VIII. REGULATORY EVALUATION SUMMARY
Changes to Federal regulations must undergo several economic
analyses. First, Executive Order 12866 directs that each Federal agency
shall propose or adopt a regulation only upon a reasoned determination
that the benefits of the intended regulation justify its costs. Second,
the Regulatory Flexibility Act of 1980 requires agencies to analyze the
economic effect of regulatory changes on small entities. Third, the
Office of Management and Budget directs agencies to assess the effect of
regulatory changes on international trade. In conducting these
analyses, the FAA has determined that this Final Rule will generate
benefits that justify its costs and is "a significant regulatory action"
as defined in the Executive Order. The FAA estimates, however, that the
final rule will not have a significant economic impact on a substantial
number of small entities. No part of the final rule will constitute a
barrier to international trade. These analyses, available in the
docket, are summarized below.
A. Sections Without Cost Impacts
Those part 121 sections that the FAA has determined will not
impose additional costs on part 135 commuter operators are not
described in this summary evaluation. Each of those part 121 sections
will not impose costs for one of the following reasons: (1) current
practice is identical or very similar to the new requirement; (2) the
new requirement represents minor procedural changes; (3) the section
determines general applicability and does not specifically impose any
costs; or (4) certain requirements of part 135 would be incorporated
into part 121 without change. Those part 121 sections without costs
are described in the full evaluation under each of the areas for which
they apply. While not shown in this summary evaluation, it is
important to note that 10 of the sections in the final rule were
identified as having negligible costs. These negligible costs, even
when combined, will not be significant.
B. SECTIONS WITH COST IMPACT
The rule will impose costs on part 135 operators with 10-to-30-
seat airplanes. The FAA estimates the total cost of the rule will be
$117.80 million over the next 15 years in 1994 dollars, with a present
value of $75.19 million (7 percent discount rate). The total
potential costs for 10-to-19 and 20-to-30-seat airplanes are presented
in the following areas:
10-19
Seats
20-30
Seats
Total
Cost
Present
Value
Operations
$48.32
$24.87
$73.19
$46.18
Maintenance
$12.93
$5.26
$18.19
$11.93
Cabin Safety
$5.99
$5.58
$11.57
$8.20
Part 119
$2.73
$0.63
$3.36
$2.30
Certification
$10.39
$1.10
$11.49
$6.58
TOTAL
$80.36
$37.44
$117.80
$75.19
Based on the $80.36 million figure shown above, the FAA estimates
that, on average over the next 15 years, the price of a one-way
airline ticket will increase by $0.62 for affected operators with 10-
to-19-seat airplanes. Similarly, based on the $37.44 million figure,
the ticket price will increase by $0.30 for affected operators with
20-to-30-seat airplanes.
It is important to note that the total cost per airplane in each
of the first four years of the rule sheds light on the initial
compliance costs. These costs per airplane are as follows:
10-to-19 seat
airplanes
20-to-30-seat
airplanes
1996
$19,400
$21,900
1997
$7,600
$6,600
1998
$7,000
$6,300
1999
$7,200
$5,900
1. Operations
This section of the regulatory evaluation examines the costs of
the changes with regard to operations. Fifteen-year costs for
operations requirements will total $73.19 million ($46.18 million,
present value). The cost items, by section, are provided below.
Section 121.97: Airports Required Data. Each domestic and flag
air carrier must show that each route it submits for approval has
enough airports that are properly equipped and adequate for the
proposed operation. Consideration is given items as size, surface,
obstructions, etc. In short, this requirement will ensure that in the
event of a single-engine failure each operator's airplane type
(regardless of the number of airplanes) can either stop at the end of
the runway or, if it continues to fly, can safely clear all of the
obstacles in the flight path.
To estimate the potential cost of this requirement, the FAA
contacted several commuter operators. According to these operators,
the potential cost of compliance is based on performance-obstacle-data
analyses for airplane types at particular airports. To ensure that
the performance objective will be met, operators are required to make
certain that the maximum-allowable-takeoff weight is always achieved
under certain temperature conditions. This is done by conducting
performance analyses for each airplane type at the airport it intends
to operate. To achieve this objective, operators typically hire a
contractor to perform obstacle-location and height surveys. The
contractor uses the airplane's flight-manual-performance data to
assess flap settings and runway-end capability for a particular
airport for information related to takeoff-run-acceleration distance,
runway length, anti-skid, etc.
The typical contractor fee is $20 per runway. For example, ABC
airlines is a commuter operator with 5 types of airplanes that it
wishes to operate at airports in 10 cities. Each city has an airport
with 10 runways. The operator, however, only intends to use two
runways per airport in each of the 10 cities. The cost performing the
needed obstacle performance data analyses is $2,000 ($20 per runway x
10 airports x 2 runways per airport x 5 airplane types). While this
is a simple example of estimating a fictitious operator's potential
cost of compliance, it sheds light on the difficulty of deriving such
costs reliably. Although reliable information is available on the
cost of contractor conducted obstacle-performance-data analyses, the
same reliability does not apply to the number of runways or airports
commuter operators will use. Potential costs for this requirement
cannot be estimated reliably without knowing what airports, runways,
and the types of airplanes operators will use. It is for this reason
that this section of the evaluation contains no estimate for costs.
Despite this situation, the FAA contends that this requirement is an
important element in achieving the one-level-of-safety objective.
Section 121.99: Communications Facilities. Currently, this
section requires each domestic and flag air carrier to show
availability of a two-way air/ground radio communication system at
points that will ensure reliable and rapid communications, under
normal operating conditions over the entire route (either direct or
via approved point-to-point circuits). Each carrier also must show
that the system is accessible between each airplane and appropriate
dispatch office, and between each airplane and the appropriate ATC
unit. In addition, each system must be independent of any other
system operated by the United States.
To estimate the potential cost, the FAA contacted several
industry sources, including operators and data link service venders.
These sources indicated that the least expensive option for most
operators would be a voice data link service from an FAA-approved
vender. According to Aeronautical Radio, Inc. (ARINC) and several
operators with operations specifications for parts 121 and 135
(scheduled), the needed voice-data-link service consists of a monthly
access fee of $35 per operator and a fee of $14 per contact. Contact
refers to any form of voice communication between the pilot while in
flight and the home dispatcher.
If, from a worst case standpoint, none of the current commuters
have this access service, the total cost will be the number of
affected operators times the monthly access fee of $35 over the next
15 years. This evaluation estimates that the number of commuter
operators will range from 63 in 1996 to 73 in 2010. This will result
in a total cost of $445 million ($269 million, present value). The
contact fee cost can be estimated in a similar manner, though it
employs a great deal more of uncertainty because the actual number of
contacts each operator will make annually is unknown and usually
varies among operators. According to industry sources, there will be
a certain percentage of contacts per annual departures for each
airplane in an operator's fleet. Based on information contained in
the Regional Airlines Association's Annual Report for 1994, each
airplane in the U.S. commuter fleet makes an average of 5.68
departures per day or 2,074 annually. The number of airplanes with 10
to 30 seats in the U.S. commuter fleet is projected to range from 950
in 1996 to 1,099 in 2010.
Initially for this evaluation, the FAA assumed at least one
contact per departure. Multiplying the 2,074 annual departures times
the $14 contact fee gives the total potential contact cost of $445
million ($269 million, present) over the next 15 years. In realistic
terms, however, this cost estimate is too high because it does not
reflect the actual practice in industry. According to several
operators, contacts via ARINC or a similar service would only be made
during emergency situations (for example, flight delays, inclement
weather, etc.). Within an average radius of 50 nautical miles,
contacts can be made directly between the airplane pilot and the home
dispatcher, without the aid of an external-communications-voice-data
network (e.g., ARINC or a similar service). In flat lands, this
communication can be made up to 100 miles, when the dispatcher is
located at the hub. In high terrain areas, communication with the
home dispatcher would have a radius of less than 50 miles. In
emergency situations that arise beyond the average radius of 50 miles,
ARINC or similar service would be needed. This would be especially
true in remote areas such as the U.S. northern frontier (Montana,
Idaho, etc.), Alaska, American Samoa, and Hawaii. This information
indicates that frequency of use of ARINC or a similar service may not
be as high as originally expected. According to some operators, the
likelihood of having at least one contact via ARINC per airplane
departure by an operator, on average, could range from 5 to 10
percent. When considering that contacts via ARINC or a similar
service beyond the 50-mile radius would only be made in emergency
situations, operators, on average, would make contact on 10 percent of
their airplane departures. Employing this approach, costs will amount
to $44 million ($26 million, present value) over the next 15 years.
In addition to the information above, industry sources contacted
indicated that commuter operators with dual or split operations
specifications (both parts 121 and 135) already have this capability.
These operators (approximately 19) account for over 60 percent of all
the airplanes in the U.S. commuter fleet. This scenario will result
in estimated costs of $18.9 million ($11.5 million, present value)
over the next 15 years. This cost estimate also recognizes that the
number of contacts will be lower because pilots typically contact ATC
for information related primarily to weather and air traffic delays.
Therefore, this evaluation assumes only 10 percent of the commuter
airplane departures, by operators without dual operations
specifications, will engage in contacts via ARINC or similar service.
Section 121.135 - Contents of Manual. This section will require
an extensive list of manual contents for operators. Unlike part 135,
part 121 requires more detailed instructions to flight and ground
personnel, including dispatch procedures, airport information, and
approach procedures. The manuals of part 121 operators are, on
average, three times as voluminous as those of part 135 operators.
Thus, compliance with the final rule will result in major rewrites of
manuals. Based on cost information received from industry, affected
operators will spend an additional $50,000 on average ($30,000 to
$70,000) each for new manuals. This cost estimate multiplied times
the number of operators over the next 15 years will total
approximately $3.65 million, ($3.28 million, present value). This
cost estimate for manuals takes into account additional preparation
and distribution requirements.
Section 121.337 - Protective Breathing Equipment (PBE) for the
Cockpit. This section will require PBE units for persons operating
airplanes under part 121. Part 135 has no PBE requirement. While
commuter airplanes are typically smaller than airplanes operating
under part 121, the accessibility of PBE in the cockpit will provide
smoke-and-fumes protection for pilots. The airplane operator is
allowed to use fixed equipment such as oxygen masks and smoke goggles
at each pilot station. Depending on the present airplane
configuration, this may require substantial modifications.
