$116 Million Helicopter Settlement; Electronic Warfare Impacting Business Jet Flights

Jessie Naor (00:00)

Good morning and welcome to the VIP seat. It's September 26th. Summer is officially over and this week's top stories in private aviation include a $116 million wrongful death settlement against a New York City helicopter operator and how global warfare is impacting commercial aviation even outside of war zones. Your hosts today include yours

Jessie Naor and our co -host, Caleb

Stitely. So sit back, buckle up and let's take

Alright, so our first story this week, we've seen these things popping up, but now it's becoming pretty extreme based on the latest reports. given the situation in Ukraine, the Middle East, there's a lot more warfare going on in the world these

Caleb Stitely (00:39)

you

Jessie Naor (00:48)

and that's leading to lot of increase in electronic disturbances in aircraft. It used to be back in February of this year, there were only a couple dozen flights a day that were affected.

But in August, we're now seeing it's happening up to 1 ,100 times This is reports of clocks resetting to earlier times, false alarms, misdirected flight paths, all sorts of weird things happening, not only in the war zones, but also after departing from those areas. So, Caleb, what are you hearing? I mean, any business aviation of flights we've heard of so far affected, or is this mostly the airlines at this point?

Caleb Stitely (01:21)

Yeah, no, I think that over the last two years, we've been seeing the uptick in these incidences happening. Operators such as myself and

really are using, I think it's interesting that we're using like ops group, kind of crowdsource and learn about these sorts of spoofing that are occurring to kind of get updates in real time. But yeah, we are seeing.

this impact business aviation flights, not only in the Middle East, but across the globe. So it's something that's really come on

radars pretty quickly.

Jessie Naor (01:55)

So I was recently in Israel about a month ago. And what's crazy is even when you're there locally in certain areas, I'd look at my phone and it would say that I was in Beirut or I was in Cairo. And I was like, wait a second, what's going on? But it's all this jamming of the systems to make sure that locations can't be targeted. These device, rockets and other things get distracted from where they're actually supposed to go.

But I can tell you, mean, even for me, I mean, having to go back to the ways and writing down instructions on how to drive somewhere, you have to relearn all these old things that you haven't used before. And I imagine too, pilots are probably like, okay, I'm gonna pull out the old VOR skills or something and not use GPS.

Caleb Stitely (02:36)

Well, that's the thing is, as I was thinking about this whole story, I was going back to what you just said, where we rely

business aviation and aviation in general on so much automation that it is important that we still know how to hand fly these machines and do things the old school ways because whenever you do find yourself in these sorts of situations, heaven forbid,

you need to be able to

things manually. And in this world of automation, sometimes we rely on that a lot.

Jessie Naor (03:11)

Yeah, well, and everything has become so digitized and electronic and a lot of times pilots and other people, they're acting as a monitoring device and not like really engaged in the process of flying. But I think people are going to have to start really practicing these old skills and dusting them off because like there was a flight. but they were just passing near Ukraine.

The GPS coordinates drifted away from their real location. The pilot was unable to reset it. you can't reset circuit breakers during flight because it causes a whole bunch of other issues. So they're forced to kind of be stuck with the GPS telling them, we're in the middle of the Atlantic, but actually no, we just landed safely at Newark. It's pretty freaky stuff.

Caleb Stitely (03:50)

It is. And your passengers, whether you're on a commercial flight or whether you're on a biz av jet, they want to know that the people up front know what to do in these instances. So yeah, it's going to be interesting to see whether training picks up on this. Will the training providers start implementing some sort of additional training to help pilots cope with this?

Jessie Naor (04:12)

Yeah, and I think it'd be proactive of any operator out there. If you're not training on this, this is a good item to kind of add to that checklist and maybe brush up on some old skills.

Caleb Stitely (04:24)

And especially if you're operating around the world, know, like I said, I know

the ops group emails that come out every morning and throughout the day are a good source. But for operators who are operating internationally, it definitely is a great way to crowdsource and learn where these instances are happening to help you be prepared.

