Wednesday, August 30, 2017 7:26:06 PM
The whole purpose of Baltia/USGlobal acquiring SongBird, is for their certificate. Without the DOT's and FAA's approvals, there is no need in going through with the acquisition of SongBird. Lets hope they can get past the trivial tasks outlined below.
Good thing Baltia has had a lot of practice with emergency evacuation demonstrations.
http://fsims.faa.gov/wdocs/8900.1/v03%20tech%20admin/chapter%2034/03_034_001.htm
VOLUME 3 GENERAL TECHNICAL ADMINISTRATION
Indicates new/changed information.
CHAPTER 34 CHANGES TO AIR CARRIER, AIR OPERATOR, OR AIR AGENCY CERTIFICATE OR OPERATING AUTHORITY
Section 1 Safety Assurance System: Mergers and/or Acquisition of Operational Assets
3-3591 GENERAL.
A. Purpose. This section provides guidance and a process to follow when certificate holders merge operations, acquire operational assets of another certificate holder, or change ownership.
NOTE: This section is designed primarily to cover mergers and/or acquisitions between certificate holders conducting Title 14 of the Code of Federal Regulations (14 CFR) part 121 operations. However, this guidance applies to other 14 CFR parts that are issued an Air Carrier, Operating, or Air Agency Certificate (e.g., 14 CFR parts 125 and 135). Principal operations inspectors (POI) should be aware that the current method used by the Federal Aviation Administration (FAA) to approve a certificate holder’s merger and/or acquisition process is through the issuance of operations specification (OpSpec) A502. This OpSpec is currently only available for parts 121 and 135 operations.
1) When mergers and/or acquisitions occur, certificate holders will typically have substantial changes in management; turnover in personnel and reduction of workforce; labor disputes; rapid expansion; changes in fleet types; and changes in outsourcing. These changes resulting from a merger or acquisition require various levels of FAA coordination, approval, and/or acceptance before they are implemented. The following are examples of changes that could occur during mergers and/or acquisitions:
• Changes in operational control systems and philosophy.
• Changes in OpSpecs.
• Changes to approved programs that are part of the operational control system.
• Revisions to manuals containing procedures for conducting various operations, maintenance, and inspection programs.
• Revisions to training curricula and/or changes in employee qualification criteria for persons who will be conducting merged or new operations and/or programs.
2) The successful merger and/or acquisition of certificate holders will depend on the effective coordination, communication, and commitment between the certificate holders and the FAA. Complete each phase of the merger/acquisition process in the respective order to ensure the smooth alignment of activities and processes. Every merger/acquisition submission must have a defined transition plan that contains timelines.
3) The certificate holder is responsible to consider the following factors and ensure that these factors have a direct influence on the FAA’s ability to effectively and timely fulfill its requirements concerning mergers and acquisitions:
• Complexity of the affected operations.
• Timely notification to the FAA.
• The FAA’s early understanding of the changes which will result from the merger or acquisition.
• The certificate holder’s comprehension of the actions to take to obtain FAA approval or acceptance of the consequent changes.
• The length of time and sequence to implement changes.
B. Scope. Mergers and acquisitions have a significant effect on FAA resources and have visibility at the highest levels of the FAA. It is imperative to handle them efficiently and effectively, ensuring continued compliance with 14 CFR and safe operating practices.
1) Mergers occur when two or more certificate holders merge operations.
2) Acquisitions occur when there is a transfer of significant amounts of operational assets, including equipment and/or personnel. This is similar to a merger. Develop a transition plan the same way as a transition plan for a merger.
NOTE: Acquisition by holding companies (non-certificate holders), when the certificate holder continues to exist as an independent entity (subsidiary), is a type of acquisition that requires little, if any, FAA action. Usually, few operational changes are made and development of a transition plan is not necessary.
C. Indepth Inspections. In complex mergers or acquisitions, or when extensive changes or integrations occur, principal inspectors (PI) should consider requesting an indepth inspection of the surviving certificate holder’s operation (see paragraph 3-3594, Task Outcomes). PIs should normally plan an indepth inspection toward the end, or after completion, of the transition period.
3-3592 TASK PREREQUISITES AND SIGNIFICANT INTERFACES.
A. Department of Transportation (DOT) Economic Authority Considerations. The air carrier is responsible for determining whether or not it will need to modify its existing DOT economic authority by virtue of receiving the single operating certificate (SOC) with different operating authority (e.g., domestic versus flag). In some cases, the answer will be “no” if the air carrier previously obtained DOT approval for transfer of international and other route authorities to the surviving certificate. The PI must ensure all required authority has been given by the DOT before issuing any OpSpecs. Any questions involving this step should be addressed to the Office of the Chief Counsel (AGC).
B. Department of Justice (DOJ) Approval. DOJ approval may be required for some mergers if antitrust laws are involved. It will be the responsibility of the surviving certificate holder to coordinate all of these issues with the DOJ.
C. Significant Interfaces.
1) A merger or acquisition requires effective coordination and communication between the FAA and each certificate holder involved. Each certificate holder is responsible to designate its personnel who will be involved with the merger/acquisition process. The FAA will designate its appropriate personnel (e.g., managers, supervisors, and PIs) of the affected certificate-holding district offices (CHDO) and Certificate Management Teams (CMT). The CHDOs and CMTs will interface with the regional Flight Standards division (RFSD). The RFSD will interface with FAA Headquarters (HQ). A Joint Transition Team (JTT), if established (see subparagraph 3-3593A2) below), should be set up early. If a JTT is established, the JTT Team Lead will interface directly with FAA HQ and keep the appropriate RFSDs informed. Active communication between all stakeholders is paramount. During the merger period, significant changes will take place. The JTT or the lead CHDO (further discussed in subparagraph 3-3593A1)) will keep all affected personnel informed of the transition plans along with the progress of the merger and/or acquisition process and any issues associated with that process.
2) Certificate holders are responsible for the merger or acquisition process. The FAA understands that certificate holders may elect to utilize third-party consultants to play a role in the merger or acquisition process; however, the FAA will conduct communications directly with the certificate holder. The FAA will not communicate directly with the consultants.
D. Additional Interface Considerations. Certificate holders who interface with international authorities shall consider early coordination with those entities for meeting all International Civil Aviation Organization (ICAO) requirements (e.g., OpSpecs and call sign changes). Contact the appropriate International Field Office (IFO), International Field Unit (IFU), or the International Programs and Policy Office (AFS-50) if necessary.
E. References. None.
F. Forms. Figure 3-130, Sample Joint Transition Team Charter.
G. Job Aids. Figure 3-121A, Transition Plan Job Aid.
H. Additional Guidance. For part 121 air carriers, the Safety Assurance System (SAS) assesses the safety of air carrier operating systems. The SAS Data Collection Tools (DCT) will be used to evaluate the design and performance of proposed merged systems during the merger process. The SAS process and the Certificate Holder Evaluation Process (CHEP) provide means to identify hazards, analyze risk, and determine action in the course of air carrier mergers or acquisitions.
NOTE: When the direction and guidance provided in this order does not adequately address a particular situation, the JTT Team Lead or the CHDO manager will forward a request for additional guidance through the RFSD to the appropriate HQ policy division.
I. Documentation Tracking. Each aviation safety inspector (ASI) who reviews submitted programs will document each activity via Program Tracking and Reporting Subsystem (PTRS) codes 1236, 3236, 5236, or 8236 as appropriate after review and acceptance or approval of each submitted program. The CMT management will be responsible to ensure all tracking is timely and accurate. Air Carrier Certificates under SAS may elect to use the Action Item Tracking Tool (AITT) to document and track specific programs; however, the AITT does not replace the requirement to use PTRS.
NOTE: The JTT or CMT will be responsible for tracking all open/pending Enforcement Investigation Reports (EIR) that have not left the office. Consult the Regional Counsel for guidance on how to combine all open/pending EIR cases and, if necessary, the Enforcement Division in the AGC in HQ.
Figure 3-121. Merger and/or Acquisition Plan Process Flow
NOTE: The transition plan can be amended at any time during each phase up to and including after SOC. For discussion on whether amending the transition plan requires an OpSpecs change and corresponding approval, see subparagraph 3-3593B1).
3-3593 PROCEDURES.
A. Phase 1—Notification and Planning.
1) Step 1—Notification from Certificate Holder and FAA Planning. Certificate holders involved in a merger or acquisition should notify the appropriate CHDO, who will then notify the RFSD. Upon notification and as early as possible, the affected CHDOs and their RFSD should accomplish the following as appropriate:
a) When two or more CHDOs are involved, the RFSD or HQ will make a determination as to which one will be the lead office and where the principal base of operations will be located. If the lead office determination crosses regional boundaries, coordination between the involved RFSDs would be required. At some point, the Flight Standards Service (AFS) must decide which district office will be the CHDO after the merger or completion of the acquisition. In making this determination, apply the considerations described in Volume 2, Chapter 1, Section 2, for assigning CHDO responsibilities. If the CHDO transfers responsibilities to another office, the CHDOs should accomplish the same types of inter-district-office and inter-regional coordination, briefings, inspections, and transfer of operator files, as described in Volume 2, Chapter 1, Section 2, at the appropriate time.
b) Affected CHDOs and assigned PIs must establish lines of communication. Once established, the CHDOs and PIs should maintain this communication throughout the transition period to provide an ongoing dialogue between assigned PIs, district offices, and the regions. If the RFSD establishes a JTT, the JTT shall also be part of this ongoing communication. The RFSD or JTT (if established) shall periodically keep the Air Transportation Division (AFS-200) and Aircraft Maintenance Division (AFS-300) informed of the status of mergers or acquisitions. The RFSD will provide AFS-200 with a point of contact (POC) for the merger or acquisition.
c) The CHDO and RFSD managers will select/assign who will serve during the merger process. If the merger warrants a JTT, the RFSD will initiate its establishment. See Step 2 for additional JTT information.
2) Step 2—JTT Formations and Expectations.
a) The RFSD will be responsible for determining if a JTT is necessary. Contact AFS-200 and/or AFS-300 for help in determining if a JTT is necessary. The JTT should include representatives from all affected CHDOs and RFSDs and should include all applicable specialties (Operations, Airworthiness, Dispatch, and Cabin Safety). The CHDO managers and RFSD managers will designate three transitional PIs (POI, principal maintenance inspector (PMI), and principal avionics inspector (PAI)) to serve during the merger process. The transitional PIs should be members of the JTT and, whenever possible, the PIs of the surviving certificate holder. These transitional PIs will be responsible for determining outcomes of program approvals, acceptance of certificate holder systems, manuals, and OpSpecs generation during the merger process. If resources are lacking at the field level, expand the search for JTT members to include regional or national personnel. Consider having JTT members dedicated solely to the merger and/or acquisition process depending on its complexity. Separate PIs (perhaps acting) should be assigned to the day-to-day certificate management of each certificate.
b) Conduct regularly scheduled JTT meetings throughout the entire merger/acquisition. The level of complexity of the merger and/or acquisition may necessitate the JTT meeting several times a week, with the certificate holders, the JTT members, or both. The JTT should regularly brief all the stakeholders, keeping inspectors and support staff informed on the progress.
