It's Not Just the FAA

Your flight operations are affected by many federal agencies, the most important of which is the Federal Aviation Administration. The FAA regulates all segments of the industry: safety, airman and aircraft airworthiness and certification, air and ground operations, maintenance practices, aircraft, engine and avionics approvals, airport and control tower operations, and the licensing and training of flight personnel, mechanics and dispatchers.  The FAA also issues technical directives, advisory documents and, policy statements

In addition to the FAA here are five other federal agencies whose rules can have a significant influence on your operations. While aviation itself is not always in the crosshairs of these agencies, the industry frequently gets included in rulemaking targeted to resolve an issue common to a broad spectrum of industries. 

1. Environmental Protection Agency (EPA).

The EPA has had a major effect on aviation in three specific environmental fields: noise, fuel spills, leakage and cleanup, and engine emissions.

It was the EPA that more than 30 years ago pushed for aircraft noise certification limits that Congress eventually ordered the FAA to promulgate. As a result, aircraft that are currently flying and newly manufactured aircraft must be certified to noise levels that have been getting more stringent as the state of the art of airframe and engine technology advances. The latest noise level requirements, Stage 5, went into effect on Jan. 1, 2021.   

Flight departments that have their own fuel storage tank farms fall under the EPA leak, spillage, cleanup and prevention regulations that were primarily intended for the thousands of older underground fuel storage tanks serving automotive gas stations. But, your flight department’s fuel storage tanks—whether below or above ground--also must be inspected regularly for possible leaks or spills, and corrective action taken.   

In 2016, the EPA made its initial effort to regulate aircraft greenhouse gas emissions, formally issuing findings that engine exhausts from certain types of aircraft contribute to air pollution that endangers public health and welfare. 

2. Internal Revenue Service (IRS).

This agency regularly issues regulatory and policy interpretations that prompt private and air taxi aircraft owner associations to regularly meet with IRS officials to obtain clarification, compromise and a clear understanding of the issues.

One IRS decision that likely has the most significant on-going effect on corporate aviation  defines the tax ramifications related to deductions for entertainment, personal, and combined personal/business use of aircraft. You, your executive staff and other employees are subject to specific limits as to what and how much may be deducted when a business aircraft is used for personal reasons. 

To satisfy IRS requirements, the value of non-business transportation aboard your aircraft is computed using the so-called standard industry fare level (SIFL) rates.  These rates, revised every six months, apply a monetary value to each flight on a per-person, per-seat basis when a seat is occupied by an employee, guest or family member not traveling on business.

A relatively new tax break for buyers of capital equipment, including business aircraft, stems from the Trump Administration’s Tax Cuts and Jobs Act. The legislation provides a one-time 100 percent bonus depreciation for the purchase of a new or used aircraft. 

3. Occupational Safety and Health Administration (OSHA).

Employee safety in the workplace for most industries, including aircraft mechanics, fuelers and other employees who work in hangars and on ramps, is regulated by OSHA. As such, these workers and facilities must conform to OSHA rules covering fire extinguisher types and locations, ear and eye protection, eye-wash stations, ladders, lifts, aircraft tow vehicles, jacks and jack stands, hangar/office exit markings and locations, other emergency signage, and accident/incident reporting requirements.  

If you are the sole hangar lessee or owner, then it is clear that your company has 100 percent responsibility for complying with OSHA equipment and worker rules. If you are a tenant renting hangar space, then responsibility could get murky because often tenants share maintenance equipment provided by the hangar lessor or owner. In this case, an accident caused by a worker’s misuse of equipment is the tenant’s responsibility and failure of equipment is the hangar lessor’s or owner’s responsibility. That said, OSHA has not considered business aviation hangars and ramps as high-hazard areas. 

4. Securities Exchange Commission (SEC).

The SEC requires the top executives of public companies to reveal their compensation, including such perks as personal use of corporate aircraft. These rules are intended to provide investors with a clearer and more complete picture of the compensation earned by a company’s principal executive officer, principal financial officer and highest paid executives and members of its board of directors.

The National Business Aviation Association (NBAA), the industry’s trade group, said it “agrees with the SEC’s assessment that the current standard of reporting perquisites and other personal benefits.” That standard is the so-called application of aggregate incremental cost (AIC).  “No other mechanism reports the true cost to the company of providing such benefits, which is the information that shareholders need to know,” said NBAA. 

Some companies have implemented policies that require its top executives to personally pay for all trips–personal or business–on company aircraft once their travel expenses have cost the company a predetermined annual maximum. Having use of the aircraft paid for directly by their principal passengers avoids some of the issues that are of concern to the SEC, as well as the IRS.

5. Transportation Security Administration (TSA).

Company aircraft and fractional ownership operations have not been subject to heavy-handed TSA rules because typically crew and passengers are known entities. However, operators of air taxi business jets must meet a TSA-approved security program to ensure that charter passengers are properly screened. To address business aviation’s concerns, the TSA has had a general aviation liaison since 2009. 

One of the current security restrictions that emanated from 9/11 is the TSA’s general aviation (GA) access program for operating at Washington National Airport. The program requires all GA aircraft to follow strict security measures to access the airport and obtain a slot reservation from the FAA. Before flying into National, aircraft must land at one of several designated gateway airports to pick up an armed TSA officer.