February 2005 deadline.
Federal Register Publishes Fractional Ownership Final Rule
Sept. 17, 2003
The FAA’s final rule “Regulation of Fractional Aircraft Ownership Programs and On-Demand Operations” sets regulatory standards for fractional ownership operations (Part 91, Subpart K) and updates requirements for on-demand charter operations (Part 135).
- Download the rule as it appeared in the Federal Register (404 KB, PDF)
International Business Aviation Council Ltd.