3) Requirements for the JTT After Establishment:
a) The CHDO managers will nominate a JTT Team Lead, who regional division management will designate. The team lead will be identified to HQ and will serve as the main POC for all information regarding the merger/acquisition process.
b) Develop a JTT guide and charter if applicable (see Figure 3-130).
c) Open lines of communication between respective field offices, Regional Offices (RO), and HQ. Include the National Simulator Program (NSP) (AFS-205) if applicable.
d) Plan and conduct initial meeting with the certificate holder.
e) The JTT will coordinate and communicate with the CMT PIs on any changes in processes or procedures, which will directly affect the continuing oversight of each certificate holder prior to SOC.
f) The JTT will use the respective CMT staff to assist in the various program review processes.
g) The JTT will be responsible for the tracking and documentation of the day-to-day activities surrounding integration of the certificates.
h) Along with a robust document tracking method for approval and acceptance of documents submitted, clerical assistance and automation support for the JTT is a requirement. The JTT may produce many certificate holder documents, as well as FAA documents, depending on the complexity of the merger/acquisition. The JTT should include all transition documents as well as all meeting minutes in the documentation process, and make them available to affected FAA stakeholders.
i) In coordination with the CMT PIs, the JTT will consider the associated risk factors of the merger/acquisition changes that the certificate holder identifies as they are fully implemented. For part 121 mergers, the use of SAS tools will help to ensure that each certificate holder continues to operate at the highest level of safety.
j) Should questions arise, JTT members will remain available until after the merger/acquisition is fully completed and all OpSpecs are combined without any references to parallel operations.
4) Step 3—Establish FAA Resource Availability. The size and scope of the merger/acquisition of the certificate holder will be a consideration during formation of the JTT and the FAA resources that need to be available during the transition. Expertise outside of the field office may be necessary. For the merger/acquisition of part 121/135 certificate holders, consider placing JTT and CMT members as a shared resource on each other’s SAS rosters. See Volume 10, Chapter 4. This will allow the team members the ability to conduct a Design Assessment (DA) and then enter that data into the respective database.
5) Step 4—Initial Meeting.
a) The FAA recommends the certificate holders have a dedicated transition team similar to the FAA’s JTT. The recommendation is to have a team be comprised of personnel who have authority and responsibility to make decisions on operating practices for the respective certificate holders. Routine changes made in the normal course of certificate management can have a significant effect on the merger or acquisition of certificates.
b) The lead CHDO or the JTT must schedule an initial meeting for the certificate holder to brief the FAA of their proposed plans and for the FAA to brief the certificate holder’s key management personnel of the FAA requirements contained in this section. All PIs affected, their managers, and the entire JTT should attend. The intent of the initial meeting is to establish a good working relationship that will help the certificate holder to understand that aviation safety must not be compromised during the merger process and that an efficient and timely transition is predicated on their response to required changes or revisions. The CHDO manager should ensure that the timing of this meeting is appropriate for the situation.
c) The lead CHDO Manager should direct either the JTT or the assigned PIs to prepare for and conduct this initial meeting. Figure 3-121A should be useful in preparing for this briefing. During the briefing, ensure that the responsible parties will:
1. Verify the information provided by the certificate holders. The information should include which certificate will survive, identification of the required management personnel in accordance with 14 CFR part 119, § 119.65 or § 119.69 as appropriate, and the location of certificate holder headquarters. If the certificate holders have changed their initial planning information to the extent that determination concerning CHDO assignment is questionable, immediately notify the RFSD.
2. Verify that all stakeholders understand that until the merger is complete, all approvals and/or acceptance within the individual CMTs must filter through the JTT to ensure any changes will not have ramifications on the merger process. Each certificate holder must follow their current processes until each new process(es) has been approved or accepted.
3. Ensure the certificate holders understand that if they apply for exemptions that information must be communicated to the JTT.
4. Inform the certificate holders of the requirement to submit a transition plan that will outline the transition that will occur throughout the merger or acquisition process. The size and scope of the operation will determine the complexity of the plan.
5. Inform the certificate holders that the FAA recognizes modifications to the transition plan and estimated schedules will often be necessary. Therefore, appropriate notification of these changes will be essential, and the FAA will attempt to respond in a timely manner. The certificate holder should submit the transition plan to the JTT or CHDO (if no JTT exists) as soon as possible so that the FAA may begin planning its activities.
6. Encourage the certificate holders to consult with either the JTT or the PIs during development of the transition plan. Any amendment to the transition plan will require acceptance of the amended plan and reissuance of OpSpec A502 may be required if significant events or changes occur.
7. Inform the certificate holders of the FAA’s merger guidance contained in this section and provide them with the information that a transition plan should include.
8. Inform the certificate holders to prepare a new compliance statement for the merged entity. This will identify how the merged certificate will maintain compliance with the CFR, as well as ensuring the certificate holder’s manuals contain the appropriate regulatory references.
B. Phase 2—Transition Plan Review and Issuance of OpSpec A502 for Air Carriers.
1) Transition Plan.
a) One of the most important early steps in a merger/acquisition process will be the certificate holder’s submission of a transition plan. A transition plan must be submitted for air carriers. The regulatory authority for this requirement is part 119 subpart C, which specifies the findings that need to be made in order to issue an SOC. The size and complexity of the transition will depend on the size and scope of the certificate holders that are undergoing the merger and/or acquisition. The plan should identify those programs that require FAA approval or acceptance. FAA approval of a merger and/or acquisition transition plan ultimately occurs at the RFSD of the CHDO, who will have oversight responsibility of the surviving certificate holder in the merger/acquisition. Upon completion of the review of the certificate holder’s transition plan, the RFSD shall forward a copy of the transition plan to AFS-200 and/or AFS-300 (and the other RFSD(s) if applicable), as appropriate along with a copy of the certificate holder’s proposed OpSpec A502. AFS-200 must approve OpSpec A502 in coordination with AFS-300 before being issued. Once AFS-200 and AFS-300 have approved issuance of OpSpec A502, the PIs will issue OpSpec A502 to each certificate holder involved in the merger and/or acquisitions. The issuance of OpSpec A502 to each certificate holder involved is a means of authorizing the plans for the transition during the merger or acquisition process.
b) The transition plan is very dynamic and the CHDO level accepts any normally occurring changes to the transition plan, unless the RFSD determines otherwise, with no reissuance of OpSpec A502. However, any significant revisions to the transition plan will require reissuance of OpSpec A502, which AFS-200 must approve in coordination with AFS-300.
c) The kind of information outlined in OpSpec A502 is dependent on the type and complexity of the situation. For additional information regarding OpSpec A502, see Volume 3, Chapter 18, Section 3, OpSpec A502. The JTT or PIs must review the transition plan in detail during this phase and consider the availability and capability of resources, making sure plans and schedules develop accordingly. To be responsive to the certificate holder’s needs, inspectors will need to conduct timely evaluations of the changes outlined in the transition plan. The FAA should carefully consider the feasibility of the plan.
d) The transition plan must:
1. Ensure the certificate holder continually identifies hazards and manages the risk associated with the merger/acquisition changes as these changes occur. Encourage the certificate holders to use a Safety Risk Management (SRM) process, as it will be beneficial. For the certificate holders that are required to use the SRM process, make sure they identify when and how they plan to use SRM.
2. Contain a Schedule of Events (SOE) or timeline. Many events and activities outlined in the transition plan must occur before other events or activities. The transition plan should not contain open-ended events or activities. It should include a timeline for the completion of the transition period when all changes resulting from the merger or acquisition are due to be complete.
3. Outline the methods or procedures to be used to ensure continued compliance with 14 CFR and safe operating practices. For example, previously approved minimum equipment lists (MEL) based on specified maintenance and operations procedures should continue to be used until the new or revised MEL is approved.
4. Be designed to ensure that changes to major programs are not submitted at the end of the transition. Submitting multiple programs to the FAA toward the end of the plan may delay acceptance and approval.
5. Below are some items to consider within a transition plan. Some of these items are part-121-air-carrier-specific.
a. A general discussion of:
• Operational control during and after SOC.
• Manual systems and how they will be identified and cataloged.
• The method of combining two Safety Management Systems’ (SMS) programs and how the SMS will be utilized during the merger activities (if applicable).
• Proving/validation flights and/or ditching/emergency evacuations plans (submit early for resource planning).
• Any change in authority to conduct a kind of operation. For example, flag versus domestic, domestic versus supplemental, commuter versus on-demand.
NOTE: The DOT grants only economic authority; it does not grant operational authority to conduct a kind of operation. In order to obtain authority to conduct a particular kind of operation (i.e., domestic, flag, supplemental, commuter, or on-demand), § 119.33 requires certificate holders to conduct proving tests. In addition, certificate holders may be required to conduct validation tests to obtain approval to conduct a type of operation such as Extended Operations (ETOPS) or extended overwater.
b. Approved or accepted items and programs, and identify how those will change. These programs include, but are not limited to:
• Training programs, including those for flight and in-flight crewmembers, dispatchers and operational control, maintenance, ground, and customer service personnel;
• Continuous Airworthiness Maintenance Program (CAMP);
• MELs;
• Airworthiness Directive (AD) program;
• Alternative method of compliance (AMOC) for ADs. Submit as early as possible. They may require Aircraft Certification Office (ACO) coordination;
• Supplemental Type Certificates (STC) (may require coordination with ACO);
• Special airports;
• Environment assessments considerations if new aircraft are added to OpSpec C070;
• ETOPS;
• Fatigue Risk Management Plan (FRMP);
• Recordkeeping;
• Pilot Records Improvement Act of 1996 (PRIA). Refer to the current editions of Advisory Circular (AC) 120-68, Pilot Records Improvement Act of 1996, and FAA Order 8000.88, PRIA Guidance for FAA Inspectors;
• Carry-on baggage program;
• Exit seating program;
• Drug and alcohol testing;
• Security programs to include access to cockpit;
• Hazardous materials (hazmat) programs;
• OpSpecs—side-by-side comparison of A004;
• Emergency Airworthiness Directive (EAD) notification;
• Driftdown procedures;
• Category II (CAT II) Approach and CAT III Approach;
• Reduced Vertical Separation Minimum (RVSM);
• Weight and Balance (W&B) program;
• Ground deicing/anti-icing program;
• Fueling;
• Aircraft parts consolidation;
• Test equipment consolidation; and
• Exemptions and deviations.
NOTE: Figure 3-121A provides a transition plan job aid for inspector use.
2) General Information on Transition Plans.
a) Transition plans must outline the strategy and include benchmarks or target dates for bringing the various processes together prior to SOC. If operational areas of the certificate holder after SOC will remain separate and operate parallel, it will be essential that the transition plan establish which processes will remain separate. The transition plan will include identified parallel processes and provide a schedule for merging these parallel processes after SOC. Parallel operations will create higher risk, so if the certificate holder elects to have separate processes at SOC then it will be important for the FAA to give careful scrutiny of those areas with increased surveillance. The FAA and the air carrier will give careful consideration to the OpSpecs and how to identify separate processes within the affected OpSpecs. More information on OpSpecs relating to this topic is in subparagraph 3-3593E, Phase 5—Approvals or Denials of Various Demonstrations or Submitted Documents.
b) If the certificate holder elects to run parallel operations after SOC, they must address the following items for each of these parallel operations. This will be necessary in order to ensure the certificate holder is properly and adequately equipped as well as able to conduct a safe operation.
• Descriptions of the parallel processes.
• Reasons for the parallel processes.
• Who is affected by the parallel processes.
