Sanctions and security: Due diligence matters now more than ever see more
What do the Russian sanctions mean to aviation lenders in the U.S.?
Are you considering an international aviation transaction? Given the recent Russian sanctions that the U.S. has implemented, there are significant concerns of which everyone needs to be aware. With sanctioned individuals, entities and countries changing rapidly, it is difficult to keep up with the latest developments. Overall, the situation creates an environment that makes it more challenging to lend in emerging markets, especially Eastern Europe. People often forget that sanctions apply to individuals, entities, vessels and aircraft. Even if an aircraft may be owned by a non-sanctioned individual, if it is sanctioned itself, no lender may lend against it.
How do you manage loans that involve—tangentially or directly—people who are under sanction by the U.S. government? While doing business with sanctioned individuals violates U.S., U.K. and E.U. laws, it also presents the potential for negative impacts on their reputation.
When it comes to financing aircraft sales, being under Russian sanctions is the equivalent of having your name on a no-fly list. Doing business with someone who wasn’t on the sanctions list earlier, but suddenly is, creates a challenge for lenders. Experts recommend calling an event of default on the loan and once the right to cure period is over, making every effort to retrieve the aircraft involved, which presents its own challenges in the current environment. Most loan contracts have a default clause for sanctions violations, providing ample recourse for terminating the transaction, but not necessarily a path to obtaining possession of the aircraft.
This NAFA article was originally published in Business Air, Issue 5 2022, p. 38 in May 2022.
United States Imports and Exports of Aircraft see more
NAFA member, Jeffrey S. Towers, Vice President and General Counsel for TVPX, discusses United States Imports and Exports of Aircraft.
Like most other developed countries, the United States (U.S.) regulates the entry and removal of goods, including aircraft, across its borders. The primary reasons for regulating commerce in and out of the country are to measure the balance of trade and to prevent cross-border transfers involving prohibited merchandise or prohibited parties. The rules for U.S. imports and exports require the party or parties involved to timely and accurately report certain information to the government and under some circumstances to obtain licenses or other authority for exports.1 Unlike other jurisdictions, the United States does not charge significant taxes, fees or duties on most aircraft imports or exports.2 However, the governmental agencies that are primarily involved in imports and exports, namely U.S. Customs and Border Protection (CBP), Census Bureau, and Bureau of Industry and Security (BIS), can assess significant penalties and seize aircraft for violations of the reporting or licensing requirements.
An aircraft does not need to be imported when it is merely functioning as a carrier of passengers or cargo into the U.S.3 However, an import entry is required in other circumstances, such as when a foreign-based aircraft is brought into the United States for a pre-buy inspection and a closing or is brought into the United States for the purpose of basing the aircraft in the U.S. long term. In addition, aircraft typically must be imported when moved to the U.S. for repairs and alterations. In these situations, the aircraft is considered the merchandise that is being imported. The import entry needs to be completed prior to bringing the aircraft into the U.S. It is critical, therefore, that the party bringing in the aircraft hires a U.S. customs broker, supplies them with the necessary information to process the entry and takes the other required steps in advance.
This article was published by TVPX in June 2022.
AINsight: Will Sanctions on Russia Upend Bizjet Sales? see more
NAFA member, David G. Mayer, Partner at Shackelford, Bowen, McKinley & Norton, LLP discusses Russia, sanctions, and business aviation.
The Russian invasion of Ukraine has drawn condemnation and severe sanctions from governments globally, including the U.S., UK, European Union, Canada, and even neutral Switzerland. Many businesses worldwide have pulled back from doing business with, or suspended selling goods and services in, Russia. The sanctions as a whole will almost certainly have serious and perhaps economically devastating consequences for Russia, including in its business aviation segment.
According to WingX, of the 3,860 private jet flights by Russian aircraft this year as of February 21, large-cabin, ultra-long-range, and VIP airliner business jets represented 43 percent of flight operations in the country. As global flight operations continue to rise, strong demand to purchase such jets persists amid the ultra-low inventory of preowned jets available for sale.
Will any of the hundreds of Russian-owned or controlled jets be sellable and sold while sanctions are in effect? For now, it appears so, but the parties may have to traverse a minefield of sanctions and other transaction obstacles to close such purchases.
This article was originally published by AINsight on March 11, 2022.
