Preserving your anonymity as an Aircraft Owner in 2019

Preserving your anonymity as an Aircraft Owner in 2019 — Originally published in BusinessAir Magazine, March 2019, Volume 29, No. 3.

When an aircraft is bought or sold in the United States, two documents must be filed with the Federal Aviation Administration (“FAA”) – a bill of sale and registration application, which are both public records. Other documents may be required depending on the ownership structure and if financing is involved. On the registration application, the buyer must list the name of the purchasing entity, an address and a telephone number. The registration must also be signed by someone with signatory authority of the purchasing entity and that person’s name is also disclosed. On the bill of sale, the seller must list the purchasing entity’s name and address. This gives many aircraft owners or potential owners pause as they often do not want the public to know about their aircraft ownership or to have their address and telephone number revealed in public records and thus subject to solicitations.

In order to preserve anonymity, several steps can be taken. First, the address listed on the bill of sale and registration application can be a “care of” address. This allows the buyer’s attorney, management company or authorized agent to receive mailings on their behalf. However, this can sometimes complicate the overflight exemption process, and care should be taken to weigh both of these issues prior to the selection of a particular address and/or phone number. Another alternative is to use a post office box for the bill of sale. However, the FAA insists upon a physical address for the registration application. In addition to requiring an address on the registration application, a telephone number must also be listed. Thoughtful consideration should be given as to which telephone number is listed, as this number will not only receive calls if there is an FAA issue, but will also be used by companies collecting data on the aircraft ownership, media in the event there is an issue with the aircraft or solicitations from management companies or brokers who are looking to generate business activity.

Even if the address and telephone number are thoughtfully planned, the purchasing entity must be shown on both the registration application and the bill of sale. Often times, a special purpose company can be formed to own the aircraft. However, if this is the case, it is important to note that special purpose companies cannot operate the aircraft, and additional ownership and operating structure planning will be necessary. In the case of a limited liability company, the FAA registry requires that a statement in support of registration be filed. The statement must list who the managers and members of the limited liability company are and who has the authority to act on behalf of the company. If another limited liability company is a member or manager of the limited liability company, then a statement in support of registration must be filed for this limited liability company too, and so on, until the managers and members are other than limited liability companies. Statements in support of registration become part of the public record; therefore, forming a limited liability company for anonymity will not provide the protection sought. Interestingly, if the entity is a corporation, the FAA registry does not require a statement in support of registration. Accordingly, there is more anonymity in owning an aircraft under a corporation than a limited liability company. However, the tax implications and the liability risks should be weighed against the desire for anonymity.

Additionally, a trust can be formed to own the aircraft. With the right trust structure, it is possible to protect anonymity inside of the trust arrangement. There are several trust companies frequently used when a purchasing entity and/or individual has issues with the FAA citizenship requirements. Some of these same trust companies can be used, if they offer the right structure, for anonymity purposes for aircraft ownership. It is important to understand what documents will be required to be filed with the FAA as part of the closing when the ownership is with the trust.

Furthermore, if the purchasing entity properly preserves anonymity along with the address and phone number, it is also important to consider any financing documents that will be filed with the FAA registry in the event the purchase of the aircraft is being financed. Again, with proper thought and structure planning, these documents can use similar entities, address and phone number as the other documents filed.

Finally, it is also important to consider what documents are going to be necessary and will be disclosed when the aircraft is put into service, either as Part 91 aircraft or a Part 135 aircraft.

There is no easy way to protect your anonymity when owning an aircraft. But thoughtful planning can allow an owner more anonymity, fewer solicitations and less public scrutiny.

Please contact Amanda Applegate at 310-392-5200 or aapplegate@aerlex.com.