NOTE: The JTT will review these items. Should a JTT not exist, the CMT will conduct the review in conjunction with the RFSD, as they hold the ultimate responsibility for the approval of the transition plan.
c) The parallel process shall also include descriptions of the controls ensuring the parallel processes are followed. A Custom Data Collection Tool (C DCT) (a SAS tool) could be helpful for the merger team to assess these required processes used by the certificate holder.
d) At the point of SOC, the airline will operate as a single entity from both organizational and management perspectives even though some departments may be running parallel operations under a single entity. Equally important for SOC is operational control; this must be done under one entity. Fenced operations must be clearly described in the appropriate OpSpec with HQ approval before issuance. For more information on issuing those OpSpecs, see subparagraph 3-3593E.
3) Return of Transition Plan.
a) If significant deficiencies, omissions, or impractical proposals exist, the PIs should meet with the controlling certificate holder’s management and attempt to resolve these problem areas. Return the transition plan if the PIs and managers cannot resolve these problems to the satisfaction of the FAA with a letter briefly describing the unsatisfactory areas. The CHDO will retain a copy of this letter along with a copy of the returned transition plan.
b) The PI will not issue OpSpec A502 for air carriers if a CHDO returns a transition plan because it does not ensure continued regulatory compliance, or if the certificate holder refuses to develop and submit a plan. Should the certificate holders continue with the merger and or acquisition process despite the rejection of the transition plan, the CHDO should increase surveillance if necessary with the option of requesting an indepth inspection, such as a CHEP, and deny any certificate amendments under § 119.41(c).
4) Issue OpSpec A502. When the RFSD in coordination with the CHDO finds the transition plan to be acceptable, the PIs will prepare a draft OpSpec A502 and send it to AFS-200/AFS-300 for approval. OpSpec A502 is a nonstandard OpSpec authorization. PIs must review Volume 3, Chapter 18, Section 2, paragraphs 3-712 and 3-713 for information on how to obtain HQ approval to issue nonstandard OpSpec authorizations. In addition, PIs must see Volume 3, Chapter 18, Section 3, OpSpec A502, which contains specific guidance on how to issue OpSpec A502. OpSpec A502 will remain in place until the merger/acquisition is 100 percent complete. Revisions to transition plans will likely necessitate updates, unless they are minor, to OpSpec A502. A revision to a transition plan could occur before or after SOC. (See the dotted line on the process flow map in Figure 3-121, Merger and/or Acquisition Plan Process Flow.) PIs will update OpSpec A502 as necessary. Each update to OpSpec A502 requires HQ approval prior to issuance. Once the final compliance statement is complete and the merger is 100 percent complete, OpSpec A502 will no longer be required and PIs must archive it in the Web-based Operations Safety System (WebOPSS).
C. Phase 3—Review of Programs Submitted.
1) Program Changes. As the certificate holder implements program changes, that certificate holder must evaluate the changes in the same manner as a certification process. The JTT will be the clearinghouse for all documents and will communicate on regular bases with all parties involved. If the CHDO receives documents containing program changes, the CHDO will forward the documents to the JTT. The certificate holders that are SMS compliant shall also make available documentation showing that an SRM was completed for each process, procedure, or system (required by 14 CFR part 5). Some of the day-to-day operations of a certificate holder are governed by “accepted manuals.” This accepted material will have to be reviewed prior to implementation. Upon completion of the review process for all submissions, the JTT will make recommendations for approval, acceptance, or review of program changes that affect the current certificate status to the current respective PIs. If designated transitional PIs exist, they will be charged with determining outcomes of program approvals, acknowledgements, or acceptance of carrier systems, manuals, and OpSpecs during the merger process. The protocol for the resolution of any merger/acquisition activities or changes that are in question between/within the JTT, the PIs, or the certificate holders will be brought to the attention of the JTT Team Lead, to the respective office managers, through the RFSD, and to HQ if necessary. The CMTs are responsible for the continued day-to-day oversight of the certificates throughout the merger process.
NOTE: Any request or correspondence sent up to HQ relating to file-naming system so that it is easy to determine the content of the memo/document. Make sure the merger entity is on the name of the file, and make it clear if there is a required action or due date.
2) OpSpecs Preparation for SOC. The Technical Programs Branch (AFS-260) offers assistance to the PIs and the JTT in preparing OpSpecs for SOC. The process involves creating a replica of the data from the merging certificates to facilitate preparation of OpSpecs for the combined operation at SOC without affecting the existing OpSpecs. To request the creation of a replica or “ghost” certificate for drafting merged OpSpecs, contact AFS-260 directly or through WebOPSS support at AFS-WebOPSS@faa.gov at the beginning of the merger process. Provide the following information:
• Target dates for SOC and the issuance of new OpSpecs.
• The designator codes of the certificates involved and the surviving certificate.
• The office that will manage the merged certificate.
• The operator data (e.g., aircraft, addresses, personnel, authorized areas, airports) to be transferred from the merging certificates.
• The list of FAA and industry users requiring access to the ghost certificate, including names, user identifications, and email addresses.
NOTE: The ghost certificate process is designed to facilitate drafting OpSpecs for SOC, but planning and communication with AFS-260 is crucial to a successful transition.
3) Two Names on One Certificate.
a) Certificate holders desiring to list the names of more than one certificate holder involved in a merger or acquisition on the Air Carrier Certificate may only do so for a limited period of time prior to completion of the merger/acquisition, and then only with the permission from the AGC. The JTT (or RFSD if there is no JTT) will review requests of this nature. If the JTT/RFSD concurs with the request, they will forward it to the AGC through the manager of AFS-200.
NOTE: In accordance with § 119.9, all aircraft must be marked with a name listed on the Air Carrier Certificate. If more than one certificate holder’s name is listed on the Air Carrier Certificate, certificate holders must still meet the requirements of § 119.9. Getting approval to have more than one name on the certificate is one way to meet that requirement; placing a placard on the airplane and using a doing business as (DBA) found in OpSpec A001 is another method to satisfy this requirement.
b) The surviving certificate number (certificate designator followed by four additional characters, e.g., TWRA118A) identifies the surviving certificate holder regardless of the surviving name chosen.
4) Exemptions and Deviations.
a) The certificate holders submit petitions for exemptions in accordance with 14 CFR part 11. This process may take a considerable length of time and may be further delayed if the exemption is published in the Federal Register (FR) for public comment. The FAA recommends the certificate holder submits the petition for exemption immediately after submitting the transition plan to help expedite the process. See Volume 3, Chapter 2, Section 1, for guidance on the exemption process. Exemption approvals or denials could affect the resources needed.
b) Examine the deviations and exemptions that each certificate holder has and encourage the certificate holder to combine them if possible prior to SOC. If the deviations and exemptions are not combined prior to SOC make sure OpSpec A005 clearly reflects this.
5) Training Program Considerations. For approved training programs/curricula, confirm there are clear parameters of what information may be disseminated by bulletins, Distance Learning (DL), and conventional training. Establish parameters for appropriate methods for delivering training. The training delivery mechanism should support the learning objectives; examples may include bulletins, DL, and conventional training. The current edition of AC 120-53, Guidance for Conducting and Use of Flight Standardization Board Evaluations, provides guidance on training difference levels. In an Advanced Qualification Program (AQP), the Implementation and Operations Plan (I&O Plan), curriculum development methodology, and qualification standards prologue should support the curriculum development and media selection.
a) Initial New-Hire Training. Initial new-hire training is required when transferring crewmembers and dispatchers onto a certificate. Initial new-hire training may be reduced if it can be determined that training requirements have already been met. The certificate holder may accomplish a gap analysis or Entry Level Analysis (applicable to AQP) to support the reduction of this training.
b) AQP Programs. There are no changes in the review and approval processes for AQP revisions. It may be appropriate for the JTT to participate on the Extended Review Team (ERT) for merger-related revisions. JTT involvement in all AQP revision reviews including those that are non-merger-related may become overly burdensome on the JTT, may produce unacceptable time delays, and therefore is not recommended. The JTT should coordinate desired ERT participation needs early in the merger process. If the JTT is functioning as a document tracking gateway during the merger, it is recommended that AQP revisions be submitted simultaneously to the ERT so as to not slow down the review process.
c) Flight Simulator Training Devices (FSTD). If FSTDs are used in the operator’s FAA-approved flight training program, the operator must notify the NSP of intent to move any FSTDs and submit changes to the operator’s FSTD Simulation Quality Management System (SQMS) program, in accordance with 14 CFR part 60.
6) Aviation Safety Action Program (ASAP) Considerations. The controlling factor behind ASAP is the Memorandum of Understanding (MOU), which will be the consolidation of employee group representation and most likely will not have any connection with SOC. Separate MOUs and event review committees (ERC) could very likely be maintained after SOC until employee representation consolidation and signature on a new MOU has occurred. The CHDOs should notify the Air Carrier Training Systems and Voluntary Safety Programs Branch (AFS-280) of key ASAP personnel changes as soon as they occur.
a) ASAP Before SOC. During the merger period, each CMT will continue to support the respective ERCs in normal fashion. When a revised MOU is signed prior to SOC, and the employee group has one representation entity, then one CMT will fulfill the necessary requirements to support a single ERC. The quarterly report submission requirements will be satisfied using the final certificate designator.
b) ASAP After SOC. In the case where there are two separate ERCs after SOC, the CHDO will need to support two ERCs. Contact the ASAP program office regarding the quarterly report submission requirements and the naming convention for one certificate with two ASAP MOUs in place.
7) Voluntary Disclosure Reporting Program (VDRP) Considerations.
a) The certificate management office (CMO) or JTT will notify AFS-200 of the pending merger and provide at least the following information:
• Names and four-letter identifiers for the merger participants.
• Name and identifier after SOC.
• CMO assigned.
• Target date for SOC.
• Contact information for key members of the JTT.
b) Actions taken by CHDO with the terminating certificate:
1. Assess any open voluntary disclosures to determine which, if any, are potentially applicable to the surviving air carrier.
2. Take action as necessary to close all open voluntary disclosures which are not applicable to the surviving air carrier (complete or rescind each case).
3. Coordinate with JTT to assure that known deficiencies (as identified in voluntary disclosures which have not yet been completed) are not carried forward into the surviving certificate holder’s programs, policies, procedures, or equipment.
NOTE: Close all open VDRP cases (rescind or complete) prior to termination of the associated operating certificate. If a certificate is terminated with open voluntary disclosures, those disclosures will remain open indefinitely and will not be available for edit or closure. All VDRP files will be locked when the certificate is terminated in WebOPSS.
c) Actions by the CHDO assigned the certificate:
1. Update WebOPSS data for the certificate to reflect the PIs assigned to the certificate following the merger.
2. Assure all inspectors assigned to the surviving CMO/CMT are entered into the VDRP user database as needed to meet the responsibilities of their positions.
NOTE: A PI or other inspector who has the authority to add new users to the VDRP system for that specific certificate holder must accomplish the addition of new users to the VDRP system. The VDRP system recognizes PIs by reference to the appropriate fields in WebOPSS. In order for a PI to add other inspectors to the VDRP system, the PI must be assigned to that certificate as documented in WebOPSS. Procedures for adding a new user to the VDRP system are available in the VDRP User Guide under “Add New User”. The VDRP User Guide may be downloaded from: https://av-info.faa.gov/vdrp/userguide.pdf.
