The History Behind the International Registry see more
NAFA member, Aircraft Guaranty Corporation, discusses the history of the International Registry.
The concept of multi-country international laws governing the financing of aircraft was the brainchild of Jeffrey Wool, who understood the global nature of airline financing and knew that more favorable international laws were needed to encourage investment in startup airlines.
Originally referred to as UNIDROIT, which is French for one law, he envisioned countries around the globe adopting a set of laws favorable to lenders that would encourage international financing of aircraft.
It would include a central international registry where rights and interests of international lenders would be registered in one place.
The Concept of Global Financing
Global financing for aircraft and airlines is of huge importance. You can read about this in ourblog, Why an Aircraft Should be Registered in Trust.
Starting a new airline is no small undertaking – with a long list of requirements needed to get a new airline off the ground, not the least of which is capital investment. Emerging markets are traditionally not affluent enough to provide start-ups with capital, so new airlines look to more prosperous economies for assistance.
The continuing increase in global air travel is overwhelming current supply chains, creating opportunities for new airlines to handle the demand. Start-ups around the world are adopting the low-cost carrier model, and opportunities to invest in these start-ups abound. Investors need to feel comfortable, however, with the business model of the airlines with which they are investing.
Investors around the globe are more willing to invest in startup airlines if they can be assured that they have the right to repossess the assets of the new business if the burgeoning new airline doesn’t make it and can’t pay off their loan.
The Cape Town Convention
In response to this need, the Convention on International Interests in Mobile Equipment was held, creating a set of uniform laws to encourage the financing of aircraft, particularly for developing countries. The original convention was held on November 16, 2001 in Cape Town, South Africa, and has therefore become widely recognized as the Cape Town Convention.
Signing the treaty was only the first step, and only represented an intent to participate in the Convention. To fully participate in Cape Town, signatories to the Convention had to ratify the treaty. This meant that participating countries had to change or adopt certain laws to make them more favorable to lenders financing the airlines.
To get Cape Town fully up and running, eight countries had to ratify the treaty. This took a while, so although the Convention was signed in 2001, not all of the provisions were fully up and running until March 1, 2006.
The original participating eight countries were Ethiopia, Ireland, Malaysia, Nigeria, Oman, Panama, Pakistan, and the United States. Today, the Convention has been signed by 77 different countries, and all but seven have fully ratified the treaty.
So, What About the International Registry?
The Cape Town Convention had a provision for creating an International Registry (IR), where the rights of all these international lenders could be filed for the world to see. The concept is much like the FAA, where all interests in the United States are filed in one place (Oklahoma City).
Unlike the FAA, however, the IR is an electronic-based registry that only gives notice of an international interest against an aircraft. In order to see the actual documents creating the interest, one must go beyond the IR to the country where the interest was created.
The IR was originally designed to show only liens against aircraft. As the concept of the Convention grew, many people felt that ownership interests should be registered as well. Many wanted it to operate more like the FAA’s title-based registry, so that interested parties could get an understanding of the aircraft owner’s current identity, not just whether there were any liens against it.
Registration of Ownership Interests were therefore added to the scope of the treaty, and the IR now allows for notices of ownership interest called contract of sales.
Is the International Registry in Cape Town, South Africa?
While the treaty was signed in South Africa, the question of where to place the IR was a big one, and political. Many countries vied for the right to host the IR, but it came down to two main contenders: Canada and Ireland.
A lot of deliberation went into making the final decision, but in the end, Ireland was selected, and the IR was placed in Dublin where it is currently managed by a company named Aviareto.
Now that we’ve given the history behind the Cape Town Convention and the creation of the International Registry, our clients may wonder about the need to register – please consult with Aircraft Guaranty Corporation to determine if you are eligible to register with the IR or not.
This article was originally published by Aircraft Guaranty Corporation on August 28, 2019.
NAFA member, Aircraft Guaranty Corporation, discusses the FAA Registry Update. see more
NAFA member, Aircraft Guaranty Corporation, discusses the FAA Registry Update.
There are changes ahead that will modernize the Federal Aviation Authority (FAA) – bringing it up to date with the latest technology and security measures. One of the key updates will be to the registry system, which is vital for ensuring aircraft are legally owned, maintained, and operated.
The deadline for the huge overhaul is now October of 2021, which doesn’t seem that far away. The Office of the Inspector General (OIG) recently issued a 29-page report – “FAA Plans to Modernize Its Outdated Civil Aviation Registry Systems, but Key Decisions and Challenges Remain” – regarding the progress the FAA is making in order to meet the modernization mandate.
The OIG delved into what they think the FAA needs in place to complete the required upgrade on time – their report put into question whether it could be accomplished, stating: “The Registry’s systems are outdated, and FAA has yet to develop a detailed plan for modernization.”
The FAA’s plans are not the only consideration in the timeframe though, given the Congress factor. Because “the regulations that govern aircraft registration do not reflect current technology or business practices”, modernizing the FAA’s registration system will require rulemaking by Congress, which can take some time.
