Welcome to GlobalAir.com | 888-236-4309 |    | Please Register or Login
Aviation Articles
Home Aircraft For Sale  | Aviation Directory  |  Airport Resource  |   Blog  | My Flight Department  | MaxTrax
Aviation Articles

Keeping the FAA Happy When Registering an Aircraft Owned by an LLC

by Greg Reigel 6. July 2015 11:46
Share on Facebook

A Limited Liability Company ("LLC") provides personal liability protection to its owners, as well as the tax and management flexibility. Both of these advantages have resulted in the increased use of LLC's for aircraft ownership. However, in order for the FAA to accept an application for aircraft registration submitted by an LLC, the aircraft owner needs to comply with the registration requirements of 14 C.F.R. Part 47.

One of those requirements is that the LLC must meet the U.S. citizenship requirements of 14 C.F.R. § 47.3. One of the ways to prove to the FAA that the LLC does, in fact, satisfy those requirements is to submit a "Statement in Support of Registration by a Limited Liability Company" ("LLC statement"). Although this isn't the only way to prove citizenship to the FAA, it is one of the most common methods.

In the LLC statement, the LLC must identify its members and confirm whether each of its members is a U.S. citizen. However, if one of the members is another LLC, the FAA will require an additional LLC statement for that member LLC identifying its members and confirming that those members are also U.S. citizens. The idea is that the FAA wants to drill down to identify which of the individuals involved are U.S. citizens and then determine whether the LLC qualifies as a U.S. citizen under 14. C.F.R. § 47.2. If that second (or third, if necessary) LLC statement isn't filed, the FAA will not register the aircraft until it either receives the LLC statement(s) or it receives other proof (usually organizational documents for the LLC) showing the citizenship of the members.

When all of the LLC's individual or entity members are U.S. citizens, then the LLC will be considered a U.S. citizen. If all of the individuals or entity members are not U.S. citizens, in order for the LLC to be satisfy the citizenship requirement, 2/3 of its officers/managers satisfy U.S. citizenship AND whether 75% of the voting interest of the LLC is controlled by individuals or entities meeting U.S. citizenship requirements.

Another item on the LLC statement indicates whether the LLC is managed by its members or managers. Whatever answer is provided, that information needs to match the information provided by the LLC on the application for registration. For example, if the LLC statement indicates that the LLC is managed by its members, then the individual who signs the application for registration should indicate his or her title as "member" or "managing member." On the other hand, if the LLC statement indicates that the LLC is managed by managers, then the individual signing the application should indicate his or her title as "manager" or some variant that includes the word manager (e.g. chief manager, chief financial manager etc.). If the LLC statement and the application for registration do not match, the FAA will reject the application.

Additionally, although an LLC may also be managed by officers, if the individual signs the application for registration as an officer (e.g. president, vice-president, treasurer etc.) the LLC statement will not be sufficient for the FAA to determine whether that individual has the appropriate authority. In that case, the FAA will reject the application unless it also receives the LLC's operating agreement or some other documentation evidencing the officer's authority to sign on behalf of the LLC.

Applying for registration of an aircraft with the FAA on behalf of an LLC can be tricky. The aircraft owner(s) using an LLC to own an aircraft need to carefully dot the "i's" and cross the "t's" to ensure that the FAA will accept the LLC's application and register the aircraft. Understanding the LLC statement and the FAA's requirements can help you avoid some of the "gotcha's" that can cause problems for an aircraft owner trying to register an aircraft with the FAA using an LLC.

Tags: , , ,

Greg Reigel

Older Aircraft (revisited)

by David Wyndham 6. July 2015 10:47
Share on Facebook

Fall of 2013, I wrote on the subject of what is old for a business aircraft. That article dealt with the issues regarding whether older business aircraft are easily sellable, and tried to put a number on what is old. I think it important enough to revisit again. 

At the recent NBAA regional meeting at Teterboro,  I sat in on briefings about the state of used aircraft sales and residual values. Much like with similar briefings at last two years' NBAA Annual Meeting & Convention, older business aircraft are still not selling. For financing, a general consensus for turbine airplanes is still this: the Aircraft Age + Length of Lease/Loan should not exceed 20 years. Age 15 allows for a five year financial deal. Some lenders are using a younger age than even 15! 

The factors I mentioned in 2013 are still valid:

- A good supply of relatively young, up-to-date, turbine business aircraft are listed as for sale.

- Future air navigation systems requirements such as NextGen and FAA 2020 are still making the ability to update older aircraft in question, both with the cost and timing.

- Markets outside of the US wanting new or nearly new aircraft.

- Increasing operating costs of older aircraft make them less desirable.