8) Integration of Other Voluntary Safety Programs. There could be other voluntary programs that will need to be combined such as flight operations quality assurance (FOQA), Line Operations Safety Audit (LOSA), or Internal Evaluation Programs (IEP). Contact AFS-280 for guidance if needed.
9) AMOC/STC Considerations. The certificate holder should address these items early within their merger process as it could take time to fully research information with the respective ACO.
10) Constraints. Delays may impact the approval of any merger/acquisition changes and final issuance of the SOC in any phase of this process. Each documented merger/acquisition process or procedure must be complete and in accordance with applicable parts of the CFR at the time of its presentation to the FAA. Once the FAA reviews and recommends the document, process, or procedure for approval/acceptance by the FAA, the certificate holders cannot change or revise that particular document, process, or procedure unless agreed upon by the lead office. Changes to documents, processes, and procedures may be required after the FAA’s initial review and recommendation. To ensure amendments do not compromise the approval or acceptability of the original document, processes, or procedures already reviewed, the FAA must review all subsequent changes.
11) Notification of Acceptance or Approval. For notification of acceptance or approval, see Volume 3, Chapter 1, Section 1.
D. Phase 4—Demonstrations and Inspections.
1) Planning and Preparation. Plan for and conduct demonstrations and inspections, if required, in the same manner as Phase 4 performance assessment of a certification process (see Volume 2, Chapter 3, for part 121 air carriers, and Volume 2 for other 14 CFR parts). The certificate holder must build time into the plan to allow for completion of a demonstration phase. Many of these demonstrations and inspections will require appropriate FAA resources. Make sure the certificate holder plans accordingly.
2) Types of Demonstrations and Inspections. Consider the following if applicable to the operations:
a) Ditching and/or Emergency Evacuations. If the certificate holder adds different/new types of aircraft to the surviving certificate, a demonstration of emergency evacuation or ditching may be required. If the air carrier plans to petition for exemption for § 121.291, the air carrier should submit the petition early. See Volume 3, Chapter 2, Section 1, for exemption guidance.
b) Proving and/or Validation Flights. Proving and/or validation flights may be necessary if the merger is authorizing the surviving certificate to operate new types of aircraft and/or new kinds of operations, such as domestic, flag, or commuter. The authorization to conduct operations over proposed routes or areas in compliance with regulatory requirements (e.g., operations outside U.S. airspace, Class II navigation authorizations, CAT II/III, and ETOPS) that were not previously granted in the surviving certificate holders’ OpSpecs may require proving or validation flights. If the certificate holder plans to petition for deviation/exemption from any rule requiring proving or validation flights, that petition should be submitted early. See Volume 3, Chapter 29, for additional information on proving and validation flights.
c) Aircraft Conformity Evaluation. For part 121 air carriers, the PMI, or JTT if one exists, shall consider the need and scope of the conformity evaluation. See Volume 2, Chapter 3, Section 4, for additional information.
d) Tabletop Exercises. Tabletop exercises are not required. However, they are beneficial in making sure the operations, procedures, and controls are in place and ready before resources are utilized from either the certificate holder or the FAA.
NOTE: Consider using the Flight Standards National Field Office (AFS-900) as a resource if needed for any of the above tasks. The first priority will be to use currently assigned inspectors who are intimately familiar with the operations.
E. Phase 5—Approvals or Denials of Various Demonstrations or Submitted Documents.
1) Procedures for Approvals or Denials. Use the same procedures used for approvals or denials for initial certification. Follow the guidance in Volume 3, Chapter 1, Section 1, for approval or denials of submitted documents.
a) Accept programs that are not OpSpec-related or require specific approval.
b) Approve those programs requiring approval.
c) Generate appropriate OpSpecs as applicable.
2) OpSpec Considerations. All 300-series and nonstandard 500-series OpSpecs/management specifications (MSpecs)/training specifications (TSpecs) (parts A, B, C, D, E, and H) require approval by the appropriate HQ policy division.
a) The Flight Technologies and Procedures Division (AFS-400) and AFS-200 or the General Aviation Commercial Division (AFS-800) must approve All Weather Operations (AWO) relating to instrument procedures, as appropriate.
b) The appropriate HQ policy division must approve all nonstandard text (sometimes referred to as Text 99) added to an OpSpec/MSpec/TSpec. For detailed guidance on the process for nonstandard text and obtaining HQ approval, see guidance contained in Volume 3, Chapter 18, Section 2, paragraphs 3-712 and 3-713.
c) Additionally, forward OpSpecs that annotate parallel or fenced operations after SOC to HQ for approval. See subparagraph 3-3593E3)a) for more guidance relating to OpSpecs for these types of operations. When each OpSpec is completed and ready to be issued, forward them for review to HQ. Please note that the OpSpecs do not have to be bundled and sent together; send the individual OpSpecs for review as they are completed.
3) OpSpecs for Parallel Operations.
a) OpSpecs are the legal documents by which the FAA authorizes air carriers to operate and delineates their operational requirements; therefore, the specifics of the parallel operations must be entered into the OpSpecs. Preferably, complete the main content of the OpSpecs describing the end state (e.g., the Carrier A method, the Carrier B method, or a new method). Then, in the nonstandard text block (formerly known as Text 99), specify whether that end state applies to both carriers immediately upon the completion of the merger. If there will be separate procedures used by the merged carriers, describe the procedures to be used in nonstandard text. OpSpec C052 is an example of an OpSpec where each side of the parallel operation may have different approaches authorized. If Carrier A had more types of approaches authorized in OpSpec C052, complete OpSpec C052 using Carrier A’s procedures and indicate which procedures Carrier B is not authorized to conduct in nonstandard text (e.g., “Carrier B not authorized Localizer back course (LOC BC)”). Another example is OpSpec C384; which could say in Text 99, “ABC B737 only.”
b) In some cases, primarily those where the OpSpec data is loaded from the Maintain Operator Data section of WebOPSS, the main content of the OpSpec does not accommodate a way to distinguish which carrier is authorized which portions of the authorization. One such OpSpec is C070, Airports Authorized for Scheduled Operations. It is not possible in the table listing Airports Authorized for Scheduled Operations in OpSpec C070 to identify the airports where each certificate holder can dispatch. To get around this limitation, export the content of the OpSpec C070 table from WebOPSS to a spreadsheet and add columns to the exported airport data to distinguish the differences in the fenced operations. The OpSpec C070 table data can be exported from Maintain Operator Data, Airports by using the Export Assigned Airports Data function in WebOPSS, or by copying the table from OpSpec C070 and pasting it into a spreadsheet. The spreadsheet file must be controlled with a revision number and updated each time any of the information changes. In the nonstandard text for OpSpec C070, record and maintain the file name, revision number, and change date each time the external file and or OpSpec C070 is amended.
c) The authorized areas information in OpSpec B050 is also loaded from Maintain Operator Data in WebOPSS. For OpSpec B050, record differences in authorized areas for fenced operations using the Authorized Areas Notes feature in WebOPSS found under Maintain Operator Data, Authorized Areas, Add/Remove Territories. Enter as many notes as necessary to describe the differences in the fenced operations and then assign those notes to the appropriate authorized areas (e.g., Note Number 5 may be entered as “Carrier A Only” and then assigned to all of the areas to which Carrier A is authorized but not Carrier B).
d) For OpSpec D085, use the Nose Number field in Maintain Operator Data, Aircraft, to indicate which side of the fence will handle maintenance and dispatch for the aircraft (e.g., add: “Carrier A” or “Carrier B” to the Nose Number column for each applicable N-numbered aircraft). Do not use the Registration Number or Serial Number columns for this purpose. Modifying the registration and/or serial numbers corrupts those numbers and prevents the ability to track or associate the aircraft by its true identifier.
F. Phase 6—SOC Phase.
1) Definition of SOC—SOC for Air Carriers. An SOC may be issued when one set of part 119 management personnel is in place and these managers have operational control of the entire organization. It is most desirable to have negotiated the merging of all operations and procedures throughout the merger period and prior to issuing an SOC. However, this is not required provided every OpSpec involved clearly shows differences between the different procedures conducted by the merging certificate holders. For example, if the certificate holder obtains an SOC before the merging certificate holders have negotiated a single deicing program, differences between the formerly separate programs must be spelled out. Merged certificate holders operating under an SOC without a complete merging of operating procedures will experience an increased risk due to the need to ensure employees are able to apply procedural differences. It is therefore advisable to minimize the number of OpSpec differences when approaching an SOC. Having parallel operations under one certificate also increases the workload for the FAA oversight offices. Because the certificate holder will be operating with two operational procedures in some cases, the resulting operation is more complex and therefore increased surveillance is warranted. As significant changes occur and those parallel operations merge, the transition plan must be amended and the appropriate OpSpecs, including OpSpec A502, must be amended.
2) Final OpSpecs for an SOC. If using the ghost certificate for OpSpecs preparation, then at least 2 weeks out from the final SOC date, contact WebOPSS support at AFS-WebOPSS@faa.gov to coordinate the final data transfer in WebOPSS to the surviving certificate. WebOPSS requires a 48-hour period to transfer the data and draft OpSpecs from the ghost certificate to the surviving certificate, during which time there can be no activity in either certificate in WebOPSS. The draft OpSpecs must remain in “Draft: In process” status in the ghost certificate. Signed OpSpecs cannot be moved.
3) Certificate Transfer. If the merger or acquisition process results in a certificate moving to a new location, see Volume 10, Chapter 10, Section 1. The referenced guidance is primarily designed for part 121 air carriers, but may provide some useful information to other 14 CFR part certificate holders.
4) FAA Databases and Naming Conventions.
a) Because of a merger or acquisition, one or both CHDO office designator(s) could change. Coordinate with the Aviation Safety (AVS) National Service Desk for new FAA employee user IDs. It is important that the surviving local field office or newly developed field office start this process before the final phase.
b) Regional ramps coordinators may need to know of the completed merger as well as any other internal data coordinators. Consider other 14 CFR parts that could be affected.
5) FAA Database Updates.
a) Update enhanced Vital Information Database (eVID), check pilot and check flight engineer authorizations, and aircrew program designee (APD) authorizations. For part 121/135/145 certificate holders, see Volume 10 and update Module 1 Configuration.
b) Update OpSpec A502, if needed, to reflect changes after SOC. This will now become post-SOC A502 and will require amendments as parallel operations merge into one. Once all parallel operations are merged, OpSpec A502 will no longer be required and should be archived.
3-3594 TASK OUTCOMES.
A. Final Considerations.
1) Prepare a new certificate if applicable. The certificate holder will surrender the old certificate and old OpSpecs. Notify the Regulatory Support Division (AFS-600) about the surrendered certificate or any administrative change such as a change in the certificate number, if needed.
2) Certificate holder will consider reregistration of aircraft and make necessary changes, if applicable.
3) A post-merger or post-acquisition surveillance plan must be used complying with the national work guidelines as a basis for inspection and surveillance.
B. Indepth Inspection. The CHEP, as described in Volume 10, Chapter 8, provides policies and procedures to evaluate part 121/135/145 air carriers at the national, regional, and CHDO levels. The gaining RFSD, CHDO, and PIs should consider requesting a CHEP. Plan the CHEP towards the end, or after SOC. The results of the CHEP should indicate how effectively the transition plan was accomplished. It should also reveal any problem areas needing further attention.