According to FAA's technical personnel, airplanes with 20-to-30
seats already have fixed PBE units for pilot stations in the cockpit
for smoke and fume protection but they are not equipped with a
portable PBE unit for fire fighting. In terms of operators with 10-
to-19-seat airplanes, the FAA is uncertain as to how many part 135
operators are already equipped with PBE (portable or fixed) in the
cockpit. As the result of this uncertainty, this evaluation assumes
that part 135 operators with 10-to-19-seat airplanes are not currently
equipped with PBE in the cockpit. This evaluation also assumes that
operators with 20-to-30-seat airplanes do not have portable PBE in the
cockpit for firefighting. The installation of fixed PBE in some
commuter airplanes could be prohibitively expensive because of
complex breathing gas supply requirements. Since portable PBE is much
cheaper than fixed PBE, operators with 10-to-19-seat commuter
airplanes are assumed to acquire and install portable smoke and fume
PBE in the cockpit if not equipped with an oxygen system. Each
portable PBE is estimated to cost $400 per unit. In 1996 and
subsequent years, operators with 10-to-19-seat airplanes are assumed
to install two smoke-and-fumes portable PBE units in the cockpit: one
at each of the two pilot stations. Over this same period, operators
with 20-to-30-seat airplanes are assumed to install one additional
fire-fighting-portable PBE unit in the cockpit. In addition to PBE
units, costs are also estimated for the weight penalty of each PBE
unit. Each of the cost components multiplied by the number of
airplanes in existence, over the next 15 years, will result in an
estimated cost of $2.64 million, ($1.81 million, present value).
Section 121.357 - Airborne Weather Radar. This section will
require part 135 commuters to equip their airplanes with approved
weather radar. Currently, section 135.173 requires that operators
equip their airplanes with either thunderstorm detection equipment or
approved weather radar. However, section 135.175 requires operators
of airplanes with 20 to 30 passenger seats to equip their airplanes
with weather radar. An estimated 90 percent of all commuter airplanes
with 10-to-19 passenger seats already have approved weather radar
equipment. Based on this information, the rule will only affect an
estimated 10 percent of those operators of airplanes with 10-to-19
seats (excluding commuter operators in Alaska and Hawaii which are not
covered by the rule). Because of their unique flying environments,
commuter operators in Hawaii and Alaska are not required under current
regulations to be equipped with weather radar equipment. Weather
radar costs approximately $30,000 per airplane, including
installation. Each weather radar unit weighs 25 pounds. This weight
translates into an average weight penalty of 87 gallons of fuel per
airplane per year. The sum of these cost components multiplied by the
number of commuter airplanes over the next 15 years will total $5.08
million ($3.73 million, present value).
Sections 121.593-595: Dispatching authority for domestic and
flag air carriers; 121.107: Dispatch centers; 121.533-535:
Responsibility for operational control; 121.683: Crewmember and
dispatcher record; 121.687: Dispatch release; and other sections that
assign specific duties to dispatchers. The rule will require that
flights in scheduled commuter operations with 10-to-30 seat airplanes
be authorized by a dispatcher. Dispatchers currently are not required
under part 135. The FAA assumes that the majority of operators
currently certificated only under part 135 do not employ fully
qualified dispatchers. These operators primarily employ full-time
flight locators . The FAA further assumes that operators conducting
both parts 121 and 135 operations currently employ half as many
qualified dispatchers as they will need to dispatch all of their
flights.
The number of dispatchers was primarily calculated using
information provided by Airline Dispatchers Federation (ADF) and
industry sources. The ADF estimated that an air carrier with 30
airplanes will need eight or nine dispatchers to staff a 24-hour
operation. The FAA used a ratio of eight dispatchers to 30 airplanes
of 10 or more passenger seats for each part 135 commuter air carrier.
The total number of required dispatchers was computed by multiplying
the number of airplanes with 10 or more passenger seats operated by
each air carrier by the ratio 8 to 30. However, to take into account
that an 8-hour day might not cover all of an air carrier's daily
flights, as well as vacation and sick leave, the FAA assumes that each
air carrier will need at least two dispatchers. In 1996, 307
dispatchers will be needed to meet the requirements of this rule. In
1997, the number of dispatchers will be 318 and will grow to 353 by
2010.
Unlike in regulatory evaluation for the proposed rule, the cost
of compliance for the final rule is based primarily on the median
annual salary differential between flight locators and dispatchers.
The FAA estimated the median annual salary of a part 135 dispatcher on
the hourly wage of $9.10 reported by the ADF. The FAA computed an
annual median salary of $23,849 for a dispatcher by multiplying the
ADF's hourly wage rate estimate of $9.10 times a fringe benefits
factor of 1.26 (or 26 percent) and full-time yearly hours of 2,080 (52
wks. x 40 hrs.). Similarly, the median annual salary of a flight
locator was estimated to be $19,656 ($7.50 x 1.26 x 2,080). The
annual median salary differential was estimated to be $4,193 ($23,849
less $19,656).
Based primarily on information received from FAA technical
personnel and industry (operators and ADF's comments on the NPRM),
about 67 percent of the required flight dispatchers will come from
existing part 135 flight locators and approximately 33 percent of the
required dispatchers will be hired from outside by operators. Some of
these new hires will be supervisors/trainers. According to several
commuter operators contacted recently, they will have to hire
dispatchers from outside of their company in order for them to meet
the proposed dispatcher requirements. The decision to hire
dispatchers from the outside is based primarily on: (1) the need for
additional supervisory personnel because of the projected number of
inexperienced dispatchers to be hired under part 121 and (2) all of
their existing personnel (flight locators and to some flight
followers) cannot be trained at once without seriously disrupting
daily operations. Thus, of all the new dispatchers projected to be
hired over the next 15 years, about 67 percent will be from existing
personnel (upgraded from flight locators and some flight followers)
with the affected commuter operators and 33 percent from the outside
(or non-upgraded employees).
Training costs include 40 hours of initial training, 10 hours of
recurrent training, and 5 hours of operating familiarization for
dispatchers who authorize turbopropeller flights (as required by
sections 121.422(c)(1)(ii), 121.427(c)(4)(ii), and 121.463(a)(2)).
Air carriers are assumed to incur the cost of dispatchers' salaries
during training. In addition to salary costs, the FAA assumes that
the air carrier will incur $1,000 in costs for initial training for
each dispatcher and $500 in costs for recurrent training for each
dispatcher. The FAA estimates that each carrier will incur $1,000 in
administrative costs for each dispatcher hired. The FAA recognizes
that during the initial and follow-up training for new dispatchers,
operators may incur additional costs in the form of reduced
operational efficiency, though to what extent is unknown. However, in
view of all available information, the FAA has no indication that such
costs would be significant.
Total personnel-related costs were calculated by adding the
salary, training, administrative costs, and multiplying by the number
of new dispatchers required. The FAA estimates that the dispatcher
requirement will cost $42.86 million ($25.9 million, present value)
over the next 15 years. Approximately $25.66 million ($15.49 million,
present value) will be borne by operators of 10-to-19-seat airplanes,
and the remaining $17.20 million ($10.38 million, present value) will
be borne by operators of 20-to-30-seat airplanes.
According to the ADF, most part 135 operators already have
facilities and communications equipment that satisfy the dispatch
requirements under part 121. Accordingly, the FAA has not included
estimates of additional costs attributable to facilities and
equipment. The FAA acknowledges that this is a reasonable assessment
since all commuter operators exercise some degree of operational
control with the use of either flight locating or flight following.
The provision of either one of these services requires communication
facilities and associated equipment.
Section 121.383: Age-60 Requirement. This section will prohibit
operators of airplanes in scheduled service with 10-to-30 passenger
seats from using people over the age of 60 as pilots for that
service. Currently there is no age restriction for pilots in part 135
operations. Based on data provided by the Air Line Pilots Association
(ALPA), the FAA estimates that only about 0.55 percent of part 135
commuter pilots are currently over the age of 60. The FAA estimates
that about 45 pilots will be affected if the requirement takes effect
in the year 1999. The FAA also estimates, based on ALPA data, that
0.32 percent of current part 135 pilots would reach age 60 in
subsequent years and thus about 27 pilots would need to be replaced
each year from 1999 on.
The FAA is unable to quantify the costs to operators or to
affected pilots. The nature and magnitude of these costs depend upon
the alternatives available to each party, which the FAA has been
unable to identify in sufficient detail to estimate costs. The FAA
believes that the four-year phase-in of this requirement will help to
minimize any potential disruptions the rule may cause and that the
resulting cost are not likely to be substantial. The FAA also
believes that the age 60 requirement is essential to achieve the "one
level of safety" goal established by the Secretary of Transportation
and that any cost of this requirement is justified by its
benefits.
2. Cabin Safety
This section of the regulatory evaluation examines the costs of
the changes with regard to cabin safety. Over the next 15 years,
costs for cabin safety items will total $11.57 million ($8.20 million,
present value). The cost items, by section, are provided below.
Sections 121.133, 121.135, and 121.137 - Flight Attendant Manual.
These sections will require all flight attendants to have an
operations manual. There is no such requirement for flight attendants
currently working for part 135 operators. This requirement
necessitates preparing such manuals for each flight attendant . Since
each flight attendant is required to have a manual, the number of
manuals equals the number of flight attendants. The 15-year cost for
the preparation, copying, and binding of these manuals is $61,600
($47,200, present value). The costs involve the preparation of the
manual contents and the copying and binding of the finished manual.
FAA analysis projects 277 20-to-30-seat airplanes in 20 air carriers
in 1996, increasing to 556 such airplanes in 39 air carriers by 2010.
Each air carrier will employ a flight attendant supervisor (paid at
$24.19 per hour) and a clerical worker (paid at $11.00 per hour) to
spend 40 hours each preparing a manual; hence, it will cost each air
carrier about $1,400 to prepare a manual. The manual is an average of
100 pages long; at $.10 to copy each page, and $2 to bind each manual,
total copying and binding costs is expected to total $12 for each
manual. Existing air carriers with new airplanes in the future will
have to reproduce a new manual for each airplane. All new air
carriers with 20-to-30-seat airplanes, which will total 19 by 2010,
will also have to prepare and publish flight attendant manuals.
Section 121.285 and 121.589 - Carry-On Baggage. These sections
will require affected operators to stow carry-on baggage and develop a
program to screen carry-on baggage. Screening, in this context,
refers to a visual check to ensure that the carry-on baggage is the
proper size and could be stored properly on the airplane; it does not
refer to security screening. Currently, part 135 airplanes adhere to
substantive baggage stowage procedures, but part 121.589 requires that
a crewmember verify that all baggage is properly secured before all
doors are closed and the airplane leaves the gate. Some air carriers
argue that this requirement will increase time at the gate, reduce
airplane utilization time, and thus result in lower revenue to air
carriers. The FAA contends that there will be no costs for this
procedure due to the minimal time necessary to properly secure carry-
on baggage and the fact that airplanes experience routine delays
anyway while waiting for clearance on the runway. The cost of the
rule will involve the preparation of an addendum to the Operations
Specifications in which each carrier will outline its procedures for a
baggage program.
The 15-year cost for operators of 10-to-30-seat airplanes to
prepare a carry-on baggage addendum to the Operations Specifications
will be $20,600 ($18,500, present value). This cost is divided
between 10-to-19-seat airplanes ($12,300) and 20-to-30-seat airplanes
($8,300). For each air carrier, this process involves two people--a
flight attendant supervisor for 20-to-30-seat airplanes or a
crewmember supervisor for 10-to-19-seat airplanes (both paid at $24.19
per hour) and a clerical person ($11.00 per hour) to do the paperwork
(average of 8 hours each) and to develop the addendum. Each carrier
will bear the cost of developing the addendum for the airplanes in its
fleet; it costs each air carrier about $280 for this work. The number
of air carriers is projected to rise from 63 in 1996 to 73 in 2010.
