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> U.S. Department
>
> of Transportation
>
> **Federal Aviation**
>
> **Administration**

January 27, 2006

Ms. Elizabeth Wadsworth

The Wicks Group, PLLC

1201 17^th^ Street, NW

Sumner Annex - Fifth Floor

Washington, D.C. 20036

RE: U.S. Registered Aircraft Operating Outside of the United States

We received your letter requesting guidance and interpretation of the
Federal Aviation Regulations. The facts, as outlined in your letter and
subsequent telephone conversations, are as follows:

Your client is a U.S. corporation operating a U.S. registered Boeing 737
aircraft. The corporation has no business purpose other than operating
the aircraft, and conducts all of its aircraft operations in Saudi
Arabia. The corporation desires to: 1) provide transportation to third
parties for a fee in non-common or private carriage in accordance with
14 C.F.R. § 125; and 2) provide transportation for the majority
corporate owner and his guests at no charge in accordance with 14 C.F.R.
§ 91.501(b)(4).

Title 14 C.F.R. § 125 applies to operations of U.S. registered civil
airplanes with a seating configuration of 20 or more passengers or a
maximum payload capacity of 6000 pounds or more when common carriage is
not involved. In order to conduct non-common or private carriage, an
operator must hold a part 125 operating certificate. Part 125
certification of foreign based operators is problematic for the
following reasons:

First, the Convention on International Civil Aviation ("Chicago
Convention") requires operating certificates to be issued by the State
of the Operator.[^1] The State of the Operator is the State in which the
operator's principal place of business or permanent residence is
located.[^2] Therefore, an operator's principal base of operations (as
defined in 14 C.F.R. § 119.3) must be located in the United States in
order for the FAA to issue an operating certificate. This rule prevents
a country from acting as a flag of convenience for an operator that has
no connection with the country other than holding an operating
certificate issued by its civil aviation authority. Your client is based
and operating exclusively in Saudi Arabia. Thus, the United States is
not the State of the Operator, and it would be inconsistent with
international law for the FAA to issue an operating certificate.

Second, part 125 requirements do not meet (or exceed) the Chicago
Convention's standards for international commercial air transport. As a
result, several foreign civil aviation authorities have refused to
recognize part 125 operating certificates, and some countries have
prohibited or limited operations by part 125 operators within their
territorial airspace.[^3] The FAA's issuance of part 125 certificates to
foreign based operators could be viewed as an unlawful interference with
a foreign sovereign's authority over its airspace. Accordingly, the FAA
has decided that it will not issue part 125 certificates to operators
who maintain their principal base of operations outside of the United
States, or to operators who conduct operations entirely outside of the
United States.[^4]

Your second question relates to whether the corporation can operate
under § 91.501(b)(4) in Saudi Arabia. In answering that question, it is
helpful to first discuss the applicability of part 91 to U.S. registered
civil aircraft operating abroad. Section 91.703 (a)(3) states that each
person operating a civil aircraft of U.S. registry outside of the United
States shall comply with part 91 so long as compliance is not
inconsistent with the applicable regulations of the foreign country
where the aircraft is operated or with Annex 2 of the Chicago
Convention. The FAA has determined that the proposed operations would
constitute commercial activities that could not be conducted under part
91 if the aircraft was operated in U.S airspace. The same regulations
prohibiting the proposed operations under part 91 in U.S. airspace,
would also prohibit the proposed operations under part 91 in Saudi
Arabia if:

> 1\) Saudi law is consistent with U.S. law (*e.g.* the Saudi government
> has adopted the Federal Aviation Regulations); or
>
> 2\) Saudi law is silent on the issues of common carriage and
> operations conducted for compensation or hire.

The FAA offers no guidance on the Saudi requirements, but the U.S.
regulations prohibiting the proposed operations under part 91 are more
fully explained below.

Section 91.501(b)(4) allows an operator to conduct flights for his
personal transportation or the transportation of his guests when no
charge, assessment or fee is made for the transportation. You suggested
in your letter that the corporation should be allowed to operate the
aircraft under § 91.501(b)(4) as long as the transportation is limited
to the majority owner and his guests. We disagree. The term "operator"
in § 91.501(b)(4) applies to individuals operating an aircraft for
personal use. It does not apply to corporations operating an aircraft
because corporations have no "personal use." Instead, corporations have
a "business use" and in this case, the only business of the corporation
is to provide transportation by air. The FAA has long held that a
corporation created solely to provide transportation by air must possess
a commercial operator or air carrier certificate.[^5] Limiting the
transportation to the corporate owner and his guests does not change
this requirement.

We trust that this interpretation is responsive to your inquiry. The FAA
reiterates that it offers no advice on the regulations of a foreign
sovereign, and encourages the operator to contact the appropriate
foreign civil aviation authority for specific operating requirements.
This interpretation was prepared by the Operations Law Branch of the
Office of the Chief Counsel, and coordinated with the Air Transportation
Division of Flight Standards Service. Please contact us if we can be of
further assistance.

Sincerely,

Rebecca MacPherson

Assistant Chief Counsel for Regulations

[^1]: Convention on International Civil Aviation, Dec. 7, 1944, 15 UNTS
    295.

[^2]: *See* Chicago Convention, annex 6, part 1.

[^3]: *See Chicago Convention*, part I, chap.5, art. 33 (certificates
    and licenses will only be recognized by other States when the
    certification requirements are equal to or above the minimum
    standards established under this Convention).

[^4]: There are also practical considerations underlying the requirement
    for part 125 certificate holders to be principally located in the
    U.S. The base of operations is the focal point of the FAA's
    certification and oversight activities. The difficulty and expense
    of performing these duties would substantially increase if the FAA
    had to perform them in foreign locations. Moreover, the FAA may not
    be able to freely enter other countries to conduct safety oversight
    as needed.

[^5]: *See* FAA Interpretations 1981-6, 1981-26 and 1989-22, Federal
    Aviation Decisions, West Publishing Co.