Business Aviation Advisor Podcast: Accentuate The Positive – Reduce Financial Risk see more
In Rewarding Risk Management, NAFA member, the VanAllen Group’s Jeff Agur and Don Henderson discuss how best to manage the business aviation expense side of your ledger, to define that value, and eliminate any unnecessary financial risks.
You may view your flight operation’s cost as just another line item on the expense side of your balance sheet … without reference to the value that this remarkable capital asset provides to your organization.
If it’s time to accentuate that positive value and eliminate any negative business aircraft perceptions, then it’s time to hear what independent aviation professionals have to say.
This podcast was originally published by Business Aviation Advisor on January 25, 2022.
Satcom Direct Confirms Three-way Strategic Alliance Enabling Streamlined Tax Reclamation for Business AviationSatcom Direct Confirms Three-way Strategic Alliance Enabling Streamlined Tax Reclamation for Busines see more
Melbourne, FL. / 10 January 2022 –Satcom Direct (SD), the business aviation solutions provider, and MySky, the AI-powered spend management platform, today announced the signing of an agreement with tax reclamation experts, VAT IT USA. The three-way strategic integration enables the companies to combine their expertise to deliver streamlined VAT and tax reclamation to mutual customers by leveraging each partner’s technology.
The aggregation of the VAT IT tax recovery option with the MySky financial module, within the digital flight operations platform SD Pro®, acts as a force multiplier for flight departments, operators, and owners. After a complimentary one time sign up to VAT IT, inputted expense and invoice data will be assessed and processed by the tax specialists to initiate the VAT reclamation which saves money, reduces workload, and improves the overall ownership experience. For those requiring Mineral Oil Tax reclamation, the VAT IT module also supports the highly complicated reclamation process to further enhance the offering.
This press release was originally published by Satcom Direct on January 10, 2022.
Holland & Knight Webinar: Updates on Russia-Related Sanctions see more
NAFA member, Holland & Knight, share their latest webinar: Updates on Russia-Related Sanctions.
In response to Russian President Vladimir Putin's continued war operations in Ukraine, the U.S. government took "unprecedented" actions to impose severe additional sanctions and new export control restrictions, specifically targeting Russian financial institutions, Russian elites, Russian state-owned enterprises and several of Russia's critical industrial sectors. The U.S. government continues to roll out new restrictions, designations, guidance and policy that directly impacts nearly every aspect of doing business with or in Russia.
Please join attorneys Antonia Tzinova, Jonathan Epstein, Robert Friedman and Dariya Golubkova from Holland & Knight's International Trade Group for a presentation on the latest developments and measures to date, followed by a Q&A with audience members. We invite attendees to submit questions in advance of the presentation by using the "Questions & Comments" space in the registration form linked below. Attendees will also be able to submit questions through the webinar's Q&A function during the presentation.
For written analysis in advance of the presentation, please refer to Holland & Knight's previously published trade alerts regarding the sanctions on Russia:
- U.S. Announces Sanctions in Response to Putin's Action in Ukraine
- U.S., Allies Impose Further Sanctions, New Export Controls on Russia as Military Advances
We hope you can join us for this highly informative presentation. To view the presentation materials, click here.
Warner AvLaw Joins National Aircraft Finance Association see more
FOR IMMEDIATE RELEASE: February 17, 2022
Contact: Tracey Cheek
Warner AvLaw Joins National Aircraft Finance Association
Edgewater, MD – National Aircraft Finance Association (NAFA) is pleased to announce that Warner AvLaw has recently joined its network of aviation professionals. Warner AvLaw provides legal services for all aspects of private and commercial aircraft financing and ownership.
“NAFA members proudly support general and business aviation aircraft throughout the world, and we’re happy to add Warner AvLaw to our association,” said Jim Blessing, president of NAFA. “Legal concerns are important topics for our members, and as NAFA celebrates our 50th anniversary, we point to the work Warner AvLaw does in the legal arena as an example of our tailored services that are valuable to our members.”
Products & Services
Assistance with the origination, documentation and enforcement of aircraft financing arrangements
Legal advice for financing, leasing, acquisition, disposition and operation of new and pre-owned aircraft
Coordination of all phases of the aircraft acquisition, disposition and operation processes
About Warner AvLaw:
David Warner founded AvLaw recently as the next step along his 42-year legal career. Through Warner AvLaw, David represents a select group of long-standing aircraft finance clients in the origination, documentation and enforcement of aircraft financing arrangements. He also provides aviation legal services that focus on the acquisition, disposition and operation of new and pre-owned aircraft through another recently formed law firm, JETREP PLLC. He advises aircraft owners and operators — high-net-worth or entrepreneurial individuals, and corporate flight departments — in all phases of the aircraft acquisition, disposition and operation processes.
