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NBAA is working with other associations to help minimize the effect this year's holiday schedule could have on an unprecedented surge of aircraft closings.December 8, 2021, 11:42 AMBusiness aviation leaders are concerned that the federal holiday at the end of the month could upend what is anticipated to be an unprecedented surge in year-end aircraft registrations, pushing the finalization of deals into the new year. NBAA, working with associations such as the General Aviation Manufacturers Association and International Aircraft Dealers Association, has been warning the business aviation community to prepare for the possible closure of the FAA aircraft registry in Oklahoma City, Oklahoma, on December 31 for the federal holiday and even the potential for early closure on December 30. While the industry has had to grapple with the usual year-end surge in the past and the federal holiday falling on the last day of the year, this year the matter becomes particularly acute with the frenzied aircraft market and the rush for aircraft buyers to claim bonus depreciation, said Scott O’Brien, senior director for public policy and advocacy. “There's just a huge demand to close aircraft transactions in this market in general, especially in December. Having this 31st be a day when the registry is closed is concerning.” At risk of losing the year-end benefits are approximately 70 to 80 deals that could be worth $750 million to $800 million, estimates from the various groups have suggested. “For many parties, it will be important to close their aircraft transactions in 2021,” Jeffrey Towers, general counsel for aircraft at TVPX and past chair of the NBAA Tax Committee, said in an NBAA article on the issue. “Manufacturers are finalizing their sales for the year, and taxpayers considering immediate or full expensing on their aircraft transactions are required to fulfill specific duties before the end of the year to be eligible for this deduction.” The registry issues the registration certificates and process liens and other documents that affect titles or interests in aircraft, engines, propellers, and spare parts, NBAA explained, adding that the registry also assigns N numbers for U.S. civil aircraft. The associations have been working with the FAA on potential mitigations, including asking the agency to keep the registry open on the final days or even prioritizing late-filed deals. “We've been trying to work with FAA leadership to explain the potential volume of closings and the fact that this December 31 not being a working day is problematic,” he said. O’Brien added that if those involved in aircraft transactions must close on December 31 there are steps that can be taken. “[The options are] not perfect,” he said, and they incorporate certain risks. But the steps generally involve sending documents electronically to the FAA during the closed day. “That's really no different than mailing documents in,” he said, noting that the FAA, due to Covid, has said that it will deem a document submitted on the date it is emailed even if it is not physically stamped on that date. “The parties involved in the transaction are all going to have to agree beforehand to do that type of closing,” he said, calling coordination between all parties critical, particularly since certain services, such as title searches, would not be available when the registry is closed. In addition, lenders will need to be on board, since there will be no formal acceptance of the documents on the 31st. Buyers will need to work with lenders “to make sure that they were comfortable with that,” he said. Another element, he added is that filing for an international registry will need to be lined up in advance. Aircraft transactions are complex, with many aspects that could cause delays, from insurance to inspections, he said. “This can be further complicated if a lender is involved, and now with the prospect of the registry closing early on December 30, it would be prudent for all parties to plan ahead and file all documentation before year-end.” NBAA anticipates issuing further guidance in upcoming days on steps that buyers may be able to take in the face of the holiday situation. “We recognized the broad and costly implications of the registry’s closure on December 31 and possible early closure on December 30, and asked the FAA to consider several resolutions,” added NBAA president and CEO Ed Bolen. “While the FAA reviews our request, NBAA strongly advises anyone finalizing an aircraft transaction this month to incorporate the registry’s holiday closings into their plans and file documentation at least several days before that date.” Business Aviation

1 month, 2 weeks ago

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