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27 May 2008

Docket Operations, M-30

U.S. Department of Transportation

1200 New Jersey Avenue, SE, Room W12-140

West Building Ground Floor

Washington, DC 20590-0001

Office of Management and Budget

Office of Information and Regulatory Affairs

Attention: Desk Officer for FAA

New Executive Building, Room 10202

725 17^th^ Street, NW

Washington, DC 20053

Re: Docket Number FAA-2008-0188

> Notice of Proposed Rulemaking
>
> Re-Registration and Renewal of Aircraft Registration

Ladies and Gentlemen:

The following comments are submitted by the Aviation Working Group
(**AWG**) with respect to the Notice of Proposed Rule Making (**NPRM**)
in respect of the Re-registration and Renewal of Aircraft Registration
(the **proposed rule**) 73 Fed Reg. 10701 (Feb 28, 2008). This is a
revised comment letter, making technical changes to, and superceding,
the AWG's submission letter dated 26 May 2008.

The stated objectives of the proposed rule are to increase and maintain
the accuracy of the aircraft registration information in the Civil
Aviation Registry (the **registry**) by ensuring aircraft owners
periodically provide information regarding registration which
information would benefit all users of the registry, including law
enforcement.

The AWG is composed of the world's major aviation manufacturers, lessors
and financiers, and co-chaired by The Boeing Company and Airbus SAS.
Members of the AWG manufacture, lease and finance a substantial majority
of the world's large commercial aircraft, and U.S. members include The
Boeing Company, General Electric Company, Pratt & Whitney, Citibank
N.A., JPMorgan Securities, Inc., Morgan Stanley, GECAS and International
Lease Finance Corporation.

# Summary

Issues: The proposed rule:

1.  places a huge burden on a population of aircraft owners that have
    followed all the appropriate requirements of the FAA, requiring all
    owners, two thirds of which are stated to be in compliance with FAA
    regulations, to re-register their aircraft and thereafter renew that
    registration every three years absent an earlier change in
    ownership;

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1.  introduces many points of potential failure in the registration of
    an aircraft by requiring re-registration and triennial renewals;

2.  fails to consider the draconian results of a loss of registration
    for an aircraft that could result from a breakdown at any point of
    the re-registration or renewal process, including possible
    invalidation of aviation insurance or invalidation of recorded
    liens, and disruption to the flying public if aircraft are grounded;

3.  proposes to eliminate an existing mechanism, the Triennial Aircraft
    Registration Report (**triennial**), which, with certain changes and
    active enforcement, would adequately serve the purpose of
    confirmation of accurate information in respect of all registered
    aircraft;

4.  underestimates the overall compliance costs, ignoring the impact on
    lessors, lenders, trust companies and other players in commercial,
    corporate and general aviation;

5.  does not contemplate the relationship to, and potential legal
    difficulties arising under, the Cape Town Convention and its
    Aircraft Protocol, particularly in connection with re-registrations
    and export authorizations recorded with the FAA thereunder and the
    sphere of application provision (Protocol, Articles XIII (and IX(5))
    and IV(1), respectively).

Proposals: In light of these points, we urge the FAA to consider
revising the proposed rule as follows:

(a) exempt from the proposed rule's application all aircraft that are
    operated under Part 121 and Part 135 certificates as these aircraft
    and their related owners and/or operators are already subject to DOT
    regulations and scrutiny and are not the population of aircraft that
    tend to be improperly or incompletely registered; or

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(a) delete the re-registration and triennial renewal requirements in
    favor of less burdensome means of maintaining the accuracy of the
    registry, such as (1) an enhanced and enforced triennial, (2) the
    enhancement and enforcement of the cancellation of registration
    number assignments as set forth in the proposed rule regarding
    amendments to Section 47.15; and (3) enforcement of the recent
    change to Section 47.41(b) requiring the return of the Certificate
    of Aircraft Registration (**hard card**) to the registry after 21
    days of termination of registration.

These issues and our proposal are more particularly discussed below.

# Discussion of the Issues

[The proposed rule will unnecessarily and unjustifiably burden the
majority of aircraft registrants that are in compliance with FAA
requirements]{.underline}: The NPRM states that an estimated 104,000 of
the 343,000 aircraft registered are possibly no longer eligible for
registration, which means that more than two-thirds of the aircraft that
are registered today are considered by the FAA to be compliant.
Requiring the compliant owners of more than two-thirds of the registered
aircraft to re-register their aircraft and thereafter to renew that
registration every three years would, contrary to the proposed rule's
assertion, disrupt aircraft operators and operations. As described
below, in many cases, such a process would involve more entities
(*e.g.*, lessors, banks, etc.) and cost significantly more than the
proposed rule estimates. While we acknowledge the legitimate law
enforcement and security concerns described in the NPRM, we encourage
the FAA to focus the proposed rule on rules and enforcement to address
those aircraft that remain in the "sale-reported" category or
"registration-pending" category for longer than acceptable periods (some
for two decades). We believe that a more focused approach and increased
enforcement will immediately reduce the number of questionable
registrations without overburdening the compliant owners.

[The proposed rule contains multiple potential points of system
failure]{.underline}: Under the current system of perpetual
registration, an aircraft is registered and re-registered only at the
time of change of ownership. At that time the operator and the other
transaction parties are careful to establish proper registration. Under
the proposed rule, there will be many points of potential failure with a
re-registration and regular renewals.

-   In the many cases where the owner is not the operator, the affected
    parties must have fool-proof processes to track the renewal,
    including a way to access and confirm the data required, to file the
    renewal in a timely manner.

