Understanding & Complying With Aircraft Truth In Leasing Requirements

by Greg Reigel, AAL
Copyright 2019. All Rights Reserved
Published in Midwest Flyer – June/July 2019 issue

If you lease an aircraft that is a “large civil aircraft,” as defined in 14 C.F.R. § 1.1 (12,500 pounds, maximum certificated takeoff weight), you should be aware of the truth-in-leasing (“TIL”) requirements of 14 C.F.R. § 91.23. Section 91.23(e) defines a lease as “any agreement by a person to furnish an aircraft to another person for compensation or hire, whether with or without flight crewmembers.” Assuming your arrangement for use of the large civil aircraft falls within this definition, then you must also comply with the following TIL requirements:

•The lease agreement must be in writing;

•The lease must include a written TIL clause that is in bold print, at the end of the lease, and immediately preceding the space for the parties’ signatures, which includes:

1.Identification of the Federal Aviation Regulations (“FAR”) under which the aircraft has been maintained and inspected during the 12 months preceding the execution of the lease and certification by the parties that the aircraft is in compliance with applicable maintenance and inspection requirements for the operations contemplated by the lease (e.g. typically Part 91 since TIL requirements don’t apply to Part 121 or 135 air carrier lessees);

2.The name, address and signature of the person responsible for operational control of the aircraft under the lease, and certification that each person understands that person’s responsibilities for compliance with applicable FAR;

3.A statement that an explanation of factors bearing on operational control and pertinent FAR can be obtained from the responsible Flight Standards District Office (“FSDO”);

•A copy of the lease must be carried in the aircraft during all operations under the lease;

•A copy of the lease must be sent to the Aircraft Registration Branch, Attn: Technical Section, P.O. Box 25724, Oklahoma City, OK 73125, within 24 hours of execution; and

•At least 48 hours before takeoff of the first flight under the lease, the lessee must inform the responsible Flight Standards office by telephone or in-person of:

1.The location of the airport of departure;

2.The departure time; and

3.The registration number of the aircraft involved.

In the past, the regulation required that the 48-hour notification be provided to the “Flight Standards district office nearest the airport where the flight will originate.” However, when the FAA recently updated Section 91.23, it replaced this language with the a less specific reference to “the responsible Flight Standards office.” And, unfortunately, this change in language has now created some confusion as to which FSDO the notice must be given: the FSDO where the first flight will originate, or the FSDO responsible for the lessee’s home base?

However, based upon a review of the Final Rule that made the language change, as well as AC 91-37B, Truth in Leasing, I think the notice must still be provided to the FSDO with jurisdiction over the airport from which the first flight will originate consistent with past practice. Here’s why:

The Final Rule states “[t]his rule does not change any existing processes. Processes for public interaction with AIR and AFS (such as application processes, reporting processes, and oversight processes) are documented in orders, notices, advisory circulars (ACs), and policy statements. Where general references to “the FAA” are introduced in specific sections, existing advisory material for the affected section specifies the AIR and AFS offices responsible for the function identified in that Section.”

And then going back to AC 91-37B, Paragraph 10 states that the 48-hour notification must be made “to the FAA,” with further clarification in Paragraph 10.1 that the “notification must be made to the FSDO nearest the airport where the lease or contract flight will originate.” So, I don’t think the Final Rule’s language changes past practice – which was to provide notification to the FSDO with jurisdiction over the airport where the first flight under the lease originates. However, I do think that it would make more sense for the notification to be made to the FSDO nearest the operator’s home base (and the language in AC 91-37B “where the lease or contract flight will originate” could support this position since it could be read to require notification to either the FSDO where the lease originates (home base) or where the first flight originates). And since one of the policy factors underlying the TIL requirement is FAA oversight lessees/operators, it would certainly make sense for the notification to be provided to the FSDO with jurisdiction over the lessee/operator, rather than a FSDO with no connection to the lessee/operator and within whose jurisdiction the first flight under the lease only happens to originate.

But for now, the conservative approach is to provide notice to the FSDO with jurisdiction over the airport where the first flight under the lease originates. And rather than providing the notice via telephone, the notice may also be provided via facsimile which then provides the lessee with proof of delivery of the notice in the event that a dispute ever arises as to whether the notice was given to the FAA.

EDITOR’S NOTE: Greg Reigel is an attorney with Shackelford, Melton, McKinley & Norton, LLP, and represents clients throughout the country in aviation and business law matters. For assistance, call 214-780-1482, email greigel@shackelfordlaw.net, or Twitter @ReigelLaw.

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