Jessie Naor (04:42)

All right, Caleb, so this has been a hot topic over the last couple of years, really, but it's starting to heat up quite a bit now that representatives and senators are getting involved in the Part 380 security

So last month, Representative Nick Langworthy, he introduced a new bill called the Safer Skies Act, which basically wants to force

380 operators, which are the

charter companies that are selling things by the seat, for those who don't know, gonna force them to go to the same security requirements as the traditional airlines. This has been a big battle between the traditional air carriers and these new upstarts like JetSuite/JSX that are offering these part 380 charters, but it seems like...

This is getting to a point where there's a lot of political pressure

willpower behind it. A lot of unions are involved, lot of victim families from previous crashes. So, I don't know, how are you feeling about this battle?

Caleb Stitely (05:44)

Yeah, certainly another jab at JSX, if you

whenever I read about this. But it's interesting. Typically in business aviation, trips are organized and the passengers all know each other. So I think the one key thing in this 380 is that it's targeting the operators who are selling by the seat.

We don't know who's sitting next to us when we get on a United flight or a Delta flight or a Southwest flight. And it's much the same for these 135, 380 operators. You don't know who's sitting next to you. Personally, I think I would feel more comfortable knowing that the person who is sitting next to me went through same sort of security that I would be going through at any other airport. that's

personal opinion, it is interesting to see legislation coming out now that is targeting and bringing up the security and safety aspect of the 135, 380 operations.

Jessie Naor (06:48)

Yeah, and I think I'm in the same camp too. And I think it's like the industry is totally split. 50 % of people are saying, well, it's proven so far to be safe. Why are we bringing this up? This is just the airlines not being happy with competition. But at the same time, you know, and this was like, let me get the quote from the Association of Flight Attendants. And I understood where they're coming from with this quote. She said, we applaud Representative Langworthy.

for taking action to stop the outrageous attempts to skirt safety and security requirements that were put in place following September 11th. Never again, said Sarah Nelson, who is the president of the association. So I get that side of it too. Obviously, they're not going through the traditional TSA. They do have their own safety and security processing, but it's just not the same as going through the airport. And I do think too, there are some people who are doing this pretty well. Boutique Air for one is at BWI, which is one of my home airports.

I get wanting the convenience factor of going to an FBO and not going through that process and how cool that is, but the airlines do have a point at the same time.

Caleb Stitely (07:55)

They do. They do. And it is, you for some of these startups, you're presenting something that is a significant cost that, you their business models probably haven't taken into consideration. So I can certainly see how pushback from the operators is to be expected.

Jessie Naor (08:14)

Yeah, but it seems like if Representative Langworthy and his caucus want it done, it might get done. So I guess we'll just have to stay tuned and see how that

Okay, so this next story, I was originally from the helicopter

so I'm very, I really understand this story and actually used to send helicopters up to New York to do some of these charters back in the day. So there was a 2018 crash, unfortunately killed five passengers in New York City. What happened was essentially the helicopter, there was a fuel valve on the floor that one of the passengers flip flops got caught on, shut the fuel off.

emergency landing in the Hudson and unfortunately the floats on the aircraft did not fully inflate so the thing immediately went into the Hudson and what was even more complicated with this is that there was a unusual harness system that the passengers were not able to remove to get out of the aircraft. So a lot of pieces to this but it's essentially resulted in a $116 million settlement for one of the passengers

which is the biggest we've ever seen in New York, probably one of the biggest we've ever seen in aviation in general. And it was pretty startling. The thing that really got

as a former operator, and I'm sure you as an operator too understand this, one of the pilots, and this was just a month before the crash, said in a safety meeting, with your carabiner being hard attached to the upper D -ring on that yellow harness, you cannot, and I repeat, cannot reach your own carabiner.

you will die drowned trapped at the bottom of the Hudson F -ing River to get to that. And that just, wow. So obviously that won the case for them, I think fairly, because if you have something like that mentioned in a safety meeting and to not act on it like immediately or yesterday, pretty shocking stuff.

