As Many As 340,000 Aircraft May Need New Paperwork To Be Legal

After initially proposing a rules change in 2008, the FAA may soon be set to require aircraft to be registered periodically, as are cars and boats. If adopted, the perpetual registration of aircraft would be scrapped and the registration of every aircraft in the United States would be cancelled, requiring a new registration within three years.

Currently, aircraft are required to be registered only at the time of transfer of title. The FAA says the new rules are designed to increase the accuracy of the information available in the registry. The registry came into existence in the 1980's when the use of aircraft in drug smuggling became an issue of increasing concern for the U.S. Customs Service, the Drug Enforcement Administration, and law enforcement agencies at all levels of government. These agencies, seeking quick and accurate identification of owners of civil aircraft, advocated an annual registration requirement. In 1988, Congress passed the FAA Drug Enforcement Assistance Act of 1988 (FAA DEA Act) (partially codified at 49 U.S.C. 44111), expanding FAA's mission to include providing assistance to law enforcement agencies involved in the enforcement of laws that regulate controlled substances. In the FAA DEA Act, Congress identified specific shortcomings in the system of records, mandated specific modifications, and authorized and directed rulemaking to make the aircraft registration system more effectively serve the needs of buyers and sellers of aircraft, law enforcement officials, and other users of the system.

In response to this mandate, the FAA has made a number of administrative modifications to its registration process including requiring physical addresses or locations of owners, and requiring legible printed or typed names on an application for aircraft registration.

As it stands now, owners are required to verify the information every three years, but only if information concerning the registration is changed. According to the FAA's proposed rule, all aircraft owners would be required to re-register and then periodically renew their aircraft. The total cost per certificate per aircraft owner is about $26. An aircraft owner would renew his or her certificate, on average, about 6 more times over a 20-year period for a total of 7 certificate actions; assuming 7 certificate actions would result in costs of about $181 over 20 years, or an average cost of $9 per year. For a small business that owned several aircraft, the cost of this proposed rule to them would be negligible and, therefore, not significant. Since annualized costs would be less than 1% of annual median revenue, the FAA believes that this proposed action would not have a significant economic impact on a substantial number of small entities.

Under the new rule, failure to properly re-register an aircraft could result in it being grounded, since operation of an improperly registered aircraft is illegal. It could also subject anyone operating an improperly registered aircraft to civil and criminal penalties. The new rules would also include leasing companies, and companies who finance those leases.

In a document provided by GE Capital, which finances a large number of aircraft leases, that company suggests modifying the current rules to require a positive verification that information in the registry is correct, rather than scrapping the entire system and requiring a complete re-registration every three years. While there is no date set for any change in the registration rules, but some industry insiders indicate the change could come as soon as the first quarter of 2010.

FMI: http://www.regulations.gov/fdmspublic/component/main?main=DocketDetail&d=FAA-2008-0188