NOTE: Regardless of the complexity of the situation, at any time during the transition period, when continued compliance with 14 CFR or safe operating practices becomes questionable, the CHDO should conduct an in depth inspection without delay.
Good thing Baltia has had a lot of practice with emergency evacuation demonstrations.
http://fsims.faa.gov/wdocs/8900.1/v03%20tech%20admin/chapter%2034/03_034_001.htm
VOLUME 3 GENERAL TECHNICAL ADMINISTRATION
Indicates new/changed information.
CHAPTER 34 CHANGES TO AIR CARRIER, AIR OPERATOR, OR AIR AGENCY CERTIFICATE OR OPERATING AUTHORITY
Section 1 Safety Assurance System: Mergers and/or Acquisition of Operational Assets
3-3591 GENERAL.
A. Purpose. This section provides guidance and a process to follow when certificate holders merge operations, acquire operational assets of another certificate holder, or change ownership.
NOTE: This section is designed primarily to cover mergers and/or acquisitions between certificate holders conducting Title 14 of the Code of Federal Regulations (14 CFR) part 121 operations. However, this guidance applies to other 14 CFR parts that are issued an Air Carrier, Operating, or Air Agency Certificate (e.g., 14 CFR parts 125 and 135). Principal operations inspectors (POI) should be aware that the current method used by the Federal Aviation Administration (FAA) to approve a certificate holder’s merger and/or acquisition process is through the issuance of operations specification (OpSpec) A502. This OpSpec is currently only available for parts 121 and 135 operations.
1) When mergers and/or acquisitions occur, certificate holders will typically have substantial changes in management; turnover in personnel and reduction of workforce; labor disputes; rapid expansion; changes in fleet types; and changes in outsourcing. These changes resulting from a merger or acquisition require various levels of FAA coordination, approval, and/or acceptance before they are implemented. The following are examples of changes that could occur during mergers and/or acquisitions:
• Changes in operational control systems and philosophy.
• Changes in OpSpecs.
• Changes to approved programs that are part of the operational control system.
• Revisions to manuals containing procedures for conducting various operations, maintenance, and inspection programs.
• Revisions to training curricula and/or changes in employee qualification criteria for persons who will be conducting merged or new operations and/or programs.
2) The successful merger and/or acquisition of certificate holders will depend on the effective coordination, communication, and commitment between the certificate holders and the FAA. Complete each phase of the merger/acquisition process in the respective order to ensure the smooth alignment of activities and processes. Every merger/acquisition submission must have a defined transition plan that contains timelines.
3) The certificate holder is responsible to consider the following factors and ensure that these factors have a direct influence on the FAA’s ability to effectively and timely fulfill its requirements concerning mergers and acquisitions:
• Complexity of the affected operations.
• Timely notification to the FAA.
• The FAA’s early understanding of the changes which will result from the merger or acquisition.
• The certificate holder’s comprehension of the actions to take to obtain FAA approval or acceptance of the consequent changes.
• The length of time and sequence to implement changes.
B. Scope. Mergers and acquisitions have a significant effect on FAA resources and have visibility at the highest levels of the FAA. It is imperative to handle them efficiently and effectively, ensuring continued compliance with 14 CFR and safe operating practices.
1) Mergers occur when two or more certificate holders merge operations.
2) Acquisitions occur when there is a transfer of significant amounts of operational assets, including equipment and/or personnel. This is similar to a merger. Develop a transition plan the same way as a transition plan for a merger.
NOTE: Acquisition by holding companies (non-certificate holders), when the certificate holder continues to exist as an independent entity (subsidiary), is a type of acquisition that requires little, if any, FAA action. Usually, few operational changes are made and development of a transition plan is not necessary.
C. Indepth Inspections. In complex mergers or acquisitions, or when extensive changes or integrations occur, principal inspectors (PI) should consider requesting an indepth inspection of the surviving certificate holder’s operation (see paragraph 3-3594, Task Outcomes). PIs should normally plan an indepth inspection toward the end, or after completion, of the transition period.
3-3592 TASK PREREQUISITES AND SIGNIFICANT INTERFACES.
A. Department of Transportation (DOT) Economic Authority Considerations. The air carrier is responsible for determining whether or not it will need to modify its existing DOT economic authority by virtue of receiving the single operating certificate (SOC) with different operating authority (e.g., domestic versus flag). In some cases, the answer will be “no” if the air carrier previously obtained DOT approval for transfer of international and other route authorities to the surviving certificate. The PI must ensure all required authority has been given by the DOT before issuing any OpSpecs. Any questions involving this step should be addressed to the Office of the Chief Counsel (AGC).
B. Department of Justice (DOJ) Approval. DOJ approval may be required for some mergers if antitrust laws are involved. It will be the responsibility of the surviving certificate holder to coordinate all of these issues with the DOJ.
C. Significant Interfaces.
1) A merger or acquisition requires effective coordination and communication between the FAA and each certificate holder involved. Each certificate holder is responsible to designate its personnel who will be involved with the merger/acquisition process. The FAA will designate its appropriate personnel (e.g., managers, supervisors, and PIs) of the affected certificate-holding district offices (CHDO) and Certificate Management Teams (CMT). The CHDOs and CMTs will interface with the regional Flight Standards division (RFSD). The RFSD will interface with FAA Headquarters (HQ). A Joint Transition Team (JTT), if established (see subparagraph 3-3593A2) below), should be set up early. If a JTT is established, the JTT Team Lead will interface directly with FAA HQ and keep the appropriate RFSDs informed. Active communication between all stakeholders is paramount. During the merger period, significant changes will take place. The JTT or the lead CHDO (further discussed in subparagraph 3-3593A1)) will keep all affected personnel informed of the transition plans along with the progress of the merger and/or acquisition process and any issues associated with that process.
2) Certificate holders are responsible for the merger or acquisition process. The FAA understands that certificate holders may elect to utilize third-party consultants to play a role in the merger or acquisition process; however, the FAA will conduct communications directly with the certificate holder. The FAA will not communicate directly with the consultants.
D. Additional Interface Considerations. Certificate holders who interface with international authorities shall consider early coordination with those entities for meeting all International Civil Aviation Organization (ICAO) requirements (e.g., OpSpecs and call sign changes). Contact the appropriate International Field Office (IFO), International Field Unit (IFU), or the International Programs and Policy Office (AFS-50) if necessary.
E. References. None.
F. Forms. Figure 3-130, Sample Joint Transition Team Charter.
G. Job Aids. Figure 3-121A, Transition Plan Job Aid.
H. Additional Guidance. For part 121 air carriers, the Safety Assurance System (SAS) assesses the safety of air carrier operating systems. The SAS Data Collection Tools (DCT) will be used to evaluate the design and performance of proposed merged systems during the merger process. The SAS process and the Certificate Holder Evaluation Process (CHEP) provide means to identify hazards, analyze risk, and determine action in the course of air carrier mergers or acquisitions.
NOTE: When the direction and guidance provided in this order does not adequately address a particular situation, the JTT Team Lead or the CHDO manager will forward a request for additional guidance through the RFSD to the appropriate HQ policy division.
I. Documentation Tracking. Each aviation safety inspector (ASI) who reviews submitted programs will document each activity via Program Tracking and Reporting Subsystem (PTRS) codes 1236, 3236, 5236, or 8236 as appropriate after review and acceptance or approval of each submitted program. The CMT management will be responsible to ensure all tracking is timely and accurate. Air Carrier Certificates under SAS may elect to use the Action Item Tracking Tool (AITT) to document and track specific programs; however, the AITT does not replace the requirement to use PTRS.
NOTE: The JTT or CMT will be responsible for tracking all open/pending Enforcement Investigation Reports (EIR) that have not left the office. Consult the Regional Counsel for guidance on how to combine all open/pending EIR cases and, if necessary, the Enforcement Division in the AGC in HQ.
Figure 3-121. Merger and/or Acquisition Plan Process Flow
NOTE: The transition plan can be amended at any time during each phase up to and including after SOC. For discussion on whether amending the transition plan requires an OpSpecs change and corresponding approval, see subparagraph 3-3593B1).
3-3593 PROCEDURES.
A. Phase 1—Notification and Planning.
1) Step 1—Notification from Certificate Holder and FAA Planning. Certificate holders involved in a merger or acquisition should notify the appropriate CHDO, who will then notify the RFSD. Upon notification and as early as possible, the affected CHDOs and their RFSD should accomplish the following as appropriate:
a) When two or more CHDOs are involved, the RFSD or HQ will make a determination as to which one will be the lead office and where the principal base of operations will be located. If the lead office determination crosses regional boundaries, coordination between the involved RFSDs would be required. At some point, the Flight Standards Service (AFS) must decide which district office will be the CHDO after the merger or completion of the acquisition. In making this determination, apply the considerations described in Volume 2, Chapter 1, Section 2, for assigning CHDO responsibilities. If the CHDO transfers responsibilities to another office, the CHDOs should accomplish the same types of inter-district-office and inter-regional coordination, briefings, inspections, and transfer of operator files, as described in Volume 2, Chapter 1, Section 2, at the appropriate time.
b) Affected CHDOs and assigned PIs must establish lines of communication. Once established, the CHDOs and PIs should maintain this communication throughout the transition period to provide an ongoing dialogue between assigned PIs, district offices, and the regions. If the RFSD establishes a JTT, the JTT shall also be part of this ongoing communication. The RFSD or JTT (if established) shall periodically keep the Air Transportation Division (AFS-200) and Aircraft Maintenance Division (AFS-300) informed of the status of mergers or acquisitions. The RFSD will provide AFS-200 with a point of contact (POC) for the merger or acquisition.
c) The CHDO and RFSD managers will select/assign who will serve during the merger process. If the merger warrants a JTT, the RFSD will initiate its establishment. See Step 2 for additional JTT information.
2) Step 2—JTT Formations and Expectations.
a) The RFSD will be responsible for determining if a JTT is necessary. Contact AFS-200 and/or AFS-300 for help in determining if a JTT is necessary. The JTT should include representatives from all affected CHDOs and RFSDs and should include all applicable specialties (Operations, Airworthiness, Dispatch, and Cabin Safety). The CHDO managers and RFSD managers will designate three transitional PIs (POI, principal maintenance inspector (PMI), and principal avionics inspector (PAI)) to serve during the merger process. The transitional PIs should be members of the JTT and, whenever possible, the PIs of the surviving certificate holder. These transitional PIs will be responsible for determining outcomes of program approvals, acceptance of certificate holder systems, manuals, and OpSpecs generation during the merger process. If resources are lacking at the field level, expand the search for JTT members to include regional or national personnel. Consider having JTT members dedicated solely to the merger and/or acquisition process depending on its complexity. Separate PIs (perhaps acting) should be assigned to the day-to-day certificate management of each certificate.
b) Conduct regularly scheduled JTT meetings throughout the entire merger/acquisition. The level of complexity of the merger and/or acquisition may necessitate the JTT meeting several times a week, with the certificate holders, the JTT members, or both. The JTT should regularly brief all the stakeholders, keeping inspectors and support staff informed on the progress.