Caleb Stitely (10:04)

It certainly is, and you're right, this is 116 million

I think is the most in the United States to date. Earlier this year, there was 100 million settlement in the Grand Canyon, I think it was 2018 crash as well, so slightly more. But we touch on something here as far as operators go, they were really operating this helicopter in a gray zone. It wasn't a tour, but rather a...

photography flight, which can be argued either way. Was it an air tour or was it photography use? So you start getting into these operating things and the one thing that I, again, like you had

Jessie Naor (10:40)

Yeah.

Caleb Stitely (10:49)

these harnesses that weren't even approved for aviation use that they had to quote,

cut themselves out of in the event of a crash. I certainly wouldn't get on a helicopter that I knew I had to cut myself out of should something happen. you know, it's back to, it kind of leads into safety. talked, you think we talked about this earlier on one of your other shows about air operators now being within new SMS requirements for air tour operators.

Jessie Naor (11:04)

No.

Caleb Stitely (11:19)

think that we're going to start to see some of more of

gray areas have to come into compliance with what so many of us other operators already do. So in the grand scheme of things, safety is key to keeping the industry moving forward. I did think that it was interesting though, in this settlement, they kind of split the liability up amongst the

operator, the float manufacturer, and the

who arranged the flight. So I thought that that was really interesting that the broker who arranged the flight actually had the most liability.

Jessie Naor (11:59)

I think that was referenced in some of the documents too, just how much pressure the broker was kind of exerting on the operator, which I think is great that, I mean, there's some accountability there. I don't know if I've seen

in a previous case, really. And they're still operating to this day. They're doing the same off door helicopter rides. And yeah, I just I think passengers really don't know what they're getting into sometimes, especially in New York City, and they take unnecessary risk that

you know, if they could just do a little more research, maybe going to another operator that had a better safety rating or a better history, higher liability

There's some due diligence that I wish passengers knew how to do, but unfortunately, you're going to New York on vacation and you just assume, the FAA has got it covered. I don't have to worry about it. But then unfortunately, you know, there's this really scary potential out there that people just don't know they're getting into.

Caleb Stitely (12:52)

Yeah, I think as operators, as part of the

we oftentimes take for granted that we know what Wyvern or Argus or Isbeo mean. And so many of our buyers, our clientele, they don't understand this terminology. They don't understand the difference between Wyvern, gold, or platinum. So it's something that is truly an education process that...

I'm not sure I've ever had a retail client ask for what's the

They don't even know it exists. So it is an interesting story that folks are being held accountable for.

Jessie Naor (13:30)

Yeah, and I think too, you know, for a private flyer out there that's considering hopping on a helicopter in New York City, maybe at least get the understanding of what their insurance liability limit is. I think that can be a telltale sign. It's a lot lower than it used to be because insurance companies these days don't want to cover a lot of these flights because of these accidents that are occurring. But I think as a minimum, get that so you know who's operating the flight, how much coverage they have, because if it's, you know,

million dollars in liability coverage, that's not someone you want to be flying with. I don't even know if you can get it these days, but it used to be, you know, 50 million was kind of the standard. It's probably more like 20, 25 if I had to guess right now, but at least you can ask that information and they should be able to give that to you as a minimum.

Caleb Stitely (14:01)

Thanks, guys.

right.

Jessie Naor (14:17)

So another vertical news, it

like powered lift or urban air mobility or advanced air mobility, whatever we're starting to call it these days, it has many names is moving along. There was a Honeywell Advanced Air Mobility Summit in Washington, D .C. last week.

and Christopher Coes who's the acting Under Secretary for Transportation at the DOT, said that they expect new special federal aviation regulations coming out in the next few weeks for these e -VTOLs. This is on the heels of, you know, they came out with a notice of proposed rulemaking last year

that met with a lot of industry frustration, given some of the things that were in there, but it looks like maybe we're seeing the future of this AAM industry.

evolve, but we'll see. We'll see how this is going and developing.

