Updated Feb. 23, 2016

On Jan. 27, 2016, both the Treasury Department Office of Foreign Assets Control (OFAC) and the Department of Commerce Bureau of Industry and Security (BIS) issued new rules further relaxing certain restrictions on travel and trade with Cuba. This follows BIS actions on Sept. 21, 2015 and July 22, 2015, implementing regulatory changes as a result of the removal Cuba as a State Sponsors of Terrorism.

The principal impact for business aviation of these changes is as follows:

  • Private (FAR Part 91) operations of aircraft from the U.S. will no longer require an advance “temporary” sojourn license from BIS, but can use the same export exception available for air carriers.
  • Crew can now remain in Cuba for up to seven days with the aircraft and engage in travel related transaction in connection with the transportation of authorized travelers.
  • Air ambulance operations to Cuba no longer required special license, and operators can carry close relatives of individual being evacuated, and evacuate individual travelers from Cuba, regardless of nationality.
  • Under a new licensing policy, and license exceptions it will be easier to support an aircraft grounded in Cuba due to a maintenance issue.
  • A U.S. air carrier could establish a physical presence in Cuba to support its provision of “carrier services” between the U.S. and Cuba.

Other changes may indirectly impact business aviation in that they will increase the amount of travel to Cuba, including new rules:

  • Allowing cruise ships and ferry vessels to operate between the U.S. and Cuba provided the passengers are authorized travelers under a General or Specific License.
  • Clarifying that U.S. credit-card companies can process credit-card transactions for third-country nationals traveling in Cuba (in addition to U.S. authorized travelers).
  • Allowing U.S. authorized travelers to open bank accounts in Cuba under certain circumstances.
  • OFAC will allow U.S. companies to establish a physical presence in Cuba in support of certain enterprises such as telecommunication, parcel and cargo delivery.
  • Allowing a close relative to accompany an “authorized traveler” traveling to Cuba for certain purposes.
  • OFAC has clarified that certain transactions “ordinary and incident” to an authorized activity are also authorized.

In light of these recent changes, below is a revised overview of the current limitations that remain in effect for access to Cuba as they affect business aviation.

Disclaimer: Operators planning to fly to Cuba are encouraged to use diligence to ensure their operations are made in accordance with U.S. law.

Aircraft Operations Involving Cuba

The following is an updated high-level overview for air carriers and private operators. Any operator must consider both OFAC regulations (which generally restrict transactions related to Cuba by U.S. citizens, U.S. companies, and foreign subsidiaries of U.S. companies); and BIS regulations that generally restrict the export of goods or technology to Cuba. (A flight from the U.S. to Cuba would be a temporary export).

Air Carrier Operations to Cuba

In general, most restrictions/requirements for air carriers (including air taxi operators) remain unchanged. These special requirements include:

  • Required amendments to FAA operations specifications (OpSpecs) to allow operations to Cuba (OpSpec B050)
  • Compliance with filing requirements set forth in FAR 91.709
  • Operations restrictions to/from certain portal airports. In particular, CBP has issued a list of portal airports authorized to handling customs clearance to/from Cuba. Operations to/from Cuba from other airports of entry in the U.S. must be pre-approved by CBP. Flights departing/arriving at other locations should be pre-cleared through Customs.
  • Air carriers required to have TSA-approved security plans should check with TSA regarding any special requirements for Cuba flights.
  • Compliance with recordkeeping requirements of carrier service provider and travel service provider provisions (5 years).

For U.S. travel service providers to handle the trip, flights that are classified as ‘official business of U.S. government or a foreign government’, even if originating from a foreign location, must depart from one of the pre-approved portal airports outlined by CBP. The actual flight of the aircraft to Cuba is a temporary export, but does not require a license from BIS, provided the flight meets the criteria for a “temporary sojourn” under 15 C.F.R. 740.15, including that there is no transfer of control and, under new rules, the aircraft cannot stay in Cuba more than seven days.

As discussed below, the carrier’s transactions related to a flight to Cuba are now covered under a new OFAC general license for providing “carrier services”.

OFAC General License to Provide Carrier Services

Prior to January 16, 2015, any authorized traveler needed to arrange travel to Cuba through an OFAC-Licensed carrier service provider (CSP) or travel service provider (TSP). However, the OFAC regulatory changes permit air carriers to act on their own behalf.

The rule change does not remove the requirements for companies providing carrier or travel services to confirm travelers who are authorized to travel (this is generally satisfied by obtaining a signed certification from the traveler for travelers traveling under general license or a copy of the license for those traveling under a specific OFAC license). Further, the carrier is required to retain records for five years.

As a practical matter, previously licensed CSPs/TSPs, including business aviation flight routing companies, have practical experience in arranging landing rights for air carriers, making payments for landing fees and other charges in Cuba and providing other technical and logistic support.

Caution: OFAC anticipates that most air carriers will fly in and out of Cuba the same day. In business aviation, it is not an uncommon practice for pilots and the aircraft to stay in country for several days waiting for the return trip. The most recent changes to OFAC and BIS rules permit the aircraft and crew to remain in Cuba for up to seven days in connection with the transportation of authorized travelers. Additionally, crew are permitted to engage in travel-related transactions that support the trip.

