Lawyers see more business jet and helicopter deals than most people in the market. They also see why many transactions fail. Leading legal counsel from around the world share the secrets of getting deals closed.
Liability of owners (including fractional interest owners), lessors and financiers for personal injury, death or property damages: Aerolease of America, Inc. v. Vreeland
Aoife O’Sullivan of Gates and Partners says financiers need to take note of the recent Supreme Court decision in Florida of Aerolease of America, Inc. v. Vreeland. In the context of business/private aviation and the highly publicised issue of illegal grey charter it is essential that extra care is taken by owners and financiers to ensure that operation of the aircraft vests with a professional and capable operator and/or that appropriate insurance cover has been obtained.
FAA Publishes Proposed Policy Clarification Regarding Non-Citizen Trusts: Permitted, but Conditioned
On February 9, 2012, the Federal Aviation Administration (the FAA) published its Proposed Policy Clarification (the PPC) regarding the use of non-citizen trusts (NCTs) to effect registration of an aircraft on the FAA registry.1 The PPC is a draft, prepared and published by the FAA for public comment, which includes its justifications for seeking to impose changes to the NCT registration process, and explanations and descriptions of those proposed changes, including a sample trust agreement revised to reflect the same.2 The PPC was issued after being reviewed and approved by officials of the FAA and DOT, as well as the Transportation Secretary.
The PPC includes the FAA’s general recognition of NCTs, which is a positive development. However, the PPC imposes new, and not insignificant, conditions on the use of NCTs including the allocation to the trustees of primary responsibility for certain matters as the “owner” of the aircraft.
This Bulletin briefly describes the FAA’s purpose for publishing this PPC, the matters addressed in the PPC, and its likely implications.
On February 21, 2012, the United States Supreme Court refused to grant certiorari in the case of Aerolease v. Vreeland (Docket No. 11-728), and in doing so leaves defendant aircraft owners, lessors and lenders in some states exposed to liability for injuries to passengers occurring when the aircraft is not in the defendant’s possession or control. This outcome is of critical importance not only to institutional financiers of commercial and business/private aircraft, but also to owners and lessees of business/private aircraft who make their aircraft – whole and fractional – available to others by lease, sublease, master dry lease, conditional sales agreement, or other arrangement.
The private aviation market continues to be a challenging and turbulent one for many of the players involved, be they operators, owners, lenders, investors or passengers. Michael Savva, Senior Assistant in the Asset Finance team at Watson, Farley & Williams LLP, summarises the key developments in the market in 2011 and how they will continue to shape the market.
Islamic financing of business jets is becoming more common and the transaction structure is not completely different to conventional leases. However, there are key differences and issues that will arise with Ijaara aircraft leases, writes Charles Viggers of Watson, Farley & Williams LLP.
This is an update to our April 2011 article in response to the Government’s changes, announced on 29 November 2011, by the Chancellor in the Autumn Statement followed by the, just published, HM Treasury “Reform of Air Passenger Duty: response to consultation” of December 2011. The principal changes affect the APD rates and the inclusion of business aviation for the first time.
Air Passenger Duty (APD) was first introduced by the UK Government in 1994 as a tax on air travel. It is a duty of Excise which is levied on the carriage, from a UK airport, of chargeable passengers on chargeable aircraft. It becomes due when the aircraft first takes off on the passenger’s flight and is payable by the operator of the aircraft. The amount due is dependent on the final destination and class of travel of the chargeable passenger.
Tom Alston, President and CEO of Aero&Marine Tax Professionals, a California sales and use tax specialist, outlines the only exemption available for personal-use aircraft in the State of California.
Opinions on Letters of Intent (LOIs) are often divided. The use of an LOI to confirm the details of a proposed sale can vary between a simple one page agreement as to the sale/purchase price of an aircraft and a detailed summary of the key commercial aspects of the transaction. Jonathan Russell, an associate in the aviation finance team at Holman Fenwick Willan LLP, believes that documenting the commercial aspects of a sale before handing the matter over your legal advisers will save time and money.