While the supply of used business jets is lower as a total percent of the market, the global market is sufficiently large that there is a good selection of aircraft to choose from across most categories. The FAA deadline for new navigation equipment is still January of 2020 and the FAA shows no signs of changing the date. The airframe manufacturers and third party companies are still trying to certify equipment for  the last 10 or 15 years' worth of models. With cheap oil and a strong US dollar, the non-US market is having a tougher time affording these new aircraft. But when they do purchase, they still look at the nearly new models. 

In this article I want to look at the operating costs again, from a different perspective.

You can buy a 30-year-old Gulfstream GIII for about $1 million. A 20-year-old GIVSP sells for about $4.9 million. A 10-year-old G450 sells for around $16 million (source Vref). According to AMSTAT, the GIII models offered for sale have been listed for an average of 491 days - about 16 months. The G450s listed for sale have been on the market about 6 months. So the average G450 is selling before the average GIII. 

Provided both aircraft have the range and cabin that fit your needs, why spend $16 million when you can spend $1 million? For much less than $15 million, you can buy a lot of maintenance and upgrades for the older GIII. It's relative, that's why.

An engine overhaul on a Spey or Tay can run to over $1 million each. Include all the other airframe and avionics maintenance and you can have a maintenance budget of from $3 million (G450) to $5 million (GIII) over five years' typical flying. The G450's maintenance budget is far less relative to the value of the aircraft:

Aircraft Value       Maintenance Budget (5 yrs) Maintenance as Percent Value

G450 $16 million $3 million                                      19%

GIII $1 million $5 million 500%

The maintenance quoted above is required to keep the aircraft in an airworthy condition. In other words, the GIII owner might spend $3 million to keep the GIII in a $1 million sellable condition. The math doesn't work from an investment perspective. A company called Asset Insight does this analysis on business aircraft to a far more detailed degree. Time and time again, their analysis shows that buyers are not willing to spend even close to the value of their aircraft for maintenance. 

If you are the GIII owner, you can shift your perspective about your current aircraft. First, accept that you are likely the last owner of the entire aircraft. Second, spend your maintenance dollars wisely. You may not want to do the engine overhauls, but instead might be able to secure a pair of Spey engines with a two or three years' life remaining for far less than the overhaul. Better yet, keep those engines on a guaranteed hourly maintenance program if they are on one. Or you may elect to sell the aircraft for salvage (keeping someone else's GIII flying for a few more years), and upgrade to the GIVSP or G450. 

I used the GIII as an example. The GIII is still a fine airplane and mechanically, most can be flown for many more years. You can replace the example of the GIII with any other business aircraft of its time. Aircraft buyers are not generally willing to buy low and pay for maintenance bills that equal or exceed the value in the aircraft. That is how the market works. 

 

Tags:

AIRCRAFT SALES | David Wyndham | Maintenance

The Evolution of In-Flight Entertainment

by GlobalAir.com 5. July 2015 13:44
Share on Facebook

By Conrad Theisen, Avionics Sales Manager
www.elliottaviation.com

Historically, cabin entertainment systems have been very heavily reliant on hardware. They have required several cabin monitors, potential cabinet modifications to accommodate other monitors, DVD players and large receivers to run the system. In addition to bulky equipment, older systems included complex and expensive repair to mounted in the drink rails and armrest. Many times, when a switch was added, interior had to be sent out for plating adding additional cost and downtime.

Also, many membrane type switches were notorious for going bad and could be very expensive to replace. Eliminating all of the switching saves literally hundreds of hours in engineering, custom design and installation.

Luckily, cabin avionics has evolved with consumer electronics to allow streaming entertainment, nearly eliminating the need for a heavy and expensive cabin entertainment system for many customers.

Gogo Business Aviation recently announced business aviation’s first turn-key, on-demand in-flight entertainment system, Gogo Vision. Gogo Vision is an in-flight streaming entertainment system that works directly with your laptop, tablet or iPhone to give you a full library of movies, TV episodes, news, destination weather, flight progress and moving maps.

This service is available with the installation of the Gogo Business Aviation UCS 5000 smart router and media server, which can be purchased for about $40,000 plus installation cost and requires Gogo Biz or Swift Broadband on board.

Compared to other cabin entertainment options, Gogo Vision is lightweight and affordable. In addition to equipment and installation, the Gogo Vision service fee is $395 per month and includes 3G/4G modem service, mailed USB updates, unlimited content updates at participating Gogo Cloud locations, news, weather, flight progress and moving maps. Each movie is $10 extra and each TV episode is an extra $6. Gogo Vision’s costs will be in addition to your monthly data provided by your Gogo Biz or Swiftbroadband package.

Comparatively speaking, the Gogo Vision can be cheaper, lighter weight and easier to maintain than most cabin entertainment options out there today.

