FAA

Washington, DC — July 24, 2019 — The General Aviation Manufacturers Association (GAMA) President and CEO Pete Bunce today issued the following statement on the confirmation of Steve Dickson to serve as the next Federal Aviation Administration (FAA) Administrator:

“We congratulate Steve Dickson on his confirmation by the U.S. Senate. GAMA and its member companies look forward to working with him as the next leader of the FAA.”

“GAMA also strongly endorses Congress passing a waiver to ensure Dan Elwell continues to serve as FAA Deputy Administrator.  Mr. Elwell has proven to be a very effective manager and leader at the FAA and will provide important continuity and support as Mr. Dickson takes over as Administrator.” 

For additional information, please contact Paul Feldman, Vice President, Government Affairs, +1 (202) 393-1500 or pfeldman@gama.aero.

This release was originally published by GAMA on July 24, 2019.

There are changes ahead for the U.S. aircraft registry due to new provisions in the recently passed FAA reauthorization bill, as well as anticipated recommendations stemming from ongoing investigations by the DOT Inspector General (IG) and Government Accountability Office (GAO), panelists said yesterday at Corporate Jet Investor Miami 2018.

Under the reauthorization bill, the FAA’s Oklahoma City-based aircraft registry is required to become fully digitized within three years, including all non-digital registry information and manual-/paper-based processes, business operations, and functions. The agency must also install systems that allow digital submission of information and conduct any transactions electronically.

Further, the reauthorization bill will allow the FAA to charge a manual surcharge “for certain matters conducted in person” and prevents a government shutdown from affecting the registry. It also directs the FAA to initiate a rulemaking by early February that would extend the duration of general aviation aircraft registrations from three years to seven.

Meanwhile, the DOT IG and GAO audits, spawned by last year’s Boston Globe reports that criticized the registry, will cause even more, yet-to-be-determined changes. A DOT IG audit report on the efficiency of the FAA registry is imminent, while one on security is expected next year. The GAO report is also anticipated to come out next year.

This article was originally published on AINonline on November 14, 2018.

NAFA member, Rene Banglesdorf, CEO of Charlie Bravo Aviation, discusses how good pilots are hard to find and how the realities of the pilot shortage are starting to affect the aviation industry.

Gone are the days when aviation departments sort through a huge stack of resumes for pilots – though a few still do. Nowadays, good pilots seem to be hard to find. And the realities of a pilot shortage are finally starting to affect the aviation industry.

High pilot training costs, several years of earlier hiring freezes in top markets, and the threat of technology replacing pilots in the not-too-distant future has deterred the next generation of talent.

By my math, the number of pilots retiring exceeds the number of new entrants by more than 100-percent – with an increasing demand from commercial, cargo and private operators. To us that signals a critical shortage – and if the airlines are feeling it sharply, general aviation will be too.

Already we hear about American or Canadian pilots being recruited to the Middle East and Asia at salaries double or greater the averages in North America. Larger carriers are offering signing bonuses, 20-percent-plus pay increases and better benefits to attract and retain experienced pilots.

Boeing’s job forecast

In its most recent jobs forecast, Boeing indicated an unprecedented 20-year demand for pilots at 790,000 – double the current workforce. And according to their report, 80,000 pilots in the US alone will age out in that same timeframe.

“Despite strong global air traffic growth, the aviation industry continues to face a pilot labour supply challenge, raising concern about the existence of a global pilot shortage in the near-term,” said Keith Cooper, Vice President of Training & Professional Services, Boeing Global Services. “An emphasis on developing the next generation of pilots is key to help mitigate this. With a network of training campuses and relationships with flight schools around the globe, Boeing partners with customers, governments and educational institutions to help ensure the market is ready to meet this significant pilot demand.”

To this end, Boeing touts its Pilot Development Program – an accelerated training program that guides future pilots from early stage ab-initio training through type rating as a first officer – to help operators meet their growing pilot needs.

That’s great for companies or people operating Boeing’s aircraft, but it may not factor down into providing a pipeline of pilots for general aviation, especially piston or turboprop operators.

