The Family Tree of Aviation

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Scheduled and non-scheduled passenger and cargo airlines, as well as on-demand air taxis or air services for hire via fractional ownership (i.e., NetJets).

Air service based on published flight schedules for the transport of passengers and cargo.

A regional airline provides short- and medium-haul scheduled service, typically connecting smaller communities with larger cities and hub airports. Regional airlines operate turboprops with 9-78 seats and jets with 30-108 seats. Arrangements with mainline partners commonly take the form of contract flying or pro-rate flying. Current examples include Air Wisconsin, American Eagle, ASA, Colgan, Comair, ExpressJet, Horizon, Mesa, Mesaba, Piedmont, Pinnacle, PSA, Republic, SkyWest, Trans States and many others. Regional airlines contribute to the Airport and Airway Trust Fund through a series of taxes and fees, the most notable of which are the 7.5 percent excise tax on domestic airline tickets, a 4.3 cents-per-gallon fuel tax and a $3.30 domestic segment fee.

A cargo airline (also referred to as an “airfreight company”) is a commercial operator of large aircraft, generally governed under Part 121 of the FAA Federal Aviation Regulations, that provides principally scheduled service to shippers. Cargo airlines specialize exclusively in the transport of commodities of all kinds, including small-package counter services, express services and priority reserved freight; and all classes of mail transported for the U.S. Postal Service (USPS). Some companies specialize in airlift only, while others are known as “integrators,” where a parent company also includes ground operations that are synchronized with the air network. Examples include ABX, ASTAR, Atlas Air, Evergreen, FedEx, UPS and many others. Cargo airlines contribute to the Airport and Airway Trust Fund through a 6.25 percent cargo waybill tax and a 4.3 cents-per-gallon fuel tax.

A passenger airline provides principally scheduled service for the carriage of passengers and freight. Examples include Aloha, American, Midwest, Hawaiian, Southwest, Spirit and many others. Some passenger airlines, such as Northwest, also have dedicated freighter operations. Passenger airlines contribute to the Airport and Airway Trust Fund through a series of taxes and fees, the most notable of which are the 7.5 percent excise tax on domestic airline tickets, a 4.3 cents-per-gallon fuel tax and a $3.30 domestic segment fee, as well as a $14.50 tax on departing and arriving international passengers.

Air service made available on demand for passengers and cargo shippers. Customers dictate when services are provided, and to what destination. Moreover, since this is not a scheduled service, customers also control with whom they fly.

Fractional ownership programs allow the benefit of full aircraft ownership without management responsibilities at a fraction of the cost of full ownership. These programs are primarily associated with business jets and business travel and offer potential customers an opportunity to purchase a block of hours in a specific aircraft or a fleet of aircraft. The amount of hours available for use is typically commensurate with the size of one’s ownership stake. Unlike a typical time-share program where a shareholder cannot use an asset if another owner is using it, fractional ownership programs usually guarantee access to a jet with a few hours notice.

Customers pay a management fee to cover all fixed costs (e.g., insurance, facilities, overhead and administration) and pay an hourly rate, based on actual use, to cover direct operating costs (e.g., labor, fuel, maintenance, catering, other fees).

Fractional ownership has played a significant role in revitalizing the general aviation manufacturing industry since the late 1990s, and most manufacturers actively support fractional ownership programs. Popular players in this segment include NetJets, Flight Options and FlexJet.

Fractional ownership programs contribute to the Airport and Airway Trust Fund through a series of taxes and fees, the most notable of which are: a 7.5 percent excise tax on the customer’s cost for domestic trips, a 4.3 cents-per-gallon fuel tax and a $3.30 domestic segment fee.

As in fractional ownership programs, charter/air taxi operators give customers full control to determine where, when and with whom they fly. While scheduled airlines sell transportation by the seat, charter/air taxi operators typically offer the entire aircraft for hire and target customers with specialized itineraries, time-sensitive cargo, air ambulance needs, and any other form of ad hoc transportation. With the development of very light jets (VLJs), a new air taxi business model is emerging, in which individual seats are sold “on demand.” This links customers with similar itineraries on the same aircraft. Such air taxi operators include DayJet, Pogo, or Linear Air.

Charters and air taxis contribute to the Airport and Airway Trust Fund through a series of taxes and fees, the most notable of which are: the 7.5 percent excise tax on the charter price for domestic trips, a 4.3 cents-per-gallon fuel tax and a $3.30 domestic segment fee.

A broad term that describes all non-military and non-airline flying, encompassing everything from recreational aircraft to experimental aircraft to privately owned and operated business jets. General aviation tends to fly according to FAA part 91 or 135 rules.

Encompasses three types of operations: corporate, fractional and air taxi. Business aviation tends to rely on turbine-driven jets and turbine-driven propeller aircraft. According to FAA, the total business jet fleet in the United States is approximately 8,500 airplanes and will be among the fastest growing segments of aviation in the next 10 years.

Fractional ownership programs allow the benefit of full aircraft ownership without management responsibilities at a fraction of the cost of full ownership. These programs are primarily associated with business jets and business travel and offer potential customers an opportunity to purchase a block of hours in a specific aircraft or a fleet of aircraft. The amount of hours available for use is typically commensurate with the size of one’s ownership stake. Unlike a typical time-share program where a shareholder cannot use an asset if another owner is using it, fractional ownership programs unconditionally guarantee access to a jet with a few hours notice.