3) Requirements for the JTT After Establishment:
a) The CHDO managers will nominate a JTT Team Lead, who regional division management will designate. The team lead will be identified to HQ and will serve as the main POC for all information regarding the merger/acquisition process.
b) Develop a JTT guide and charter if applicable (see Figure 3-130).
c) Open lines of communication between respective field offices, Regional Offices (RO), and HQ. Include the National Simulator Program (NSP) (AFS-205) if applicable.
d) Plan and conduct initial meeting with the certificate holder.
e) The JTT will coordinate and communicate with the CMT PIs on any changes in processes or procedures, which will directly affect the continuing oversight of each certificate holder prior to SOC.
f) The JTT will use the respective CMT staff to assist in the various program review processes.
g) The JTT will be responsible for the tracking and documentation of the day-to-day activities surrounding integration of the certificates.
h) Along with a robust document tracking method for approval and acceptance of documents submitted, clerical assistance and automation support for the JTT is a requirement. The JTT may produce many certificate holder documents, as well as FAA documents, depending on the complexity of the merger/acquisition. The JTT should include all transition documents as well as all meeting minutes in the documentation process, and make them available to affected FAA stakeholders.
i) In coordination with the CMT PIs, the JTT will consider the associated risk factors of the merger/acquisition changes that the certificate holder identifies as they are fully implemented. For part 121 mergers, the use of SAS tools will help to ensure that each certificate holder continues to operate at the highest level of safety.
j) Should questions arise, JTT members will remain available until after the merger/acquisition is fully completed and all OpSpecs are combined without any references to parallel operations.
4) Step 3—Establish FAA Resource Availability. The size and scope of the merger/acquisition of the certificate holder will be a consideration during formation of the JTT and the FAA resources that need to be available during the transition. Expertise outside of the field office may be necessary. For the merger/acquisition of part 121/135 certificate holders, consider placing JTT and CMT members as a shared resource on each other’s SAS rosters. See Volume 10, Chapter 4. This will allow the team members the ability to conduct a Design Assessment (DA) and then enter that data into the respective database.
5) Step 4—Initial Meeting.
a) The FAA recommends the certificate holders have a dedicated transition team similar to the FAA’s JTT. The recommendation is to have a team be comprised of personnel who have authority and responsibility to make decisions on operating practices for the respective certificate holders. Routine changes made in the normal course of certificate management can have a significant effect on the merger or acquisition of certificates.
b) The lead CHDO or the JTT must schedule an initial meeting for the certificate holder to brief the FAA of their proposed plans and for the FAA to brief the certificate holder’s key management personnel of the FAA requirements contained in this section. All PIs affected, their managers, and the entire JTT should attend. The intent of the initial meeting is to establish a good working relationship that will help the certificate holder to understand that aviation safety must not be compromised during the merger process and that an efficient and timely transition is predicated on their response to required changes or revisions. The CHDO manager should ensure that the timing of this meeting is appropriate for the situation.
c) The lead CHDO Manager should direct either the JTT or the assigned PIs to prepare for and conduct this initial meeting. Figure 3-121A should be useful in preparing for this briefing. During the briefing, ensure that the responsible parties will:
1. Verify the information provided by the certificate holders. The information should include which certificate will survive, identification of the required management personnel in accordance with 14 CFR part 119, § 119.65 or § 119.69 as appropriate, and the location of certificate holder headquarters. If the certificate holders have changed their initial planning information to the extent that determination concerning CHDO assignment is questionable, immediately notify the RFSD.
2. Verify that all stakeholders understand that until the merger is complete, all approvals and/or acceptance within the individual CMTs must filter through the JTT to ensure any changes will not have ramifications on the merger process. Each certificate holder must follow their current processes until each new process(es) has been approved or accepted.
3. Ensure the certificate holders understand that if they apply for exemptions that information must be communicated to the JTT.
4. Inform the certificate holders of the requirement to submit a transition plan that will outline the transition that will occur throughout the merger or acquisition process. The size and scope of the operation will determine the complexity of the plan.
5. Inform the certificate holders that the FAA recognizes modifications to the transition plan and estimated schedules will often be necessary. Therefore, appropriate notification of these changes will be essential, and the FAA will attempt to respond in a timely manner. The certificate holder should submit the transition plan to the JTT or CHDO (if no JTT exists) as soon as possible so that the FAA may begin planning its activities.
6. Encourage the certificate holders to consult with either the JTT or the PIs during development of the transition plan. Any amendment to the transition plan will require acceptance of the amended plan and reissuance of OpSpec A502 may be required if significant events or changes occur.
7. Inform the certificate holders of the FAA’s merger guidance contained in this section and provide them with the information that a transition plan should include.
8. Inform the certificate holders to prepare a new compliance statement for the merged entity. This will identify how the merged certificate will maintain compliance with the CFR, as well as ensuring the certificate holder’s manuals contain the appropriate regulatory references.
B. Phase 2—Transition Plan Review and Issuance of OpSpec A502 for Air Carriers.
1) Transition Plan.
a) One of the most important early steps in a merger/acquisition process will be the certificate holder’s submission of a transition plan. A transition plan must be submitted for air carriers. The regulatory authority for this requirement is part 119 subpart C, which specifies the findings that need to be made in order to issue an SOC. The size and complexity of the transition will depend on the size and scope of the certificate holders that are undergoing the merger and/or acquisition. The plan should identify those programs that require FAA approval or acceptance. FAA approval of a merger and/or acquisition transition plan ultimately occurs at the RFSD of the CHDO, who will have oversight responsibility of the surviving certificate holder in the merger/acquisition. Upon completion of the review of the certificate holder’s transition plan, the RFSD shall forward a copy of the transition plan to AFS-200 and/or AFS-300 (and the other RFSD(s) if applicable), as appropriate along with a copy of the certificate holder’s proposed OpSpec A502. AFS-200 must approve OpSpec A502 in coordination with AFS-300 before being issued. Once AFS-200 and AFS-300 have approved issuance of OpSpec A502, the PIs will issue OpSpec A502 to each certificate holder involved in the merger and/or acquisitions. The issuance of OpSpec A502 to each certificate holder involved is a means of authorizing the plans for the transition during the merger or acquisition process.
b) The transition plan is very dynamic and the CHDO level accepts any normally occurring changes to the transition plan, unless the RFSD determines otherwise, with no reissuance of OpSpec A502. However, any significant revisions to the transition plan will require reissuance of OpSpec A502, which AFS-200 must approve in coordination with AFS-300.
c) The kind of information outlined in OpSpec A502 is dependent on the type and complexity of the situation. For additional information regarding OpSpec A502, see Volume 3, Chapter 18, Section 3, OpSpec A502. The JTT or PIs must review the transition plan in detail during this phase and consider the availability and capability of resources, making sure plans and schedules develop accordingly. To be responsive to the certificate holder’s needs, inspectors will need to conduct timely evaluations of the changes outlined in the transition plan. The FAA should carefully consider the feasibility of the plan.
d) The transition plan must:
1. Ensure the certificate holder continually identifies hazards and manages the risk associated with the merger/acquisition changes as these changes occur. Encourage the certificate holders to use a Safety Risk Management (SRM) process, as it will be beneficial. For the certificate holders that are required to use the SRM process, make sure they identify when and how they plan to use SRM.
2. Contain a Schedule of Events (SOE) or timeline. Many events and activities outlined in the transition plan must occur before other events or activities. The transition plan should not contain open-ended events or activities. It should include a timeline for the completion of the transition period when all changes resulting from the merger or acquisition are due to be complete.
3. Outline the methods or procedures to be used to ensure continued compliance with 14 CFR and safe operating practices. For example, previously approved minimum equipment lists (MEL) based on specified maintenance and operations procedures should continue to be used until the new or revised MEL is approved.
4. Be designed to ensure that changes to major programs are not submitted at the end of the transition. Submitting multiple programs to the FAA toward the end of the plan may delay acceptance and approval.
5. Below are some items to consider within a transition plan. Some of these items are part-121-air-carrier-specific.
a. A general discussion of:
• Operational control during and after SOC.
• Manual systems and how they will be identified and cataloged.
• The method of combining two Safety Management Systems’ (SMS) programs and how the SMS will be utilized during the merger activities (if applicable).
• Proving/validation flights and/or ditching/emergency evacuations plans (submit early for resource planning).
• Any change in authority to conduct a kind of operation. For example, flag versus domestic, domestic versus supplemental, commuter versus on-demand.
NOTE: The DOT grants only economic authority; it does not grant operational authority to conduct a kind of operation. In order to obtain authority to conduct a particular kind of operation (i.e., domestic, flag, supplemental, commuter, or on-demand), § 119.33 requires certificate holders to conduct proving tests. In addition, certificate holders may be required to conduct validation tests to obtain approval to conduct a type of operation such as Extended Operations (ETOPS) or extended overwater.
b. Approved or accepted items and programs, and identify how those will change. These programs include, but are not limited to:
• Training programs, including those for flight and in-flight crewmembers, dispatchers and operational control, maintenance, ground, and customer service personnel;
• Continuous Airworthiness Maintenance Program (CAMP);
• MELs;
• Airworthiness Directive (AD) program;
• Alternative method of compliance (AMOC) for ADs. Submit as early as possible. They may require Aircraft Certification Office (ACO) coordination;
• Supplemental Type Certificates (STC) (may require coordination with ACO);
• Special airports;
• Environment assessments considerations if new aircraft are added to OpSpec C070;
• ETOPS;
• Fatigue Risk Management Plan (FRMP);
• Recordkeeping;
• Pilot Records Improvement Act of 1996 (PRIA). Refer to the current editions of Advisory Circular (AC) 120-68, Pilot Records Improvement Act of 1996, and FAA Order 8000.88, PRIA Guidance for FAA Inspectors;
• Carry-on baggage program;
• Exit seating program;
• Drug and alcohol testing;
• Security programs to include access to cockpit;
• Hazardous materials (hazmat) programs;
• OpSpecs—side-by-side comparison of A004;
• Emergency Airworthiness Directive (EAD) notification;
• Driftdown procedures;
• Category II (CAT II) Approach and CAT III Approach;
• Reduced Vertical Separation Minimum (RVSM);
• Weight and Balance (W&B) program;
• Ground deicing/anti-icing program;
• Fueling;
• Aircraft parts consolidation;
• Test equipment consolidation; and
• Exemptions and deviations.
NOTE: Figure 3-121A provides a transition plan job aid for inspector use.
2) General Information on Transition Plans.
a) Transition plans must outline the strategy and include benchmarks or target dates for bringing the various processes together prior to SOC. If operational areas of the certificate holder after SOC will remain separate and operate parallel, it will be essential that the transition plan establish which processes will remain separate. The transition plan will include identified parallel processes and provide a schedule for merging these parallel processes after SOC. Parallel operations will create higher risk, so if the certificate holder elects to have separate processes at SOC then it will be important for the FAA to give careful scrutiny of those areas with increased surveillance. The FAA and the air carrier will give careful consideration to the OpSpecs and how to identify separate processes within the affected OpSpecs. More information on OpSpecs relating to this topic is in subparagraph 3-3593E, Phase 5—Approvals or Denials of Various Demonstrations or Submitted Documents.
b) If the certificate holder elects to run parallel operations after SOC, they must address the following items for each of these parallel operations. This will be necessary in order to ensure the certificate holder is properly and adequately equipped as well as able to conduct a safe operation.
• Descriptions of the parallel processes.
• Reasons for the parallel processes.
• Who is affected by the parallel processes.