The competition is on

Regional airlines have doubled starting salaries and bonuses in recent years, which heralds stiff competition for lower-time pilots, as regional airlines typically serve as time and tenure builders for younger pilots.

Private aviation flight departments are getting more competitive as well. Recent news of airline compensation increases has encouraged some firms to bump salaries by 30 or 50 per cent to avoid pilot turnover.

The pilot shortage that’s affecting commercial and private aviation is affecting the military, as well, as fighter pilots are leaving the military in droves for cushier, better-paying jobs in commercial and private aviation.

“Despite strong global air traffic growth, the aviation industry continues to face a pilot labour supply challenge, raising concern about the existence of a global pilot shortage in the near-term.” ~Keith Cooper

In order to compete with the airlines and private flight departments, the military is taking steps to improve benefits to their pilots in addition to increasing pay, including more cockpit time, increased flexibility in assignments, more career options, and shorter deployments.

Many flight departments and airlines are doing the same.

While I’m all for more competition among operators – especially with my daughter in expensive flight training – the bigger question here is how can we make training less cumbersome or costly?

Flight schools

Flight schools, like Flight Safety International, where my daughter is in training for her airline transport pilot (ATP) license, are competing for certified flight instructors to keep up with demand for training. When there aren’t enough instructors, training is delayed, pilot trainees are discouraged, and expenses increase – all deterrents to increasing the numbers of pilots entering the workforce.

According to a 2017 study conducted by CAE, a civil aviation training provider, the global airline industry will require 255,000 new pilots in order to meet the demand of airline growth and pilot attrition over the next 10 years. “The largest requirement will come from the Asia-Pacific region which alone will need 90,000 new pilots, followed by the Americas which will need 85,000,” said Kinda Sarrage, Regional Sales Manager for the Middle East, Northern Africa and South Asia.

“The largest requirement will come from the Asia-Pacific region which alone will need 90,000 new pilots, followed by the Americas which will need 85,000.” ~Kinda Sarrage

“Many regions have been experiencing a higher than usual turnover of experienced pilots or captains leaving them for the Asian carriers as they offer more competitive packages, tax benefits, and flexible work rotations. To compensate for this loss, airlines should establish second officer recruitment schemes. Though some airlines have begun implementing programs to attract lower hour pilots, it is at a much slower rate than that which is required. If airlines established such programs several years ago, they would have a steady pipeline of first officers coming through that would be upgradable to captains today. The reality is that the pool of available captains is shrinking, and this is becoming apparent as airlines struggle to recruit and train pilots to meet their demands,” Sarrage said.

SARA Act

In the US, Senators James Inhofe and Tammy Duckworth are co-sponsoring bipartisan legislation aimed at helping the general aviation community.

The Securing and Revitalizing Aviation (SARA) Act of 2018 (S.3270) calls for the creation of an Aircraft Pilot Education Program that would allow high school students to get a head start on their flying careers by taking aviation-related courses for credit, according to a press release from the National Business Aircraft Association (NBAA).

The bill also includes reforms to existing Federal Aviation Administration (FAA) regulations to ease the shortage of qualified designated pilot examiners (DPE) needed for initial and recurrent pilot training.

Additional provisions would enhance existing due process protections for pilots; extend limited liability coverage for FAA designees performing agency duties, but who are not covered under immunities for government employees, as well as for pilots performing volunteer missions; and grant the National Transportation Safety Board (NTSB) the authority to review denials of airman certificates by the FAA.

AOPA

The Aircraft Owners and Pilots Association (AOPA) has worked diligently for years for medical requirements reform, facilitating the renewal of licenses for more than 5,000 “rusty” pilots.

The AOPA You Can Fly High School Initiative ninth-grade STEM curriculum was tested in 29 high schools during the 2017-2018 school year. It has proved popular with teachers and students alike because it engages youth with hands-on activities and exposes them to the world of aviation and potential careers. The program, created in partnership with educators, curriculum developers, and aviation experts, offers four-year study options in aviation career pathways and is aligned with rigorous math and science educational standards already in use.

Each of us should be working toward attracting as many pilots and mechanics as possible to aviation –and then working to keep them here!

