ON-DEMAND OPERATORS HAVE LESS 

STRINGENT SAFETY REQUIREMENTS AND 

OVERSIGHT THAN LARGE COMMERCIAL AIR 

CARRIERS 

Federal Aviation Administration 

Report Number: AV-2009-066 

Date Issued: July 13, 2009 

 
U.S. Department of 

Memorandum

Transportation 

Office of the Secretary 

of Transportation 

Office of Inspector General 

Subject: ACTION: On-Demand Operators 

Have Less Stringent Safety Requirements and 

Oversight Than Large Commercial Carriers 

Federal Aviation Administration 

Date: July 13, 2009 

Report Number AV-2009-066 

From: Ann Calvaresi-Barr 

Principal Assistant Inspector General 

 for Auditing and Evaluation 

Reply to 

Attn. of: JA-1 

To: Federal Aviation Administrator 

At the request of the Chairmen of the House Committee on Transportation and 

Infrastructure and the House Subcommittee on Aviation, we reviewed the Federal 

Aviation Administration’s (FAA) oversight of on-demand aircraft operators. 

Their request was prompted by concerns with disparate regulatory requirements 

between large commercial and on-demand operators and the level of FAA 

oversight of on-demand operators. 

Our audit objectives were to (1) evaluate the differences between FAA regulation 

and oversight for on-demand operators and larger, commercial air carriers and 

(2) identify specific issues that may hinder FAA’s oversight of on-demand 

operators. 

This is the first of two reports and focuses solely on objective 1. Our second 

report, which addresses objective 2, will be issued later this year. We conducted 

this performance audit from September 2007 to March 2009 in accordance with 

generally accepted government auditing standards prescribed by the Comptroller 

General of the United States. We included such tests as considered necessary to 

provide reasonable assurance of detecting abuse or illegal acts. Exhibit A details 

our scope and methodology. Exhibit B lists the entities we visited or contacted. 
2

BACKGROUND 

FAA has three tiers of aviation oversight conducted under three primary 

regulations: (1) private owner operations regulated under Part 91; (2) small, 

commercial operators flying primarily on-demand service regulated under Part 

135; and (3) large, commercial operators regulated under Part 121. These three 

industry segments, discussed below, have unique operating environments and 

serve very different markets. 

Private (General) Aviation (Part 91)1

 

This group is comprised of individuals or private businesses that usually fly 

smaller aircraft that are not for hire. These operators have the least restrictive 

regulations and receive the least FAA oversight. 

Small Commercial Aviation: On-Demand/For-Hire (Part 135)2

This group operates smaller aircraft that are configured for 30 passengers or less 

or under 7,500 pounds of payload. Most of these operators fly on-demand (i.e., at 

the request of their customers).3

 The operators 

comprising the on-demand industry segment can range 

from a company with 1 pilot and 1 aircraft to a company 

with over 600 aircraft. On-demand aircraft range from 

small, 2-seat piston engine aircraft to helicopters to 

turboprops and jets with 10 or more seats. The operations 

may include short flights to small regional airports, cross-country domestic flights, 

or international flights. 

 

The on-demand segment of the aviation industry consists of unscheduled 

passenger service, cargo operations, air tour (e.g., commercial sightseeing), and air 

medical (e.g., air ambulance, rescue, human organ transportation, and emergency 

medical services). However, the majority of operations within this segment are 

conducted for passenger and cargo services. For example, in 2007, passenger and 

cargo operations accounted for 83 percent of the on-demand aircraft used and 

77 percent of the flight hours for Part 135 on-demand operations. While operators 

in this group receive more oversight than those in the Private Aviation group, they 

do not receive the level of oversight that FAA provides for large, commercial air 

carriers. 

1

 14 CFR § 91, General Operating and Flight Rules. 2

 14 CFR § 135, On-Demand, Operating Requirements: Commuter and On Demand Operations and Rules Governing 

Persons On Board Such Aircraft. 14 CFR § 119, Certification: Air Carriers and Commercial Operators, and some of 

the requirements of Part 91 also pertain to on-demand operators and commercial air carriers. 3

 Commuter operators, which conduct scheduled operations using aircraft with nine or fewer passenger seats, 

comprise only 3 percent of Part 135 operators and were not included in our review. 

 
3

Large Commercial Aviation (Part 121)4

These carriers operate larger aircraft with primarily scheduled flights. FAA’s 

commercial aviation safety record cites data for Part 121 carriers; on-demand 

accident statistics are not included. Because these air carriers generally fly the 

largest aircraft and carry the most passengers, they have the most stringent 

regulations and receive the most FAA oversight. FAA principal inspectors are 

usually responsible for only one large, commercial air carrier. Table 1 highlights 

major distinctions between on-demand and larger, commercial air carriers. 

