Asian Sky Quarterly 2020Q4

COMMENTARY: SURVEY HIGLIGHTS ILLEGAL CHARTER ACTIVITY ACROSS ASIA-PACIFIC
Are the penalties for illegal charter a
sufficient deterrent in the Asia Pacific region?
Did you report the illegal charter
activity to the local regulator?
Comparison between Asia and US positions 1
No
Yes
16%
50%
Yes
No
50%
84%
US
Asia
© 2021 Holman Fenwick Willan LLP. All rights reserved. Ref:002600
Respondents said that there are several signs that suggest a charter is
illegal, such as flights being advertised at prices far below legitimate operations,
flights claiming to operate as “cost sharing”, and flights being sold
as “sales demos” or “flight training”.
Significantly, 84% of respondents said that they did not report suspected
illegal charter activity to the local regulator. Several barriers to reporting
illegal charter were highlighted, including the potential loss of customers
and other adverse effects on their own business, as well as uncertainty
over how the authorities would respond. By comparison, half of US respondents
to NATA’s previous survey said that they would file a report.
The clear loser when it comes to illegal charter operations are the legitimate
operators who have invested significant time and money in obtaining
an AOC or Part 135 certificate. Illegal charter distorts the market, as
1
2019 1 NATA’s Illegal 2019 Charter Illegal Survey Charter by Survey National Air Transportation Association (NATA)
© 2021 Holman Fenwick Willan LLP. All right reserved. Ref:002600
© 2021 Holman Fenwick Willan LLP. All rights reserved. Ref:002600
it evades the high regulatory compliance costs of legal air operations, including
proper training and insurance. The position of passengers is compromised
– illegal charter flights are unlikely to provide the same level of
operational safety (such as more stringent pilot training and maintenance
standards) offered by legitimate operators.
The survey results emphasize that illegal charter is a significant issue
across the Asia-Pacific region. Given the substantial impact on legitimate
operators, more should be done to tackle the problem. The welcome launch
of the Air Charter Safety Alliance allows a coordinated effort and provides
a powerful platform to do so. Clearly, one of the key factors which impedes
the reporting of illegal charter activity is the lack of any formal reporting
mechanism. Until such a mechanism is established by regulators in the
Asia-Pacific region, it is likely that many more illegal charter flights will continue
to operate unchecked.
www.hfw.com
For further details on the results of the HFW/AsBAA survey,
please contact Gordon Gardiner or James Jordan at HFW, or Jeff Chiang at AsBAA.
GORDON GARDINER
Partner, Hong Kong
D: +852 3983 7710
E: Gordon.Gardiner@hfw.com
JAMES JORDAN
Senior Associate, Singapore
D: +65 6411 5374
E: James.Jordan@hfw.com
JEFF CHIANG
COO, AsBAA
D: +852 6330 0605
E: jeff.chiang@asbaa.org
HFW has more than 600 lawyers working across Asia Pacific, the Americas, Europe and the Middle East. HFW is committed to Asia Pacific,
with six offices and two associations across the region. HFW has been at the forefront of legal developments in the aerospace sector for
more than four decades. With more than 80 specialist aviation lawyers in ten international hubs, HFW provides at the point of delivery the
resources of a global team. HFW prides itself in knowing clients’ business needs and delivers solutions 24 hours a day.
Recent examples of HFW’s business aviation work include advising on:
• Sale and purchase agreements for both new and used business jets, and the associated financing
• Terms and conditions of use for an Asian FBO
• Commercial contracts relating to the services provided by an Asian MRO facility
• Various commercial disputes in relation to aircraft acquisition and aircraft management
• Insured claims arising out of business jet and general aviation incidents and major accidents
FOURTH QUARTER 2020 — ASIAN SKY QUARTERLY | 23