A Modern System
This is a significant update to the Registry – many provisions were implemented with the Reauthorization Act of 2018 (HR 302) – which Aircraft Guaranty Corporation covered in more depth in Highlights of the 5 Year FAA Reauthorization Act.
The new registration system, Civil Aviation Registry Electronic Services (CARES), “is expected to streamline processes, allow for the submission of electronic applications and forms, improve controls, automate registration processes, and improve online data availability” according to the FAA. Its key aims are:
- Web-based access to all public data. For the first time in history, the general public will be able to view FAA records online in real time. Currently, what isn’t already electronically maintained is held in the Public Documents Room (PDR) available for those who have access. Any electronic records are only in real time via the computers at the PDR – outside access is limited to information that is updated once daily.
The modernization mandate includes digitizing all aircraft registration documents for real-time, public and web-based access, which means phasing out the PDR at the FAA. Furthermore, using the PDR will incur a fee if the business could have been conducted by electronic means as efficiently.
- Automation of application services (processes and procedures). For the first time in history, the general public will also be able to file any document electronically. Most aircraft registration functions still require paper documents that are manually scanned and reviewed by Registry examiners. Digitizing and automating the registration process means the role of FAA examiners will change, becoming more high-level.
In Order to Proceed
Detailed estimates of technical and operational requirements for the new system are vital right now – anticipating the rulemaking, cost and schedule that will be necessary to successfully complete the expansive project. Some key questions need to be answered:
What are the new components/upgrades needed in the new system? The FAA is considering: automated approvals for low-risk applications; automated verification of fraudulent or incorrect submissions; additional security controls such as crosschecking information with non-agency entities; the registry structure, including combining aircraft and airmen systems; and matters of data storage with a cloud- or server-based system.
How will the FAA fund the new system?It hasn’t been decided yet – funding modernization projects usually comes from its facilities and equipment (F&E) account, but they may be able to use money from its operations and maintenance (O&M) account. This must be decided before it becomes a part of the agency’s budget.
What rulemaking via Congress is necessary in order to proceed?The FAA will have to develop a rulemaking that revises current regulation and allows for the electronic registration of aircraft –to improve controls, strengthen requirements, and implement digital signatures and electronic payments – a complete outline of the new system is needed beforehand to know exactly what rules to change
Now What? – The Challenges
The OIG report contained four main recommendations to the FAA. The FAA accepted and outlined a schedule for implementing them:
- Develop and implement timeline for making key decisions regarding CARES by May 31, 2019.
- Define desired capabilities of CARES by Dec 31, 2019
- Develop and implement a procedure to obtain industry feedback by Oct 31, 2019.
- Develop and implement a plan for maintaining real-time access to data by June 30, 2019.
There are challenges to face though, including: the transfer of a huge amount of data (with a lot of outdated/large files) to a new system; meeting the needs of registry users – aircraft title companies, financial institutions, aircraft manufacturers, airmen, other government agencies etc. – to ensure the operation of aircraft worldwide; and addressing workforce issues arising from role changes.
The Transition & After
The OIG has concerns, but if the FAA stays on track with this schedule, they can meet the October 2021 deadline, barring delays with Congressional rulemaking.
Updating and modernizing the new system will be a great improvement but will not fully alleviate all the pitfalls in submitting documents, electronically or not. With the extensive rules in place for filing documents, there is a good chance it won’t be done correctly without industry knowledge of FAA rules and regulations.
Furthermore, it is paramount to know What to Look for in Owner Trustee Documents to uphold high standards for creating and maintaining the title to the aircraft. It will still be important to hire a company that knows the ins and outs of the FAA system to avoid costly errors that could take time and money to correct.
Ultimately, the changes ahead will modernize the FAA’s registry system, helping to bring the aviation industry up to date in technology and security measures. There is significant work to do, but we’re confident that every entity involved in this important endeavor will fulfill expectations.
This article was originally published by Aircraft Guaranty Corporation.
Aircraft Guaranty Corporation Turns 30! see more
FOR IMMEDIATE RELEASE
OKLAHOMA CITY, Okla. – Feb. 26, 2019
Aircraft Guaranty Corporation (AGC), one of the most well-respected trustee service providers in the aviation industry, is excited to announce their 30th year in business. Founded in 1989 by Dr. Connie Lee Wood and his wife Mary, AGC began in order to simplify the aircraft registration and re-registration process for entities who cannot meet the Federal Aviation Administration (FAA) citizenship requirements, providing a safe and lawful way to do so.
The formation of Aircraft Guaranty Corporation responded to the need for informed and personable trust companies. Trusts were initially established for use by airlines, which are publicly traded, and foreign aircraft manufacturers that have facilities in the U.S. Both are essential for the operation of aircraft in the U.S., but neither meet the citizenship requirements for registering at the FAA. Trust structures evolved since this early construct to legally benefit more than just airlines and manufacturers, continuing growth and development in the aviation industry.
Based on the founders’ strong work ethic and impeccable service standards, Aircraft Guaranty Corporation has grown to be a renowned trust company led by Debbie Mercer-Erwin, who bought the company in December of 2014. AGC now controls over one billion in aircraft value across sixty countries. With 30 years of experience and over 2000 aircraft registered in more than 160 different countries, the company handles their clients’ transactions with knowledgeable, dependable and responsive service.
