NBAA 2013
BOOTH
C8145
How to get on solid ground when importing an aircraft
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by Jeff Wieand
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Once upon a time, the vast majority of business jets were owned and operated in the U.S., but that’s changing. Residents of other countries represent an evergrowing segment of the market, and the business of buying and selling corporate jets is increasingly international. In fact, a majority of factory-new aircraft these days are delivered outside the U.S. As a result, for American buyers, the purchase of an aircraft on a foreign registry no longer constitutes an unusual event; on the contrary, it has become almost commonplace. Nevertheless, it’s often more expensive, and certainly more work, to import an aircraft from overseas than it is to buy one that is U.S.-based and -registered, so the underlying business deal has to be good enough to make it worthwhile for both buyer and seller. If you’re an American who is contemplating the purchase of a foreign-registered aircraft, keep in mind that the country of registration is in many ways less important than where the airplane is based, maintained and used. Suppose you’re considering acquisition of a jet registered in notorious Corruptionland. If the aircraft was based and maintained in Corruptionland, that country’s reputation may be a valid concern. On the other hand, if it was based in Switzerland, maintained by a world-class facility, spent most of its time flying back and forth to the U.S. and has logbooks in English instead of Corruptionese, the Corruptionland registration may be of little consequence. Due Diligence
In sum, the level of due diligence required when purchasing a foreign aircraft is much greater. First, you should employ local counsel in the country of registration and/or where the aircraft is based to help uncover any liens and to make sure you obtain clear title. In Italy, for example, regulations require publication of advance notice of the sale to give lienholders a chance to collect. Local counsel may also be crucial in arranging the mechanics of closing. (For instance, such counsel may need to act as the closing agent.) Second, you should determine where the aircraft regularly traveled. If it made frequent trips to company facilities in
India and Sweden, for example, you may want to order lien searches in those countries to avoid encountering undischarged liens the next time you fly there on the aircraft. Better yet, consider buying title insurance that covers all relevant jurisdictions. Third, as with any aircraft, arrange for a thorough prepurchase evaluation– if possible, at a factory-authorized service center in the U.S. If necessary, have foreign-language maintenance logs and records translated into English. Probably the most important player in importing an airplane into the U.S. is the designated airworthiness representative, or DAR. The DAR is a maintenance technician authorized by the FAA to provide aircraft with an airworthiness certificate from that agency. DARs are located all over the world. When purchasing the imported airplane, you register it in the U.S. by filing paperwork with the U.S. aircraft registry in Oklahoma. For the registration to be valid, you must satisfy FAA requirements, such as its tests for being a U.S. citizen. Airworthiness Certificate
However, to fly the aircraft once it’s on U.S. registry you need something more: an airworthiness certificate. That’s where the DAR comes in. As part of the prepurchase evaluation, you should have a DAR review the aircraft to determine whether it satisfies requirements for an airworthiness certificate. The DAR may require an annual inspection to be accomplished as part of the process. You should also arrange for the DAR to be standing by to issue the certificate following closing. Many buyers assume that obtaining an export certificate of airworthiness from the country of registration accomplishes the same thing. However, in my experience, DARs often regard the export certificate as an expensive irrelevancy; they still want to conduct their own review of the aircraft and its records to determine compliance with U.S. requirements. Check with your DAR about whether an export certificate is necessary or helpful and whether the exporting country will require any other approvals or paperwork. In any event, the aircraft purchase
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Business Jet Traveler: Making Sense of Private Aviation This article first appeared in the bimonthly Business Jet Traveler, whose 10th anniversary issue is available here at the show. Published by the same company that produces this magazine, as well as Aviation International News, BJT is edited for business jet owners and passengers. It offers unbiased reviews of new and used aircraft; advice about buying and selling jets; and information about taxes, laws, financing, safety and more. It also features articles about luxury autos, vacation destinations and other leisure pursuits, plus interviews with business jet travelers such as John Travolta and Sir Richard Branson. The current issue includes an exclusive interview with Penn & Teller and results of the magazine’s comprehensive survey of business aircraft users.
22 NBAA Convention News • October 24, 2013 • www.ainonline.com