Table 1. Differences Between On-Demand and Commercial Air Carrier 

Operations

Characteristic On-Demand Operators Commercial Air Carriers* 

Function Unscheduled, 30 passengers 

or less 

Primarily scheduled passengers 

and cargo 

Sector Size Over 2,300 operators Less than 120 carriers 

Number of Aircraft Over 9,000 Over 7,400 

Aircraft Type Helicopters, single and doubleengine airplanes, jets, 

turboprops, and float planes 

Airplanes only—almost all 

multi-engine jets or turboprops 

Number of 

Passengers in 2008 

Unknown 753 million 

Flight Hours in 2008 3.67 million (FAA estimate) 19.35 million 

Airports About 5,000, both large and 

small public 

About 500, primary and 

commercial service 

* Part 121 commercial air carriers 

RESULTS IN BRIEF 

On-demand operators have more risk in their operating environments and receive 

less oversight from FAA. For example, one on-demand operator we visited flew 

dozens of flights daily during the summer to take tourists to glaciers on which the 

aircraft landed and took off on skis. This operator flies 17 aircraft and was 

inspected 8 times by FAA in 2008. In contrast, a Part 121 operator with 

10 aircraft, overseen by the same FAA oversight office, received 199 inspections 

in 2008. Industry and the National Transportation Safety Board (NTSB) have 

made recommendations to strengthen on-demand regulations. While FAA has 

made efforts to improve safety and adapt its oversight to the increased complexity 

of industry operations, it has not taken substantive action to address these 

recommendations. Further, FAA does not effectively target inspections to higherrisk on-demand operators. The number of fatalities from on-demand operations 

makes it imperative that FAA take action to address three issues we identified as it 

plans regulatory and oversight changes for the growing on-demand operator 

industry. 

 

4

 14 CFR § 121, Operating Requirements: Domestic, Flag, and Supplemental Operations. 

 
4

 Weaker Safety-Related Regulatory Requirements: On-demand operators 

do not have to meet many of the regulatory requirements that large, 

commercial air carriers must follow. These differences can impact the safety 

of on-demand flight operations. For example, on-demand regulations allow 

lower minimum pilot experience for flight crews than commercial air carriers. 

Further, commercial aircraft must have ground proximity warning systems and 

traffic alert and collision avoidance systems, but not all on-demand operators 

are required to have this advanced equipment. Maintenance inspection 

requirements are also less restrictive for smaller on-demand aircraft. Although 

on-demand operator regulations are less restrictive, FAA has not implemented 

recommendations made by its Aviation Rulemaking Committee (ARC) in 2005 

that would strengthen the regulations. FAA also has not addressed 16 NTSB 

recommendations, some of which parallel the ARC recommendations. 

 High-Risk Operating Environment: On-demand operators generally have 

more risk factors in their operations and environment than commercial air 

carriers. For example, they operate shorter flights and generally perform more 

frequent take-offs and landings than larger air carriers, which are the most 

dangerous parts of flight. Further, these operations typically involve small 

airports without air traffic control towers or emergency equipment and flight 

crews who are often less familiar with their destination airports. These flights 

are therefore more vulnerable to terrain and weather obstacles. In 2007 and 

2008, commercial air carriers had zero passenger deaths although they flew 

significantly more hours than on-demand operators.5

 In contrast, during that 

same period, there were 33 fatal on-demand accidents, resulting in 109 deaths.6

 

Given these risk factors and the diversity of on-demand operators, targeted, 

risk-based oversight from FAA is a critical issue. 

 Absence of a Risk-Based Oversight Strategy: FAA oversight of on-demand 

operators is based on compliance with regulations rather than where risk 

dictates. Conversely, FAA oversight of large, commercial air carriers is based 

on risk assessments. Prioritizing inspections based on areas of highest risk is 

essential for the efficient use of inspection staff and resources. FAA is 

developing a new risk-based oversight approach for on-demand operators; 

however, this new system is not scheduled for full deployment for at least 

4 years. In the interim, FAA has decided not to pursue two prioritization 

systems for safety oversight of on-demand operators, which have already been 

successfully piloted in some regions. 

This report makes a number of recommendations focusing on actions FAA needs 

to take to enhance safety and oversight of on-demand operators. 

 

5

 Commercial air carriers flew five times more flight hours in 2007 than on-demand operators. 6

 This is the total for all on-demand operators, including air ambulance and cargo. 

 
5

FINDINGS 

On-Demand Operators Have Less Stringent Safety Regulations Than 

Commercial Operators 

The on-demand industry has changed significantly in the past 30 years. For 

example, the use of jet aircraft is now very common, and operators fly more 

complex operations and international flights. However, FAA has not revised its 

regulations for on-demand operators to keep pace with these changes; many of the 

Part 135 provisions have not been updated since 1978. One result is that current 

requirements for maintenance focus on the number of passenger seats rather than 

the risk factors in an aircraft’s operating environment. As shown in table 2 below, 

regulations for on-demand operators are also far less rigorous than those for large, 

commercial carriers in key areas, such as flight crew requirements, aircraft 

equipment, and maintenance inspections. In addition, on-demand operators with 

aircraft seating 9 or fewer passengers have even less stringent maintenance 

regulations than on-demand operators flying aircraft with 10 or more seats. 

Table 2. Regulatory Differences Between Parts 135 and 121

Subject Part 135 Part 121

Pilot Duty/Rest 

Maximum Yearly Flight Hours 1,400 1,000 

Maximum Flight Hours in 24-Hr. period 10 hours 8 hours 

Personnel Requirements 

Minimum Pilot Experience/Hours 500 hours and commercial license 1,500 hours and Air 

Transport license 

Crew Resource Management Training Not Required Required 

FAA-Licensed Dispatcher Not Required Required 

Maintenance 

Aging Airplane - Operator 

Supplemental Inspections Not Required for all operators Required

Aging Airplane - FAA Inspection and 

Records Review Not Required for all operators Required

Maintenance program that includes 

required inspection items and continuous 

analysis and surveillance system

Not Required for all operators Required

Aircraft Flight Instruments 

Terrain Awareness and Warning System Not Required for all operators Required 

Traffic Alert & Collision Avoidance 

System Not Required for all operators Required 

Cockpit Voice/Data Recorders Not Required for all operators Required 

In-Flight Weather Radar Not Required for all operators Required 

Note: Depending on the size and type of aircraft used, FAA regulations for on-demand operations can be more or 

less restrictive. This table contains the least restrictive regulations for on-demand aircraft for each subject.

