On November 22, 2022, the Federal Aviation Administration (FAA) published the direct final rule in response to the FAA Reauthorization Act of 2018. The final rule modifies (i) the duration that certificates of aircraft registration are valid and (ii) extends the period of effectiveness of aircraft registration applications. The effective date of this final rule was January 23, 2023.
First, the rule increases the validity of certificates of aircraft registration from three years to seven years. The certificates will now expire seven years from the month issued. In addition, the FAA is applying this rule to all aircraft currently registered under the existing regulations. The temporary authorization to operate under registration applications previously expired 90 days after the date filed. Now, registration applications are valid until the earlier of (a) the applicant receiving the certificate of aircraft registration from the FAA, (b) the FAA denies the application or (c) twelve months from the date the application was filed.
Due to the rule changes a new aircraft registration application form has been created by the FAA and published for use. The AC Form 8050-1 (01/23) supersedes previous versions and should be used on a go-forward basis. Not only does the new AC Form 8050-1 (01/23) remove the language regarding the registration expiring in 90 days, but there are also other changes to note. First, on the previous form the aircraft manufacturer and model were in the same box and now they are in separate boxes. Also, there is now a box for the applicant to include an email address.
The FAA has advised that the applicant will not currently be required to include an email address on the registration application and that this box can be considered optional for now. The addition of the email address on the registration application is in connection to the ongoing transition to Civil Aviation Registry Electronic Services (CARES). Eventually as a part of the transition, the email address will become a required field.
These changes will hopefully reduce the workload of the FAA Registry and allow the registry to be able to work on the elimination of the current backlog related processing filed documents. To start, the extension of time that a certificate of aircraft registration is valid from every three years to every seven years will mean less work is needed by the FAA Registry to process aircraft registration renewals. In addition, eliminating the expiration of applications after 90 days means that extension requests for applications no longer have to be filed and processed. Currently, documents filed with the FAA registry are worked in the order they are filed unless they are expediated because it is an import or export transaction or because there is an international trip planned. Documents that are not expediated are currently taking approximately five months to be processed.
What are the practical implications of the current delay in processing and recording documents with the FAA registry?
First, the one noticed most by my clients, is that the FAA website does not accurately reflect who the registered owner of an aircraft is. Almost weekly I receive questions from my clients who recently acquired an aircraft as to why the FAA website does not show them as the owner of their new aircraft. New aircraft owners are immediately concerned that we missed something in the closing process. However, the FAA website is not updated until the filed documents are examined and approved by the FAA registry. As a result, the current FAA website does not reflect changes to ownership, legal name changes, mergers, etc. filed within the last five months.
The second issue that is impacting aircraft owners is the inability to change the aircraft registration number in a reasonable time period. Just as you can personalize the license plate on your car, you can also select the registration number for your aircraft (subject to the guidelines established by the FAA and if the desired registration number is available). However, there is no way to expediate the process. For example, if the registration number you have on the aircraft you are selling is the same number you want to use on the aircraft you are purchasing it can take up to a year to complete that change. It will take approximately five months to receive the authorization to remove the registration number from the aircraft that was sold and reserve it back. It will take an approximate second five months to request the assignment the registration number to the new aircraft.
Next is the impact on international trips. The authorization to operate under the registration application only allows for flights within the continental United States. If an aircraft has an international trip that comes up quickly, it may no longer possible. Without the aircraft registration (not issued until the registration application is processed) the applicant is required to file a declaration of international operations to obtain a fly wire. The declarations of international operations I have filed recently have taken between three to five business days to process. As a result, travel outside of the continental United States on an aircraft that is purchased but where the application for registration has not been processed due to the five month backlog of the FAA registry, is not immediately possible.
Finally, there is an impact to lenders. Until the documents filed and indexed are actually examined it is unknown if the FAA registry will accept or deny the documents. It is also unknown if there are any errors in the filed documents that will cause them to be rejected. As a result, after initially filing it could be five months or more before a security agreement is rejected due to a typographical error or a more substantive error. Additionally, for aircraft that are financed and quickly bought and sold, the lien releases should contain the conveyance number assigned by the FAA registry. However, the conveyance number is not assigned until the documents are examined and recorded. As a result, if an aircraft is bought and sold before the original documents are examined the lien release cannot contain the conveyance number. I believe this will cause issues with title opinions for the aircraft in the future and will generate additional work in order to confirm that clear title can be conveyed.
Thoughtful change to the aircraft registration process is needed. I’m hopeful that these changes are a step in the right direction to get the FAA registry back on track and reduce the processing time for documents filed with the FAA- which would be welcome result for all involved.