Finally, the actual baggage screening function will not impose costs
because part 135 crewmembers are already required to screen baggage in
order to secure it.
Section 121.291(d) - Ditching Demonstration. This section
requires new air carriers to conduct a ditching demonstration for each
airplane type it proposes to operate in extended overwater operations.
There is no similar requirement in part 135.
In the NPRM, the FAA used an estimate that 25 percent of all 10-
to-30-seat airplanes conduct extended overwater flights. Upon further
examination, this assumption turned out to be too high. Based on a
recent survey, the FAA has ascertained that less than 3 percent of all
10-to-19 seat airplanes (14 airplanes) and no 20-to-30-seat airplanes
currently conduct overwater flights. The percentages were projected
into the future. Based on this paucity of airplanes certificated for
extended overwater flights, the FAA tried to estimate the costs for
part 135 operators to conduct ditching evacuation demonstrations for
new 10-to-30-seat airplanes using two different methods. In both
cases, as will be shown below, the 15-year cost for part 135 operators
to conduct ditching evacuation demonstrations for new 10-to-30-seat
airplanes will be zero.
The first method involves taking an aggregate approach and
examining the entire fleet using the same methodology used in the
NPRM. This involves a demonstration which requires crewmembers to
perform ditching evacuation drills and safety procedures including the
deployment of one raft. For both 10-to-19- and 20-to-30-seat
airplanes the annual incremental change in the number of airplanes
times the applicable percentage of airplanes conducting extended
overwater flights was zero for every year between 1996 and 2010.
Accordingly, using this methodology, the cost will be zero.
The second method involved individually examining those air
carriers that this provision affects. The FAA was able to identify
those operators that conduct extended overwater operations with 10-to-
30- seat airplanes. In every case, the airplanes involved were 10-to-
19-seat types. Since the FAA is projecting only a modest increase in
such airplanes through 1997 and an overall decline in 10-to-19-seat
airplanes after 1997, it is highly unlikely that these operators will
seek to increase their fleet size with a new airplane make and model
currently not in its fleet that will require a ditching evacuation
demonstration. Therefore, there will be no cost.
Both the operator and the FAA incur labor costs to complete a
ditching demonstration. The actual demonstration takes about one hour
to complete and requires two sets of crews. If an operator should need
to conduct a ditching demonstration, the FAA estimates the cost for a
10-to-19 seat airplane at $1,025 per demonstration.
Section 121.309 - Medical Kits. This section will require
affected commuters to have one medical kit on each 20-to-30-seat
airplane for those operators. The FAA has decided to except 10-to-19-
seat airplanes from this requirement due to their smaller size and the
unlikelihood that a medical professional will be on board or a flight
attendant to administer the use of the kit.
The FAA estimates that the 15-year cost for providing medical
kits on the 20-to-30-seat airplanes operating under part 135 will be
$1.11 million ($674,300, present value). The costs of providing
medical kits are composed of acquisition ($200 each) with a 60 percent
spares reserve, installation, annual replacement (5 percent), annual
maintenance ($20 per kit), a weight penalty (7 pounds per unit),
physician consultation expenses ($500 per consultation), engineering
and administrative costs, and record keeping (1 hour each time a kit
is used at $20.58 per hour).
Acquisition, replacement, and maintenance costs for kits are a
function of the number of airplanes. In the first year of the rule,
the bulk of the medical kits will be purchased; 443 kits will be
needed for 277 airplanes, which takes into account the 60 percent
spares reserve. Additional kits are purchased in the future as the
airplane fleet increases to 556 airplanes in 2010, and to take into
account a 5 percent annual replacement rate. Maintenance costs are
calculated based on the number of units that were in use the previous
year. The annual maintenance cost equals $8,860 ($20 per kit x 443
kits) for all kits (active and spares) in 1997.
Historical data on part 121 airplanes shows one medical emergency
for every 124,647 passenger enplanements. The FAA assumes that the
medical emergency rate is the same on 20-to-30-seat airplanes since
all air carriers serve the same base population. The FAA estimates 70
medical emergencies in 1996 and 77 medical emergencies in 1997. A
physician consultation will be required twice a year per air carrier
to obtain certain contents, such as prescription drugs, for the
medical kits at a cost of $500 per consultation. In 1996, for the 20
projected air carriers, total consultations will total $20,000.
Record keeping will be needed per medical emergency; it will take one
hour to write up each emergency. At $20.58 per hour, in 1996, record
keeping costs will total $1,433.
In the NPRM, the FAA assumed that the medical kits could be
secured and installed with industrial strength Velcro tape. The FAA
still believes that securing these kits with Velcro (a low cost
option, at $20 per kit plus two hours for a Maintenance worker at
$20.58 per hour) will meet the 18-G requirement. Also, airplane
manufacturers will need to spend $1,500 for each make and model to
account for the design and administrative costs involved with securing
these kits and to comply with FAA regulations; with 8 makes and
models, this totals $12,000. This cost will be spread across the
entire population of each make and model.
Section 121.309 - First Aid Kit. This section will require 10-
to-19-seat airplanes to have at least one first aid kit. Currently,
part 135 requires all airplanes with greater than 19 seats to have one
kit, but there is no requirement for airplanes with 10 to 19 seats to
have a kit.
The 15-year cost of this requirement will be $371,400 ($267,400,
present value). The costs of providing first aid kits are composed of
acquisition ($70 each based on industry survey) with a 35 percent
spares reserve, installation, annual replacement rate (5 percent of
total), a weight penalty (4 pounds), engineering and administrative
costs, and annual maintenance ($7 per kit). Costs are a function of
the 10-to-19-seat airplane count, which ranges from 673 in 1996 to 543
in 2010.
Section 121.309 - Halon Fire Extinguisher. This section will
require commuter operators of 10-to-30-seat airplanes to replace
existing or install fire extinguishers (2 per 10-to-30-seat airplane
(one in cabin and one in cockpit) with halon fire extinguishers. For
this analysis, the FAA assumes that no part 135 airplanes are
currently equipped with halon fire extinguishers. Since part 135
airplanes are already equipped with fire extinguishers prior to
complying with part 121 standards, there will be no additional
maintenance costs or weight penalties for this equipment.
The 15-year cost of this requirement is $442,900 ($346,500,
present value). The cost of this provision will involve purchasing
the requisite number of halon fire extinguishers per airplane in 1996,
a 13 percent spares reserve ratio, and a 5 percent recharge rate per
year after 1996, and up-front administrative costs.
Section 121.549 - Flashlight. This section will require commuter
operators of 20-to-30-seat airplanes to acquire two additional
portable flashlights for use by the flight attendant and the copilot.
This section will also require 10-to-19-seat airplanes to acquire one
additional portable flashlight for use by the copilot. The analysis
assumes that no part 135 airplanes with 10-to-30 seats are equipped
with portable flashlights. Based on a recent survey, a portable
flashlight costs $5 and 2 D alkaline battery cells cost $2.25.
The 15-year cost of this requirement will be $134,400 ($82,000,
present value) broken out between $56,500 for 10-to-19-seat airplanes
and $77,900 for 20-to-30-seat airplanes. The cost of this provision
will involve purchasing the requisite number of flashlights for
airplanes in 1996 and for airplanes added to the fleet through 2010,
10 percent spares, 5 percent replacement rate for every year after
1996, and a weight penalty (1 pound per flashlight). The analysis
also assumes that all batteries will be replaced each year.
Section 121.313 - Cockpit Key. This section will require all
required crewmembers of affected operators to have access to a key for
the locking cockpit door. This lock and key requirement will provide
additional security for equipment and instruments in the cockpit.
This requirement only applies to 20-to-30-seat airplanes. Airplanes
with 10 to 19 seats are not required to have locking cockpit doors and
will not be affected by this requirement. The rule will require 20-
to-30-seat airplanes to retrofit the cockpit door with a lock and copy
a key ($1 per key). If an airplane does not have a lock, then the
operators will be required to install one.
The 15-year cost is $102,900 ($78,500, present value). The
highest yearly cost ($51,245) will occur in 1996 when all of the 277
20-to-30-seat airplanes will have their cockpit doors retrofitted with
locks and keys. Subsequent yearly costs are based on the annual
increase in airplanes. Hence, in 1997, with 30 new airplanes, costs
total $5,550 ($90 for new keys + $5,460 for door retrofit costs).
Section 121.333 - Portable Oxygen. This section will require
airplanes that are certificated to fly above 25,000 feet to have a
portable oxygen unit for each flight attendant. This requirement will
only apply to commuter airplanes having more than 19 seats. This is
because currently no 10-to-19-seat airplanes in commuter operations
are certificated to fly above 25,000 feet.; also, 10-to-19-seat
airplanes are not required to have flight attendants on board. Of the
249 20-to-30 seat airplanes in 1995, 146 fly over 25,000 feet.
The 15-year cost to equip all affected 20-to-30-seat part 135
airplanes will be $472,900 ($299,200, present value). Costs primarily
are composed of $400 per oxygen unit and weight penalty.
Parts 121.333, 121.571, 121.573 - Passenger Information. New
cards will have to be prepared for 20-to-30-seat airplanes. Industry
experience has shown that each card has a lifetime of approximately 3
years. Thus, every year, only one-third of the cards will normally be
replaced.
The 15-year cost for the preparation of these cards will be
$125,000 ($72,300, present value). Each air carrier having 20-to-30
seat airplanes (20 in 1996 growing to 39 in 2010) will incur
preparation costs and will then need to prepare enough passenger
information cards for all airplanes in its fleet. Preparation costs
involve two people two hours each: a flight attendant supervisor
($24.19 per hour) and a paperwork layout specialist ($20.58 per hour).
There will be no training costs, as the flight attendant could read
the new passenger information material directly from the manual.
Based on an industry survey, the FAA assumes that it costs $1 to print
and distribute each information card; a total of 5,353 cards will need
to be produced in 1996.
Section 121.337 - Protective Breathing Equipment (PBE) for the
Cabin. This section requires a fire fighting PBE unit in the cabin on
all 20-to-30-seat airplanes. The 15-year costs to supply all 20-to-
30-seat airplanes total $936,800 ($595,600, present value). Costs are
composed of PBE acquisition ($400 per unit) with a 40 percent spares
reserve ratio, installation (two hours of mechanic labor), engineering
and administration costs, a 5 percent replacement rate per year,
annual maintenance ($40 per unit performed annually), and a weight
penalty (5 pounds per unit, one unit per airplane).
Section 121.339 - Life Rafts. This section requires all affected
commuters conducting extended overwater operations to carry an
additional life raft. The 15-year cost to equip the affected
airplanes with an additional life raft will be $265,100 ($183,800,
present value).
Section 121.340 - Flotation Cushions and Life Vests. This
section requires operators to provide a flotation cushion or life vest
for each passenger seat on each airplane. In 1995, 10-to-19-seat
airplanes average 18.66 seats per airplane and 20-to-30-seat airplanes
average 28.99 seats per airplane. In this analysis, the FAA assumes
that these ratios remain constant into the future.