 
6

The following discussion further details key regulatory differences and how they 

impact operations and flight safety. 

Regulatory Differences in Crew and Personnel Requirements 

Crew Resource Management (CRM) training is not required for on-demand 

operators. While not required for on-demand operators, large, commercial air 

carriers and scheduled Part 135 operators (commuter) are required to train pilots in 

CRM. This training focuses on leadership and decision making in the cockpit. 

However, scheduled, commuter operations account for only 3 percent of total Part 

135 operations; therefore, the majority of Part 135 demand operators (who fly 

non-scheduled) are not required to have CRM training. CRM for on-demand 

operators is one of the NTSB’s six most wanted aviation safety improvements. 

The NTSB determined that the following fatal, on-demand aviation accidents were 

caused by crew errors and concluded that an effective CRM program might have 

prevented them: 

 2001 accident in Colorado, resulting in 18 deaths 

 2002 accident in Minnesota, resulting in 8 deaths 

 2004 accident in Colorado, resulting in 3 deaths 

Specifically, the flight crew in the fatal 2004 Colorado crash did not de-ice their 

aircraft in winter weather and attempted to take off from a runway that was too 

short for the conditions. The NTSB noted that formal CRM training might have 

assisted the captain by directing crew attention to the hazards posed by the 

weather, reinforced his awareness of the importance of complying with company 

procedures, and promoted more effective crew coordination. The NTSB also 

concluded that formal CRM training for the recently hired first officer might have 

reinforced the company’s policy that he was authorized to question the captain’s 

decisions and actions. 

FAA issued a Notice of Proposed Rulemaking on May 1, 2009, to require CRM 

training for all Part 135 crew members. However, industry comments are not due 

until the end of July. Even when the rule goes final, which can take years, FAA 

has proposed a 2-year implementation period. As a result, we have retained this 

issue in our report and will continue to monitor the CRM rulemaking process. 

Safety training is not required for cabin attendants on smaller aircraft. 

Operators of larger, on-demand aircraft may use cabin aides or customer service 

 
7

representatives to serve food and drinks, but these employees are not required to 

receive safety training if the aircraft carries 19 or fewer passengers.7

 

A February 2005 accident in Teterboro, New Jersey, demonstrated the value of 

flight attendant training and the potential impact to flight safety. An on-demand 

passenger jet crashed on take-off, which caused 14 injuries—4 of them serious—

and destroyed the aircraft. The NTSB’s investigation found that not all passengers 

were wearing their seatbelts when the take-off roll began, passengers did not 

receive a safety briefing, and the cabin aide was not able to open the main cabin 

door and conduct a professional evacuation. The NTSB concluded that the cabin 

aide’s training did not adequately prepare her to perform her assigned duties. In 

contrast, flight attendants on commercial air carriers must be able to perform an 

emergency evacuation and be capable of using any emergency equipment installed 

on the aircraft. The importance of this training was demonstrated in January 2009 

when the flight attendants and crew of U.S. Airways Flight 1549 safely evacuated 

all 150 passengers after an emergency landing in New York’s Hudson River. 

Regulations for on-demand operators do not require dispatchers. On-demand 

operators need only establish procedures for following and locating each flight so 

they can quickly notify FAA or conduct search-and-rescue if an aircraft is overdue 

or missing. This means that while on-demand operators must maintain flight 

information (such as departure point and time, planned route, destination, and 

estimated time en route) there is no requirement for the operator to remain in 

contact with the air crew during flight. Conversely, commercial carriers are 

required to have FAA-licensed flight dispatchers who monitor the progress of each 

flight and provide the pilot-in-command with safety-of-flight information (e.g., 

adverse weather conditions, airport conditions, etc.) before and during the flight. 

In addition, Part 121 dispatchers have the authority to delay, divert, or cancel a 

flight at any time. 

In reviewing fatal on-demand accident reports, we identified at least one tragedy 

that might have been averted if a dispatcher’s “second set of eyes” had been 

involved. In March 2001, an on-demand flight crashed on approach to Aspen 

Airport killing all 18 passengers and crew. The NTSB investigation determined 

that the pilot was under pressure from the charter customer to land at Aspen 

because the customer was to host a dinner party later that evening. We believe the 

participation of a dispatcher in the decision-making might have encouraged the 

crew to reevaluate their attempt to land at Aspen given the deteriorating visibility 

and missed approaches by three other planes. 

 

7

 This is also true for the small number of Part 121 aircraft that seat 19 or fewer passengers. 

 
8

Regulatory Differences in Aging Aircraft Maintenance Requirements 

Current FAA regulations do not require either FAA inspectors or operators to 

perform aging aircraft inspections of aircraft used by on-demand operators. As a 

result, FAA has no assurance that passengers on these aircraft have the same level 

of safety as passengers on older commercial aircraft. 

According to a 2005 FAA study,8

 60 percent of the on-demand passenger and 

cargo fleet is over 20 years old. The average age of aircraft registered to the 

22 on-demand operators we reviewed was 19 years old. Additionally, two of the 

on-demand operators were flying eight aircraft that were more than 50 years old. 

