Throwing light on DOT 14 CFR Part 295 for regulation of air charter brokers

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Under Part 295, a new class of broker is created: that of indirect air carrier, whereby brokers are able to arrange aircraft charter with those air carriers (‘operators’) that have the requisite DOT economic authority and FAA operating authority.

For every flight a broker must now disclose to the client:

1. the name, and legal DBAs, of the operator conducting the flight, regardless of whether it is a US or foreign carrier;
2. whether the broker is acting as an indirect air carrier, indirect foreign air carrier, as an agent of the client or as an agent of the air carrier;
3. whether the broker holds any liability insurance, over and above the operator’s own insurance. Note that the DOT does not require brokers to have insurance.

If asked by the client, the broker must also disclose:

1. the total cost of the air transportation paid by the client to or through the broker, including any broker or carrier imposed fees or government-imposed taxes;
2. if the broker is acting as a client’s agent, the existence of any corporate or business relationship (including a pre-existing contract) between the broker and the operator;
3. the existence and amount of any fees collected by third-parties that will fall to the client, including fuel, landing fees, and aircraft parking or hangar fees.

This information must be given at time of contract, or within a reasonable time after the information becomes available, and the client must also be kept up to date with any changes. Otherwise they have the option to cancel the contract and receive a full and prompt refund.

The impact of disclosing an operator’s identity Some brokers have preferred not to provide the operator’s name to a client for fear of losing future business. However, the DOT is confident that when a broker adds value to the transaction in terms of sourcing the lift, arranging catering and ground transpor-tation, booking multiple legs using multiple carriers and conducting due diligence, a client will realise that the broker commission is well-deserved. 

Accurate representation

Brokers may display their name and logo on an aircraft, ‘provided the name of the direct air carrier is displayed prominently and clearly on the aircraft and consumers are not otherwise misled into thinking that the air charter broker is a direct air carrier or direct foreign air carrier’.

Who does this benefit?

Reputable brokers who conduct business on behalf of their clients safely, cost effectively and with full transparency. Those who do not will face enforcement actions from the DOT in the form of fines and refunds.

Brokers had been acting as principals without any federal regulatory authorisation or legal standing. The new rule prevents unethical business practices such as brokers implying that they have a fleet of aircraft when they do not, and selling charter on a specific aircraft only for a different aircraft to turn up.

What does the rule not do?

It does not establish a charter broker registry, although this may be revisited in the future, nor does it cover air ambulance transportation. However, the DOT does not prevent voluntary registrations developed by third parties.

Key differences, before and after

Brokers in the US will now be able to provide single-entity air charter services as principles or as bona fide agents. Previously they would have only been able to act as an agent of the air carrier or the passengers; they do not need to obtain separate DOT authorisation. US brokers will now be able to resell charters after contracting with the air carrier directly.

You may be of the opinion that reputable brokers have been following these practices all along.

“We have always made it clear to customers that we are not an air carrier. However, as of 14 Feb, ACA marketing material and paperwork will state that we are an indirect air carrier acting as the customer’s agent when they are contracting with us. Transparency has always been one of our policies and it is great to see our industry moving in that direction.” Air Charter Advisors president Adam Steiger

“BACA welcomes the attention given to the air charter market by the DOT in the US. We will watch the implementation of the 295 ruling with interest and urge all of our members to make sure they are aware of the letter and spirit of it when doing business in the US. While we do not wish to see unnecessary regulation of the market, the introduction of rules and guidance that help to raise standards of market conduct will always be welcomed by our members. In the EU, the concept of brokers as indirect air carriers risks a misconception of their role and it should be made clear that brokers do not act as air carriers for the purposes of the operation of EC261.” BACA - the Air Charter Association

“Le Bas International is pleased with the implementation of the DOT 295 ruling to further safeguard public safety. Our wish is for a similar expanded ruling to be adopted worldwide for each recognised civil aviation authority.”

Le Bas International COO Tracey Deakin

“Our membership is pleased that the DOT has provided the 295 ruling. ACANA and its members have collaborated extensively for many years working in the background and providing extensive essential knowledge taken from actual casebook studies. Many of the judgments in the 295 ruling come to fruition on the back of groundbreaking expertise provided by ACANA and its members. We take this opportunity to thank all concerned.” ACANA