Dec. 13, 2021
Thanks to a coordinated advocacy effort by NBAA and the General Aviation Manufacturers Association (GAMA), the FAA recently announced a plan to ensure limited personnel are available at the FAA Aircraft Registry in Oklahoma City on Dec. 31.
A quirk of the calendar led to potential headaches related to closing aircraft deals by the end of the year as federal employees are slated to have Friday Dec. 31 off in observance of the New Year holiday on Jan. 1.
NBAA, GAMA and other stakeholders, including the International Aircraft Dealers Association and National Aircraft Finance Association, proactively raised this issue to FAA leadership earlier this month. Due to the unprecedented volume of transactions in 2021 and supply chain challenges, many aircraft deals will finalize at the end of December. The associations suggested reasonable mitigations to the FAA for consideration, taking into account the dedication of FAA employees at the registry and appreciating that Dec. 31 is a federal holiday.
“Aircraft buyers and sellers are going to need every day of the calendar year to finalize aircraft transactions,” said Scott O’Brien, NBAA senior director of public policy and advocacy. “Considering the value of the aircraft, not being able to complete even a small number of transactions in 2021 has a significant impact on a manufacturer’s bottom line.”
“With the demand we’re seeing, [a Dec. 31 closure] is an unfortunate set of circumstances,” said Jens Hennig, GAMA’s vice president of operations. “We know the interests of the customer to have a new aircraft with them before the end of the year for tax planning purposes and we fully appreciate that.”
GAMA reports due to supply chain issues, some manufacturers have several dozen aircraft slated for delivery in the last week of December.
The associations requested the FAA keep full staff until 3:30 p.m. on Dec. 30 and provide a skeleton crew on Dec. 31 to process documents submitted to the FAA by email and through the public documents room. After careful review, the FAA agreed in part to move forward with both of these requests.
On Dec. 31, the FAA will “file stamp” documents submitted through the public documents room or by email, but only those documents relating to a transfer of ownership together with any supporting loan or lease documents will be file stamped. By federal law, the date and time of the filed stamp from the Registry is considered the point of perfection, along with International Registry registrations when applicable, for buyers, lessors and lenders purchasing and financing an aircraft.
The FAA will not actually process the documents submitted on Dec 31, so parties will not be able to obtain a fly wire, import/export an aircraft, renew an aircraft registration or obtain a unique authorization code for purpose of making registrations on the International Registry. Those tasks will be completed after the holiday weekend. Parties needing to fly internationally immediately after closing should plan to close Dec. 30 or if not sooner, and if International Registry registrations are required at closing parties should consider making prospective registrations or obtain a unique authorization code on or before Dec. 30.
“This is an excellent example of the industry identifying a problem and the FAA understanding the concerns while also being sensitive to the needs of their employees,” said O’Brien. “NBAA appreciates the FAA’s quick response, which will help the industry close the year strong.”
So if you’re currently involved in buying or selling an aircraft, do you have time to close this year?
Scott McCreary, attorney with McAfee and Taft in Oklahoma City, said there’s a now an additional opportunity for transactions to be completed on Dec. 31.
“If parties are closing a transaction the last week of December, their best bet is to close on Dec. 29 or 30. If they have to close on the 31st, the FAA has provided us an opportunity to take documents related to an ownership transfer and submit them to the filing bin at the FAA Public documents room during normal working hours,” said McCreary.
Based on guidance from the FAA, McCreary confirms parties should designate on the filing cover letter that the documents are “Ownership Transfer Documents. He also noted applicants must submit payment using pay.gov to pay fees, as the agency won’t be able to process checks on Dec. 31.
The holidays also have International Registry impacts.