Conrad Theisen has been with Elliott Aviation since 1996. He started his career as an Avionics Installer and was promoted to Avionics Manager in 2001. In 2009, he led the Customer Service and Project Management teams for all in-house aircraft. He joined the Avionics Sales team in 2012.

Tags: , , , ,

Aviation Technology

The End of the PTS? What the New Airmen Certification Standards Will Mean for Pilots

by Sarina Houston 1. July 2015 22:37
Share on Facebook

In order to obtain a pilot certificate of any kind in the United States, a pilot must take an FAA Practical Test, better known as a checkride. The checkride you might take tomorrow is not much different from the checkride I took ten years ago. That is about to change. The FAA recently announced that the practical test standards that we all know so intimately will be overhauled. But will pilot training change? Will the actual checkride be conducted differently than it has for decades? Will aviation safety improve?

After the creation of the Air Commerce Act in 1926, which introduced new rules for pilot certification and the first ever regulations pertaining to aviation, along with a host of other things like new navigational aids and designated airways, the nation's first certificated pilots were born. The first official pilot license was issued to William P. MacCracken, Jr., after both Charles Lindbergh and Orville Wright declined the honor, with Orville boasting that he did not need a piece of paper to prove to the world that he was the first pilot.

This first pilot certificate was awarded as an honor in recognition of service to civil aviation. Subsequent certificates were awarded based on the personal judgment of examiners, which could be subjective. To standardize and make more objective the requirements for checkrides, the FAA eventually introduced the Practical Test Standards. These practical test standards outlined more specific expectations for pilot applicants and gave pilot examiners a rubric with which to evaluate pilot applicants. The test standards began mostly as a maneuvers-based evaluation, making sure the pilot could take off, land, recover from stalls, navigate by means of pilotage and dead reckoning, and others. Today, we still use these same practical test standards, although they've been modified over the years to include advanced navigation and new safety protocols. Yet, the practical test standards remain primarily maneuvers-based: The PTS lists what the applicant should be able to do, the conditions under which each task is to be performed and an acceptable performance standard for each maneuver or task.

The trouble, as accident data suggests, is that mastering a maneuver to a certain level, while it requires effective airspeed and altitude management, is not the most effective indicator of a safe pilot. The Nall report, for example, tells us year after year that improper decision-making and improper planning are common causes of accidents. The 2010 Nall report states that, "After excluding accidents due to mechanical failures or improper maintenance, accidents whose causes have not been determined, and the handful due to circumstances beyond the pilot’s control, all that remain are considered pilot-related. Most pilot-related accidents reflect specific failures of flight planning or decision-making or the characteristic hazards of high-risk phases of flight."

The PTS was created principally to provide objective standards for evaluating and certifying pilots. We have since learned that most of the qualities and abilities that separate safe from unsafe pilots are very difficult to quantify. In an effort to focus attention on these more subjective qualities – knowledge, discipline, risk assessment and management – the flight training community has in recent years created training techniques designed to incorporate these concepts. These techniques would include scenario-based training, FITS (FAA-Industry Training Standards), and training focused on technically advanced airplanes. Most thoughtful flight instructors already make every attempt to include risk management in the training regimen. The question remains as to how to evaluate these principles, which are really processes of thought, mental and emotional approaches to flight, in the course of a practical test. In recent years, these concepts have made their way into the existing PTS as front matter called “special emphasis areas," but only now, with the FAA's new Airmen Certification Standards (ACS), has there been a serious attempt to integrate these concepts into the specific objective tasks of the PTS.

But what exactly does this mean? Will it accomplish anything productive or valuable to flight training? The most prevalent change you'll see will be in the task list included. What we know currently as the PTS will be incorporated into the ACS, and the task list items, which were fairly brief, will be expanded to include many more specifics. For example, the current version of the Private Pilot PTS has 10 objectives listed for the Soft Field Approach and Landing task. It looks like this:

The new ACS project will have much more specific tasks in four different areas under the Soft Field Approach and Landing task: Objective, knowledge, skills and risk management. From a reading of the draft of the proposed ACS, this will be true for every task in the ACS. Knowledge and risk management are now made more specific by referring, in the standards for each task, to ways in which these somewhat amorphous and slippery concepts apply specifically to that task. It goes into much more detail about what could be evaluated on the check ride, including an entire section on risk items. It will look like this:

Along with the added emphasis on risk management, some students and instructors may be relieved to know that there will also be a change in the FAA's written knowledge tests. The FAA admits that over the years, parts of the knowledge test question bank have become redundant and outdated. With the new ACS, we should see the demise of old questions about NDBs and and irrelevant and poorly worded questions that include multiple calculations and interpolations. That's good news. As for when the new ACS will take effect, the FAA is proposing a rolling introduction beginning in late 2015 with the Private Pilot, the Commercial Pilot ACS and the Instrument Rating ACS and revision of the corresponding knowledge tests and codes. A Frequently Asked Questions document recently posted by the FAA admits that this schedule may slip into 2016, but advises that examiners, now called evaluators, may already use the draft ACS as guidance for the administration of checkrides.