In contrast, the average age of the aircraft flown by the Part 121 air carriers is just 

over 10 years.9 

 

Although the average age of commercial aircraft is lower than the on-demand 

average, the 2005 Aging Airplane Safety Rule10 requires FAA inspectors to 

examine only Part 121 and Part 135 commuter operator records and aircraft after 

14 years of service. Inspectors must determine airworthiness directive 

compliance, ensure timely replacement of all age-sensitive parts, and inspect for 

cracks and corrosion. Most commercial air carriers are also required to do 

additional inspections to examine airplane structures susceptible to fatigue 

cracking that could contribute to a catastrophic failure. We believe a risk-based 

surveillance system should require aging aircraft inspections based on the age of 

the aircraft, without regard to the certificate-type of the operator. 

Fewer Maintenance Requirements for Aircraft Seating Nine Passengers or 

Less 

Many of the maintenance regulations for on-demand 

aircraft seating 10 or more passengers are similar to 

those for commercial air carriers. However, regulations 

for the maintenance of aircraft seating nine or fewer 

passengers are less demanding, despite the fact that these 

aircraft are involved in more fatal accidents. For 

example, required inspection items (RII) and continuing analysis and surveillance 

systems (CASS) are both required for on-demand aircraft seating 10 or more 

passengers and for commercial air carriers, but not for on-demand aircraft seating

fewer passengers. 

 

8

 Congress mandated this study in 2000. Report to Congress, Section 735 of the Wendell H. Ford Aviation 

Investment and Reform Act for the 21st Century, On-Demand Air Taxi Operators (ATO) Study, Federal Aviation 

Administration, undated (according to media coverage, the report was issued around January 2005). 9

 OIG calculated using 2007 air fleet ag data from e www.airsafe.com. 10 70 Fed. Reg. 5518 (February 2, 2005).

 
9

 RIIs are mandatory maintenance activities that, due to their importance to the 

overall airworthiness of the aircraft, must be independently inspected by a 

specially trained inspector after the work is complete. 

 Air carriers and operators implementing a CASS regularly review the 

performance and effectiveness of their maintenance and inspection programs 

and correct any identified deficiencies. 

Because these additional requirements do not apply to aircraft with nine or fewer 

seats, a large percentage of on-demand operators receive a lesser level of 

inspection. Specifically, operators with these smaller aircraft make up more than 

85 percent of total on-demand operators according to 2008 data from FAA’s 

Safety Performance Analysis System (SPAS).11 

Despite the potential safety impacts of the regulatory differences discussed, FAA 

has been slow to update or strengthen on-demand regulations. On-demand 

operators stress that FAA must carefully weigh the safety benefits gained from 

stronger regulatory requirements against the increased costs, which could 

negatively impact operators and even drive smaller operators out of business. 

FAA Has Not Implemented Recommended Actions To Strengthen Part 135 

Regulations 

In response to new technologies, new aircraft types, and changes in operating 

environments, FAA formed an Aviation Rulemaking Committee, or ARC, in 2003 

to review Part 135 regulations. The ARC and its subcommittees worked for more 

than 2 years and submitted 124 recommendations to FAA in September 2005, 

which provided a roadmap to improve safety and oversight of the on-demand 

industry. However, more than 3 years after the ARC completed its work, FAA has 

not issued any final rulemakings to address the recommendations resulting from 

the ARC’s in-depth analysis of on-demand safety and operations. 

FAA’s 135 Air Carrier Operations Branch (AFS-250), which evaluated the ARC 

recommendations, provided us 

with a summary of its disposition 

of the ARC recommendations as 

of April 2009 (see table 3): 

AFS-250 does not track the 

progress of recommendations 

transferred to other FAA offices 

and therefore could not provide 

Table 3. Disposition of ARC Recommendations

Action Taken Number of Items 

Considering Rulemaking 32 

No Action 16 

Transferred to Other 

FAA Offices 

60 

Deferred 11 

 Guidance Developed 1 

Under Discussion 4 

 Total 124 

 11 SPAS is a computer-based system that analyzes inspection and air carrier data to aid inspectors in identifying safety 

problems. 

 
10

status information on 60 of the ARC recommendations. FAA plans to issue a 

Notice of Proposed Rulemaking (NPRM) for Very Light Jets in October 2009, 

which addresses one of the ARC’s recommendations. Three other rules, which 

will address multiple ARC recommendations, are still under development. 

In addition, we found that 16 NTSB recommendations resulting from on-demand 

operator accident investigations (issued since June 2002) also remain open. For 

example, the NTSB has been concerned about the safety effects of fatigue on 

flight crews since 1989 and has recommended that operators set working-hour 

limits for flight crews based on fatigue research. The ARC Subgroup on Flight, 

Duty, and Rest noted that this is a particular issue for on-demand operators 

because of “pop-up” flights (i.e., unplanned or unscheduled) that require the 

operator to take off within a short period of time, making it difficult to ensure that 

flight crews have received sufficient rest prior to flights. 

Some ARC Subgroup members commented that the present FAA flight time/duty 

time rules are a patchwork of regulations that have been developed over the past 

50 or 60 years. Modern technology has decreased cockpit crew size and travel 

times, while pilot and aircraft utilization have increased. These factors, in 

combination with the old rules, have put additional pressures on flight crews. 

Although the ARC Subgroup identified the need for changes, it was not able to 

reach consensus on a specific flight duty and rest recommendation to FAA. 

FAA’s most recent attempt to significantly update flight duty and rest rules was an 

NPRM issued in December 1995, but no final regulations were issued. 

Another key NTSB concern is reducing dangers to aircraft flying in icing 

conditions; this has been on the NTSB’s Most Wanted Aviation Safety 

Improvements list since 1997. FAA’s response to this issue has been classified as 

“unacceptable” by the NTSB. The ARC recommended regulations for pilot 

training to specifically include ice detection to reduce dangers applicable to ondemand aircraft. This recommendation was related to the NTSB’s determination 

that the 2004 fatal crash in Colorado occurred because the flight crew did not 

properly de-ice the aircraft. Table 4 below shows ARC and NTSB 

recommendations to improve on-demand safety in these areas as well as crew 

resource management and cabin safety. 