The 15-year cost for providing flotation cushions or life vests
on 10-to-30-seat airplanes will be $7.50 million ($5.53 million,
present value) composed of $5.03 million for 10-to-19-seat airplanes
and $2.47 million for 20-to-30-seat airplanes. The FAA assumes that
10-to-19-seat airplanes will not be able to install flotation cushions
and hence will obtain life vests. In addition, even though some
airplanes may have flotation cushions currently installed, the
analysis assumes that all operators of 20-to-30-seat airplanes will
replace existing seat cushions with flotation cushions. Data from
industry sources place the same cost and weight on both items: $50 and
2 pounds each. As the current seat cushions weigh the same amount,
there will not be a weight penalty on the 20-to-30-seat airplanes.
The total number of life vests and cushions per year is derived by
multiplying the number of seats per airplane times the projected
airplane count for the 10-to-19-seat and 20-to-30-seat airplane
categories.
Section 121.391 - Flight Attendants At The Gate. This section
requires a flight attendant or other authorized person to stay on the
airplane during intermediate stops while passengers are on board. The
final rule adopts new section 121.393(a) for 10-to-19 seat airplanes
to allow crewmembers (not necessarily a flight attendant) to stay near
the airplane.
The only costs imposed on operators, as a result of this rule
will be the training and documentation of authorized substitute
personnel. Based on information received from FAA technical
personnel, there will be no additional crewmember personnel costs for
flight attendants or other crewmembers at the gate requirement due to
the delay. In the NPRM, the FAA attributed additional compensation
costs to operators in the event of a flight delay due to additional
time spent by personnel to monitor passengers. FAA technical
personnel state that delay costs are a result of the air carrier
operations system and not the final rule. The air carrier operations
system currently compensates any additional personnel costs due to
delays.
Individual operators can comply by having a flight crewmember
near the airplane (no cost) or by following one of three scenarios.
Under the first scenario, operators could require all passengers to
deplane during intermediate stops at the gate. Because deplaning will
cause inconvenience to the passengers, air carriers will not use this
option all the time. The FAA acknowledges that the deplanement of
passengers under this scenario may impose some cost on passengers in
the form of inconvenience; however, the FAA is unable to quantify this
cost. Under the second scenario, operators can require either a
flight attendant or pilot to remain on the airplane at intermediate
stops as long as passengers are on board. Generally, the 20-to-30
seat airplanes will use a flight attendant, while 10-to-19 seat
airplanes will use a pilot. Under the third scenario, operators can
allow a trained, authorized person to stand in for the flight
attendant or pilot when coverage is needed due to flight delay. Not
all air carriers have authorized personnel at all intermediate stops;
this will put a cap on the amount of time that this option will be
used. This third scenario will require 24 hours of training for each
authorized person ($16.48 per hour) and documentation of personnel
records by a clerical worker (paid at $11.00 per hour for one hour of
work per record). In the NPRM, the FAA assumed that non-Alaska
operators would use the third scenario 20 percent of the time, and the
FAA is keeping this percentage. Based on industry sources, the FAA
does not believe it is very likely that air carriers in Alaska will
have trained substitute personnel waiting at the intermediate stops to
be used in the event that the airplane is delayed; thus, the third
scenario will not be used. Currently, 88.4 percent of all 20-to-30
seat airplanes and 91.9 percent of all 10-to-19 airplanes fly in areas
other than Alaska, and this analysis projects these percentages into
the future.
The 15-year cost for training and documentation of authorized
personnel in areas other than Alaska on 10-to-30-seat airplanes will
be $20,500 (present value, $12,700). This cost is the summation of
the 10-to-19-seat airplane cost and the 20-to-30-seat airplane
category cost. The cost for the 10-to-19-seat category is derived by
multiplying the total 15-year cost for training and documentation
($67,500) by the expected probability of occurrence for the third
scenario (20%) and then multiplying by the percentage of the fleet not
operating in Alaska (91.9%). The cost for the 20-to-30-seat category
is derived by multiplying the total 15-year cost for training and
documentation ($45,500) by the expected probability of occurrence for
the third scenario (20%) and then multiplying by the percentage of the
fleet not operating in Alaska (88.4%).
3. Certification
This section examines the costs of the rule with regards to
airplane certification and performance. The total 15-year costs for
certification are $11.49 million with a present value of
$6.58 million.
Part 121 Subpart I: Performance Criteria. In the NPRM, the FAA
had stated its belief that all of the commuter airplanes would be able
to meet the part 121 performance standards. Consequently, the only
compliance cost would be a manufacturer's one-time recertification
cost of $5,000 per airplane. However, after additional FAA analysis
and input from several commenters, the FAA realizes that some of these
airplanes are not able to meet the part 121 performance standards.
Further, there will be an enormous economic impact if the proposed
rule were to be adopted for all commuter airplanes.
Airplanes operating under part 121 face stricter performance
requirements than those faced by airplanes operating under part 135.
Part 135 performance requirements allow greater gross take-off weights
for a given runway length and, conversely, allow a shorter runway for
a given gross take-off weight than are allowed under part 121 for high
altitude and/or high temperature conditions. However, as airplane
models' performance capabilities differ, a change in performance
requirements has a different effect across airplane models.
For example, the SFAR 41 and predecessor category commuter
airplane performance capabilities are such that compliance with the
part 121 performance requirements would require them to offload so
many passengers or cargo as to become unprofitable to operate in
scheduled passenger service. Due to the potential substantial
economic loss and the potential safety reduction that would result
when many of these airplane operators substitute airplanes with fewer
than 10 passenger seats for these airplanes, the FAA decides that they
will have 15 years to meet the part 121 performance requirements. By
allowing these airplanes to remain in scheduled passenger service,
their operators will have a sufficient amount of time to profitably
exploit these airplanes, to plan their replacement, and to reduce the
potential impact on the resale price in other uses of these airplanes.
In addition, this 15-year period will provide an opportunity for
manufacturers to develop future airplanes that may be better
substitutes than the current available substitute airplane models.
Further, this 15-year allowance will reduce the tendency for many of
these operators to substitute smaller airplanes with less than 10
seats. These airplanes have an accident rate 14 times that of 10-to-
15-seat commuter airplanes. Nevertheless, some of these airplanes
will be phased out of scheduled passenger service before they would
have been phased out if there were no commuter rule.
Currently, there are 112 pre-SFAR 41 commuter airplanes in part
135 scheduled service. As the FAA was unable to directly obtain the
ages of these airplanes, the FAA used a data source to construct an
approximate age-profile distribution for each of these airplane models
and then assigned the appropriate number of airplanes to individual
years based on those distributions. The FAA determines that, due to
the increasing maintenance costs as airplanes age, the economic
lifespan of these airplanes in scheduled passenger service is 30 years
for the Twin Otter and 25 years for all of the other models. On that
basis, the FAA projects that, in the absence of the commuter rule, 4
of these airplanes would still be in scheduled passenger service after
15 years.
Finally, these airplanes' market values will fall over time
because the airplane ages because it takes an increasing level of
expenditure on maintenance and replacement to keep the airplane
airworthy for scheduled passenger service. Currently, the average
market values for the pre-SFAR 41C airplanes are $500,000 for the Twin
Otter and the EMB-110; $350,000 for the Beech 99; and $250,000 for the
SA-226 and the Beech 200.
In light of those factors as they relate to the pre-SFAR 41
airplanes, the FAA determines that a one-year compliance date would
generate a 60 percent loss in these airplanes' average market values
and this percentage loss is reduced by 2.5 percentage points per year
for four years (e.g., the second year would have a percentage loss of
57.5 percent, the third year will be 55 percent, etc.) and by 5
percentage points per year thereafter. Thus, the percentage loss of
the market value of these airplanes in 15 years will be 5 percent of
that airplane's market value. On that basis, the FAA determines that
in 15 years these airplanes will incur a reduction in market value of
$56,000 ($20,000, present value).
SFAR 41 airplane models would also be affected by the part 121
performance criteria because these criteria are stricter than those in
part 135. However, the part 121 performance requirements are very
similar to the performance requirements in the ICAO Annex 8 flight
operating requirements - the flight operating requirements under which
these airplanes must fly in European scheduled service. As all of
these airplanes are used in European scheduled service, they can
comply with the part 121 performance requirements, but at a potential
payload loss. There are some combinations of temperature, airport
elevation (pressure altitude) and airport runway length that would
require SFAR 41C airplanes either: (1) to unload one, two, or even
three passengers from the currently permitted part 135 gross take-off
weight; or (2) to operate out of airports with longer runway lengths
in order to meet the ICAO Annex 8 performance requirements. For
example, the minimum runway length for a Beech 1900-C airplane with a
16,600 lb. maximum takeoff weight (its maximum certificated load) from
a pressure altitude of 1,000 ft. (a typical Midwestern airport) at 13
degrees Centigrade (standard day) would be 4,700 ft. under part 135
but would be 5,900 ft. under ICAO Annex 8. From another perspective,
in order for a Beech 1900-C to operate under ICAO Annex 8 from an
airport with a 4,700 ft. runway, the maximum allowable takeoff weight
would be 14,900 lbs. in comparison to the 16,600 lbs. allowable under
part 135. One commenter reports that these operating limitations may
affect these SFAR 41 airplanes at as many as 65 airports at some point
during the year. Nevertheless, for most of the temperatures, airport
elevations (pressure altitude), runway lengths, and actual takeoff
loads faced by these airplanes, the part 121 performance requirements,
ICAO Annex 8 rules, and the part 135 performance requirements would
have the same limiting effect on these airplanes' operations.
As a result, the FAA will allow SFAR 41 and predecessor category
airplanes 15 years to comply with the part 121 performance
requirements. With a 15-year time horizon, operators will be able to
organize their schedules (for example, departing high temperature
airports earlier in the morning), their airplane/airport pairings,
etc. such that the costs in 15 years will be minimal.
Finally, the commuter category airplanes have the performance
capability of meeting part 121 performance requirements. However, the
manufacturers will need to document these capabilities for the
approved flight manuals. This documentation will require about 20
hours of flight time at a per hour cost of $1,500 (includes instrument
calibration, engineering analysis, ground personnel review, etc.) for
a total cost of $30,000 per type certificate. In addition, there will
be a one-time manufacturer's cost of $5,000 per type certificate to
obtain FAA approval for this flight manual revision. Thus, the one-
time first-year cost for commuter category airplanes will be $105,000.
Section 121.161(a) - Airplane Limitations: Type of Route.
Section 121.161(a) requires that an adequate airport be within one
hour flying time at single engine cruising speed along all points of
the designated flight route. There is no similar requirement in part
135. This requirement is not expected to affect scheduled operators
in the lower 48 states. In the Regulatory Evaluation for the NPRM,
the FAA had estimated that 150 round-trip flights in Alaska would be
affected annually, with reroutings adding one-half hour to each round-
trip, for a total of 75 hours increased flying time. Applying an
hourly variable operating cost for Alaskan air carrier commuter
category airplanes of $500, the FAA had estimated that annual
operating costs would increase $37,500. The 15-year total costs would
be $375,000 ($265,000, present value). As no comments were made on
the estimated costs of this provision, the FAA affirms its previous
calculations. However, carrying them out for 15 years generates a
cost of $570,000 ($346,000, present value).