David has extensive knowledge on the broad range of aviation matters and regularly counsels clients on matters related to crafting and implementing tax-efficient structures, FAA and DOT regulatory matters, aircraft operational and management arrangements, and personal-use issues.
David has served on the Board of Directors and acted as General Counsel for NAFA since 1998 and the Pacific Northwest Business Aviation Association for nine years. David has been active in NAFA for 32 years (since 1990).
About NAFA: The National Aircraft Finance Association (NAFA) is a professional association that has been promoting the general welfare of aircraft finance for 50 years. Our network of members is comprised of lenders and product service providers who work together to finance general and business aviation aircraft. NAFA sets the standard for best practices in aviation finance by educating its members with the most up-to-date industry trends and best practices. Government legislation, market influences, and industry insights allow member companies to provide the highest quality services the industry has to offer.
AINsight: Who Gets To Fly on the Company Jet? see more
NAFA member, David G. Mayer, Partner at Shackelford, Bowen, McKinley & Norton, LLP, shares his recent blog that lays out key elements of aircraft use policies and who participates in administering the policies. It also suggests that, in the hot job market, companies should consider extending the use the company jet to up-and coming-executives below the C-suite level to recognize their value to, and allow them to feel valued by, the business enterprise.
As companies increasingly lift restrictions on travel via business aircraft amid the Covid-19 pandemic, the time seems right to reconsider aircraft use policies and plan for the future reliance on business aviation.
Proven by extensive research, business aviation in general and the use of business aircraft by companies in particular support the success of many business enterprises. Business aircraft are time machines. They consistently save travel time over airline travel and access many more airports than airlines serve. Companies typically acquire private aircraft to foster personal engagement, an objective that electronic media like Zoom will never replicate.
Companies also realize that business aircraft can provide their personnel with a healthy and safe environment—a huge concern during the pandemic. From small cabin to ultra-long-range aircraft, each aircraft should also offer travelers personal security, connectivity, and privacy in a comfortable place that fosters efficiency and productivity.
In writing an aircraft use policy, a company can expect to balance the perceived benefits of using business aircraft with the company’s associated business, cultural, legal, and financial circumstances.
This article was originally published by AINsight on January 14, 2022.
Aircraft Export Laws: Owners, Beware! see more
With an increase in US government enforcement actions for failure to comply with applicable aircraft export laws, it’s vital to understand these complex requirements and regulations. Here, the National Aircraft Finance Association (NAFA) breaks them down.
Aircraft transactions are complicated and involve a host of tax and regulatory issues. While attention has rightly been focused on federal and state tax planning and compliance with FAA, DOT (among other agencies) regulations, compliance with US export laws has often been inadvertently overlooked.
In many cases, parties have failed to properly export aircraft due to confusion over, and lack of awareness of, the requirements.
- One common misconception is that de-registration from the FAA registry and/or issuance of an export certificate of airworthiness satisfy US export clearance requirements.
- Another common misconception is that export laws and export clearance requirements are not applicable to US registered aircraft.
- Further, the export regulations are not written with aircraft in mind, so applying them within the context of aircraft transactions can be difficult.
Nevertheless, recent government enforcement actions, including an uptick in aircraft seizures, have placed a spotlight on the importance of compliance with US export laws.
This article was originally published by AvBuyer on January 10, 2022.
Amanda Applegate, aviation legal specialist establishes new firm servicing international clientele. see more
CLEVELAND, Ohio, December 15, 2021 - Esteemed aviation legal specialist Amanda Applegate today announced the formation of Soar Aviation Law, a firm devoted to private aviation matters. Headquartered in Cleveland, Ohio, Soar will officially open for business on January 1, 2022. Applegate will partner with her longtime colleague, accomplished aviation attorney Sarah Northcraft Spann, to service the needs of their international clientele.