 
11

Table 4. Examples of On-Demand ARC and NTSB Recommendations That 

FAA Has Not Implemented

ARC 

Recommendation 

(September 7, 2005)

Proposal to FAA Similar NTSB 

Recommendations 

(Based on On-Demand 

Accident Investigations)

FAA 

Flight Duty and Rest Amend the flight, duty, and rest 

limitations to be more applicable to air 

carriers operating under on-demand. 

Yes - NTSB Most Wanted (all 

commercial operations) - 

Multiple Accidents/Fatalities

No NPRM 

to date 

Icing Conditions Regulations for pilot training to include 

ice detection in order to reduce dangers 

applicable to on-demand aircraft. 

Yes (all commercial operations)

- Accident: Dillingham, Alaska 

Fatalities (10)

No NPRM 

to date 

Crew Resource 

Management (CRM) 

Require on-demand dual-pilot ondemand operations to establish an 

FAA-approved CRM training program. 

Yes - NTSB Most Wanted 

Accident: Montrose, Colorado 

Fatalities (3), 

Serious Injuries (3)

NPRM 

issued 

May 1, 2009 

Cabin Safety Create two categories of 

crewmembers that are assigned cabin 

duties: Cabin Safety Crewmember 

and Passenger Service Specialist. 

Yes 

Teterboro, New Jersey 

Serious Injuries (4)

No NPRM 

to date 

NTSB investigations of multiple on-demand accidents resulted in additional 

recommendations for FAA that would also strengthen Part 135 regulations in other 

areas, such as requiring cockpit voice recorders in the aircraft as is required for 

commercial aircraft. The NTSB also recommended required data reporting for ondemand operators in August 2003 so that accurate accident rates can be calculated, 

which is vital to identifying and prioritizing risk. The on-demand reporting would 

be much less detailed than the data currently filed by commercial carriers. These 

recommendations also remain open. During our review, FAA managers and 

inspectors providing on-demand oversight expressed frustration with the outdated 

regulations. 

On-Demand Operators Have More Inherent Risks in Their Operations 

and More Fatal Accidents Than Commercial Operators 

Commercial air carriers and on-demand operators serve divergent markets with 

very different equipment and operating environments. Both industry and FAA 

agree that on-demand operators have more risk factors in their operating 

environment than commercial air carriers (see table 5 below). 

 
12

Table 5. Basic Risk Factors for On-Demand and Commercial Operators

Risk Factor On-Demand Commercial 

Operations Have more take-offs and 

landings per aircraft 

Have longer flights and 

therefore fewer take-offs and 

landings 

Communications Fly to airports without ATC 

towers 

Have ATC support 

Crew Have pilots who may be 

unfamiliar with route. Cabin 

attendants on smaller aircraft 

have no safety training 

requirements. 

Have more experienced pilots. 

Flight attendants on large 

aircraft are required to have 

safety/emergency training. 

Aircraft Limitations Have smaller aircraft susceptible 

to weather with less advanced 

electronics 

Have jet aircraft that can fly 

“above weather” at high 

altitudes; advanced 

electronics required 

These risk factors are inherent in on-demand operations as they include more 

frequent take-offs and landings, flights into small airports without towers or 

emergency equipment, and crews and pilots who may be unfamiliar with 

destination airports.12 For example: 

 On-demand operators in southern Florida frequently fly tourists to the 

Bahamas, where only 4 of the approximately 30 airports have air traffic control 

towers. 

 More than half of the flights completed by two Portland, Maine, operators we 

visited were into non-towered airports. Conversely, commercial flights have 

more experienced pilots flying scheduled passenger operations into familiar, 

FAA-certificated airports with air traffic control facilities and emergency 

equipment. 

In addition, on-demand operators fly many aircraft types and models—helicopters, 

single-engine airplanes, turbine-powered airplanes, and float planes. We 

determined that the 22 operators we reviewed had 321 registered aircraft 

comprised of 65 different makes/models, from small Cessnas to Gulfstream jets 

and Sikorsky helicopters. Because they fly at lower altitudes, on-demand aircraft 

are more vulnerable to sudden weather changes or other obstacles. We note that 

the high-end jet aircraft flown by some on-demand operators have the same 

advanced electronics as commercial aircraft. Many of the smaller operators, 

however, still have very basic equipment in their cockpits. Conversely, 

 

12 Part 121 Supplemental Operators also fly on-demand. However, after reviewing 2008 data on flight hours for Part 

121 air carriers, we concluded that the supplemental operators are not a significant portion of the Part 121 universe. 

Specifically, unscheduled Part 121 carriers (supplemental) flew only 3 percent of the total Part 121 hours flown in 

that year. 

 
13

commercial air carriers predominately operate jet aircraft at high altitudes, well 

above any terrain or weather obstacles. All of these aircraft have advanced 

electronics, such as ground proximity warning and traffic alert and collision 

avoidance systems, and they fly into airports with air traffic control towers. 

Higher risks have translated into more fatal accidents for on-demand operators. 

NTSB statistics show major differences in the accident rates between commercial 

carriers and on-demand operators. Between 2000 and 2008, the fatal accident rate 

for on-demand operators was 50 times higher than that of commercial carriers (see 

figure below).13 Since January 2003, on-demand operators have been involved in 

95 fatal accidents, which resulted in 249 deaths. We note that on-demand 

operators utilizing jet aircraft accounted for only 5 of the fatal accidents and 22 of 

the fatalities. 