Section 121.191 Engine Out En Route Net Flight Data. Although
the FAA had not estimated a compliance cost for this provision in the
Regulatory Evaluation for the NPRM, three commenters report that these
data do not currently exist for 10-to-19-seat airplane models and
there is a cost to developing these data. Based on those comments,
the FAA determines that manufacturers' will incur a one-time first-
year cost of $1,900 per type certificated model, resulting in a one-
time first-year compliance cost of $24,700 for the 13 type-
certificated airplanes.
Section 121.305(j) - Third Attitude Indicator. This section
requires that a third attitude indicator be retrofitted on all
affected airplanes (manufactured before March, 1997) within 15 years
of the rule's effective date. Any affected airplane manufactured
after March, 1997, must have the device. This device is not required
under part 135 or part 23.
In the Regulatory Evaluation for the NPRM, the FAA had estimated
that it would cost $16,000 for a retrofit that would add about 5 lbs.
of weight while the annual maintenance, inspection, and replacement
costs would be about 10 percent of the retrofitting costs. The FAA
had also estimated it would cost $8,000 for an installation on a
newly-manufactured airplane. The FAA had also determined that a third
attitude indicator is standard equipment on the Beech 1900-D. The
proposed rule had a 1-year compliance date. On that basis, the FAA
had estimated that the 10-year cost would be $19.2 million
($18.4 million, present value).
The FAA estimates that the retrofitting cost will be $16,000 and
will add 15 lbs. of weight to the airplane. To eliminate the
potential for down time, operators will retrofit this device during
one of the airplane's 200-hour scheduled checks. On that basis, the
FAA expects that this device will be installed in half of the 58 SFAR
41C airplanes in scheduled passenger service during the 13th year and
in the remaining half during the 14th year. On that basis, the FAA
determines that the 15-year compliance cost will be $319,000
($116,000, present value).
Section 121.308 - Lavatory Fire Protection . This section
requires each lavatory to have a smoke detector system connected to
either: (1) a warning light in the flight deck; or (2) a warning
light or an aural warning in the passenger cabin that can be readily
detected by a flight attendant. Section 121.308(b) requires each
lavatory to have a built-in automatic fire extinguisher in each of its
disposal receptacles. These requirements are also found in section
25.854 but only for airplanes type certificated after 1991. There are
no such provisions in part 135 or part 23.
On that basis, the FAA estimates that for the 20-to-30-seat
airplanes, there will be a first-year compliance cost of $78,000 and
an annual cost in each succeeding year of $45,000 to $58,000. The 15-
year total cost will be $858,000 ($519,000, present value). In the
Regulatory Evaluation for the NPRM, the FAA had estimated a 10-year
total cost of $263,000 ($206,000, present value).
Section 121.310(l) Flight Attendant Flashlight Holder. This
section requires an emergency flashlight holder be available to the
flight attendant. A flashlight holder is needed to keep the
flashlight available and within reach of the flight attendant seat.
This provision requires retrofitting within one year of the effective
date of the rule. The FAA had not estimated any compliance cost for
the flashlight holder in the Regulatory Evaluation for the NPRM.
However, after additional analysis, the FAA found that there will be a
per airplane cost of $50 for a retrofit and $25 for an installation on
a newly-manufactured airplane. It will increase the airplane's weight
by 2 lbs. In addition, there will be a one-time engineering design,
development, and FAA approval cost of $250 for each type certificated
model. As there are no flight attendants in 10-to-19-seat airplanes,
no flight attendant flashlight will be required and there will be no
compliance cost for those airplanes. For 20-to-30-seat airplanes, the
first-year cost will be $42,000 and the annual cost thereafter will be
between $2,000 and $6,000. The 15-year total cost will be $88,000
($68,000, present value).
Section 121.312(b) - Passenger Seat Cushion Fire Blocking
Materials. This section requires that 10-to-30-seat airplane seat
cushions comply with the fire protection standards in Section
25.853(b) within 15 years. The proposed rule had allowed a two-year
compliance period with an option for two additional years if there
were demonstrated compliance difficulties.
In the Regulatory Evaluation for the NPRM, the FAA had assumed
that this provision would affect only the 10-to-19-seat airplanes
because the 20-to-30-seat airplanes are type-certificated under part
25, which requires fire blocked seats for airplanes type-certificated
after 1991. As those airplanes are used in both part 121 and part 135
service, the FAA believed that they have already been retrofitted and
are being manufactured with fire blocking cushions. As there were no
comments to the contrary, the FAA has retained that assumption.
In the Regulatory Evaluation for the NPRM for 10-to-19-seat
airplanes, the FAA had estimated that it would cost $20,000 for a
retrofit, $5,000 for installation on newly-manufactured airplanes, and
fire blocking would add 2 lbs. per seat cushion. In addition, the FAA
had believed that the incremental compliance costs from replacing a
fire-blocked cushion with another fire-blocked cushion (due to normal
wear and tear) would be only due to the difference in the costs of the
fire-blocking material, which was estimated to be $5,000. There would
be no incremental labor costs because it would take as long to replace
a fire-blocked cushion with a fire-blocked cushion as it would take to
replace a non-fire-blocked cushion with a non-fire-blocked cushion.
The FAA had also estimated that 10 percent of the 10-to-19-seat
airplanes have fire blocked seats because they are offered as an
option on currently manufactured models. Further, the FAA had
estimated that it would cost $50,000 for engineering, developing,
testing, and documenting the results for FAA approval for those
airplanes no longer in production. Finally, allowing operators four
years to comply means that they can schedule this retrofitting to fit
into the normal cushion reupholstery schedule. Consequently, the
existing cushions would not have been prematurely replaced before they
would have been replaced due to normal wear and tear.
Based on information received from industry, the FAA estimates
that the average retrofitting cost (weighted by the number of each
type of airplane model in the existing fleet) will be $21,500 and the
average new-installation cost (weighted by the number of new airplanes
projected to be sold by each manufacturer) will be $4,875. The
average weight of 38 lbs. (for a 19 seat airplane) results in a yearly
per airplane fuel cost of $105. In addition, an industry source
reports that airplane operators normally reupholster their seat
cushions every four years. Further, the FAA estimates that there will
be no engineering costs for current commuter category airplanes
because all of the manufacturers offer the fire blocked seat cushions
as an option and the engineering and FAA-approval costs have already
been incurred. However, the FAA revises its engineering costs for
each out-of-production airplane model from $10,000 to $5,000 because
there are a sufficient number of fabrics that have been approved so
that each manufacturer will not have to completely reengineer its
seats.
In response to the increase in time (from 4 years to 15 years) to
comply with the rule, the FAA assumes that no airplane that will be
withdrawn from scheduled-passenger service during those 15 years will
be retrofitted with fire-blocking-seat-cushion materials. Further, an
operator of an existing airplane that will be employed in scheduled
passenger service beyond the 15-year period will wait until the last
moment (13 to 14 years) before performing the retrofit. Based on
industry statements, commuter-category airplanes are being built with
the expectation of a 25-to-30-year lifespan. Also based on industry
statements, the initial cost (plus one or two cushion reupholsteries)
is less than or about the same as a retrofit 10 or fewer years in the
future. The FAA anticipates that beginning in 5 years, operators will
only purchase new airplanes that have factory-installed-fire-blocked
seat cushions. Over time, the compliance costs will increase because
a greater number of these airplanes will carry the extra 38 lbs. of
weight. On that basis, the annual compliance costs will begin at
$150,000 in the sixth year after the effective date and increase to
$1.25 million by the 13th year. The 15-year total will be $5.88
million ($2.55 million, present value).
Section 121.317(b) - Fasten Seat Belt Lighted Sign . This
section requires that there be a lighted "fasten seat belt" sign that
can be controlled by the pilot. In the Regulatory Evaluation of the
Proposed Rule, the FAA had not estimated any compliance costs because
it was believed that affected airplanes had these lighted signs.
Based primarily on information received from industry, the FAA
estimates that the total 15-year cost for the 2 lb. device will be
$522,000 ($269,000, present value).
Section 121.342 - Pitot Heat Indication System. This section
requires all affected airplanes, within 4 years of the rule's
effective date, to have a pitot heat indication system that indicates
to the flight crew whether or not the pitot heating system is
operating. Section 23.1323 requires a pitot heat system for most
commuter category airplanes, but there are no requirements for a heat
indication system.
In the Regulatory Evaluation for the NPRM, the FAA estimated a
per airplane cost of $500 for a retrofit and $250 for installation on
a newly-manufactured airplane. The FAA did not estimate a weight
penalty or costs for inspection, maintenance, and repair, but it had
estimated a one-time manufacturer cost of $10,000 for initial
engineering design, testing, and documentation for FAA approval. On
that basis, the FAA had estimated that the compliance cost during each
of the first four years would be $280,000 and $10,000 per year
thereafter. The 10-year total costs were estimated to be $1.184
million or $993,000, present value.
After additional analysis, the FAA is persuaded that its initial
cost estimates need revision. Based on its analysis of the technology
required to install these devices, the FAA determines that there is a
per airplane cost of $4,000 for a retrofit and $2,000 for installation
in a newly-manufactured airplane. However, the number of airplanes
expected to be sold by the manufacturer who reported this device is
standard equipment is subtracted from the expected number of newly-
manufactured airplanes that will need to install this device. In
addition, the associated equipment and wiring will add 5 lbs. to the
airplane. Finally, there will be a $10,000 one-time cost to engineer,
design, test, and obtain FAA approval for the manufacturer of each
type certificate.
On that basis, the annual costs in each of the first 4 years will
be between $515,000 and $535,000 and the annual costs in each year
thereafter will be between $17,000 and $23,000. The 15-year total
costs will be $2.29 million ($1.87 million, present value).
121.349(c) Distance Measuring Equipment. This section requires
at least one approved distance measuring equipment (DME) unit within
15 months of the final rule publication date for operations under
VFR over routes not navigated by pilotage or for operations under IFR
or over-the-top. The FAA had estimated no compliance costs for this
provision and there were no comments on this provision. After
additional analysis, however, the FAA determines that some airplanes
are affected by this requirement.
Based on the 1994 AOPA Pilot General Aviation Aircraft Directory
and Avionics Directory and Buyer's Guide, the FAA estimates that the
average price of a 25 lb. DME for an airplane is $7,000 and it will
cost another $7,000 to retrofit for a total cost of $14,000. The FAA
General Aviation and Air Taxi Activity and Avionics Survey for 1993
reports that 3.1 percent of the turboprops in service (twenty-three
10-to-19-seat airplanes and ten 20-to-30-seat airplanes) do not have
this device but that all newly-manufactured airplanes will have this
device installed. On that basis, the FAA estimates that the first-
year-compliance cost is $434,000 ($294,000 for 10-to-19- and $140,000
for 20-to-30-seat airplanes) and the 15-year-compliance cost is
$452,000 of which $303,000 is for 10-to-19-seat airplanes and $149,000
is for 20-to-30-seat airplanes ($418,000, present value of which
$281,000 is for 10-to-19-seat airplanes and $137,000 is for 20-to-30-
seat airplanes).
