Tips on Purchasing an Existing Part 135 Charter Certificate Post 2013 FAA Sequestration
This is a post by guest author Dean Kantis, founder and owner of Micro Jet Network, Inc and Charter My Jet. Dean was asked to contribute to this blog because of his expertise in aircraft brokerage and matching aircraft owners and operators for charter operations. Any thoughts expressed below are entirely Dean’s and do not necessarily reflect the views of Universal Weather and Aviation, Inc.
Since the Federal Aviation Administration’s (FAA’s) sequestration, much has changed in the arena of new Part 135 charter certificates. With the FAA looking to reduce the current number of certificates, it may be best to look at purchasing an existing charter certificate. Below we will cover items you should consider when establishing a new Part 135 certificate or purchasing an existing one.
1. What has happened since the 2013 FAA sequestration?
Since the FAA’s sequestration started a few years ago, one of the FAA’s goals was to downsize the number of part 135 charter certificates from ~4,000 to ~2,000. As many 135 operators can attest, there have been numerous changes made at each FAA Flight Standards District Office (FSDO), and these changes, although seemingly “small,” could really be game changers.
One potentially big change that I am hearing about from people–Directors of Maintenance (DOMs), Directors of Operations (DOOs), and Chief Pilots (CPs) from both large and small operations–is that some existing Part 135 entities are now up for sale.
2. What does this mean to anyone wanting to create their own Part 135 certificate?
- Delays –If you are starting a part 135 from scratch, you could be potentially facing long delays before you are approved to start operations–up to two to three years, or even longer.
- Lost costs – The worst scenario is that you spend tens of thousands of dollars in creating a part 135 certificate/entity that has a jet in a so-called “holding pattern” in line to pass the conformity process by the FSDO, but it never happens. Not to mention, expenses for lease for hangar and office space, insurance, personnel, type ratings for pilots, maintenance hourly programs, and other aviation costs that add up very quickly. When considering the creation or purchase of a part 135 charter certificate, the NBAA has some tips.
3. There is a quicker and more cost efficient way.
It makes more sense, if priced right, to purchase an existing 135 entity that owns the existing certificate and has everything already approved and in place. For instance, it will have already gone through all the “proving runs.” Also, the operational specifications (ops specs) will already be in place, including the manuals for safety, training, pilots, and most importantly, the ability for the 135 certificate to fly in and around the U.S., Canada, and Mexico–as well as potentially the Caribbean, Central American, and South American territories.
In addition, make sure the existing DOM, DOO, and CP positions either 1) stay on during the entire transition period (about three to nine months, and sometimes beyond) or 2) are replaced one by one with new personnel. The FAA is usually more than helpful in allowing new positions to be changed out, as long as long as no more than one position is replaced at a time. If you attempt changing multiple positions at once, the FAA may red flag the certificate. Results could be a temporary invalidation of the certificate, or in extreme cases of negligence, the FAA shutting down the certificate or surrendering it.
Once you acquire a pre-existing certificate, you can adjust the ops specs and grow or reduce the size to meet your charter needs.
4. What type of part 135 charter certificates are the most desirable?
The simplest charter certificate is called a basic certificate that consists of up to five aircraft, which are usually a single piston or twin turbo props, approved for travel within U.S.-only territories. Next is the full charter certificate which nine or less aircraft in their fleet, and have approval to operate to the U.S., Canada, Mexico, the Caribbean, and Central American territories. This type of certificate may also have the ability for air ambulance and/or chartering body parts and organs.
Another level up is the full certificate that has 10 or more passenger aircraft, with jets already conformed, that already:
- earns residual charter income through an existing client base,
- holds ops specs for international operational territories, and
- has the ability for air ambulance and/or chartering body parts and organs
The ultimate scenario is to take over a 20+ year charter business that is turnkey and one that is already established with full staff willing to stay on with the new owner. That would be a grand slam!
When deciding between starting a new charter certificate or purchasing an existing one, there are many things to consider. If trying to start a new 135 certificate from scratch, you could potentially spend a lot of time and money, only to find out that you can never get the operation off the ground. Plus, FAA employees can change at any time, which will change how you work with the FSDO you are assigned to. By double checking all options, consulting with the proper aviation tax attorney and accountant, picking the appropriate DOM, DOO, and CP, you will be taking the right steps leading to the best possible experience.
More information on the FAA sequestration can be found on the National Business Aviation Association (NBAA) website.
Also, for more information on single pilot, basic, or full certified 135 operations, see the FAA’s requirements.
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