NOTE: The JTT will review these items. Should a JTT not exist, the CMT will conduct the review in conjunction with the RFSD, as they hold the ultimate responsibility for the approval of the transition plan.
c) The parallel process shall also include descriptions of the controls ensuring the parallel processes are followed. A Custom Data Collection Tool (C DCT) (a SAS tool) could be helpful for the merger team to assess these required processes used by the certificate holder.
d) At the point of SOC, the airline will operate as a single entity from both organizational and management perspectives even though some departments may be running parallel operations under a single entity. Equally important for SOC is operational control; this must be done under one entity. Fenced operations must be clearly described in the appropriate OpSpec with HQ approval before issuance. For more information on issuing those OpSpecs, see subparagraph 3-3593E.
3) Return of Transition Plan.
a) If significant deficiencies, omissions, or impractical proposals exist, the PIs should meet with the controlling certificate holder’s management and attempt to resolve these problem areas. Return the transition plan if the PIs and managers cannot resolve these problems to the satisfaction of the FAA with a letter briefly describing the unsatisfactory areas. The CHDO will retain a copy of this letter along with a copy of the returned transition plan.
b) The PI will not issue OpSpec A502 for air carriers if a CHDO returns a transition plan because it does not ensure continued regulatory compliance, or if the certificate holder refuses to develop and submit a plan. Should the certificate holders continue with the merger and or acquisition process despite the rejection of the transition plan, the CHDO should increase surveillance if necessary with the option of requesting an indepth inspection, such as a CHEP, and deny any certificate amendments under § 119.41(c).
4) Issue OpSpec A502. When the RFSD in coordination with the CHDO finds the transition plan to be acceptable, the PIs will prepare a draft OpSpec A502 and send it to AFS-200/AFS-300 for approval. OpSpec A502 is a nonstandard OpSpec authorization. PIs must review Volume 3, Chapter 18, Section 2, paragraphs 3-712 and 3-713 for information on how to obtain HQ approval to issue nonstandard OpSpec authorizations. In addition, PIs must see Volume 3, Chapter 18, Section 3, OpSpec A502, which contains specific guidance on how to issue OpSpec A502. OpSpec A502 will remain in place until the merger/acquisition is 100 percent complete. Revisions to transition plans will likely necessitate updates, unless they are minor, to OpSpec A502. A revision to a transition plan could occur before or after SOC. (See the dotted line on the process flow map in Figure 3-121, Merger and/or Acquisition Plan Process Flow.) PIs will update OpSpec A502 as necessary. Each update to OpSpec A502 requires HQ approval prior to issuance. Once the final compliance statement is complete and the merger is 100 percent complete, OpSpec A502 will no longer be required and PIs must archive it in the Web-based Operations Safety System (WebOPSS).
C. Phase 3—Review of Programs Submitted.
1) Program Changes. As the certificate holder implements program changes, that certificate holder must evaluate the changes in the same manner as a certification process. The JTT will be the clearinghouse for all documents and will communicate on regular bases with all parties involved. If the CHDO receives documents containing program changes, the CHDO will forward the documents to the JTT. The certificate holders that are SMS compliant shall also make available documentation showing that an SRM was completed for each process, procedure, or system (required by 14 CFR part 5). Some of the day-to-day operations of a certificate holder are governed by “accepted manuals.” This accepted material will have to be reviewed prior to implementation. Upon completion of the review process for all submissions, the JTT will make recommendations for approval, acceptance, or review of program changes that affect the current certificate status to the current respective PIs. If designated transitional PIs exist, they will be charged with determining outcomes of program approvals, acknowledgements, or acceptance of carrier systems, manuals, and OpSpecs during the merger process. The protocol for the resolution of any merger/acquisition activities or changes that are in question between/within the JTT, the PIs, or the certificate holders will be brought to the attention of the JTT Team Lead, to the respective office managers, through the RFSD, and to HQ if necessary. The CMTs are responsible for the continued day-to-day oversight of the certificates throughout the merger process.
NOTE: Any request or correspondence sent up to HQ relating to file-naming system so that it is easy to determine the content of the memo/document. Make sure the merger entity is on the name of the file, and make it clear if there is a required action or due date.
2) OpSpecs Preparation for SOC. The Technical Programs Branch (AFS-260) offers assistance to the PIs and the JTT in preparing OpSpecs for SOC. The process involves creating a replica of the data from the merging certificates to facilitate preparation of OpSpecs for the combined operation at SOC without affecting the existing OpSpecs. To request the creation of a replica or “ghost” certificate for drafting merged OpSpecs, contact AFS-260 directly or through WebOPSS support at AFS-WebOPSS@faa.gov at the beginning of the merger process. Provide the following information:
• Target dates for SOC and the issuance of new OpSpecs.
• The designator codes of the certificates involved and the surviving certificate.
• The office that will manage the merged certificate.
• The operator data (e.g., aircraft, addresses, personnel, authorized areas, airports) to be transferred from the merging certificates.
• The list of FAA and industry users requiring access to the ghost certificate, including names, user identifications, and email addresses.
NOTE: The ghost certificate process is designed to facilitate drafting OpSpecs for SOC, but planning and communication with AFS-260 is crucial to a successful transition.
3) Two Names on One Certificate.
a) Certificate holders desiring to list the names of more than one certificate holder involved in a merger or acquisition on the Air Carrier Certificate may only do so for a limited period of time prior to completion of the merger/acquisition, and then only with the permission from the AGC. The JTT (or RFSD if there is no JTT) will review requests of this nature. If the JTT/RFSD concurs with the request, they will forward it to the AGC through the manager of AFS-200.
NOTE: In accordance with § 119.9, all aircraft must be marked with a name listed on the Air Carrier Certificate. If more than one certificate holder’s name is listed on the Air Carrier Certificate, certificate holders must still meet the requirements of § 119.9. Getting approval to have more than one name on the certificate is one way to meet that requirement; placing a placard on the airplane and using a doing business as (DBA) found in OpSpec A001 is another method to satisfy this requirement.
b) The surviving certificate number (certificate designator followed by four additional characters, e.g., TWRA118A) identifies the surviving certificate holder regardless of the surviving name chosen.
4) Exemptions and Deviations.
a) The certificate holders submit petitions for exemptions in accordance with 14 CFR part 11. This process may take a considerable length of time and may be further delayed if the exemption is published in the Federal Register (FR) for public comment. The FAA recommends the certificate holder submits the petition for exemption immediately after submitting the transition plan to help expedite the process. See Volume 3, Chapter 2, Section 1, for guidance on the exemption process. Exemption approvals or denials could affect the resources needed.
b) Examine the deviations and exemptions that each certificate holder has and encourage the certificate holder to combine them if possible prior to SOC. If the deviations and exemptions are not combined prior to SOC make sure OpSpec A005 clearly reflects this.
5) Training Program Considerations. For approved training programs/curricula, confirm there are clear parameters of what information may be disseminated by bulletins, Distance Learning (DL), and conventional training. Establish parameters for appropriate methods for delivering training. The training delivery mechanism should support the learning objectives; examples may include bulletins, DL, and conventional training. The current edition of AC 120-53, Guidance for Conducting and Use of Flight Standardization Board Evaluations, provides guidance on training difference levels. In an Advanced Qualification Program (AQP), the Implementation and Operations Plan (I&O Plan), curriculum development methodology, and qualification standards prologue should support the curriculum development and media selection.
a) Initial New-Hire Training. Initial new-hire training is required when transferring crewmembers and dispatchers onto a certificate. Initial new-hire training may be reduced if it can be determined that training requirements have already been met. The certificate holder may accomplish a gap analysis or Entry Level Analysis (applicable to AQP) to support the reduction of this training.
b) AQP Programs. There are no changes in the review and approval processes for AQP revisions. It may be appropriate for the JTT to participate on the Extended Review Team (ERT) for merger-related revisions. JTT involvement in all AQP revision reviews including those that are non-merger-related may become overly burdensome on the JTT, may produce unacceptable time delays, and therefore is not recommended. The JTT should coordinate desired ERT participation needs early in the merger process. If the JTT is functioning as a document tracking gateway during the merger, it is recommended that AQP revisions be submitted simultaneously to the ERT so as to not slow down the review process.
c) Flight Simulator Training Devices (FSTD). If FSTDs are used in the operator’s FAA-approved flight training program, the operator must notify the NSP of intent to move any FSTDs and submit changes to the operator’s FSTD Simulation Quality Management System (SQMS) program, in accordance with 14 CFR part 60.
6) Aviation Safety Action Program (ASAP) Considerations. The controlling factor behind ASAP is the Memorandum of Understanding (MOU), which will be the consolidation of employee group representation and most likely will not have any connection with SOC. Separate MOUs and event review committees (ERC) could very likely be maintained after SOC until employee representation consolidation and signature on a new MOU has occurred. The CHDOs should notify the Air Carrier Training Systems and Voluntary Safety Programs Branch (AFS-280) of key ASAP personnel changes as soon as they occur.
a) ASAP Before SOC. During the merger period, each CMT will continue to support the respective ERCs in normal fashion. When a revised MOU is signed prior to SOC, and the employee group has one representation entity, then one CMT will fulfill the necessary requirements to support a single ERC. The quarterly report submission requirements will be satisfied using the final certificate designator.
b) ASAP After SOC. In the case where there are two separate ERCs after SOC, the CHDO will need to support two ERCs. Contact the ASAP program office regarding the quarterly report submission requirements and the naming convention for one certificate with two ASAP MOUs in place.
7) Voluntary Disclosure Reporting Program (VDRP) Considerations.
a) The certificate management office (CMO) or JTT will notify AFS-200 of the pending merger and provide at least the following information:
• Names and four-letter identifiers for the merger participants.
• Name and identifier after SOC.
• CMO assigned.
• Target date for SOC.
• Contact information for key members of the JTT.
b) Actions taken by CHDO with the terminating certificate:
1. Assess any open voluntary disclosures to determine which, if any, are potentially applicable to the surviving air carrier.
2. Take action as necessary to close all open voluntary disclosures which are not applicable to the surviving air carrier (complete or rescind each case).
3. Coordinate with JTT to assure that known deficiencies (as identified in voluntary disclosures which have not yet been completed) are not carried forward into the surviving certificate holder’s programs, policies, procedures, or equipment.
NOTE: Close all open VDRP cases (rescind or complete) prior to termination of the associated operating certificate. If a certificate is terminated with open voluntary disclosures, those disclosures will remain open indefinitely and will not be available for edit or closure. All VDRP files will be locked when the certificate is terminated in WebOPSS.
c) Actions by the CHDO assigned the certificate:
1. Update WebOPSS data for the certificate to reflect the PIs assigned to the certificate following the merger.
2. Assure all inspectors assigned to the surviving CMO/CMT are entered into the VDRP user database as needed to meet the responsibilities of their positions.
NOTE: A PI or other inspector who has the authority to add new users to the VDRP system for that specific certificate holder must accomplish the addition of new users to the VDRP system. The VDRP system recognizes PIs by reference to the appropriate fields in WebOPSS. In order for a PI to add other inspectors to the VDRP system, the PI must be assigned to that certificate as documented in WebOPSS. Procedures for adding a new user to the VDRP system are available in the VDRP User Guide under “Add New User”. The VDRP User Guide may be downloaded from: https://av-info.faa.gov/vdrp/userguide.pdf.
8) Integration of Other Voluntary Safety Programs. There could be other voluntary programs that will need to be combined such as flight operations quality assurance (FOQA), Line Operations Safety Audit (LOSA), or Internal Evaluation Programs (IEP). Contact AFS-280 for guidance if needed.