4. MAINTENANCE
The FAA estimates that over the 15-year period, the total cost of
compliance for the relevant maintenance sections affected by the final
rule will amount to an estimated $18.18 million ($11.92 million,
present value). A discussion of the individual maintenance costs is
presented below.
Section 121.361 Applicability. The final rule requires all
affected commuter operators to have an airplane maintenance program
that is appropriate for part 121 operations. All part 135 commuters
currently operating under a part 135 continuous airworthiness
maintenance program (CAMP) will be required to revise and possibly
upgrade their programs in accordance with the new part 121 standards.
Currently, commuter operators of airplane type-certificated with a
passenger seating configuration of 10 seats or more operate under a
CAMP as specified in section 135.411(a)(2). Most differences among
the respective part 135 operators' CAMP's arise from the varying
complexity of the different airplanes, not solely from the type of
operation. Therefore, the only new requirement will be to revise and
possibly upgrade part 135 operators' existing CAMP's, not to develop
entirely new maintenance programs.
The FAA estimates the one-time total compliance cost of the
maintenance applicability section is $104,000. Of this total, $63,000
will be incurred by operators of 10-to-19-seat airplanes and $41,000
will be borne by operators of 20-to-30-seat airplanes. The FAA
assumes, based on information received from its technical personnel,
that an average of 80 hours will be required of each affected
operator's maintenance shop foreman to review an operators' CAMP to
ensure compliance with the final rule. Assuming a loaded hourly wage
of $20.58 for a maintenance foreman, the one-time cost estimate for
each operator will be approximately $1,650 (80 x $20.58).
Section 121.377 Maintenance And Preventive Maintenance Personnel
Duty Time Limitations. The final rule will require all commuter
operators to adhere to the part 121 limitation of time that
maintenance and preventive maintenance personnel can be required to
remain on duty. Section 121.377 requires maintenance personnel to be
relieved from duty for a period of at least 24 consecutive hours
during any 7 consecutive days, or the equivalent thereof within any
one calendar month. Maintenance and preventive maintenance personnel
employed by part 135 operators have no such duty time limitation.
The FAA maintained in the NPRM that simple adjustments in work
scheduling or duty requirements of maintenance personnel were on-going
costs of doing business which would not be affected by the commuter
rule. Furthermore, the FAA held that the existence of union work
rules, Department of Labor regulations and the generally accepted
notion of a "day of rest" would be sufficient to limit the amount of
time that part 135 maintenance and preventive maintenance personnel
remained on duty. The FAA, therefore, did not estimate any
incremental costs associated with this section, and treated it as one
not contributing to the total maintenance costs.
For the final rule, in considering the unique operating
environment of Alaska, the FAA has determined that imposing the
requirements of the maintenance and preventive-maintenance-personnel-
duty-time limitations for part 121 operators onto part 135 operators
will be a cost factor. The cost for the Alaskan operators is $312,000
per year for all Alaskan 10-to-19-seat airplane operators. This cost
estimate was provided by the Alaskan Air Carriers Association (AACA)
and adopted by the FAA for this analysis. For the remaining
operators, the annual cost is an estimated 80 hours per year at $20.44
per hour for the maintenance foreman to perform the additional
scheduling necessary to comply with the rule. The FAA estimates that
a maintenance foreman will spend approximately 80 additional hours per
year to meet the part 121 standards. Thus, the cost for non-Alaskan
10-to-19-seat operators in 1996 will be 23 operators x $20.58 x 80
hours or $37,870. For 20-to-30-seat seat operators, the cost in 1996
will be 25 operators x $20.58 x 80 hours or $41,000. The calculations
would be the same in subsequent years.
Over the 15-year period, the total cost imposed due to the new
duty-time-limitation requirement will be approximately $6.02 million
($3.65 million, present value). Most of this cost, $4.68 million,
falls on Alaskan part 135 operators of 10-to-19-seat airplanes. This
disproportionate amount reflects the probable added labor requirements
of Alaskan operators owing to the uniqueness of the Alaskan operating
environment.
Section 121.380 Maintenance Recording Requirements. This section
provides for the preparation, maintenance, and retention of certain
records using the system specified in the certificate holder's manual.
It further specifies the length of time records must be retained and
the requirements for records to be transferred with the airplane at
the time the airplane is sold. Section 121.380a, Transfer Of
Maintenance Records, develops the transfer of records in more detail.
It requires the certificate holder to transfer certain maintenance
records to the purchaser, at the time of sale, in either plain
language or coded form which provides for the preservation and
retrieval of information. The section ensures that a new owner
receives all records that are to be maintained by an operator as
required under section 121.380.
In the NPRM, the FAA maintained that because section 135.439 was
essentially identical to 121.380, there would be minimal new
recordkeeping requirements imposed on part 135 operators and thus,
assumed no incremental costs would result from changes to this
section. The FAA also maintained that there would be no incremental
cost impact resulting from changes to part 121.380a. Upon review of
the proposal and subsequent comments received, the FAA has determined
that the merging of the recordkeeping requirements of sections 121.380
and 135.439 brought on by the commuter rule will involve incremental
administrative costs. The FAA therefore, has revised its NPRM position
of no costs, and estimated the administrative costs for the new
requirements incorporated in the changes to sections 121.380, 121.380a
and 135.439.
The cost was derived from averaging the total recording cost for
Alaskan commuter airplanes as provided by the AACA and applied to the
total 10-to-19-seat airplane fleet. The AACA estimated the total
first-year cost for Alaska operators to be $156,000. This was divided
by the number of 10-to-19-seat airplanes in Alaska (44) for an average
cost of $3,545 per airplane. This was then multiplied by the total
number of airplanes in the 1996 U.S. fleet. In 1996, the number of
airplanes will be 629 (673-44), 44, and 277 for 10-to-19-seat non-
Alaska airplanes, 10-to-19-seat Alaska airplanes, and 20-to-30-seat
airplanes respectively. For subsequent years, the additional
reporting cost will be $26,000 for the 10-to-19-seat airplanes in
Alaska. The FAA divided that cost by the number of Alaskan airplanes
(44) and then multiplied it by the total U.S. fleet. Thus, in 1997
the fleet count is 639 (683-44) 10-to-19-seat non-Alaska airplanes and
307 20-to-30-seat airplanes. The total costs for 1997 are $26,000 for
Alaska, $377,590 ($26,000/44 x 639) for 10-to-19-seat non-Alaska, and
$181,409 ($26,000/44 x 307) for 20-to-30-seat airplanes. The same
procedure is used for the remaining years. The total cost imposed on
operators of part 135 airplanes due to the additional recordkeeping
required to merge parts 121 and 135 maintenance recording requirements
is approximately $11.5 million ($7.8 million, present value) for the
15-year period.
As a final point, this rule will impose costs on some part 121
operators by requiring them to maintain information on engine and
propeller time in service as specified in section 135.439/121.380.
The FAA concurs with a commenter's objection that for the few
operators of older, part 121 propeller-driven airplanes, this will
necessitate a substantial search-cost for historical records. In this
instance the costs will not be borne by part 135 operators who, for
the most part, utilize propeller-driven airplanes, but rather, by a
few part 121 operators who do not utilize jet-driven airplanes.
However, in the final rule, the FAA will make this requirement
prospective only; those part 121 operators of propeller-driven
airplanes will be required to maintain information on engine and
propeller time in service only from the date of the first overhaul of
the engine or propeller as applicable. Thus, this new requirement
should only impose negligible costs on these part 121 operators.
5. Part 119
Part 119 is a new part that consolidates the certification and
operations specifications requirements for persons who operate under
parts 121 and 135. Most of these regulations are currently in SFAR
38-2; therefore, moving them to part 119 would not impose any
additional cost. However, some sections currently under parts 121 and
135 would be moved to part 119. The costs imposed on affected
operators by those sections are presented below. Over 15 years, the
costs of these provisions are estimated to be $3.36 million
($2.30 million, present value).
Sections 119.33(c) and 121.163 - Proving Tests. When an operator
changes the type of operation it conducts or purchases an airplane
that is new to a certain type of operation, that operator must
undertake a proving test. A proving test generally consists of a non-
passenger flight in which the operator proves that it is capable of
safely conducting that type of operation or airplane. Going from a
part 135 operation to a part 121 operation would be a change in
operation and be subject to a proving test. Under the final rule,
there would be two costs associated with proving tests--initial and
recurring. The initial cost would be proving tests for upgrading the
existing part 135 fleet that would become part 121. The recurring
costs would be for any future operational or airplane changes that
would normally require a proving test( as required by the existing
rule).
The current regulation prescribes 50 hours of flight for a part
121 (section 121.163(b)(1)) proving test. This is the number that
part 135 operators switching to part 121 will be subject to. However,
the current rule also allows for deviations from the 50-hour
requirement. A sample of FAA records on proving tests shows that,
since 1991, there has been a wide range of hours actually flown for
proving tests. This is because the amount that the operator is
allowed to deviate from the prescribed number of hours is based on
what that operator requests and on what the FAA will allow. However,
based on the above sample, the FAA assumes for the purposes of this
analysis that the average deviation will be down to a total of 15
hours.
The FAA recognizes that some operators who currently operate
under a split certificate already have experience operating under part
121. Also, some part 135 operators already voluntarily comply with
part 121 requirements for much of their operation. To the extent
practicable, for these and possibly other operators, the FAA will not
require a proving flight. However, some operators who will have to
make significant changes to the operation as a result of the final
rule will have to have a proving flight. The FAA anticipates that 50
percent of the estimated number of proving tests will not have to
include a proving flight. The only cost to these operators will be
the preparation and completion of the test for the dispatch system.
For this analysis, the FAA assumes three days preparation for the
manager, maintenance director, and secretary.
For those operators who must take the proving test, the cost will
be the same three days preparation plus the 15 hours of flight time.
The FAA estimates that the 15 hours of proving test flights will cost
the operator approximately $8,560 for a 20-to-30-seat airplane and
$7,000 for a 10-to-19-seat airplane. The difference in cost is due to
the flight attendant being on board in the 20-to-30-seat airplanes.
The FAA estimates that there will be 90 proving tests necessary
1n 1996 to bring the existing fleet up to part 121 standards (assuming
a proving test for each type of airplane for each part 135 carrier
affected by the final rule.) The cost to the 60 part 135 operators in
1996 to complete the initial 90 proving tests would be approximately
$393,660 ($367,900, present value). Of this cost, approximately
$128,300 would be incurred by operators with 20-to-30-seat airplanes
and $265,360 by operators with 10-to-19-seat airplanes.