AGC’s professional team has vast experience in aviation, international business and tax law, ensuring that their clients’ aircraft is properly registered at the FAA in Oklahoma City. The company’s straightforward procedures, attorney-created documents, and easy to use website make aircraft registration as secure, uncomplicated and timely as possible. Aircraft Guaranty is highly reputed for adhering to FAA, state and federal regulations in registering and maintaining the titles of their clients.
Owner and President of AGC, Debbie Mercer-Erwin, embraced the opportunity to grow this business and infused it with her trademark passion for serving clients and building long-standing relationships. She attributes much of her success in the industry to personalized, prompt service. Debbie is also the owner and founder of Wright Brothers Aircraft Title, one of the most well respected, recognized Title & Escrow Companies in Oklahoma City. With her knowledge of aviation, keen insight and reputation for integrity, continued growth is expected for both businesses.
About Aircraft Guaranty Corporation:
Founded in 1989, Aircraft Guaranty Corporation has become one of the most well respected and trusted Trustee Service providers in the aviation industry. Over this long tenure, they have registered over 2000 aircraft on behalf of clients from over 160 different countries worldwide. AGC prides itself on service and expertise, with a professional team of employees and legal advisors well equipped to make their clients’ transactions run as smoothly as possible. For more information about AGC, visit agcorp.com.
This release was originally published on Aircraft Guaranty's Blog on March 1, 2019.
Highlights of the 5 Year FAA Reauthorization Act see more
NAFA member, Aircraft Guaranty Corporation, shares highlights of the 5 Year FAA Reauthorization Act.
There were several proposals put forward for the Federal Aviation Administration (FAA) Reauthorization Act of 2018 (HR 302), but not all of them made it through. While privatizing air traffic control will not be happening, the rules regarding re-registration have once again been changed. The bill also includes an edict that all documents will be digitized soon, along with opening records electronically to the public for the first time. The 462-page bill passed on October 3rd, 2018 contains many provisions, a few of which we’ve highlighted here. There are changes on the horizon, and while the overall effects are uncertain, we can surmise some of the possibilities.
In years past, registration was only required once per owner of the aircraft. In 2010 that changed in an attempt to make FAA records more current, with re-registration required every 3 years. While this involved more work, the change helped update and maintain more accurate information on aircraft owners. In Section 556 of the 5 Year Reauthorization Act, reregistration is changed to every 7 years, to be enacted within 180 days of the bill passing. We can’t be sure why the FAA is modifying the requirement to less frequent updates once again but are optimistic that the integrity of registration records will not be affected.
There are already a lot of FAA documents consistently digitized, making some functions involving registration and record searches more efficient. What isn’t electronically maintained is held in the public documents room at the FAA and available to those who have access to that room. Section 546 of the new bill states that everything will be digitized within the next 3 years, including all registry information such as paper documents, microfilm images and photographs, as well as the registry manual, business operations and functions, and all paper-based processes. It’s certainly an earth-friendly endeavor but could produce some complications of its own regarding access and security.
Public Electronic Database
Possibly the most significant aspect covered in Section 546 of the bill and happening within 3 years is that the FAA records will be made electronically available to the public. For the first time in history, the general public will be able to view any record and file any document they want at the FAA. Furthermore, anyone using the public documents room to perform any acts that could have been done with the same efficiency by electronic means, will be charged a fine. The implications of this switch could be quite far reaching.
The ability to submit documents electronically might make it more appealing for anyone to do individually, but it does not mean they should. While the FAA is opening their records, they are not changing the rules for submitting documents to them. With the extensive rules in place for filing documents, there is a good chance it won’t be done correctly without industry knowledge of FAA rules and regulations for filing of documents.
Furthermore, as the registered owner of the aircraft, an owner trustee is going to want to maintain high standards for creating and maintaining the title to the aircraft. They would therefore be filing all documents affecting title in accordance with their own standards. It would likely mean an unrecordable document otherwise. They also know What to Look for in Owner Trustee Documents, and would never rely on documents created or filed by someone else. They would also perform any title searches since an outstanding lien or break in the title can be easily missed without an experienced eye, resulting in the need for Clearing Clouded Aircraft Titlesas discussed by Wright Brothers Aircraft Title.
The Owner Trustee’s Role
There are many possibilities for error in the registration process, increasing the amount of time and money spent. It’s complicated and requires experts for error-free and timely filings. There are many Benefits to Registering an Aircraft in Trustsince the main role of an owner trustee is to represent the interests of the beneficiary. It is the owner trustee’s responsibility to ensure that all documents filed at the FAA are recorded and kept up-to-date. For an owner trustee then, less frequent re-registration filings do not mean less work since they are regularly in communication with their clients.
In sum, the changes coming forward could be both helpful and harmful. We’re hopeful that all will go smoothly for the FAA and progress will continue. The risks involved with registration, title searches and filing documents will not change though, and representation by an experienced owner trustee company is key.
This article was originally published by Aircraft Guaranty Corp. in January 2019.