Caleb Stitely (15:05)

Yeah, it is really interesting because we are truly in brand new

with something our industry has never seen before. So it's encouraging to see that the FAA is taking the industry comments into consideration. It's, you know, again, sometimes we don't like what's dictated to us. So seeing that they're actually

this into consideration is encouraging.

Jessie Naor (15:27)

Yeah, and I had this conversation yesterday. My husband's a helicopter pilot, so he has a lot of opinions on this. And we were talking about one of the big issues that came up last year in NPRM is that they're requiring in -aircraft training, as we all have to do with our fixed -wing or rotorcraft aircraft. But the problem is, in some of these E VTOLs

they only designed one pilot seat.

So there's really no ability to have dual controls and to do training alongside someone. So they're trying to figure out how they work around that issue. they do more simulator training versus in aircraft training? And I, for one, I'm just wondering, and it's all going to depend on the design of these aircraft, but how do you do emergency engine out procedures, which I guess you can't because they've got a whole bunch of

There's so much nuance to this and it's almost like, how do we even design rules when you don't even know what the aircraft's gonna look like at the end of the day?

Caleb Stitely (16:23)

Yeah, well, mean, and it's new tech, like I said, it's new technology. We've never been here before. So I would certainly

over the last 100 plus years, there's always been two people in an airplane as far as training purposes go. So it is something that I think that we're probably going to see modifications to.

Jessie Naor (16:34)

Right.

Caleb Stitely (16:48)

more quickly than what we've seen on fixed wing and even helicopters in the past. So it's new territory. would hope that the progress, the rulemaking, that it would flow with the technology as we get there.

government doesn't move fast most times, but we're going to have to.

Jessie Naor (17:08)

Yeah, and certainly not as fast as some of these companies want them to. You know, they're publicly traded and trying to have a product available immediately. But I think they've run into the fact

FAA really cares about safety, not necessarily getting things done as fast as possible, which is their directive. That's what they're in the business of doing is ensuring safety.

But man, yeah, I mean to design a rule that's flexible enough to meet all the coming designs and ideas versus having something that is proven. We've been training pilots in aircraft for many, many, many decades now and in aircraft training is pretty vital. That's been a big piece of the training component. So how do you

around that? they're trying to, conference attendees at this event.

were hoping that by the time the Los Angeles Olympic Games come around, they'll be able to use that event in 2028 as an AAM showcase. So we'll see if we have some Joby's and Archer's buzzing around at the Los Angeles Games.

Caleb Stitely (18:15)

And we'll see if they actually hit their date of December the 16th to roll these regs out.

Jessie Naor (18:21)

Yeah, they seem confident, but history would tell us maybe otherwise.

Caleb Stitely (18:25)

Yes.

Jessie Naor (18:25)

All right, Caleb, so you're probably happy to see this news as a charter management company coming along, but we've seen decreases in charter activity over the last year in certain sectors of the industry. think charter specifically has declined overall, while fractional companies and some larger companies are increasing. And actually, from June to August of this year, the largest operators, the FlexJets, the VistaJets, Fly Exclusive,

they're actually seeing significant increases. It was 15 % for VistaJet, 22 % for Fly Exclusive. So there's some positive

now for the market. And I think even last week, we covered another story saying that charter is going down. So it's this big cycle of are we up, are we down, what's going on? So what are your insights? Do you think we've got hope? Is it getting busier?

Caleb Stitely (19:14)

It's great news for the industry. think over the last

we've been seeing these numbers come in each month and decline year over year or month over month. And so it was encouraging to see some of these numbers. I think honestly, we need to dig a little deeper into the numbers. I certainly see where fractional usage is up.

Jessie Naor (19:32)

Yeah.

Caleb Stitely (19:38)

As an operator, know, we're seeing more 91 flying, a slight uptick in 91 flying, which means as a management company, if 91 flying is up, that's less availability for charter, which, you know, then you would expect a decline on the charter side. You know, one of the other questions I asked myself as

Jessie Naor (19:52)

No.

