As a general rule, any person or firm based in the UK who operates an aircraft and carries passengers or cargo on it for remuneration needs an Operating Licence granted by the CAA. This page defines the criteria under which an operating licence is issued.
The CAA grants two classes of Operating Licence – Type A and Type B.
A Type A Operating Licence is required by operators of aircraft with 20 or more seats.
A Type B Operating Licence is required by operators of aircraft with 19 or fewer seats.
The criteria for grant of each licence are described here.
Operating Licences do not themselves authorise air operations, but holders of Operating Licences are entitled to take advantage of Regulation (EC) 1008/2008 on common rules for the operation of air services in the Community. This enables EEA air carriers to fly on most routes within the EEA, with no further licences being required. Operations outside the EEA will normally require a carrier to hold an additional licence (a Route Licence), which is also granted by the CAA.
Full details on what is required for the grant and retention of an Operating Licence are set out in Licensing Airlines in the UK but a brief summary of the requirements is given below.
An Operating Licence may be granted only to an air operator whose principal place of business and registered office (if any) are within the territory of the licensing state. Further, the main occupation of the licence holder must be solely air transport or air transport combined with other aviation related activities.
A holder of an Operating Licence must be majority owned and effectively controlled by European Economic Area (EEA) States or the nationals of EEA States. The EEA States consist of the members of the EU (Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden and the UK) together with Iceland, Liechtenstein, Norway and Switzerland. Although the Channel Islands and the Isle of Man are part of the UK, they are not part of the EU and operators registered there are subject to different licensing legislation.
The holders of Air Transport and Route Licences are subject to different control criteria in that they must be controlled by UK citizens, rather than EEA nationals as for Operating Licence holders. There is no ownership criterion. If an applicant for or holder of such a licence is unable to comply with this requirement then the CAA must refer the application or licence to the Secretary of State for a decision.
A guidance note has been prepared outlining the requirements of ownership and control.
In order to ensure that the CAA can be satisfied that Operating Licence holders continue to meet the ownership and control criteria on an ongoing basis, licence holders are required to provide the CAA with an updated Company Particulars Form, on an annual basis for Type B licences or every 6 months in the case of Type A licence holders. Furthermore, all Operating Licence holders are required, under the terms of Regulation (EC) 1008/2008, to advise the CAA within 14 days of any significant change affecting the ownership of the licence holder and/or its parent or ultimate holding company.
Before a Type A Operating Licence is granted, airlines must demonstrate that they have enough funding for the first two years of operation. Once a licence is granted, the CAA will in most cases continue to monitor their finances and may revoke the licence of any licence holder that it considers no longer has sufficient resources to carry on its business. Further details of what is required from different types of air operator after a licence is granted are set out in Licensing Airlines in the UK. Smaller companies operating aircraft with fewer than 20 seats do not have to pass any financial tests.
An Operating Licence does not offer any direct financial protection to passengers if a company fails, though in some cases where the ticket was booked through a tour operator passengers may be protected by ATOL.
Before an Operating Licence is granted, an applicant must provide evidence that it has in place adequate passenger insurance to cover any potential liability in respect of death or injury to passengers in the event of an accident, as well as insurance against third party damage. The CAA has minimum levels of insurance cover levels of insurance cover for different kinds of operators, details of which can be found in Licensing Airlines in the UK. Once a licence is granted the licence holder must ensure that it keeps appropriate insurance in place. Furthermore, Operating Licence holders are responsible for ensuring that the CAA is provided with confirmation of the renewal of insurance policies prior to the expiry of any existing policy.
An Operating Licence cannot be granted until the applicant holds an Air Operator's Certificate (AOC) granted by the CAA’s Safety Regulation Group. For further information about an AOC.