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August 31, 2015

DOT Releases Second Half 2015 SIFL Rates

The U.S. Department of Transportation has released the Standard Industry Fare Level (SIFL) rates for the six-month period from July 1, 2015 to December 31, 2015. These rates are needed in order to apply the IRS's aircraft valuation formula to compute the value of non-business transportation aboard employer-provided aircraft and impute the income of the employee as required by the Internal Revenue Service Rules Section 1.61-21(g). The SIFL rates for the six-month period from July 1, 2015 to December 31, 2015, are: 0500 miles $0.2341; 501-1,500 miles $0.1785; over 1,500 miles $0.1716; and Terminal Charge of $42.79.

If you are an employer and an employee or a non-employee guest or family member is flown on your aircraft, the flight is potentially taxable to the individual receiving the ride. The aircraft valuation formula applies on a per-flight, per-person basis and will be calculated using the distance in statute miles from where the individual boards the aircraft to where the individual deplanes.

Posted by Greg

August 27, 2015

100-Hour Inspections and Aircraft Used for Rental and Flight Instruction

If you run an FBO or flight school and you use the same aircraft for both rental to customers and providing flight instruction, then you know you have to perform 100-hour inspections on your aircraft. But the timing for performing the 100-hour inspection can sometimes be confusing. For a discussion of how this requirement is applied in several real-world examples, please read my latest article on the subject: When is the 100-Hour Inspection Due for Aircraft Used for Rental and Flight Instruction?.

Posted by Greg

August 04, 2015

FAA Updates Its Compliance Philosophy: A Move in the Right Direction?

The FAA has issued Order 8000.373 effective June 26, 2015 to explain its current compliance philosophy. That is, as the FAA explains it, its "strategic safety oversight approach to meet the challenges of today's rapidly changing aerospace system." What does that mean? Well, as the regulator of the aviation and aerospace communities, the FAA is charged with establishing regulatory standards to ensure that operations in the National Airspace System are conducted safely. And as we all know, compliance with those regulatory standards is mandatory.

However, not only does the FAA expect us to comply with the regulations, but it also believes that we have "a duty to develop and use processes and procedures that will prevent deviation from regulatory standards." Thus, we are required to conduct ourselves in a way that not only complies with the regulations, but that will also ensure that deviations are prevented. Sounds great, until something (e.g. a deviation) happens. Then what? In the past, the result was typically unpleasant. But that may have changing.

According to the FAA's new philosophy, "[W]hen deviations from regulatory standards do occur, the FAA's goal is to use the most effective means to return an individual or entity that holds an FAA certificate, approval, authorization, permit or license to full compliance and to prevent recurrence." This appears to be a shift from the FAA's past compliance philosophy. At least from my perspective, in the past the FAA's response to violations has leaned heavily toward enforcement and punitive action (e.g. certificate suspensions and revocations). And that approach never made sense to me.

If we truly want to encourage compliance and ensure that a certificate holder is safe, why would we want that certificate holder to be sitting on the ramp and out of the system for 30-180 days or longer with a suspended certificate? Wouldn't it make more sense to educate certificate holders and do what may be necessary to get them back into compliance and in a position where future compliance is more likely?

The FAA's current policy appears to be a step in this direction, at least on paper. The Order explains that

The FAA recognizes that some deviations arise from factors such as flawed procedures, simple mistakes, lack of understanding, or diminished skills. The Agency believes that deviations of this nature can most effectively be corrected through root cause analysis and training, education or other appropriate improvements to procedures or training programs for regulated entities, which are documented and verified to ensure effectiveness.

Sounds to me like the FAA is talking about letters of correction with remedial training. I think that's a good thing. The Order also notes that "[M]atters involving competence or qualification of certificate, license or permit holders will be addressed with appropriate remedial measures, which might include retraining or enforcement." Here again, the concept of retraining rather than enforcement (which was typically revocation in cases involving alleged incompetence or lack of qualification) appears to more appropriately address the situation in a more positive and productive manner. Maybe not in all cases, but hopefully more cases than in the past.

Of course, this doesn't mean that certificate and civil penalty actions will go away. If a certificate holder fails or refuses to take steps to remediate deviations or is involved in repeated deviations then enforcement may result. That makes sense. Additionally, in those situations where a certificate holder's conduct was intentional or reckless, the FAA indicates that it will pursue "strong enforcement." Also not a surprise.

Although this appears to be a positive shift in the FAA's philosophy/national policy, the rubber really hits the runway with the inspectors at the FSDO level. Will this policy shift actually trickle down? I hope so. But only time will tell.

Posted by Greg

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