New FAA Rule May Clip the Wings of New Airline Competition

The Federal Aviation Administration (“FAA”) recently proposed a rule change that, if passed, would likely put airlines like JSX out of business. (Regulations.GOV; Alison Sider, The Wall Street Journal). JSX is a Dallas-based airline founded in 2016, which operates regularly-scheduled flights using a fleet of 30-seat aircraft that provides a premium flying experience to the general public. (JSX). JSX does this by operating “semi-private” flights out of private terminals that provide flyers with easy access parking, no lines, no-hassle security, and a flexible pet policy. (JSX; Gary Leff, View From The Wing). Additionally, because JSX operates from private terminals, it can fly to destinations that other airlines cannot, such as Taos, New Mexico. Id.

JSX operates its flights under FAA Regulation 135 (“Part 135”), which allows them to operate scheduled flights as “public charters” under the same flight rules that apply to “on-demand” private charter operations, which are less stringent than commercially scheduled flights with airlines such as United, Delta, and American. (Regulations.GOV; Robert Silk, Travel Weekly). One of the less-stringent rules for a Part 135 airline is that their flights may be flown by pilots who are over 65 years of age and pilots who have fewer than 1,500 hours of flight experience. (14 C.F.R. 135 (2023)). As a result, in addition to the customer experience benefits described above, JSX can operate their flights with a lower personnel cost, relative to traditional airlines. (Gary Leff, View From The Wing). The proposed rule change to Part 135 would remove the exceptions that allow airlines like JSX top operate.

In contrast to Part 135 airlines like JSX, traditional commercial flights, such as those by United, Delta, and American, must be flown by pilots who are under 65 years old and have more than 1,500 hours of flight experience. (FAA; Ben Baldanza, Forbes). The FAA put the 1,500 flight hour requirement into effect in 2010, arguing that it helps make flights safer. (Ben Baldanza Forbes; Leopard Aviation). Even though the 1,500-hour rule may have had good intent, comparatively, European-licensed pilots, including those that fly commercial flights to U.S. Airports, are only required to have 250 hours of flight experience under European regulations, and there is no evidence that there is a difference in commercial flight safety. Id. Many believe that the FAA age and flight-hour requirements are contributing to the national pilot shortage in the United States and as a result, pilot salaries have skyrocketed. (Ben Beldanza, Forbes).

JSX's innovative business model has attracted opposition from American Airlines, the Air Line Pilots Association (“ALPA”), and the Association of Flight Attendants (“AFA”), which are proponents of the FAA’s proposed rule change that will eliminate the Part 135 exception. (Gary Leff, View From The Wing; David Silk, Travel Weekly; David Shepardson, Reuters). Proponents of the FAA’s proposed rule change argue that Part 135 carriers like JSX have an unfair advantage in terms of recruiting pilots and keeping operational costs low amidst the current pilot shortage and that relaxed pilot requirements put the flying public at risk. (Alison Sider, The Wall Street Journal; Gary Leff, View From The Wing; David Silk, Travel Weekly; David Shepardson, Reuters). While the former may be true, there have not been any major safety incidents with JSX or other Part 135 airlines. (View From The Wing). Opponents to the Proposed rule change believe that American Airlines and the ALPA have pressured the FAA into removing the Part 135 exception in order to eliminate competition and provide leverage to union negotiations (fewer pilots means higher wages). Id. In a grand twist of irony, it may not be JSX that American Airlines, the ALPA, and AFA are so afraid of, they’re likely more afraid of how the biggest operator of regional flights in the United States, SkyWest Airlines, is planning to take advantage of the Part 135 exceptions. (Alison Sider, The Wall Street Journal).

Regional flights on United, American, or Delta, are often operated by SkyWest and in 2022, SkyWest flew 40 million passengers in North America on behalf of these airlines. (SkyWest Airlines). Last year, SkyWest sought permission from the FAA to launch a Part 135 subsidiary, with a plan to modify its 50-seat planes down to 30-seats. (Alison Sider, The Wall Street Journal). Put another way, SkyWest’s current business model depends on the mainline carriers, but if it were approved to operate a Part 135 subsidiary, SkyWest could in theory operate a massive airline operation without have to fly under the mainline carrier’s respective brands. Seemingly, this is the real trojan horse that the proposed rule change seeks to squash.

At the heart of the proposed rule change is the issue of regulatory fairness. (Alison Sider, The Wall Street Journal; Gary Silk, Travel Weekly). While airlines like JSX have technically been operating within the law, some say if a major operator like SkyWest, a publicly traded company, moves forward with its plans to establish a Part 135 subsidiary, doing so would circumvent the spirit of the law. Id. Meanwhile, others argue that the spirit of the law is to encourage business model innovation, where the flying public has more choice and new air service can be profitably delivered to underserved markets. (Gary Leff, View From The Wing). While the fairness debate about the Part 135 could be argued ad nauseum within the airline industry, what is clear, based on a sample from the nearly 60,000 public comments, is that the flying public overwhelmingly opposes the proposed rule change. (Regulations.GOV). 

The FAA’s mission is “to provide the safest, most efficient aerospace system in the world…[and the FAA is] accountable to the American public and [the FAA’s] aviation stakeholders.” (FAA). JSX has proven that the Part 135 exception promotes innovation in the airline industry, it enables direct, tangible benefits to the flying public, and flights can be safely operated under the exception. Given that the American public is significantly opposed to the proposed rule change, if the FAA enacts the change, it begs the question of who the FAA really serves: the American public or a select group of aviation stakeholders.