The FAA wants us to look at the new ACS as an improved upon PTS, a long-overdue plan to make the qualities now known to correlate with safety an integral part of flight training and testing. They define it as "a holistic, integrated presentation of specific knowledge, skills, and risk management elements and performance metrics for each Area of Operation and Task." I'm not entirely convinced that this will be anything new or unusual for those of us training pilots. The performance standards will remain the same, and, according to the FAA, the ACS will not change the check ride. Instructors should already be teaching risk management and decision-making at every step of flight training, although the specific bullet points now included under each task may suggest specific ways in which these qualities pertain to every task we perform as pilots. In the end, the ACS is a change that is past due and should align the evaluation of pilots with the principles we should have long since been teaching.

Tags: , , ,

Aviation Safety | Flying | Sarina Houston

Behind the Scenes at the Air Race Classic

by Tori Williams 30. June 2015 10:50
Share on Facebook

Last Monday I had the opportunity to be a small part of history. 50 teams participating in an air race dating back to 1929 were landing at an airport right in my backyard and I had the opportunity to visit and help as they arrived. As the all-female Air Race Classic came to their third stop along the 2,200 NM route, Clark County Airport in Jeffersonville, Indiana, a small army had gathered to welcome them, provide them with food, fuel, and transportation to hotels. I was a volunteer “greeter,” meeting the racers as they came into the airport and providing them with answers to any questions that had about operations. Most importantly, I directed them to the restrooms and food.

The Air Race Classic had not been in the area since 1981, so spirits were high as many people worked hard to make this the best stop of their trip. In addition to an abundance of food and desserts provided by UPS, racers were offered complimentary massages and transportation to their hotels. The stop had a Kentucky Derby theme, so several volunteers wore colorful derby hats. The men’s restroom had a sign saying “Fillies (Women); Men’s Restroom Outside,” to accommodate the 123 women who would be flying in.

Special accommodations had to be made for the 123 women flying in.

Preparations for this day started almost an entire year ago. Once the route for the race was announced, Honaker Aviation teamed up with several local pilots and organizations to gather volunteers and create a game plan for the day the racers arrived. It was difficult to predict how weather would affect the day from months away, so Stop Chair Amy Bogardus prepared for every possible outcome. An online scheduling system through Sign Up Genius was set up with slots for Timers, Greeters, Transporters, Hospitality, and Stuff to Bring. Time slots were available for each task for Monday-Thursday. The organizers anticipated racers being able to spend the night and leave out Tuesday, but with the unpredictable weather it was best for there to be too many volunteers than too few.

My time slot was from 3:00 pm – 5:00 pm but I ended up staying until 6:00 pm. My younger sister has recently taken an interest in aviation, so I brought her along to meet all of the Ninety-Nines who were volunteering and to experience the race. I had been watching the racers make their way towards our stop since they took off in the morning through the live tracking at Trackleaders.com. Excitement was building as I arrived at the airport and watched the same live tracker from a large TV in the command room. All volunteers were given bright yellow arm bands to identify themselves, and we were ready for racers to begin flying in.

Stop organizers and spectators watched the live feed of aircraft flying in all morning, ready to serve as soon as they arrived.

The first few racers came in at a moderate pace, having left the last airport sooner than the others. After an hour or so of airplanes steadily coming in 10 minutes apart, the bulk of the racers came and it was amazing to see them doing a high speed pass and landing one after another. Because the race is judged on a handicap speed, the only time that the racers had to beat was their own.

The first few arrivals enjoy food provided by UPS.

My sister commented on how young many of the collegiate racers looked, as most of them are in their early 20s. I could see in her face that her dream of becoming a pilot seemed more and more realistic as she saw these shining examples of female pilots casually walking into the airport from their aircraft. It was different for her from hearing about my piloting adventures and actually being at an airport and experiencing the sights and sounds. The entire drive home she excitedly spoke about how she was beginning to find her purpose in life, and that becoming a pilot and flying medical missions was her dream.

I had an amazing experience volunteering at the Air Race Classic, and all racers said that the Clark County stop was well done and efficient. A huge thank you to every single volunteer, organizer, and sponsor for making the day incredible for everyone.

Tags: , ,

Flying | Tori Williams





GlobalAir.com on Twitter