Why are Charter Operators not allowed to carry out Scheduled Operations?

Air Charter is the business of renting an entire aircraft (i.e.chartering) as opposed to individual aircraft seats (i.e. purchasing a ticket through a traditional airline). While the airlines specialize in selling transportation by the seat, air charter companies focus on individual private aircraft and itineraries, urgent or time-sensitive cargo, air ambulance service, and other forms of ad hoc air transportation. Some air charter companies offer a large variety of aircraft, such as helicopters and business jets.

https://en.wikipedia.org/wiki/Air_charter

Most of the countries in the world restrict Air charter companies to operate scheduled services on routes being frequently served by Regular Public Transport carriers (airlines) to protect their economic interests ensure regularity and punctuality on these routes protect them economics of operations.

Scheduled Operators (airlines) ought to be protected against non-scheduled operators (Air Charter companies) to ensure regularity and punctuality on the routes being served by airlines. Not doing so will adversely affect the economics of airlines and they will not be able to continue schedules services on the said route.

There is a clear difference in the operating economics of the two categories. Airlines are bound to maintain a degree of regularity and punctuality,  which does not apply on charter operations. Because airlines have to maintain regularity and punctuality they cannot wait to fill the aircraft before take off.

Air Charter companies usually have far less ‘Minimum Paid up Capital’ requirements and Minimum fleet requirements in comparison to Regular Public Transport Operators (Airlines). The difference in some countries is 1:10. Hence the cost of doing business in case of airlines is much higher than Air Charter Operators. Both serve primarily serve two different categories travellers i.e. business travellers and leisure travellers.

For Businessmen punctuality and regularity factors are extremely important and they are willing to pay the premium for this. Airlines’ business model is designed around this type of market. whereas leisure travellers look for cheaper tickets and can wait for longer time. Air Charter companies meet these requirements.

Minimum Paid Up Capital requirements for Airlines is usually 10 times higher than Air Charter companies because of the peculiarities of the regular scheduled operations. Fleet requirements of airlines is also much higher than air charter companies.

Airlines’ average seat factor is, therefore, about 80%. If charter operators were to be allowed to enter the market specified for scheduled operators without meeting the essential requirements of regularity and punctuality,

in comparison to chartered aircraft’ 100% in case the entire capacity is sold to on or two tour operators. The tour operator would wait until all seats are full and then allow the aircraft to take off. The Tour Operator would therefore be in a position to sell cheaper tickets, if allowed to operate scheduled operations in comparison to airlines whose 20% seats on the average remain empty. Empty seats being perishable, the airlines  would be clearly at a disadvantage.

Travelling needs of businessmen and leisure travellers are different. The businessmen

Regularity and punctuality are the essential requirements of businessmen and airlines are required to do that as opposed to leisure travellers who plan their tours months in advance. Travelling needs of both category of travellers are therefore different.  needs t not only the requirements of the business travellers but also for the airlines themselves as they aircraft being flown has to operate on other sectors as well at the specified times.