Figure. Fatal Accident Rates for On-Demand Operators and 

Commercial Carriers, Fiscal Year 2000 to Fiscal Year 2008 

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

2000 2001 2002 2003 2004 2005 2006 2007 2008

Year

Fatal Accident Rate 

(per 100,000 flight hours) 

On-Demand

Commercial

The most fatalities for the period 2003 through 2008 occurred in the states of 

Alaska and Hawaii and in the Gulf of Mexico (see map of fatal crash locations at 

exhibit C). In both Alaska and Hawaii, air tours are common, and small planes are 

a major source of transportation for people and cargo. In addition, there are 

numerous helicopter operations in the Gulf of Mexico delivering crews and 

supplies to oil rigs. 

 

13 As discussed previously, on-demand accident rates are estimated because FAA does not require operators to report 

annual operational data. The NTSB accident rate is calculated using accidents per 100,000 flight hours. The flight 

hours for on-demand are projected from a voluntary annual general aviation survey. 

 
14

FAA Lacks a Risk-Based Oversight Strategy for On-Demand 

Operators 

FAA does not have a risk-based oversight system for on-demand operators even 

though the number and diversity of on-demand operators and the number of fatal 

accidents warrant this type of oversight strategy. FAA began developing the riskbased, data-driven Air Transportation Oversight System (ATOS) in 1998 to 

oversee all commercial air carriers. Oversight of on-demand operators, however, 

is primarily based on required, pre-determined inspection items assigned to 

inspectors on a nationwide basis. These items are focused on compliance with 

regulations rather than where risk dictates. FAA has elected not to implement 

pilot programs of two nationwide oversight prioritization systems for on-demand 

operators. Instead, FAA plans to wait until its new risk-based oversight approach 

for on-demand operators is fully developed; however, this system will not be 

ready for at least 4 years. 

FAA Uses ATOS To Oversee Part 121 Air Carriers 

ATOS is FAA’s primary tool for overseeing commercial air carriers. The 

emphasis in ATOS is on the airline’s ability to maintain a safe process and to 

correct any identified deficiencies. ATOS provides risk assessment tools instead 

of the less rigorous, conventional surveillance work program inspections. An air 

carrier’s principal inspectors use data analysis to develop a safety surveillance 

plan, which is adjusted periodically based on identified risks. 

National Program Guidelines for Oversight of On-Demand Operators Are 

Not Risk Based 

FAA uses the National Program Guidelines (NPG) to assign required inspections 

(R-items, based on oversight issues identified at the national level) to on-demand 

inspectors. These are assigned using a national database of basic operator 

information and without considering operator risk factors. Inspectors must 

complete all R-items and may add other inspections to their work plan (planned or 

P-items) for operators that they feel need additional oversight. However, some of 

the inspectors we spoke with did not complete P-items because they only had time 

to complete the R-items on their programs. 

Although the NPG use the terms “risk,” “risk-based,” and “risk management,” the 

inspections required by the NPG are not risk-based. Instead, inspectors are 

required to do designated inspections for all or a percentage of their regional ondemand operators. For example, operations inspectors must conduct a ramp 

inspection on a minimum of 10 percent (minimum of 25 percent for Alaska 

region) of all on-demand operators that are certificated within their region. 

Surveillance of these operators must be rotated from year to year, meaning an 

operator could receive a ramp inspection from an operations inspector as seldom 

 
15

as once every 10 years. Also, they must conduct a Manual/Procedures, 

Crew/Dispatcher Records, and Trip Records inspection for each on-demand 

operator, regardless of operator risk factors. 

Further, even though the smallest operators and aircraft have more fatal accidents, 

they are assigned fewer required inspections by the NPG. We found that 

78 percent of all fatal on-demand accidents between 2003 and 2008 involved 

aircraft seating 9 or fewer passengers. Yet, the NPG require inspections for 

aircraft seating 10 or more passengers that are not required for aircraft seating 9 or 

less. Single-engine aircraft and single-pilot operators have even fewer required 

inspections than operators categorized as 9 or fewer seats. 

The inspectors we interviewed did not use SPAS for safety or risk assessments, 

even though the system has some tools to identify potential safety issues and risk 

factors. Most inspectors did not believe the existing data, guidance, or procedures 

were useful in analyzing risks for their on-demand operators. Instead, they 

determined what needed to be inspected based on general perceptions or their 

experience with the operators. However, we do not believe this approach is 

sufficient to safely oversee these operators. The number of on-demand operators 

and other inspection responsibilities, coupled with the high inspector turnover rate 

at the Flight Standards District Offices (FSDO) we visited, makes this informal 

approach to FAA oversight problematic. 

FAA Lacks an Interim Strategy for Risk-Based Oversight 

FAA plans to wait until its new risk-based oversight approach, System Approach 

for Safety Oversight (SASO), is developed rather than implement any interim, 

nationwide oversight prioritization processes for on-demand operators. A key 

requirement of SASO is a risk-based allocation system that applies inspector 

resources to the areas of highest risk. When it is fully implemented, SASO will 

become a functional subset of ATOS. However, SASO is in the early stages of 

development for on-demand operators. FAA does not expect to implement SASO 

until at least 2013. 

