One of the Biggest Obstacles to an International Import/Export

One of the Biggest Obstacles to an International Import/Export

January 20, 2014

As the pre-owned aircraft market becomes more and more global, an increasingly common occurrence is that the aircraft is registered in a country that operates with a very different set of regulations and standards than where it will ultimately reside after the sale. This raises a variety of potential complications because, at its most basic, the buyer is purchasing the aircraft in order to use it, and to accomplish this the aircraft must be able to import into their chosen set of regulations. Frequently, this can set both buyer and seller in a stand-off where both claim it is the others responsibility to make the aircraft comply, potentially making for a very difficult and ultimately unpleasant transaction experience.

However it is really in both parties’ interests to enter into a transaction to achieve the same goal of closing the deal and transferring the title.

 

So what can be done about this? As with most things in aviation, a little bit of forward planning can yield massive benefits.

As a Buyer, decide before the transaction begins which registration you would like the aircraft to be on. The registration you choose will consequently determine which standards of compliance the aircraft and its records will need to meet. This is one of the key points of the transaction and will make an enormous difference to which aircraft you will finally select.

Understanding which register you will use before the transaction begins allows you ample time throughout the transaction to address potential problems with the regulatory authorities in terms of corporate structures and the aircraft’s paperwork. One of the key goals in buying an aircraft is being able to use your new aircraft as soon as possible upon purchasing it. Knowing the registration issues on the selected aircraft before the transaction really gets underway will help tremendously towards this goal.

We often see European customers want to purchase an aircraft currently registered in the USA. The USA is run by the Federal Aviation Administration (FAA), while Europe generally follows the rules of the European Aviation Safety Administration (EASA). One of the main differences between the USA’s FAA and EASA is their paperwork standards. A modification made in the USA using perfectly legal and standard paperwork is many times not recognized under EASA regulations. In such instances, the only option is to submit that modification to the EASA authorities for their review and approval, a process that can be extremely expensive and often very time consuming. Such approvals can take a period of months, if approved at all, meaning that throughout that entire process the aircraft is grounded pending the EASA approval. In the worst case scenario where EASA will not recognize the installation after review, it can mean that you have to remove the offending modification before the aircraft can legally fly adding further cost and expense. As a buyer, during the initial inspection of the aircraft make sure that a full record of all modifications to the aircraft is taken and that those modifications are checked with your selected regulatory authority. Knowing before you purchase is always preferable to a nasty surprise the day after funding.

That being said, the onus of preparation is not solely on the buyer. As a seller, it will be extremely useful to prepare for the possibility of an international sale at the beginning. Start doing some of the research ahead of time to understand where your aircraft can and cannot easily import into. Knowing this in advance can let you avoid wasting time working on a deal that plans to import into a registration where you know the aircraft will not easily go. This ultimately saves you time and money, avoiding unrealistic deals and letting you focus on options that have a far greater chance of success.

In addition, throughout your ownership there are certain things you can do that help maximize the potential to import and export into different authorities. This is true especially during modifications, upgrades and refurbishments to the aircraft. Most day to day operations and maintenance will have little impact on the ability of the aircraft to easily change registrations, but it is the major modifications that will pose the biggest challenges. As a general guide, STCs (Supplemental Type Certificates) are easier for foreign authorities to approve for import, so request that any modifications are made under an STC. If that cannot be accomplished, the next best thing is for the manufacturer to make a modification to the aircraft. A modification by the manufacturer holds higher esteem in many foreign regulations than a modification made by a local facility.

One of the bigger misconceptions of aviation transactions, especially international ones, is the focus on the asset itself. We find more and more commonly that it is the structures and regulatory compliance that create far larger obstacles and delays in an ordinary transaction than the actual condition of aircraft. The largest problems during the transaction are almost always non-technical in nature, but are legal and procedural. It is important to note that while one authority does not accept or recognize a modification made in that aircraft’s history, it does not mean it was completed improperly or that is poses a safety problem. Technically the aircraft operates just as well on a modification made in one country that is not recognized as proper in another. But in the legal world of aviation regulation, the paperwork is often just as important, if not more so, than the actual technical work itself.

Remember, in today’s global marketplace your ability to resell quickly and at a retail price is directly related to your aircraft’s ability to import onto as many registrations as possible.

 

Often times, this is easy to forget as you operate the aircraft for a period of years on your current registration, but helping an easier resale is part of the full cycle of enjoying the aircraft and should be treated accordingly. The phrase ‘act locally, but think globally’ is never more true than in aviation.

Blogs are written from real world experience by Colibri Aircraft’s individuals. If you have any questions or comments about the topic of this blog, please feel free to contact our team at enquiries@colibriaircraft.com