Around 50% of the world's charter flights are being performed illegally. The combination of consumer ignorance and regulator nonchalance has spawned a flourishing industry at the expense of the law-abiding providers, say leading market experts.
A roundtable meeting at TAG Farnborough airport in the UK this month discussed the problem of illegal or grey chartering. This occurs when flights are offered on privately owned aircraft for financial reward, even though aircraft are not registered under a commercial air operator's certificate or when aircraft registered outside a market - including in the USA, Bermuda or the Cayman Islands - are offered for charter without having the necessary permits to fly commercially within that region.
"There are serious safety and legal implications if a flight is chartered illegally," says Marwan Khalek, chief executive of business aviation services provider Gama Aviation.
Grey charters can be significantly cheaper than flights offered by holders of aircraft operator's certificates, "but they are illegal and do not adhere to the same stringent operational safety standards as the regulated provider", he says.
"The hapless customer is often ignorant of the consequences. If an aircraft crashes, their life insurance may not pay out and the aircraft owner - now in breach of European regulations - could be liable, as the operational risk of the aircraft often lies with them. "
David Macdonald, director of international charter broker Air Partner, believes the trade in illegal charter has shifted from "under the counter" to blatant selling through websites and other prominent advertising mediums.
"The underground market is on the increase. Unlicensed aircraft that should obviously not be sold for hire are being promoted openly by people who are holding themselves up as brokers. This is an illegal an unlawful act," he says.
Aviation lawyer Aoife O'Sullivan suggests the increase in grey charter activity is due in part to a lack of awareness by aircraft owners and users of the rules and regulations surrounding commercial charter.
The lacklustre approach by safety authorities towards the offenders also contributed to the rise in this illegal activity. "Enforcement can lead to a tap on the hand. There appear to be no consequences and no deterrent," O'Sullivan says.
In 2009 the UK government performed 250 ramp checks at UK airports - 100 more than the previous year - although all the inspections are known in advance, which defeats the object, says Khalek.
For operators such as Gama, such flouting of the charter regulations has put law-abiding companies at a disadvantage. "There seems to be a culture within the industry where you are scrutinised more if you hold a licence and play by the rules than if you don't," says Khalek. "If nothing is going to be done, let's make it a free-for-all so we all play by the same rules."
The European Business Aviation Association is poised to launch an educational campaign to raise awareness of the grey charter market and the consequences of this illegal activity. O'Sullivan says: "We must stop rise of illegal charter as it will expose every player involved to serious legal penalties and liabilities."