FAA Policy Change on Owner Trusts Prompts Pushback

The FAA has begun investigating the use of aircraft owner trusts to obtain valid registration where the trust beneficiary is a non-U.S. citizen, and the agency has stopped processing aircraft registrations that are based on the use of non-citizen owner trusts. NBAA said it is working with other industry stakeholders to explain the “catastrophic consequences” of the FAA’s action and is urging the agency to continue to process aircraft registrations using non-citizen owner trusts. According to the Association of Aircraft Title Lawyers (AATL), the FAA is most concerned with registrations under trusts with non-U.S. citizen beneficiaries in those instances where operational control is deemed to be given back to the non-citizen beneficiary following registration in the name of the owner trustee. While AATL said it remains uncertain as to whether operational control by non-U.S. citizen lessees is one of the issues under examination by the FAA, the association hinted that the moratorium could expand to voting trusts and statutory trusts where a non-U.S. citizen is beneficiary.