Example: Telco owns a business jet operated by an air taxi operator. Telco wishes to fly a team from Miami to Cuba to hold discussions with Cubacel on the sale of telecommunications equipment.

  • The travelers would be authorized to travel to Cuba under OFAC general license.
  • An air carrier flight from the U.S. to Cuba would not require a BIS temporary sojourn license.
  • The owner or operator could arrange with a pre-existing CSP/TSP to make payments, arrange flight clearances and conduct vetting to ensure the passengers were authorized to travel.
  • Operators should ensure that their passengers have confirmed all meetings with
    individuals in Cuba prior to travel and they are informed to retain the detailed itinerary for the 05 year retention period, as required by the Treasury Department Office of Foreign Assets Control.

    An aircraft landing application must be submitted to the Cuban Civil aviation Authority (CAA) and a landing clearance granted before the aircraft departs the US. The application must include the name and contact details of the local business contact in Cuba. The business contact will be contacted directly by the CAA to verify the purpose of the visit to Cuba before they will issue the landing clearance.

  • The air taxi operator would need to comply with all special FAA, TSA, CBP requirements.

Note: Under the new rules, the operator could make its own arrangements for some or all of the activities performed by the CSP/TSP, but should do so only if the regulatory requirements are thoroughly understood.

Private Operations to Cuba

Prior to July 22, 2015 private (FAR Part 91) operators of “N” registered aircraft were required to obtain an export license from BIS for the flight to Cuba. This requirement was removed, and now private operators can fly to Cuba and pay landing fees, etc. without need to apply for a BIS or OFAC license provided the purpose of the flight is to carry authorized travelers between the U.S. and Cuba.

Example: Telco operates a business aircraft under FAR Part 91. Telco wishes to fly a team to Cuba to hold discussions with Cubacel on the sale of telecommunications equipment.

  • The travelers would be authorized to travel under a general license to Cuba.
  • The temporary export (flight) of a private jet to Cuba would not require a BIS temporary sojourn license provided the aircraft does not remain in Cuba more than 7 days.
  • Telco could provide its own travel services in making flight arrangements or use a third-party provider.
  • Compliance with filing requirements are set forth in FAR 91.709.
  • Operations restrictions to/from certain portal airports must be considered. In particular, U.S. Customs and Border Protection (CBP) has issued a list of airports authorized to handle customs clearance to/from Cuba. Operations to/from Cuba from other airports of entry in the U.S. must be pre-approved by CBP. Flights departing/arriving at other locations should be pre-cleared through Customs.
  • As discussed under air carriers, as of January 2016 the pilots are permitted to stay up to seven days in Cuba during a multi-day visit in connection with the transportation of authorized travelers. Additionally, crew are permitted to engage in travel-related transactions that support the trip.

Mechanical Breakdowns in Cuba

The recent changes make it easier to support aircraft in Cuba. In particular:

  • OFAC regulations now generally allow travel to Cuba to service items lawfully exported to Cuba.
  • A person could ship one-for-one replacement parts to, replace a defective part on a U.S. aircraft that had lawfully traveled from the U.S. to Cuba. This would include most parts for a civil aircraft other than inertial navigation system components, which would require an export license from BIS The defective part must be either returned or destroyed.
  • In the past U.S. air carriers that routinely fly to Cuba were not allowed to obtain licenses to stage fly-away kits, towbars or other items in Cuba. Under a new licensing policy, BIS may favorably consider applications for such licenses.

Compliance and Practical Issues

The U.S. embargo on Cuba remains largely in place, and operators considering flights to Cuba need to carefully review the requirements and limitations on flight operations to Cuba, as well as the types of travel authorized. It is important to also note that unless specifically related to limited humanitarian missions or governmental flights, U.S. travel service providers in compliance with the current regulations are unable to provide services to non-U.S. operators or passengers, even if they are flying aboard or operating a US registered aircraft. In addition, OFAC has specific recordkeeping requirements related to travel to Cuba that apply to the operator, the individual authorized traveler and, for group trips, the travel agency operating under a general license.

Insurance and Finance Restrictions

Many aircraft loans and leases contain express prohibitions on operations to Cuba or other U.S. sanctioned countries, in some cases without any provision for “authorized flights” to Cuba, and operators should review such restrictions.

Similarly, while a U.S. insurer could lawfully insure a flight if such flight was “authorized,” operators should check their policies and check with their insurance broker before assuming such flights are not excluded.

Resources

This Resource was prepared for the NBAA Regulatory Issues Advisory Group. The principal authors are: Jonathan Epstein, Holland & Knight LLP, jonathan.epstein@hklaw.com, 1.202.828.1870 and Kathlynn L. Self, Universal Weather and Aviation, Inc., kself@univ-wea.com, 1 713.947.5576. This Resource is general in nature and is not intended as legal advice with respect to any particular flight. Given the complexity of the regulations, we recommend members seek advice on the specifics of their proposed operations before undertaking flights.