Customers pay a management fee to cover all fixed costs (e.g., insurance, facilities, overhead and administration) and pay an hourly rate, based on actual use, to cover direct operating costs (e.g., labor, fuel, maintenance, catering, other fees).

Fractional ownership has played a significant role in revitalizing the general aviation manufacturing industry since the late 1990s, and most manufacturers actively support fractional ownership programs. Popular players in this segment include NetJets, Flight Options and FlexJet.

Fractional ownership programs contribute to the Airport and Airway Trust Fund through a series of taxes and fees, the most notable of which are: a 7.5 percent excise tax on the customer’s cost for domestic trips, a 4.3 cents-per-gallon fuel tax and a $3.30 domestic segment fee.

As in fractional ownership programs, charter/air taxi operators give customers full control to determine where, when and who they fly with. While scheduled airlines sell transportation by the seat, charter/air taxi operators typically offer the entire aircraft for hire and target customers with specialized itineraries, time-sensitive cargo, air ambulance needs, and any other form of ad hoc transportation. With the development of very light jets (VLJs), a new air taxi business model is emerging, in which individual seats are sold “on demand.” This links customers with similar itineraries on the same aircraft. Such air taxi operators include DayJet, Pogo, or Linear Air.

Charters and air taxis contribute to the Airport and Airway Trust Fund through a series of taxes and fees, the most notable of which are: the 7.5 percent excise tax on the charter price for domestic trips, a 4.3 cents-per-gallon fuel tax and a $3.30 domestic segment fee.

Corporate ownership describes an arrangement in which a company or other entity owns and operates an aircraft. In this instance, there is no compensation paid from one party to another for management or operation of the aircraft. If company XYZ purchases a fleet of airplanes for use by the executive team of XYZ, this would constitute corporate jet operations. The majority of business jets in the United States are corporate jets, and normally operate under FAA Part 91 rules.

From an operational perspective, FAA treats these aircraft the same as they treat airlines because these airplanes tend to fly in the same airspace as major cargo, passenger and regional airlines. This requires IFR flight plans, ATC clearances and separation services. From an air traffic controller’s chair, these airplanes appear no differently on his radar scope from any airline operation.

From a tax perspective, however, these operations are treated the same as “personal aviation.” When the ATC system’s funding mechanism was designed, over 35 years ago, very few corporate jets existed. This segment of aviation will grow faster than any other segment in the next ten years.

Corporate aviation contributes to the Airport and Airway Trust Fund through a fuel tax of 21.8 cents per gallon which is collected when the operator purchases fuel.

Personal aviation, a subset of general aviation, accounts for the large majority of aircraft in the United States - approximately 90 percent. At nearly any airport nationwide, single-engine, piston-driven aircraft can be found on the tarmac; these are all examples of personal aviation aircraft. These airplanes tend to be used for personal reasons, instead of business or commercial reasons.

The majority of the nation’s pilots are recreational aviators, who generally fly at low altitudes, slow speeds and without ATC interaction. This type of operation is usually conducted according to visual flight rules (VFR), which allows the pilot to navigate and aviate with whatever he can see outside the airplane windows. This typically entails following roads, rivers, railroad tracks and other features on the ground. This may also include some limited use of the ATC system, including ground based radio beacons such as VORs and NDBs. This segment of aviation is also the largest user of the Flight Service Stations (FSS) which deliver weather briefings to some general aviation pilots. Generally, these small aircraft tend not to use the IFR system.

Recreational aviation contributes to the Airport and Airway Trust Fund through a fuel tax of 21.8 cents per gallon, which is collected when the operator purchases fuel.

"Other" aviation is a catch-all category that encompasses a variety of non-traditional aircraft types and business models. Click on Experimental, Rotorcraft or Miscellaneous for more information.

Experimental aircraft are airplanes that have not yet received full certification from the FAA or are undergoing additional testing and calibration before entering service. When an aircraft manufacturer designs a new version of an existing airplane, like the Boeing 737-900ER, it will test an experimental version of the aircraft before it enters revenue service.

Currently, many Very Light Jets (VLJs) are considered experimental by FAA, because they have not been fully certified to FAA's operational standards.

Rotorcraft include helicopters of all types, including news and traffic, law enforcement, scheduled airline service and business helicopters. Helicopters utilize the air traffic control system according to the type of operation in which they engage. This may or may not include use of the IFR system, though helicopters tend to fly at lower altitudes and speeds.

This category includes gliders, balloons, blimps, crop-dusting operations and any other aircraft operation that does not fit into the other categories.

According to the Federal Aviation Administration, the U.S. military operates approximately 4,000 flights within controlled U.S. airspace every single day. These flights are not accompanied by a direct contribution to the federal Airport and Airway Trust Fund. However, the U.S. government contributes to the operation of the ATC system through an apportionment from the U.S. General Fund. Over the past 10 years, this general fund contribution has ranged from 8 percent to 24 percent of the FAA’s annual budget.