Further, FAA has decided not to implement the following two oversight 

prioritization systems for on-demand operators, which have already been 

successfully piloted in some regions: 

 The Surveillance Priority Index (SPI) was developed in Alaska to assist 

inspectors in prioritizing surveillance of on-demand operators. SPI provides a 

ranked order based on risk factors identified in both the SPAS databases and 

principal inspectors’ surveillance and assessment of their operators. The SPAS 

data used include accidents, incidents, violations, and average surveillance per 

aircraft. Inspectors’ assessment factors can include rapid expansion and non-

 
16

compliant attitude. An SPI score is available in SPAS for all on-demand 

operators, but few of the inspectors we interviewed used the SPI to prioritize 

surveillance. At the first 3 FSDOs we visited, only 1 of the 23 inspectors we 

interviewed had any knowledge of SPI. 

 The Surveillance and Evaluation Program (SEP) was added to the NPG in 

2002 to incorporate risk assessment principles into oversight of commercial 

carriers not yet under the ATOS system. According to FAA managers, seven 

FSDOs14 voluntarily use SEP to perform oversight of on-demand operators. 

CONCLUSION 

Despite experiencing a fatal accident rate 50 times higher than commercial air 

carriers, on-demand operators have less restrictive regulations and oversight than 

commercial carriers. Many of the regulations for on-demand operators have not 

been updated to address changes in the industry since 1978. On-demand flights 

are also conducted in a higher-risk environment than flights of scheduled air 

carrier operations. For example, on-demand operators fly at lower altitudes, use 

unfamiliar airports, and conduct more frequent take-offs and landings. In addition, 

FAA has no near-term plans to implement a risk-based oversight system for ondemand operators similar to the ATOS system used for commercial air carriers. 

These differences may all be contributing factors to the higher fatal accident rate 

for this segment of the industry. FAA’s lack of attention to the issues addressed in 

this report negatively impacts safety and potentially puts travelers at risk. 

RECOMMENDATIONS 

We recommend that FAA revise outdated regulations and strengthen its oversight 

of on-demand operators by: 

1. Establishing milestones to track the implementation of recommendations 

made by the ARC and the NTSB that would enhance the safety and oversight 

of on-demand operators and reporting annually on progress toward those 

milestones to the Office of Inspector General. 

2. Implementing an interim risk assessment oversight process for on-demand 

operators until the risk-based SASO approach is implemented. 

3. Considering the inherent operational risk factors in on-demand operations in 

developing risk indicators for the new risk-based Part 135 oversight system. 

 

14 Columbus, Ohio; Baton Rouge, Louisiana; Allegheny, Pennsylvania; Honolulu, Hawaii; Juneau, Alaska; Fairbanks, 

Alaska; and Anchorage, Alaska. 

 
 

17

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

We provided FAA with our draft report on May 27, 2009, and received its 

response on June 26, 2009. FAA concurred with all three of our recommendations 

and provided appropriate planned actions and target completion dates. FAA’s 

response is included in its entirety in the appendix to this report. 

ACTIONS REQUIRED 

We consider all three recommendations addressed pending completion of FAA’s 

proposed actions. We appreciate the courtesies and cooperation of FAA 

representatives, on-demand industry groups, and operators during this audit. If 

you have any questions concerning this report, please contact me at 

(202) 366-1427 or Tina Nysted, Program Director, at (404) 562-3770. 

# 

cc: FAA Associate Administrator for Aviation Safety 

 Director, Flight Standards Service 

Martin Gertel, M-100 

Anthony Williams, ABU-100 

 
18

EXHIBIT A. OBJECTIVES, SCOPE, AND METHODOLOGY 

Our audit objective was to evaluate the differences between FAA regulations and 

oversight for on-demand operators versus larger commercial air carriers. We 

conducted this audit between September 2007 and March 2009 in accordance with 

government auditing standards prescribed by the Comptroller General of the 

United States and included such tests as necessary to provide reasonable assurance 

of detecting abuse or illegal acts. 

We reviewed data for the period January 2003 to December 2008. One exception 

was that we used NTSB accident rate data going back to 2000 to better establish 

the trend. To gather information for our evaluation, we visited FAA Headquarters 

and five Flight Standards District Offices (FSDOs). At the FSDOs, we 

interviewed managers, supervisors, and inspectors and reviewed files and 

documents related to inspector assignments, work plans, and training and ondemand operator oversight. We also visited or met with 22 on-demand operators 

to obtain data. In addition, we met with officials from the NTSB, the safety 

inspectors union, and five on-demand industry groups. Exhibit B lists the entities 

we contacted or visited during our review. 

We omitted commuter operators from our review because they comprise only 

3 percent of total on-demand operators and have more restrictive regulations and 

fewer fatal accidents. We also eliminated two other aviation sectors from our 

work because they have been the focus of recent or current reviews by other 

entities. Specifically, we did not include air medical operations because the NTSB 

issued a special investigation report in January 2006 on emergency medical 

services helicopter operations.15 We also excluded all-cargo operators because of 

their small number and because the Government Accountability Office initiated an 

audit of air cargo safety in December 2007. This enabled us to focus on passenger 

operations by air taxis and air tours. 