The recurring costs would accrue over the next 15 years as
affected operators conduct part 121 proving tests instead of part 135
proving tests. If the prescribed number of hours for part 135 and
part 121 operators is 25 and 50 respectively, and the average
deviation is 50 percent, then the difference in hours would be 13
[(50-25) x .5]. Also, the FAA found from the survey of its records
that, on average, operators conduct one proving test every four years,
which equates to approximately 3 tests over the 15-year period.
The average number of operators in any given year over the next
15 years is 68. Based on this, the FAA will conduct approximately 14
((68 operators x 3 tests)/15 years) proving tests annually: 8 for 10-
to-19-seat airplanes and 6 for 20-to-30-seat airplanes. The FAA
estimates that the increased cost of a proving test per part 135
operator would be $6,050 for a 20-to-30-seat airplane and $5,800 for a
10-to-19-seat airplane. For all affected operators, the final rule
will impose approximately $82,700 annually in additional costs for
proving tests. Over the next 15 years, the total recurring cost of
this provision would be $1.24 million ($0.75 million, present value).
Sections 119.65, 119.67, 119.69, and 119.71--Directors of
Maintenance, Operations, and Safety; Chief Inspector; and Chief Pilot.
The existing requirements for establishing and the eligibility of
management personnel only apply to part 135 operators (excluding those
that use only one pilot) and supplemental and commercial part 121
operators. The final rule will expand the applicability of the
requirement for management positions to all part 121 operators as
well. However, the FAA contends that part 121 operators, by the very
nature and size of their operations, already have personnel in these
positions (or the equivalent of these positions). Thus, there will be
no cost to incorporate part 121 operators under these requirements.
There are three other potential cost areas for the management
positions required in the final rule. First, is the new recency of
experience for first time Directors of Operations and Maintenance.
Second, is the new Director of Safety position for both part 121 and
part 135 operators. Third is the Chief Inspector, which will be a new
position for those part 135 commuters who upgrade to part 121.
Recency of Experience. The final rule will impose new recency of
experience requirements for those Director of Maintenance and
Operations candidates who will have that title for the first time. In
addition to other requirements, these candidates will have to have
three years of experience (within their respective fields) within the
past six years to be eligible for a Director position. This will
ensure that those candidates who do not have any experience as a
Director at least have recent on-the-job experience in their
respective fields.
The potential cost of the recency of experience requirement is
the reduction at any given time in the number of first-time candidates
available for these positions. This is because some first-time
candidates may have to acquire additional years of experience if they
do not have it at the time that they are being considered for a
Director position. It is extremely difficult to project how many
future first-time Director candidates will be affected by the final
rule. However, this will have little if any affect on an operator's
ability to find potential applicants to fill a Director position.
This is for three reasons. First, the FAA contends that the number of
potential candidates who do not meet the recency of experience
requirement both now and in the future is small in relation to the
total number of potential applicants for a Director position. Second,
the FAA contends that the supply of existing personnel who would
qualify for a Director position, plus those who are already a
Director, is sufficient to keep wages from increasing as a result of
the new qualification requirements. Further, the new requirements are
not substantive enough to cause wages to increase. Third, operators
can always request authorization from the FAA to hire an applicant who
has comparable experience. For the initial upgrade to part 121, the
FAA will approve these authorizations to the extent practicable.
Thus, the FAA contends that the final rule will not impose a hardship
on operators in having enough potential qualified applicants to fill
the Director positions.
Director of Safety. This is a new position for part 121 but the
FAA contends that this position will impose little if any additional
cost to operators. The rationale for this assessment is based on two
factors: 1) there are no eligibility requirements for the Director of
Safety so virtually anyone can be designated as such; and 2) most
operators already have a Director of Safety or the equivalent.
Chief Inspector. For existing part 135 commuter operators who
will now operate under part 121, the position of Chief Inspector will
be new. The FAA contends that this requirement will impose little if
any additional cost. Many part 135 operators already have personnel
that are the equivalent of a Chief Inspector. The operator may
petition the Administrator to combine positions or request authori-
zation to appoint someone who has comparable experience. For the
initial upgrade to part 121, the FAA will consider these requests on a
case-by-case basis.
On-Demand Operators Conducting Scheduled Operations. Under part
135, on-demand operators will be allowed to conduct up to four
scheduled operations a week and still remain an on-demand operator.
There is no such allowance in part 121. Thus, if a current on-demand
operator conducts even one scheduled passenger flight with a 10-to-30-
seat airplane, then that airplane must be upgraded to and the
operation flown under part 121. The FAA has identified 5 airplanes in
the current fleet with 10 to 19 seats that are used by on-demand
operators in scheduled service. To bring these airplanes up to the
part 121 standards will cost approximately $1.73 million
($1.18 million, present value). The components behind this estimate
are provided below (explanations of these costs components are
provided in their respective sections).
C. BENEFITS
The commuter segment of the U.S. airline industry is a vital and
growing component of the nation's air transportation system. Commuter
airplanes transport passengers between small communities and large
hubs, and they play a vital role in transporting passengers over short
distances, regardless of airport or community size. In many cases,
they are a community's only convenient link to the rest of the
nation's air transportation system.
Over the past 15 years, the size of the commuter industry has
grown considerably. In 1993, for example, enplanements for commuter
carriers grew by over 10 percent, far outpacing the one percent growth
of enplanements on larger carriers. Forecasts of commuter industry
activity give every indication that growth in this segment of the
airline industry will continue to be robust during the next 15 years.
Many commuter carriers operate in partnership with large air
carriers, providing transportation to and from hub locations that
would be unprofitable with larger airplanes. These partnerships
frequently operate within a seamless ticketing environment, in which
the large carrier issues a ticket that often includes a trip segment
on a commuter airplane. As these relationships between large carriers
and commuter airlines continue to grow, it will become more common for
the average long distance flyer to spend at least one flight segment
on commuter airplanes.
The combined effect of a continuing growth in the commuter
industry and the ever growing relationship between large carriers and
their commuter counterparts will progressively blur the distinction
between commuter carriers and larger air carriers. In other words,
passengers will no longer readily distinguish between one type of
carrier and another, but will simply view each component as a part of
the nation's air transportation system. It is imperative, therefore,
that a uniform level of safety be afforded the traveling public
throughout the system. Air carrier accidents, perhaps more than
accidents in any other mode, affect public confidence in air
transportation.
What is the public value or benefit of air transportation? It
would be nearly impossible to calculate something that has been so
widely accepted in the American lifestyle. One figure that represents
the very least value the public places on traveling by air is the
annual amount the public spends on air transportation, or in other
words, annual air carrier revenues. In 1994, the FAA estimated that
amount to be $88 billion. If public confidence wavers by only one
percent, annual total air carrier revenues would be reduced by $880
million, which is a minimum dollar estimate of the cost that would be
experienced by the public in terms of being denied a fast, safe means
of transportation.
Some studies have been done to measure the effect of change in
public confidence. In 1987, the FAA studied the impact of terrorist
acts on air travel on North Atlantic routes. The study investigated
the relationship between the amount of media attention given to a
specific terrorist act and reductions in air traffic. The study
concluded that there was a measurable, short-term, carrier-specific
correlation between the two. Following a well-publicized incident,
ridership on the carrier experiencing the incident dropped by as much
as 50 percent for a few months. In another instance, a major air
carrier reported that two catastrophic accidents in 1994 resulted in a
half-year-revenue loss to that carrier of $150 million. These
examples relate to carriers operating large airplanes, but they
illustrate how the prevailing level of public confidence can affect
the public use of air transportation.
It is clear that the American public demands a high degree of
safety in air travel. This is manifested by the large amount of media
attention given to the rare accidents that do occur, by the short term
reductions in revenues carriers have experienced following accidents
or acts of terrorism, and by the pressure placed on the FAA as the
regulator of air safety to further reduce accident rates.
The FAA is confident that the final rule will further reduce air
carrier accidents. The final rule will require dozens of changes to
the way that smaller air carrier airplanes are built, maintained, and
operated--all aimed at eliminating or at the very least minimizing the
differences between small and large airplanes and the way they
operate. Many of these changes result in small, unmeasurable safety
improvements when examined in isolation, but taken together result in
a measurable difference. That measurable difference ultimately is to
bring commuter accident rates down to the very low level of that of
the larger carriers. That rate is nearing the point of rare, random
events.
What follows is a quantified analysis of the potential benefits
of the final rule based on the assumption that it will reduce the
number of commuter airplane accidents and (possibly mitigate the
severity of those casualties in accidents that will occur). The
analysis finds that measurable potential benefits substantially exceed
the cost of the final rule, but the FAA believes that the larger but
unquantifiable benefit is continued public confidence in air
transportation.
Safety Benefits From Preventing Accidents. The intent of the
Commuter Rule is to close, to the extent practicable, the accident
rate gap between airplanes with 10 to 30 seats currently operating
under part 135 and airplanes with 31 to 60 seats operating under part
121. The smaller "commuter-type" part 121 airplanes were used for
comparison because their operations best resemble those of commuters
than do larger part 121 airplanes. If the accident rate gap were
completely closed, the FAA estimates that up to 67 accidents involving
airplanes with 10 to 30 seats could be prevented from 1996 to 2010.
This would generate a benefit of $588 million, with a present value of
$350 million.
Typically, the FAA estimates aviation safety benefits based on
rates of specific types of accidents that the rulemaking would prevent
in the future. For this rulemaking, however, the FAA used a more
broad-based accident rate. This approach was adopted because the
scope of the various components of the rule covers such a wide range,
and many of those components are interrelated.
To estimate the benefits of the rule, the FAA assembled a
database of applicable part 121 and part 135 accidents between 1985
and 1994 using National Transportation Safety Board (NTSB) accident
reports. These accidents were categorized by the passenger seating
configuration of the airplanes involved -- 10 to 19, 20 to 30, and 31
to 60. The FAA then divided the annual number of accidents by the
annual number of scheduled departures for each group to derive the
annual accident rates. After calculating the 10-year historical
average accident rates, the FAA took the difference in the accident
rates between the part 135 airplanes and the part 121 airplanes. The
difference in rates was then multiplied by the projected annual number
of scheduled part 135 departures of airplanes with 10 to 19 seats and
20 to 30 seats from 1996 to 2010. Each step of this estimation
procedure is described in detail below.
The Accident Database. The NTSB defines an accident as an
occurrence associated with the operation of an airplane which takes
place between the time any person boards the airplane with the
intention of flight and the time such that persons have disembarked,
and in which any person suffers death or serious injury or in which
the airplane receives substantial damage. The FAA looked at only
those accidents for which the final rule could have an effect.
Accidents in which the probable cause was undetermined, the result of
turbulence, or was related to the ground crew were not included in the
database. The FAA also excluded midair collisions, since the current
airspace rules (Mode C, TCAS, positively-controlled-airspace areas,
etc.) would not be affected by the final rule. Finally, the FAA
excluded accidents involving unscheduled and all-cargo operations.
Annual Accident Rate. Based on the annual number of accidents
from the database and the annual number of departures, the FAA
estimated the accident rates for 10-to-30-seat airplanes operating
under part 135 and 31-to-60-seat airplanes operating under part 121.
