It is not the case that anybody can own an airplane in America. This statement is not a comment about who can or cannot afford a general aviation airplane, but rather a legal fact. Federal regulations strictly limit and mandate ownership and registration of airplanes to American citizens. Alternatively, non-U.S. interests can take ownership stakes in airplanes through legal mechanisms called trusts.
Under federal law aircraft owners must keep the registration of their airplanes current with the Federal Aviation Administration ("FAA"). The FAA has a corresponding interest in keeping its records fresh, but apparently that has not been done.
Given the above background, it is interesting to note recent news that, according to an audit by the Department of Transportation's Inspector General, the FAA's civil aviation registry is incomplete with respect to the identify of non-citizen aircraft owners and pilot certifications.
“We found incomplete registrations for about 5,600 aircraft, or 54 percent, owned under trusts for non-U.S. citizens,” the audit report said. “As a result, the FAA has been unable to provide information on these aircraft to foreign authorities upon request when U.S.-registered aircraft are involved in accidents or incidents in foreign lands, as required by the Convention on International Aviation.”
(The full report is here.)
All of this follows the FAA's release of long-anticipated policy clarification related to the registration of aircraft to U.S. citizen trustees in situations involving non-U.S. citizen trustors and beneficiaries.
Think quickly: If you are a car owner, where must you register and record ownership of your car?
Think more carefully: If you own an airplane, where should you register and record your ownership interest?
The solution is a typical lawyer's refrain: It depends. For cars, owners simply register their ownership in the state in which they reside as a general rule. Airplane ownership is more nuanced, complicated (necessarily so) by issues like tax, nationality, and even national security.
In fact, not all airplane owners are even eligible to register their airplanes in the United States (let alone any particular state) unless they meet certain requirements under federal aviation regulations. The law says that
[a]n aircraft is eligible for U.S. Registration if it is not registered in another country and it is owned by:
- a U.S. citizen as defined by law;
- a Resident Alien (foreign individual lawfully admitted for permanent U.S. residence);
- a U.S. governmental unit or subdivision; or
- a non-citizen corporation lawfully organized and doing business under the laws of the U.S. or one of the States as long as the aircraft is based and primarily used in the U.S. (60% of all flight hours must be from flights starting and ending within the U.S.).
An aircraft may be registered only by and in the legal name of its owner.
Interesting, but what does it have to do with the title of this blawg. Well, presuming an aircraft can be registered in the United States, it is vital that its owner understand that the recording and registration process for airplanes registered in America are maintained through the Oklahoma aircraft registration branch of the Federal Aviation Administration and not simply in the state (Florida, Nebraska, wherever). Aviation counsel plays an important role in aviation transactions in this regard.
It would be a mistake to conclude this legal discussion without acknowledging the pain of many in Oklahoma on account of recent devastating tornadoes there. The important deployment and use of weather helicopters, together with search and rescue efforts by the business aviation community, should be a reminder of the vital importance of general aviation.