General aviation flight departments are beginning to awaken to a reality that pilot salaries, bonuses and flexibility are changing. What are you doing to adapt?

Rene Banglesdorf is the CEO of Charlie Bravo Aviation, a worldwide aircraft brokerage based in Austin, Texas. She is an author, speaker and podcast host.

This article was originally published in Altitudes Magazine on October 14, 2018.

NAFA member, GKG Law, writes about their success in vacating aircraft liens.

In August 2018, GKG Law reported on the risks posed by service providers filing liens on aircraft for amounts owed for storage, repairs, maintenance or other services relating to an aircraft.  In that article, we noted precautionary measures that can be taken to minimize the risks posed by such liens, and that defenses may exist to such liens.  GKG Law recently was successful in vacating such liens in a case filed in the United States District Court for the Eastern District of Virginia.  In the case, the service provider filed two separate liens with the Federal Aviation Administration (FAA) and with Florida regulatory authorities asserting liens for approximately $450,000.  We were successful in not only having both liens vacated, but our client also was awarded almost $50,000 in damages resulting from the invalid lien filings.  The result highlights the fact that although lien statues may serve a valid purpose, such as ensuring that mechanics and other aircraft service providers are compensated for services they performed at the request of the aircraft owner or operator, aircraft owners are not defenseless when such liens do not have a valid basis or when the lien filings fail to comply with statutory requirements.

GKG Law’s extensive experience in all aspects of the business aviation marketplace makes it particularly suited to aggressively protect your rights in such commercial disputes.  Please contact Brendan Collins at GKG Law if you would like to discuss any potential aircraft related disputes.  Brendan may be reached by telephone at (202) 342-6793 or by email at bcollins@gkglaw.com. 

The original article was published by GKG Law on October 2, 2018.

NAFA members, Marc L. Antonecchia and John M. Toriello, Partners at Holland & Knight, discuss the FAA Reauthorization Act of 2018. 

The FAA Reauthorization Act of 2018, enacted on Oct. 5, 2018,¹ has clarified and confirmed the pre-emptive effect of the federal statute intended to shield from liability owners, lessors and secured parties not in operational control of an aircraft for injuries to persons on board an accident aircraft. This clarification comes by way of an amendment to the federal statute, 49 U.S.C. §44112(b). 

The Federal Statute Prior to Amendment

Prior to the amendment, 49 U.S.C. §44112(b), provided, in relevant part: 

Liability.-- A lessor, owner, or secured party is liable for personal injury, death, or property loss or damage on land or water only when a civil aircraft, aircraft engine, or propeller is in the actual possession or control of the lessor, owner, or secured party, and the personal injury, death, or property loss or damage occurs because of --
(1) the aircraft, engine, or propeller; or
(2) the flight of, or an object falling from, the aircraft, engine, or propeller.

The majority of courts had held, or suggested in dicta, that the statute provided immunity to owners, lessors and secured parties not in actual possession or control of the aircraft for state law claims arising out of injuries to persons, regardless of whether or not they were on board the accident aircraft.²

Courts in a minority of jurisdictions, however, had limited the pre-emptive effect of the statute depending on whether the injured party was on the ground or a passenger on board the aircraft. Most notably, in Vreeland v. Ferrer, the Florida Supreme Court found that the "limitation on liability would apply only to individuals and property that are underneath the aircraft during its flight, ascent, or descent."³ Under the Vreeland approach, there was no pre-emption for claims made by or on behalf of persons on board the accident aircraft.

The FAA Reauthorization Act Amends 49 U.S.C. §44112(b) 

Section 514 of the FAA Reauthorization Bill, titled "Aircraft Leasing," removes any uncertainty cast by Vreeland and its progeny. It amends 49 U.S.C. §44112(b) by striking "on land or water" and inserting "operational" before "control." As a result, the statute now reads:

Liability.-- A lessor, owner, or secured party is liable for personal injury, death, or property loss or damage only when a civil aircraft, aircraft engine, or propeller is in the actual possession or operational control of the lessor, owner, or secured party, and the personal injury, death, or property loss or damage occurs because of --
(1) the aircraft, engine, or propeller; or
(2) the flight of, or an object falling from, the aircraft, engine, or propeller.