 

15 EMS Helicopter Operations: Special Investigative Report, January 2006, National Transportation Safety Board. 

Exhibit A. Objectives, Scope, and Methodology
19

EXHIBIT B. ENTITIES VISITED OR CONTACTED 

FAA

Headquarters: 

Aviation Safety (AVS) Washington, DC 

Flight Standards District Offices: 

Anchorage FSDO Anchorage, AK 

Portland FSDO Portland, ME 

Windsor Locks FSDO Windsor Locks, CT 

South Florida FSDO Miami and Fort Lauderdale, FL 

Van Nuys FSDO Van Nuys, CA 

 

INDUSTRY GROUPS

Industry Associations 

Air Charter Safety Foundation Alexandria, VA 

General Aviation Manufacturers Association Washington, DC 

National Air Transportation Association Alexandria, VA 

National Business Aviation Association Washington, DC 

Regional Airlines Association Washington, DC 

Other Stakeholders 

National Transportation Safety Board Washington, DC 

Professional Airways Systems Specialists Washington, DC 

ON-DEMAND OPERATORS 

Alaska Bush Float Plane Service Talkeetna, AK 

Aspen Helicopters Oxnard, CA 

Associated Aircraft Group Danbury, CT 

AVjet Aviation Burbank, CA 

Biscayne Helicopters, Inc. Miami, FL 

Channel Islands Aviation Camarillo, CA 

Clay Lacey Aviation Van Nuys, CA 

Evergreen Helicopters of Alaska Anchorage, AK 

Executive Air Charter of Boca Raton Stuart, FL 

(DBA: Fair Wind Air Charter) 

Interstate Aviation, Inc. Plainville, CT 

Exhibit B. Entities Visited or Contacted
Exhibit B. Entities Visited or Contacted

20

ON-DEMAND OPERATORS (CONT.)

JetLogistics, Inc. Raleigh, NC 

K2 Aviation Talkeetna, AK 

Maine Instrument Flight Augusta, ME 

NetJets International, Inc. East Granby, CT 

Palm Beach Aviation West Palm Beach, FL 

Presidential Aviation/Sentient Flight Group Ft. Lauderdale, FL 

Sentient Flight Group Weymouth, MA 

The Air Group Van Nuys, CA 

Trail Ridge Air, Inc. Anchorage, AK 

Twin Cities Air Services, LLC Auburn, ME 

Universal Jet Aviation Boca Raton, FL 

World Jet II Ft. Lauderdale, FL 
EXHIBIT C. ON-DEMAND FATAL ACCIDENTS BY STATE 

(2) Fatalities

(1) Fatality (7) Fatalities 

(5)

 Fatalities (1) Fatality (1) Fatality

SC (8) Fatalitie

CA (6) Fatalities

WA (13) Fatalities

MT (5) Fatalities 

IA (2) Fatalities

OH (4) Fatalities 

MICH (1) Fatality

WIS (9) Fatalities 

AZ (14) Fatalities 

MN (8)

Fatalities

NM (5) Fatalities

(5) Fatalities

(1) Fatality

ID (4) Fatalities

AK (43) Fatalities 

TX (17) Fatalities

LA (10) Fatalities 

HI (21) Fatalities

(24) Fatalities Gulf of Mexico 

Exhibit C. On-Demand Fatal Accidents by State 
Exhibit D. Major Contributors to This Report 

22

EXHIBIT D. MAJOR CONTRIBUTORS TO THIS REPORT 

Name Title 

Lou Dixon Assistant Inspector General 

 for Aviation and Special Program Audits 

Tina Nysted Program Director 

Gloria Denmark Project Manager 

Karen Thompson Senior Analyst 

Curt Boettcher Senior Analyst 

Manuel Ramos Auditor 

Stefanie McCans Analyst 

Taniesha Snell Analyst 

Andrea Nossaman Writer-Editor 

 
Appendix. Agency Comments 

23

APPENDIX. AGENCY COMMENTS 

Federal Aviation 

Administration 

Memorandum 

Date: June 26, 2009 

To: Lou E. Dixon, Assistant Inspector General for Aviation and Special Program 

Audits 

From: Ramesh K. Punwani, Assistant Administrator for Financial Services/CFO 

Prepared by: Cynthia A. Dominik, Acting AAE-2, x77560 

Subject: OIG Draft Report: On-Demand Operators Have Less Stringent Safety 

Requirements and Oversight than Large Commercial Air Carriers 

Thank you for the opportunity to review and comment on the findings and recommendations of 

the subject draft report dated May 27, 2009. The Federal Aviation Administration (FAA) 

concurs with all three recommendations. 

The following is FAA’s response to each of your recommendations: 

OIG Recommendation 1: Establishing milestones to track the implementation of 

recommendations made by the Aviation Rulemaking Committee and the National Transportation 

Safety Board that would enhance the safety and oversight of on-demand operators and reporting 

annually on progress toward those milestones to the Office of Inspector General. 

FAA Response: Concur. Because some of the recommendations may have been overtaken by 

events, the FAA will review the recommendations, determine which are still valid, and establish 

a timeline for implementation by December 31, 2009. 

Recommendation 2: Implementing an interim risk assessment oversight process for on-demand 

operators until the risk-based SASO approach is implemented. 

FAA Response: Concur. The surveillance requirements for on-demand operators in FAA Order 

1800.56J, Flight Standards National Work Program Guidelines (NPG), are risk-based oversight 

activities. By December 31, 2009, the FAA will review the current policy and its application, 

and will make subsequent adjustments to reflect a risk-based oversight approach to surveillance 

of on-demand operators. 
24

Appendix. Agency Comments

Recommendation 3: Considering the inherent operational risk factors in on-demand operation 

in developing risk indicators for the new risk-based Part 135 oversight system. 

FAA Response: Concur. By September 30, 2010, the FAA will identify the initial set of risk 

indicators for part 135 on-demand operators which inspectors would use in a risk-based 

surveillance system. The FAA will consider and incorporate the appropriate, inherent 

operational risk factors in on-demand operations as it develops its risk-based Title 14 Code of 

Federal Regulations part 135 oversight system scheduled for implementation in calendar year 

2013.