Fatal Crashes Highlight Rising Danger Of Illicit Charter Flights

(Bloomberg Businessweek) -- A dark corner of the glamorous air-charter market, where some flight operators appear to cut corners on safety, is putting passengers at risk — and drawing increasing scrutiny from US regulators..Numerous prominent passengers have traveled in recent years on charter flights that allegedly ran afoul of laws governing private air travel, including movie star Jamie Foxx; Hollywood producer Peter Guber; Major League Baseball and National Hockey League teams; and a governor, according to a Bloomberg News review of thousands of pages of government records and interviews with two dozen pilots, industry officials and US regulators. None of the travelers responded to questions from Bloomberg about their flights..Fatal crashes, an upswing in enforcement cases, reports made to an industry tip line and accounts by legitimate operators indicate the problem has been growing, at a time when crashes of legitimate flights are at an all-time low. Disruptions to airline travel caused by Covid-19 have pushed some flyers to look for alternatives — and mobile apps that make it simple to book a flight on a private plane have made it easier to find them. This hidden side of the corporate-jet world is difficult to monitor, according to government records and industry officials. Some travelers also have begun raising alarms..“There are too many opportunities and incentives for people to cheat the system and take shortcuts,” said Marci Wilhelm, who was aboard an unauthorized charter that crashed in 2018, shortly after she sold the health-care company she’d helped found for $195 million..In her first interview since the accident, Wilhelm said she was jetting on a charter flight to Nantucket with her then-husband Steve Rose and planned to stop in South Carolina to pick up friends. But the plane, a Dassault Aviation SA Falcon 50 business jet, was overdue for dozens of routine maintenance tasks, including malfunctioning brakes, and never should have been in service, according to investigators and court records. It crashed off a runway, critically injuring Wilhelm and Rose. The pilots, who lacked proper certification, died..The owner of the company was one of the pilots and his sons surrendered its Federal Aviation Administration certificate days later..Legal action aimed at penalizing operators who have allegedly sidestepped the basic legal and safety protections in federal law for paying passengers has surged at the FAA. Since the agency began ramping up investigations in 2018 at the request of industry, it has brought civil charges alleging illegal charter operations in 24 cases and sought more than $21 million in fines..Fifteen of the cases have come since 2021, making it one of the most common violation categories in the US aviation industry. By comparison, there were just four such cases with proposed fines of $427,700 from 2015 through 2017..The FAA has also referred cases for criminal prosecution. For example, a Florida man pleaded guilty in 2018 to making hundreds of illegal flights to the Bahamas and other locations and received a seven-year prison sentence..Poor Visibility.The enforcement cases and prosecutions almost certainly represent a sliver of the veiled charter activity, say some legitimate operators..“This goes on regularly,” said Stephen Noto, general manager at the Tampa, Florida-based Skyway Aviation Services Inc. Noto checks aircraft registration information and chats with passengers on flights that are unaffiliated with his company, and said he often sees suspicious activity..Some say enforcement isn’t making enough of a difference, while many acknowledge that the FAA faces significant hurdles to identifying and taking action against alleged wrongdoers..“The FAA does not scare those people,” said Jim Hensley, owner of America Jet Charter Inc. in Bethany, Oklahoma, and an outspoken critic of charter businesses that don’t meet federal standards..The underlying rules are simple: If a passenger pays more than a small share of a flight’s costs, the operator needs to be certified as an air carrier by the FAA. However, there’s no simple way to determine who is operating a corporate aircraft..Pilots aren’t required to notify the FAA about the purpose of a flight. A business jet carrying passengers could be owned and operated privately, or could be a leased plane or a chartered flight — all of which are legal. A flight in which money changes hands without FAA approvals could appear identical..“The air traffic controllers don’t know,” said J. E. Murdock, who formerly served as FAA’s chief counsel. “The flight standards inspectors don’t know.”.There’s also a lack of awareness among plane owners and customers..“It’s something that is not intuitively understood,” he said. “I can lend my car to anyone I want to. Why can’t I do that with my airplane?”.Skirting Standards.The result of that lack of understanding can be substantial. Illegal charter operations have skirted FAA-mandated maintenance standards; pilot training and examinations; limits to prevent fatigue; drug and alcohol testing; and safety standards for runway length and weather reporting, the agency said in a report to Congress last year..