The effect of the amendment is twofold. First, the deletion of "on land or water" abolishes the minority view expressed in Vreeland that there is a distinction based on the location of the injured persons. A court will no longer be able to subscribe to the Vreeland approach that the injured person must be "underneath" the aircraft. Second, the addition of "operational" before "control" serves as a further bar to arguments that certain types of activities by owners, lessors or secured parties – other than operation of the aircraft – could be deemed "control." 

The amendment furthers the full purpose and original objectives of Congress in enacting a statute limiting liability for financiers, owners and long-term lessors⁴ of aircraft. The amendment ensures a uniformity of result by confirming that in all instances the pre-emptive scope of the statute is very broad, subject only to the express limitation of "actual possession or operational control."   

Notes

¹ H.R. 302, Pub.L. 115-254, Oct. 5, 2018, 132 Stat 3186.

² See, e.g., Matei v. Cessna Aircraft Co., 35 F.3d 1142 (7th Cir. 1994) (predecessor statute to 49 U.S.C. §44112 and Illinois bailment law precluded liability against aircraft owner because owner did not retain possession or control of aircraft and did not have knowledge of alleged defects); In re Lawrence W. Inlow Accident, 2001 WL 331625 (S.D. Ind. Feb. 7, 2001) (49 U.S.C. §44112 precluded liability of sublessor of helicopter following death of passenger hit in head with rotor while disembarking); Mangini v. Cessna Aircraft Co., 2005 WL 3624483 (Conn. Super. Dec. 7, 2005) (49 U.S.C. §44112 pre-empted negligence claims on behalf of deceased passenger against owner whose aircraft made emergency landing and crashed); Esheva v. Siberia Airlines, 499 F. Supp. 2d 493, 499 n.4 (S.D.N.Y. 2007) (stating indictathat aircraft lessor would be "absolutely immune for such liability in the United States" for claims of derivative liability brought on behalf of passengers of airplane that crashed); Escobar v. Nevada Helicopter Leasing LLC, 2016 WL 3962805 (D. Haw. July 21, 2016); Lu v. Star Marianas Air, Inc., 2015 WL 2265464 (D.N.Mar.I. May 12, 2015). 

³See Vreeland v. Ferrer, 71 So. 3d 70 (Fla. 2011), reh'g denied (Sept. 13, 2011), cert denied, 132 S. Ct. 1557 (U.S. 2012); see also Storie v. Southfield Leasing, Inc., 282 N.W.2d 417 (Mich. Ct. App. 1979), aff'd sub nom. Sexton v. Ryder Truck Rental, Inc. 320 N.W. 843 (1982). 

⁴ 49 U.S.C. §44112(a) defines "lessor" as "a person leasing for at least 30 days a civil aircraft, aircraft engine, or propeller."

This article was originally published by Holland & Knight on October 31, 2018.

NAFA member, Tobias Kleitman, President of TVPX, announces new services to aviation clients.

TVPX 1031 Exchange Co. (TVPX) is pleased to announce that it is now providing our aviation clients and their advisors with U.S. customs brokerage services. TVPX’s customs brokerage services can be utilized as a stand-alone service or bundled with our FAA owner trust services to increase efficiencies, reduce costs and avoid closing delays. 

TVPX has hired Steve Pesce, a customs broker with 35 years of experience. Steve will be an invaluable addition to our team and will ensure that our clients’ aircraft imports are properly handled in accordance with U.S. Customs and Border Protection (CPB) regulations. Given the high number of cross-border transactions in today’s market, this new service is a perfect complement to our product portfolio.

TVPX intends to build off the success of our trust division with complementary services that help make it easier for parties to shepherd an aircraft transaction to its close. TVPX also will be announcing other new services to our product portfolio in the coming weeks and months.

For more information please call 978-610-1234. You can also read more about our customs brokerage services at www.tvpx.com.

Original article submitted by TVPX on October 8, 2018.

NAFA member, GAMA shares good news for the general aviation industry from the U.S. House of Representatives.  