9) AMOC/STC Considerations. The certificate holder should address these items early within their merger process as it could take time to fully research information with the respective ACO.
10) Constraints. Delays may impact the approval of any merger/acquisition changes and final issuance of the SOC in any phase of this process. Each documented merger/acquisition process or procedure must be complete and in accordance with applicable parts of the CFR at the time of its presentation to the FAA. Once the FAA reviews and recommends the document, process, or procedure for approval/acceptance by the FAA, the certificate holders cannot change or revise that particular document, process, or procedure unless agreed upon by the lead office. Changes to documents, processes, and procedures may be required after the FAA’s initial review and recommendation. To ensure amendments do not compromise the approval or acceptability of the original document, processes, or procedures already reviewed, the FAA must review all subsequent changes.
11) Notification of Acceptance or Approval. For notification of acceptance or approval, see Volume 3, Chapter 1, Section 1.
D. Phase 4—Demonstrations and Inspections.
1) Planning and Preparation. Plan for and conduct demonstrations and inspections, if required, in the same manner as Phase 4 performance assessment of a certification process (see Volume 2, Chapter 3, for part 121 air carriers, and Volume 2 for other 14 CFR parts). The certificate holder must build time into the plan to allow for completion of a demonstration phase. Many of these demonstrations and inspections will require appropriate FAA resources. Make sure the certificate holder plans accordingly.
2) Types of Demonstrations and Inspections. Consider the following if applicable to the operations:
a) Ditching and/or Emergency Evacuations. If the certificate holder adds different/new types of aircraft to the surviving certificate, a demonstration of emergency evacuation or ditching may be required. If the air carrier plans to petition for exemption for § 121.291, the air carrier should submit the petition early. See Volume 3, Chapter 2, Section 1, for exemption guidance.
b) Proving and/or Validation Flights. Proving and/or validation flights may be necessary if the merger is authorizing the surviving certificate to operate new types of aircraft and/or new kinds of operations, such as domestic, flag, or commuter. The authorization to conduct operations over proposed routes or areas in compliance with regulatory requirements (e.g., operations outside U.S. airspace, Class II navigation authorizations, CAT II/III, and ETOPS) that were not previously granted in the surviving certificate holders’ OpSpecs may require proving or validation flights. If the certificate holder plans to petition for deviation/exemption from any rule requiring proving or validation flights, that petition should be submitted early. See Volume 3, Chapter 29, for additional information on proving and validation flights.
c) Aircraft Conformity Evaluation. For part 121 air carriers, the PMI, or JTT if one exists, shall consider the need and scope of the conformity evaluation. See Volume 2, Chapter 3, Section 4, for additional information.
d) Tabletop Exercises. Tabletop exercises are not required. However, they are beneficial in making sure the operations, procedures, and controls are in place and ready before resources are utilized from either the certificate holder or the FAA.
NOTE: Consider using the Flight Standards National Field Office (AFS-900) as a resource if needed for any of the above tasks. The first priority will be to use currently assigned inspectors who are intimately familiar with the operations.
E. Phase 5—Approvals or Denials of Various Demonstrations or Submitted Documents.
1) Procedures for Approvals or Denials. Use the same procedures used for approvals or denials for initial certification. Follow the guidance in Volume 3, Chapter 1, Section 1, for approval or denials of submitted documents.
a) Accept programs that are not OpSpec-related or require specific approval.
b) Approve those programs requiring approval.
c) Generate appropriate OpSpecs as applicable.
2) OpSpec Considerations. All 300-series and nonstandard 500-series OpSpecs/management specifications (MSpecs)/training specifications (TSpecs) (parts A, B, C, D, E, and H) require approval by the appropriate HQ policy division.
a) The Flight Technologies and Procedures Division (AFS-400) and AFS-200 or the General Aviation Commercial Division (AFS-800) must approve All Weather Operations (AWO) relating to instrument procedures, as appropriate.
b) The appropriate HQ policy division must approve all nonstandard text (sometimes referred to as Text 99) added to an OpSpec/MSpec/TSpec. For detailed guidance on the process for nonstandard text and obtaining HQ approval, see guidance contained in Volume 3, Chapter 18, Section 2, paragraphs 3-712 and 3-713.
c) Additionally, forward OpSpecs that annotate parallel or fenced operations after SOC to HQ for approval. See subparagraph 3-3593E3)a) for more guidance relating to OpSpecs for these types of operations. When each OpSpec is completed and ready to be issued, forward them for review to HQ. Please note that the OpSpecs do not have to be bundled and sent together; send the individual OpSpecs for review as they are completed.
3) OpSpecs for Parallel Operations.
a) OpSpecs are the legal documents by which the FAA authorizes air carriers to operate and delineates their operational requirements; therefore, the specifics of the parallel operations must be entered into the OpSpecs. Preferably, complete the main content of the OpSpecs describing the end state (e.g., the Carrier A method, the Carrier B method, or a new method). Then, in the nonstandard text block (formerly known as Text 99), specify whether that end state applies to both carriers immediately upon the completion of the merger. If there will be separate procedures used by the merged carriers, describe the procedures to be used in nonstandard text. OpSpec C052 is an example of an OpSpec where each side of the parallel operation may have different approaches authorized. If Carrier A had more types of approaches authorized in OpSpec C052, complete OpSpec C052 using Carrier A’s procedures and indicate which procedures Carrier B is not authorized to conduct in nonstandard text (e.g., “Carrier B not authorized Localizer back course (LOC BC)”). Another example is OpSpec C384; which could say in Text 99, “ABC B737 only.”
b) In some cases, primarily those where the OpSpec data is loaded from the Maintain Operator Data section of WebOPSS, the main content of the OpSpec does not accommodate a way to distinguish which carrier is authorized which portions of the authorization. One such OpSpec is C070, Airports Authorized for Scheduled Operations. It is not possible in the table listing Airports Authorized for Scheduled Operations in OpSpec C070 to identify the airports where each certificate holder can dispatch. To get around this limitation, export the content of the OpSpec C070 table from WebOPSS to a spreadsheet and add columns to the exported airport data to distinguish the differences in the fenced operations. The OpSpec C070 table data can be exported from Maintain Operator Data, Airports by using the Export Assigned Airports Data function in WebOPSS, or by copying the table from OpSpec C070 and pasting it into a spreadsheet. The spreadsheet file must be controlled with a revision number and updated each time any of the information changes. In the nonstandard text for OpSpec C070, record and maintain the file name, revision number, and change date each time the external file and or OpSpec C070 is amended.
c) The authorized areas information in OpSpec B050 is also loaded from Maintain Operator Data in WebOPSS. For OpSpec B050, record differences in authorized areas for fenced operations using the Authorized Areas Notes feature in WebOPSS found under Maintain Operator Data, Authorized Areas, Add/Remove Territories. Enter as many notes as necessary to describe the differences in the fenced operations and then assign those notes to the appropriate authorized areas (e.g., Note Number 5 may be entered as “Carrier A Only” and then assigned to all of the areas to which Carrier A is authorized but not Carrier B).
d) For OpSpec D085, use the Nose Number field in Maintain Operator Data, Aircraft, to indicate which side of the fence will handle maintenance and dispatch for the aircraft (e.g., add: “Carrier A” or “Carrier B” to the Nose Number column for each applicable N-numbered aircraft). Do not use the Registration Number or Serial Number columns for this purpose. Modifying the registration and/or serial numbers corrupts those numbers and prevents the ability to track or associate the aircraft by its true identifier.
F. Phase 6—SOC Phase.
1) Definition of SOC—SOC for Air Carriers. An SOC may be issued when one set of part 119 management personnel is in place and these managers have operational control of the entire organization. It is most desirable to have negotiated the merging of all operations and procedures throughout the merger period and prior to issuing an SOC. However, this is not required provided every OpSpec involved clearly shows differences between the different procedures conducted by the merging certificate holders. For example, if the certificate holder obtains an SOC before the merging certificate holders have negotiated a single deicing program, differences between the formerly separate programs must be spelled out. Merged certificate holders operating under an SOC without a complete merging of operating procedures will experience an increased risk due to the need to ensure employees are able to apply procedural differences. It is therefore advisable to minimize the number of OpSpec differences when approaching an SOC. Having parallel operations under one certificate also increases the workload for the FAA oversight offices. Because the certificate holder will be operating with two operational procedures in some cases, the resulting operation is more complex and therefore increased surveillance is warranted. As significant changes occur and those parallel operations merge, the transition plan must be amended and the appropriate OpSpecs, including OpSpec A502, must be amended.
2) Final OpSpecs for an SOC. If using the ghost certificate for OpSpecs preparation, then at least 2 weeks out from the final SOC date, contact WebOPSS support at AFS-WebOPSS@faa.gov to coordinate the final data transfer in WebOPSS to the surviving certificate. WebOPSS requires a 48-hour period to transfer the data and draft OpSpecs from the ghost certificate to the surviving certificate, during which time there can be no activity in either certificate in WebOPSS. The draft OpSpecs must remain in “Draft: In process” status in the ghost certificate. Signed OpSpecs cannot be moved.
3) Certificate Transfer. If the merger or acquisition process results in a certificate moving to a new location, see Volume 10, Chapter 10, Section 1. The referenced guidance is primarily designed for part 121 air carriers, but may provide some useful information to other 14 CFR part certificate holders.
4) FAA Databases and Naming Conventions.
a) Because of a merger or acquisition, one or both CHDO office designator(s) could change. Coordinate with the Aviation Safety (AVS) National Service Desk for new FAA employee user IDs. It is important that the surviving local field office or newly developed field office start this process before the final phase.
b) Regional ramps coordinators may need to know of the completed merger as well as any other internal data coordinators. Consider other 14 CFR parts that could be affected.
5) FAA Database Updates.
a) Update enhanced Vital Information Database (eVID), check pilot and check flight engineer authorizations, and aircrew program designee (APD) authorizations. For part 121/135/145 certificate holders, see Volume 10 and update Module 1 Configuration.
b) Update OpSpec A502, if needed, to reflect changes after SOC. This will now become post-SOC A502 and will require amendments as parallel operations merge into one. Once all parallel operations are merged, OpSpec A502 will no longer be required and should be archived.
3-3594 TASK OUTCOMES.
A. Final Considerations.
1) Prepare a new certificate if applicable. The certificate holder will surrender the old certificate and old OpSpecs. Notify the Regulatory Support Division (AFS-600) about the surrendered certificate or any administrative change such as a change in the certificate number, if needed.
2) Certificate holder will consider reregistration of aircraft and make necessary changes, if applicable.
3) A post-merger or post-acquisition surveillance plan must be used complying with the national work guidelines as a basis for inspection and surveillance.
B. Indepth Inspection. The CHEP, as described in Volume 10, Chapter 8, provides policies and procedures to evaluate part 121/135/145 air carriers at the national, regional, and CHDO levels. The gaining RFSD, CHDO, and PIs should consider requesting a CHEP. Plan the CHEP towards the end, or after SOC. The results of the CHEP should indicate how effectively the transition plan was accomplished. It should also reveal any problem areas needing further attention.
NOTE: Regardless of the complexity of the situation, at any time during the transition period, when continued compliance with 14 CFR or safe operating practices becomes questionable, the CHDO should conduct an in depth inspection without delay.
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