“The chance of them having an accident is really high, certainly relative to other types of commercial aviation,” said John McGraw, director of regulatory affairs for the National Air Transportation Association, the trade group representing US charter-flight companies..There are no comprehensive statistics on safety incidents with illicit charter flights, though federal documents reviewed by Bloomberg detail specific accidents..According to National Transportation Safety Board records released in August, a flight carrying businessmen from Indiana to Michigan that crashed on Oct. 3, 2019, was an unlicensed charter. Five of the six occupants died after the pilot made basic errors, including overloading the plane, investigators found..Improperly licensed charters are also a problem outside the US, according to industry groups. The UK-based Air Charter Association has called for increased enforcement. In a survey released last year, 90% of members of the Asian Business Aviation Association in Hong Kong said government agencies aren’t doing enough to combat the issue..Emiliano Sala, the Argentina-born European soccer star, died in 2019 when an unlicensed charter flight crashed in the English Channel. The mid-sized Piper Aircraft Inc. Malibu was flown by a pilot who was unqualified for the dark and poor weather conditions, UK investigators found. The Englishman who arranged it was sentenced to prison..Safer Skies.While mainstream airlines bring the indignities of long security lines and cramped flights, they have been highly vetted for safety by the FAA, and crash rates have declined dramatically. In recent decades, major carriers eliminated more than 90% of risks..By sidestepping federal safety standards, operators can significantly undercut prices charged by legitimate operators — and also avoid paying the 7.5% federal excise tax on charter flights..“It’s impossible to compete on price when the playing field isn’t level,” said Noto of Florida. “They can offer a competing or similar product for half the price. Unless something goes wrong, nobody ever knows it was done illegally.”.The costs to hire a jet legally vary based on the size of the plane and the distance flown. A round trip from New York to Los Angeles ranges from $40,000 to more than $70,000..There are almost 2,000 charter operators in the U.S., ranging from sightseeing companies at the Grand Canyon to the biggest corporate jet operators, according to FAA data. About 4,400 of their aircraft are jets or turboprops, which are capable of carrying groups of people over long distances..But far more such aircraft are owned privately in the US, more than 25,000, according to the FAA. That creates a ready pool of available planes that can be used to fly customers illegally..“We need everyone’s help in recognizing, flagging and eliminating this activity whenever and wherever we find it or suspect it,” Marc Nichols, FAA’s chief counsel, said in August during a webinar for charter brokers, who act as middlemen to arrange flights..Unqualified Pilots.The wave of recent cases, several of which involve repeat offenders, suggests some operators are willing to accept the penalties or believe their chances of dodging inspectors are good..A Beverly Hills, California, company that wasn’t licensed for commercial charter operations and used pilots who weren’t qualified made dozens of flights in the past decade, the FAA has alleged. Steele Aviation Inc. carried movie star Foxx and Hollywood producer Guber, who is co-owner of the Golden State Warriors basketball team, according to people familiar with the company. Many of Guber’s flights coincided with games at the Warriors’ Oakland, California, home, public records show..Steele Aviation has been cited three separate times by the FAA for allegedly operating illegally, with a total of $1.3 million in proposed fines. Nicolas Steele, the owner of the company, also flew a man convicted in a federal fraud case hundreds of times, often taking payments “in cash wrapped in rubber bands,” according to a 2021 US district court judge’s opinion upholding the trial’s outcome..Steele Aviation’s website isn’t active and phone numbers listed to the business weren’t functional. An attorney who has represented Steele, Eric Bensamochan, said they wouldn’t comment..Foxx and Guber didn’t respond to multiple messages seeking comment. The office of Michigan Governor Gretchen Whitmer didn’t respond to questions on why or whether she was aware she chartered a flight to Florida on an unlicensed operator last year..A group identified as “Dolan Family/Cablevision” flew on a Boeing Co. 737-400 to the Grand Caymans in December 2013, returning in January 2014, according to FAA records obtained by Bloomberg. The same plane was used to fly Major League Baseball’s Cleveland Indians, now known as the Guardians, in 2018..The company that operated the flights, Paradigm Air Operators Inc., wasn’t properly licensed and was forced in 2020 to cease operations, according to the records. Paradigm’s lawyer, Kathleen Yodice, said the company disputed the FAA’s allegations and had operated safely..The Guardians, partly owned by a branch of the Dolan family, didn’t respond to requests to comment. Cablevision Systems Corp., founded by billionaire Charles F. Dolan, was sold to Altice NV in 2016..“The client doesn’t care,” said Camilo Beltran, the chief executive officer of Vida Jets in Boca Raton, Florida, which acts as a broker for charter flights. “They just care about the price.”.Profound Impact.Wilhelm — who reached a settlement following her crash limiting her ability to speak about the case — says she had no idea of the potential dangers when she and Rose began hiring flights through Air America Flight Services Inc. When the jet touched down on the runway, the pilots realized something was terribly wrong..“Whoa, whoa, whoa, whoa, whoa. Where are the brakes? Where are the brakes?” lead pilot John Caswell said, according to a transcript of the black box cockpit recorder..The plane raced off the runway, went off an embankment and broke into pieces. Wilhelm was knocked unconscious, still strapped into her seat, which was partially outside the plane..“I woke up face down,” she said..The crash had a profound impact on her life. She endured 11 surgeries and stepped down as president of the business she’d just sold to AMN Healthcare Services Inc., no longer capable of the rigors of corporate leadership, she said. She and Rose split up..More stories like this are available on bloomberg.com.©2022 Bloomberg L.P.

Fatal Crashes Highlight Rising Danger Of Illicit Charter Flights

Low-cost operators can put flyers in harm’s way, at a time when airlines&nbsp;have never been safer. Regulators are racing to curb the risks.

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Low-cost operators can put flyers in harm’s way, at a time when airlines have never been safer. Regulators are racing to curb the risks.