Washington, DC –– The General Aviation Manufacturers Association (GAMA) today applauded the U.S. House of Representatives for passing legislation authorizing the programs of the Federal Aviation Administration (FAA) for five years and advancing key priorities for the general aviation manufacturing and maintenance industry.

“We are thrilled to see a long-term FAA reauthorization bill that will strengthen the general aviation industry, mandate needed reforms, and provide certainty for the entire aviation sector,” said GAMA President and CEO Pete Bunce. “We thank the House of Representatives and the bipartisan leadership of the House Transportation and Infrastructure Committee, including Chairman Bill Shuster (R-PA), Ranking Member Peter DeFazio (D-OR), Aviation Subcommittee Chairman Frank LoBiondo (R-NJ) and Ranking Member Rick Larsen (D-WA), for their work on this important legislation. We encourage the U.S. Senate to pass the measure expeditiously.”

H.R. 302, which authorizes the FAA through September 30, 2023, includes numerous provisions that will improve aviation safety, streamline regulatory burdens, strengthen job creation, encourage competitiveness and innovation, and stimulate exports. Specifically, the bill:

• Requires the U.S. Department of Transportation Secretary establish a Safety Oversight and Certification Advisory Committee that includes representatives of commercial and general aviation, including aircraft, engine, and avionics manufacturers, and maintenance, repair and overhaul organizations. The Committee’s work will focus on certification and regulatory process reform, safety management systems, rulemaking improvements and enhancing global competitiveness;
• Strengthens the effectiveness of the Organizational Designation Authorization (ODA) process and oversight to enhance the predictability and efficiency of the certification process for new products and technology;
• Sends a clear message to the FAA to improve safety cooperation with international partners, facilitate improvements and end delays in the validation and acceptance of aviation products;
• Requires the FAA establish a comprehensive regulatory database and a Regulatory Communications Consistency Board to reduce regulatory inconsistency at the agency;
• Calls for the FAA to establish a Task Force on Flight Standards Reform to help drive needed improvements in the FAA Flight Standards Office. The Task Force includes manufacturers and will look at how the certification, operational evaluation and entry into service of newly manufactured aircraft can be improved;
• Asks the Government Accountability Office (GAO) to conduct a review of the FAA’s Part 23 rulemaking implementation to ensure the agency is working with industry to maximize the rulemaking’s effectiveness;  
• Mandates the FAA Aircraft Registry Office in Oklahoma City remain open in the event of a government shutdown or emergency furlough; and
• Addresses the aviation workforce shortage by establishing a ‘Youth Access to American Jobs in Aviation Task Force’ and a ‘Women in Aviation Advisory Board’; directs the GAO to initiate a study on the current and future supply of aviation and aerospace workforce; and establishes a pilot grant program to train pilots and maintenance and technical workers.

For additional information, please contact Sarah McCann, GAMA Director of Communications, at +1 (202) 637-1375 or smccann@gama.aero.

This original article was published by GAMA on September 26, 2018.

NAFA member, Nel Stubbs, Vice President of Conklin & de Decker, writes about when the FAA and IRS do not agree about taxing leases.

The recent spotlight on illegal charter and who has operational control of an aircraft is generating new interest in leases: not finance leases, but “wet” and “dry” aircraft operating leases.

The FAA defines a “wet” lease as “any leasing arrangement whereby a person agrees to provide an entire aircraft and at least one crewmember.” Leasing an aircraft without the crew normally is a “dry” lease, and the lessee has operational control of the aircraft. With a “wet” lease, the lessor retains operational control.

The IRS imposes the commercial Federal Excise Tax (FET) on wet leases, and the noncommercial Federal fuel tax on dry leases. But the distinction is not simple. While passing the test for FAR Part 91 (owner use only), a wet lease operation might be considered a commercial activity (Part 135) for FET purposes.

The most common non-financial leasing arrangements and their tax ramifications are:

Wet Leases

CHARTER – Conducted under FAR Part 135, the operator must hold a commercial operating certificate. Charter is always considered a wet lease, as the aircraft is provided with crew. “Commercial” for both FAA and IRS purposes, the FET is due, less catering, flight phones, ground transportation, etc., listed separately on the invoice. A credit or refund is allowed for tax paid on the fuel for that flight.