Applegate spent the early part of her career in leadership positions at NetJets, the creator of fractional aircraft ownership. She gained comprehensive experience as she managed hundreds of whole aircraft transactions and thousands of fractional share purchases during her thirteen years with the company. Northcraft Spann similarly began her career at NetJets and later transitioned to its sister company, Executive Jet Management, where she developed her skills in whole aircraft ownership and aircraft management. Most recently, Applegate served clients worldwide for over a decade at Los Angeles-based Aerlex Law Group where she was elevated to Partner in 2015. Northcraft Spann served as Transactional Attorney at Aerlex and teamed with Applegate to close 450 transactions valued at over $2.5 billion since 2017.
“Sarah and I are thrilled to strike out on our own after a great experience at Aerlex. One of the hallmarks of Soar Aviation Law will be a dedicated responsiveness to our clients. The current seller’s market and lack of aircraft inventory requires thoughtful but prompt action to avoid languishing deals and lost opportunities. We will grow Soar and add the right individuals to provide not only comprehensive legal advice but the responsiveness that is essential in today’s market.”
Amanda Applegate is highly regarded in the business aviation industry for her legal expertise and negotiating skills. She speaks frequently at industry conferences for NBAA, NAFA, IADA and CJI, among others. Applegate authored a monthly column in BusinessAir Magazine for nine years, resulting in an encyclopedic collection of information on every aspect of aircraft acquisition and ownership, and reflecting her expansive knowledge of the industry.
This press release was originally published by Soar Aviation Law on December 15, 2021.
Solairus' John King and Jeff Ritzinger discuss critical steps required to keep your data safe. see more
NAFA member and Solairus' President John King and IT Director Jeff Ritzinger discuss some of the critical steps required to keep those data out of sight – and away from hackers’ prying eyes.
Today, aviation safety concerns aren’t confined only to flight operations. Internet security also is an issue – the need to keep your as well as your passengers’ and clients’ profile information safe and secure.
And that requires staying one step ahead of hackers and phisher-men from anywhere in the world – whether their intent is using that information to grab a competitive edge, to hold your data for ransom … or to seek revenge.
When there’s more to be said than space and copy deadlines allow, you can rely on the Business Aviation Advisor Above and Beyond podcast series to get you the information you need, enabling you to make the most of your aviation investments.
This podcast was originally published by Business Aviation Advisor on October 12, 2021.
David G. Mayer, Partner at Shackelford Law shares some insights and guidance on aircraft management. see more
NAFA member, David G. Mayer, Partner at Shackelford, Bowen, McKinley & Norton, LLP, shares some insights and guidance on aircraft management.
Many first-time and experienced aircraft buyers have entered the market to purchase a private jet and travel far away from commercial airports. But the aircraft they plan to fly may be no more than an expensive paperweight until the right management organization helps the owners get their aircraft safely off the ground.
Since Covid-19 disrupted air travel in 2020, the demand of first-time and repeat aircraft purchasers of whole and fractional aircraft has climbed sharply and reduced the available inventory of aircraft to historical lows. At the same time, Part 135 operators have experienced a burst in demand for chartering, creating significant pressure to provide services to customers beyond the operator's normal capacity. The stress makes the careful selection of a management company more important than ever before.
This article was originally published by AINonline on November 12, 2021.
7 Avoidable Mistakes in Acquiring a Bizjet see more
NAFA member, David G. Mayer, Partner at Shackelford, Bowen, McKinley & Norton, LLP, shares what to watch for when purchasing a private jet.
Acquiring a private jet aircraft is fraught with the potential to make expensive mistakes. Yet, a qualified aviation team can help a purchaser achieve optimal results by avoiding these seven missteps:
GOING IT ALONE
Assembling the right aviation team admittedly entails some cost and initial effort. But most purchasers quickly realize that buying a jet is not like buying a car, real estate, or other assets. Rather, a jet purchase or lease is complex and requires the assistance of aviation experts who excel in the subject matter and interact seamlessly on a deliberate closing schedule. Tax-intensive, cross-border, and novel purchases may require additional expertise beyond the core team members described below.
This article was originally published on AINonline on November 13, 2021.
NAFA Webinar - CARES Act and Digital Signatures - Part 1 see more
NAFA presents Part 1 of the CARES Act and Digital Signatures Webinar.
This NAFA webinar originally aired on September 1, 2021.
NAFA Webinar - CARES Act and Digital Signatures - Part 2 see more
NAFA presents Part 2 of the CARES Act and Digital Signatures webinar.
This NAFA webinar originally aired on September 1, 2021.