NAFA members, Scott McCreary at McAfee & Taft and Jeffrey Towers at TVPX, weigh in on deciding where to register an aircraft that is operated in multiple jurisdictions. Originally published in Corporate Jet Investor's Official Guide to Aircraft Registration - April 2018.
As many aircraft are regularly operated in multiple jurisdictions, corporate aircraft owners are faced with multiple choices as to where they will register their aircraft for nationality purposes. Once the pros and cons of each registry are fully considered, owners often choose to register their aircraft on a registry that does not correspond with the nationality of the corporate jet owner. One of the most frequently chosen aircraft registries is the United States Federal Aviation Administration (FAA) Aircraft Registry, commonly referred to as the N Registry.
The FAA is the primary US regulatory agency that governs and oversees registration, maintenance and operation of aircraft. In addition, the United States Department of Transportation further provides economic authority for certain aircraft operations and protects consumers from unfair and deceptive trade practices involving the sale of air transportation. The FAA Aircraft Registry located in Oklahoma City, Oklahoma, issues Certificates of Aircraft Registration for both commercial and general aviation aircraft. To register an aircraft with the FAA, the applicant for registration must file documents evidencing ownership of the aircraft in the name of the applicant, as well as an AC Form 8050-1 aircraft registration application. To perfect liens or encumbrances against aircraft registered with the FAA, parties must (i) file the security documents with the FAA and (ii) comply with the registration requirements under the Cape Town Treaty, when applicable.
Why is the US a preferred jurisdiction for aircraft registration?
There are several advantages to registering an aircraft in the US. The FAA is widely respected for its easy, secure and inexpensive processes for filing aircraft title transfer, registration and security documents. There is also a long history of court decisions and other legal precedents regarding the processes for registering and canceling aircraft from the FAA, as well as the validity, priority and enforceability of security interests in aircraft. The US was also one of the first countries to adopt the Cape Town Treaty, thus providing the additional comfort and assurance that interests properly created and registered under the Cape Town Treaty will be recognized in other Contracting States. The clarity of applicable law and long history of legal precedents for enforcing rights of owners and lenders for US-registered aircraft appeals to aircraft lenders, lessors and borrowers.
The FAA provides an efficient system for owners and lenders to file documents and now accepts documents bearing appropriate digital signatures, which simplifies and expedites the closing process. There is a large pool of internationally-recognized aviation attorneys and other professionals in the US available to assist aircraft owners and lenders. Many parties also take comfort in the fact that the FAA, as part of the US government, has the resources and wherewithal to properly oversee and enforce its rules and obligations as an aircraft registry. Finally, there is ample evidence that registration with the FAA helps to preserve the value of a business aircraft, both because the FAA’s standards for aircraft operations and maintenance are among the highest in the world and because the US is the most active market for