From 1986 to 1994, the FAA found that part 135 airplanes with 10 to 19
seats were involved in accidents at a rate of .32 accidents per
100,000 departures and airplanes with 20 to 30 seats occurred at an
average rate of .17 accidents per 100,000. Accidents involving part
121 airplanes with 31 to 60 seats had an average accident rate of .13
accidents per 100,000 departures.
The Average Cost of a Part 135 Accident. From the accident
database discussed above, the FAA found that the average part 135
accident involving 10-to-19- and 20-to-30-seat airplanes cost
$6.3 million and $24.6 million, respectively.
Estimating Potential Benefits. To estimate the benefit of
closing the accident-rate gap between part 135 and part 121 airplanes,
the FAA took the difference in average accident rates for 10-to-30-
seat part 135 airplanes and 31-to-60-seat part 121 airplanes and
multiplied them by the projected annual number of departures for 10-
to-30-seat part 135 airplanes. This gives the projected annual number
of accidents that the final rule could prevent. The FAA estimates
that, from 1996 to 2010, 67 accidents could be prevented. Multiplying
the number of potential accidents by the average cost of a part 135
accident ($6.3 million for 10-to-19-seat airplanes or $24.6 million
for 20-to-30-seat airplanes) results in total potential benefits of
$588.2 million ($350 million, present value).
The extent to which the accident rate gap closes will determine
how much of the $350 million in potential benefits is actually
achieved. Based on the scope of the final rule, the FAA anticipates a
significant closing of this gap.
D. COMPARISON OF COSTS AND BENEFITS
Over the next 15 years, the Commuter Rule will impose total costs
of $117.80 million, with a present value of $75.19 million. Of the
total costs, $80.36 million will be for airplanes with 10 to 19 seats
and $37.44 million will be for airplanes with 20 to 30 seats.
The benefit of the Commuter Rule is its contribution to closing
the accident rate gap between part 121 and existing part 135 commuter
operators. The FAA estimates that closing this gap will prevent 67
accidents over the 15 year period for a total present value benefit of
$350 million. It is not certain how much of the accident-rate gap the
final rule will close. In view of this uncertainty, the FAA contends
that the final rule will be cost-beneficial because it will have to be
only 21 percent effective for costs to equal benefits. Given the
broad scope of the rule, the FAA anticipates that, at a minimum, the
rule will be this effective and more.
One additional observation needs to be made. The FAA considers
the Commuter Rule to be complimentary to the Air Carrier Training
Program final rule and the Flight Crewmember Duty Period Limitations
and Rest Requirements NPRM. A common goal of these three rulemaking
actions is to prevent the 67 accidents that represent the accident-
rate gap between part 135 commuters and part 121 operators.
In terms of the accident-rate gap, the benefits of the Commuter
Rule are a part of this total benefit. However, it is not possible to
allocate that benefit among the three rulemaking actions because it is
difficult to determine which rulemaking action would prevent a given
accident. For example, individual accidents may be prevented by any
one or a combination of several factors such as:
preventing the occurrence of a problem with an airplane in the first
place (Commuter rule);
providing more or better crew training to properly respond to the
problem after it occurs (Air Carrier Training Program rule);
providing a dispatcher to help identify a problem before it becomes
a potential accident (Commuter rule); and
ensuring pilots are not over-worked and tired (The Rest and Duty
NPRM).
The Commuter Rule only addresses a portion of the necessary
requirements to close the accident-rate gap. If the $75 million
present value cost of this rule is combined with the $51 million in
cost-savings of the Flight and Duty NPRM, and the cost of Pilot
Training, $34 million, the total cost, $58 million ($34 - $51 + $75),
is still less than the estimated $350 million benefit of eliminating
the accident-rate gap. These rules combined need only be 17 percent
effective to be cost-beneficial.
E. INTERNATIONAL TRADE IMPACT ASSESSMENT
Overview. The final rule will have a minimal effect on
international trade. Although there are a number of across-the-border
commuter services between the U.S., Canada, and Mexico, they represent
a small number of routes and airplanes. The only other concern with
regard to international trade is airplane sales. There is the
potential that increased equipment requirements and standards may
limit the ability of commuter airplanes manufactured for the U.S.
market to be resold to buyers in developing nations. Often, these
countries do not have extensive safety requirements and may prefer
less sophisticated airplanes.
International Routes. Most of the nation's 63 commuter airlines
operate almost exclusively on domestic routes, with only limited
international operations and no transoceanic routes. The majority of
these international operations are across-the-border services between
cities in the United States and locations in Canada and Mexico. There
are relatively few carriers engaging in this kind of commuter service,
with only a limited number of flights. Most of these services are
between points in the border states, such as California, Arizona,
Texas, Wisconsin, Michigan, Washington, and New York, flying to
Mexican and Canadian cities. Although the final rule may require some
foreign carriers to comply with its requirements, the primary effect
will still be borne by the domestic air carrier market with a minimal
affect on international trade.
Airplane Sales. Commuter airplanes are sold on a worldwide
basis, and this creates the potential for international trade impacts.
The final rule could affect the competitiveness of airplanes made for
the U.S. market that are resold internationally. Under the final
rule, commuter airplanes made for the American market would include
new equipment and upgrades necessary to meet expanded safety
requirements. These improvements will increase the cost and
maintenance requirements for the airplane and could negatively affect
their sales potential in foreign markets, particularly to customers in
developing nations.
Many small air carriers in the developing world fly under
significantly lower safety requirements than are required in the
United States. Operators are generally not motivated to purchase
airplanes that exceed their countries' minimum requirements. Further,
these operators sometimes lack the facilities, equipment, and
expertise that are necessary to keep sophisticated systems
operational. Therefore, when purchasing either new or second-hand
airplanes, operators tend to focus on airplanes that rely on a minimum
of complex systems and equipment and that meet their basic
requirements at the lowest cost.
Although sales of smaller airplanes to the developing countries
represent an important component of the market, the largest market by
far is in North America. In this case, since the airplanes will have
to operate under the same standards as before their resale, there
would be no impact. According to recent estimates, the worldwide
market for commuter airplanes is estimated to be almost $20 billion
over the next 15 years, with a projected 59 percent of those sales
occurring in North America. Sales to Europe account for approximately
20 percent of the total sales.
F. Regulatory Flexibility Determination Summary
The Regulatory Flexibility Act of 1980 (RFA) was enacted by
Congress to ensure that small entities are not unnecessarily or
disproportionately burdened by Federal regulations. The RFA requires
a Regulatory Flexibility Analysis if a final rule will have "a
significant economic impact on a substantial number of small
entities." The definitions of small entities and guidance material
for making determinations required by the Regulatory Flexibility Act
of 1980 are contained in the Federal Register [47 FR 32825, July 29,
1982]. Federal Aviation Administration (FAA) Order 2100.14A outlines
FAA's procedures and criteria for implementing the RFA. With respect
to the final rule, a "small entity" is defined as a commuter operator
(with 10 to 30 seats) that owns, but does not necessarily operate nine
or fewer airplanes. A "significant economic impact on a small entity"
is defined as an annualized net compliance cost to a small scheduled
commuter operator that is equal to or greater than $67,000 (1994
dollars). The entire fleet of a small scheduled commuter operator has
at least one airplane of seating capacity of 60 or fewer seats. The
annualized net compliance cost to a small operator whose entire fleet
has a seating capacity of over 60 seats is $119,900 (1994 dollars). A
substantial number of small entities is defined as a number that is 11
or more and that is more than one-third of small commuter operators
subject to the final rule.
The FAA is requiring certain commuter operators that now conduct
operations under part 135 to conduct those operations under part 121.
The commuter operators that will be affected are those conducting
scheduled passenger-carrying operations in airplanes that have a
passenger-seating configuration of 10 to 30 seats and those conducting
scheduled passenger-carrying operations in turbojets regardless of
seating configuration. The rule will revise the requirements
concerning operating certificates and operations specifications. The
rule will also require certain management officials for all operators
under parts 121 and 135. The rule will increase safety in scheduled
passenger-carrying operations and clarify, update, and consolidate the
certification and operations requirements for persons who transport
persons or property by air for compensation or hire.
The total present value cost to small entities with 10-to-19-seat
airplanes is $16.7 million. The section on operations represents
$10.1 million or 64 percent of the total. The section on maintenance
represents $4.0 million or 24 percent of the total. The total present
value cost to small entities with 20-to-30-seat airplanes is
$4.0 million. The section on operations represents $2.9 million or 73
percent of the total. The section on part 119 represents $416,000 or
10.4 percent of the total.
This determination shows that for an operator with only 10-to-19-
seat airplanes, the average annualized cost will be $61,900 and for an
operator with 20-to-30-seat airplanes, the average annualized cost
will be $35,600. Given the threshold annualized cost of $67,000 for a
small commuter operator (with 60 or fewer seats), the FAA estimates
that this final rule will not have a significant economic impact on a
substantial number of small entities. A complete copy of the
Regulatory Flexibility Determination is in the public docket.
Federalism Implications
The regulations do not have substantial direct effects on the
states, on the relationship between the national government and the
states, or on the distribution of power and responsibilities among
various levels of government. Thus, in accordance with Executive
Order 12612, it is determined that such a regulation does not have
federalism implications warranting the preparation of a Federalism
Assessment.
Paperwork Reduction Act
The information collection requirements associated with this rule
have been approved by the Office of Management and Budget, until
December 1998, in accordance with 44 U.S.C. Chapter 35 under OMB No.
2120-0593, TITLE: Commuter Operations and General Certification and
Operations Requirements.
Conclusion
For the reasons set forth under the heading "Regulatory
Analysis," the FAA has determined that this regulation: (1) is a
significant rule under Executive Order 12866; and (2) is a significant
rule under Department of Transportation Regulatory Policies and
Procedures (44 FR 11034; February 26, 1979). Also, for the reasons
stated under the headings "Trade Impact Statement" and "Regulatory
Flexibility Determination," the FAA certifies that the rule will not
have a significant economic impact on a substantial number of small
entities. A copy of the full regulatory evaluation is filed in the
docket and may also be obtained by contacting the person listed under
"FOR FURTHER INFORMATION CONTACT."
List of Subjects
14 CFR Part 91
Aircraft, Airmen, Aviation safety, Reporting and recordkeeping
requirements.
14 CFR Part 119
Administrative practice and procedures, Air carriers, Air taxis,
Aircraft, Aviation safety, Charter flights, Commuter operations,
Reporting and recordkeeping requirements.
14 CFR Part 121
Air carriers, Aircraft, Airmen, Aviation safety, Charter flights,
Reporting and recordkeeping requirements.
14 CFR Part 125
Aircraft, Airmen, Aviation safety, Reporting and recordkeeping
requirements.
14 CFR Part 127
Air carriers, Aircraft, Airmen, Aviation safety, Reporting and
recordkeeping requirements.
14 CFR Part 135
Aircraft, Airplane, Airworthiness, Air transportation.