TIMESHARING – FAR Part 91.501 permits timesharing, a form of wet lease, which allows the owner to provide the aircraft and crew to a lessee, and charge up to twice the direct operating costs for any flights. The IRS considers this a commercial activity, and the FET is due on the amounts paid and a credit or refund is allowed for the tax paid on the fuel consumed during the trip(s).

INTERCHANGE – When “… a person leases his airplane to another person in exchange for equal time, when needed, on the other person’s airplane and no charge, assessment or fee is made, except that a charge may be made not to exceed the difference between the cost of owning, operating and maintaining the two airplanes,” it also is a wet lease, as the aircraft and crew of one company is exchanged for another’s aircraft and crew. So for FET purposes, it’s a commercial operation, and tax is due on the fair market value of any difference between the operating costs of the two aircraft. Again, a credit or refund is allowed for the tax paid on fuel. Two fair market values must be considered: the IRS’ and yours.

Dry Leases

A “True” Dry Lease offers the aircraft without crew. Typically, the lessee hires the crew and has operational control of the aircraft. The lease is considered noncommercial, and neither lessee nor lessor are required to hold an FAA-issued charter operator’s certificate, as long as the lessee does not carry persons or property for compensation or hire. The IRS and FAA agree that no FET is due on dry lease payments.

A “Sham” Dry Lease (or “Damp” Lease) may be a purposeful attempt to confuse the issue of who has control of the aircraft. Typically, the lessor provides the aircraft under a dry lease and also provides the crew under a separate agreement. Or, the lessor leases the aircraft, but you as lessee must get your crew from the lessor or a lessor-specified source. In each case, the aircraft and the crew are too closely connected, and the FAA may determine that the lessor should hold a commercial operating certificate. The IRS likely would consider the lessor to have “possession, command and control,” and the lessee would owe FET on the lease and pilot service payments.

It’s in everyone’s best interest to understand what type of lease arrangement you are entering. Don’t be caught unaware by either the FAA or the IRS. 

The original article was published in Business Aviation Advisor on August 31, 2018.

Washington, DC ­­— The General Aviation Manufacturers Association (GAMA) and 32 other aviation industry organizations today sent a letter to U.S. Senate Majority Leader Mitch McConnell (R-KY) and U.S. Senate Minority Leader Chuck Schumer (D-NY), urging them to have the Senate move expeditiously to consider legislation for a long-term reauthorization of the Federal Aviation Administration (FAA). “It is essential that the FAA is provided long-term authorization for its activities and programs to maintain and advance the safest, most efficient aerospace system in the world,” the groups, spanning representatives of general aviation, labor, commercial and cargo airlines, drones, manufacturers and more, wrote. “The U.S. aviation sector supports nearly 11 million jobs and contributes $1.6 trillion in economic activity. The aerospace industry needs dependable authority from the FAA and policymakers to continue to provide the highest level of service for aviation customers and meet the needs of the aviation industry and workforce.” Congress has not enacted a multi-year authorization bill for the FAA since 2012, a bill that expired almost three years ago. Since September 2015, the agency has been working under a series of short-term extensions, including the current measure expiring on September 30, 2018. The U.S. House of Representatives recently passed its version of a long-term reauthorization bill (H.R. 4). The signatories of this letter believe it is imperative for the U.S. Senate to complete its consideration of S. 1405 as soon as possible, to allow adequate time for House and Senate negotiators to reach a final conference agreement by the end of September. “There is bipartisan support for moving the FAA bill forward now to ensure safety, economic benefits, regulatory reform, and international competitiveness through a long-term reauthorization bill for the FAA,” the groups concluded. “We are eager to assist you in securing consideration of this important legislation and we appreciate your leadership.” The complete letter is attached. For additional information, please contact Sarah McCann, GAMA Director of Communications, at +1 (202) 637-1375 or smccann@gama.aero. This article was originally published by GAMA on August 15, 2018.