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Regulation Is Good For Incumbent Airlines – View from the Wing

Regulation Is Good For Incumbent Airlines

A Public Interest Comment on Public Charter Operations

American Airlines and Southwest Airlines are lobbying the federal government to put their Dallas-based competitor JSX out of business. They want the federal government to change regulations to make their business model that lets them fly 30 seat planes out of private terminals illegal. And the FAA is considering this request.

American and Southwest have joined forces with the major pilot union, that wants to stop an expansion of use of the same rules by SkyWest Charter (and potentially others in the future) since those rules allow them to hire recently-retired senior captains from major airlines (the most experienced in the skies) and also co-pilots with fewer than 1,500 hours.

Nobody in a serious position believes that the 1,500 hour rule for co-pilots is key to safety (as opposed to motivated reasoning), and certainly not for short flights on regional jets.

  • No other country has followed the U.S. with this. Europe, without a similar rule, has just as strong a safety record. (U.S. improvements in safety are the result of other changes, including pilot rest rules.)
  • Airlines operating under this regulatory model have a strong safety record.
  • The 1,500 hour rule itself promotes bad habits and doesn’t train pilots for commercial operation. They takeoff and land in clear air from the same airports, open and over. The rule even allows them to rack up many of their hours in a hot air balloon. That balloon can even be tethered.
  • The Air Line Pilots Association is fighting allowing some of those hours from being flown in real simulators and in real commercial flying scenarios, when hours can be racked up in a balloon. The goal is to keep it costly to train real pilots.

The model of having senior pilots with tens of thousands of hours in the left seat and more junior pilots in the right seat is a best practice for safety and training. ALPA and the airlines who are piggy backing on their safety arguments say they want to promote ‘one level of safety’ but that is not true. They want to impose the same formulaic rules rather than promoting actual safety.

  • A regional jet operating short flights doesn’t have the exact same requirements as a long haul flight with inflight rest requirements.
  • Imposing high costs and barriers to entry to becoming a pilot is why there’s a pilot shortage. And it means less air service, and many cities losing air service. That means more people drive (either to their destination or a farther away airport) and that is less safe. On net more people die in car accidents as a result.

This is like putting scrubbers on coal plants. There’s dirty coal from West Virginia, and cleaner coal in the Mountain West. The only way West Virginia Senators (at the time, Robert Byrd) would sign off on scrubbers for coal plants is if they had to be used on clean coal plants where they weren’t needed because West Virginia coal couldn’t be disadvantaged. So coal plants got one level of cleaning rules.

Legendary Silicon Valley investor Bill Gurley (GrubHub, Nextdoor, Open Table, Stitch Fix, Zillow,, The Knot and Uber, and played by Kyle Chandler in Showtime’s Super Pumped) gave a talk recently about regulatory capture – that government regulation almost always benefits incumbent businesses. It’s a great talk in its own right, but also perfectly encapsulates what’s happening to upstarts like JSX.

It’s the regulatory capture here that bothers me most, and Stephen Jonesyoung and I submitted a comment to the regulatory docket.

The FAA is considering expanding the scope of some regulations that currently apply to only large commercial airlines to include public charter services. They suggest that the growth of these services justifies the change, but looking at the actual data it doesn’t appear there’s been an increase in public charter travel since relevant rules were first adopted! (Growth in this area is actually meant to be encouraged in any case.)

Changing these rules wouldn’t create a discernable safety benefit, while there are real costs to small communities, to Indian tribes, and to the consumers who value these services who would effectively be put out of business. It’s also not clear that the FAA has the statutory authority to make the changes that they’re contemplating.

We can only conclude from this regulatory history that the FAA’s intent from the commuter rule was not to apply Part 121 rules to public charter operators, because the FAA iden3fied the 1995
text as mistaken.

From the FAA’s descrip3on, it sounds like the FAA concluded that the safety issues present for commuter carriers were not similarly present for public charter carriers and/or that the FAA did not have the legal authority to alter the regula3ons to public charters under the proposed rule. We elaborate on why the FAA may not have had the legal authority to do so…


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