Caleb Stitely (19:58)

was looking at these numbers, some of these operators have increased their fleet size in the last

year. So we would expect to see additional flight hours under some of these big operators, especially if they've increased their fleet size in the last year.

Jessie Naor (20:13)

Right, but are they actually meeting the utilization targets of the fleet that they expect is the question. Yeah. Well, we saw wheels up to decline but again, that's expected because they've gone through this big, you know, kind of business renovation where they're not flying empty all the time. They're trying to be profitable, which is a great thing for a business to do.

Caleb Stitely (20:19)

Exactly. Yes. Yeah. So.

Jessie Naor (20:35)

But obviously they're going to have declines, know, that one makes sense. But yeah, like you said, Fly exclusives add a lot of airplanes. VistaJet adds a lot of airplanes. Is it at the right rate overall or not? So.

Caleb Stitely (20:47)

Yeah, I was looking at the

Tuvoli does their weekly or their monthly evaluations. I was looking at the first two weeks of September. Charter is down 17 .5 % versus 2023 in the first two weeks of September. And part 91

Jessie Naor (21:03)

Yeah.

Caleb Stitely (21:05)

is down 3%. So yeah, we have some conflicting numbers in the

Also interesting to see that some of these reported numbers are from publicly traded companies. So, you know, as always, I take that into the back of my head, you you can manipulate data however we need. So I just kind of took that into consideration as I was reviewing the numbers.

Jessie Naor (21:16)

Mm -hmm.

Well, that's a good point. I think

seen a lot of turmoil, especially as a lot of companies went public and have now started to go out of business. Maybe the customer is not happy with the charter industry at this point. Maybe they are going back to this, let me be a fractional customer. Let me just own my own airplane and charter it out because

I can't get consistent service or I'm afraid I'm going to lose my jet card deposit. Maybe some of this, because there's definitely a trend where the ownership model, the 91s, they seem to be very healthy and growing and charter is just in

weird kind of, it's good, it's bad, it's good, it's bad. But maybe that's part of it. It's just that people want that really personalized ownership of their aircraft and the activity they have on it.

Caleb Stitely (22:10)

Yeah, that's certainly something as a management company that we're seeing. The industry, we rode this bubble during 2020, 2021, and 2022. And

right. People don't always want to be just a number on some of these larger companies. I always go back. We have these airmail. We have airmail that still works great after all of these years.

But when you start to see, I always gauge my demand on what I'm seeing in airmail. And whenever you start to see, I think from the end of 2020 until halfway through last year, I would only see

in airmail. And now I'm starting to see must move, must sell. And it's like, hmm, that's kind of how I gauge my demand whenever.

Jessie Naor (22:55)

Hmm.

Yeah.

Yeah.

Caleb Stitely (23:05)

what I'm seeing in airmail and the must moves and must sells

Jessie Naor (23:10)

Language is a little different than, I've got this, have this. Well, for those who don't know, we're like deep in ops right now. is how the

does this. But the National Business Aviation Association has this email system and it's essentially, it's so old school, which is just indicative of what our industry is. But it's just people emailing this subscription list every single day and you get digest of, here's

200, I had this, I need this. It's like the old, you know, the stock market, essentially of aviation But yes, it's still so valid today, and even with all these tools that have been built, there's some great systems out there. Avinode actually is

and there's others. There is still this reliance on airmail. You just, can't avoid it. You gotta pay attention.

Caleb Stitely (23:58)

know. That's how I gauge my thermometer on charter demand is what I'm seeing there. It's old school, but it works.

Jessie Naor (24:04)

Yeah. Someone should really do like a deep AI like data dive on the airmail system to really understand the market. You there's activity, but then there's the request for activity and it's a totally different dynamic.

with that, we're going to wrap up this pod today. Thank you for joining us. The VIP seat is the fastest way to get the top news on what's happening in private aviation. Don't forget to subscribe to our weekly email digest in the show notes and click follow wherever you get your podcasts.

Comments and suggestions on what we should cover next are always welcome. So stay in touch and we'll see you next time on the VIP seat.