-   Thousands of replacement hard cards will have to be sent by mail or
    courier.

-   A mechanism similar to the "flying time wire" would have to be
    developed to permit international operations while hard cards are
    being replaced.

-   The operator would have to develop a system to ensure that the
    replacement hard card is put on board an aircraft, which may itself
    be in motion within an airline's operating system, before the
    expiration of the existing hard card.

-   The FAA would need to process the re-registrations and renewals in a
    timely manner but there is no discussion in the NPRM about
    increasing the FAA's resources to accommodate the increased workload
    or the ability of the FAA to grant extensions or exemptions for
    delays caused by the FAA, for example, by computer failures.[^1]

There will inevitably be failures in the system, resulting in losses
that could occur upon a failure of aircraft registration to continue in
effect, as described below.

[The impact of a loss of registration would be significant]{.underline}:
If the registration of an aircraft expires without renewal:

-   aviation insurance could be invalidated leaving the operator, the
    owner, financing parties, as well as any person injured in an
    aircraft incident, exposed to liabilities and costs with inadequate
    or no insurance cover;

-   aircraft would be grounded until registration is re-established,
    which in the case of commercial aviation would affect an airline's
    financial condition and have knock-on effects within the airline
    system, potentially further drawing the ire both of the traveling
    public and of legislators in Washington D.C.; and

-   liens perfected through the FAA on interests in aircraft could be
    invalidated leaving the financing community at risk for their loans
    and investments in the aviation industry.

[The NPRM underestimates the costs associated with the proposed rule
because aircraft registration involves multiple parties and the costs
will greatly exceed NPRM estimates]{.underline}: The NPRM seems to
assume that each registered owner of an aircraft is the operator of that
aircraft and that no other entities are involved. In reality, a high
percentage of commercial and corporate aircraft, and presumably a large
number of general aviation aircraft, are either owned by lessors or are
subject to mortgages or security interests in favor of lenders who
financed the purchase of the aircraft. In many cases, title to an
aircraft is held in a grantor trust or the mortgage or security interest
is vested in a trustee or collateral agent. In connection with virtually
all commercial and corporate aircraft transactions and many general
aviation transactions, law firms or title companies assist in the
registration process. They would undoubtedly be called upon in the
proposed re-registration and renewal process, thereby increasing the
costs to the owners and/or operators of aircraft. Accordingly we believe
that the annual cost to these entities of the proposed rule is far in
excess of the estimates in the NPRM.

If the proposed rule is adopted, we are concerned that uncertainty in
the system and the costs of addressing the necessary tracking and
renewal processes could cause some leasing and financing parties to exit
the aviation field making credit even more difficult to obtain for the
aviation industry during a time of economic distress.

[Triennial Aircraft Registration Report could be improved]{.underline}:
The NPRM proposes to eliminate the existing triennial as ineffective in
maintaining the accuracy and currency of the aircraft registration,
stating that efforts to improve the effectiveness of the triennial
through enforcement have proven to be expensive, time-consuming and
ineffective (NPRM p. 10703) without describing what such efforts
entailed. It also states that there are no current enforcement or
follow-up actions in respect of the triennial so there is nothing to
compel the owner to complete and return the triennial (NPRM p. 10705)
(which need only be completed and returned if the data contained therein
is inaccurate). We urge the FAA to consider possible changes and
enforcement methods to make the triennial an effective mechanism to
maintain the accuracy of the registry.

[Discussion of Our Proposals]{.underline}

[Exempt aircraft operated under Part 121 and Part 135]{.underline}: The
proposed rule should be revised to exempt from its application in all
respects aircraft that are operated under Part 121and Part 135,
regardless of the nature of registered owner. For the reasons stated
above in respect of the effects of loss of registration (insurance,
financing and operation), the interests of the operators, owners,
lenders, lessors and other parties in keeping the registration
information accurate and having clean ownership transfers align with the
objectives of the NPRM and no evidence has been provided that the
registrations for this group of aircraft are non-compliant. In addition,
such operators are regulated by the DOT and are subject to regular
scrutiny, ongoing fitness requirements, and additional compliance
review. The safety information the FAA is concerned get to the
owner/operator already reaches the operator through the manufacturers
and other certification and notification procedures, including regular
contact with the Flight Standards District Offices, so the safety
concern is well covered. This exemption would provide some measure of
comfort to the aviation financing community and would eliminate any
disruptions to this portion of the aviation industry occasioned by a
loss of registration.

[Delete the requirement for re-registration and renewal; retain, enhance
and enforce the triennial]{.underline}: As demonstrated herein and in
other comments on the proposed rule, the requirement for re-registration
and renewal is a costly and burdensome solution to the problems of the
accuracy of the registry and is unnecessary to achieve the stated
objectives. Accordingly, the proposed rule should be revised to
eliminate such requirements. It should further be revised to not only
maintain the triennial but to require that each triennial be completed
and returned to the registry either with changes noted thereon or with a
"no changes" box checked off. We believe that others filing comments
have detailed proposals for the enhancement of the triennial, which we
largely support, but in brief, the provisions should require that if an
owner fails to return the completed card, the FAA should send notices to
the owner and the other interested parties on record with the FAA
(lessors, lenders, mortgagees, etc.) of such failure. Renewal fees would
apply and escalate with each successive reminder notice and the third
notice would include a suspension of registration with termination
slated within a reasonable time thereafter if renewal is not completed.
This proposal provides funds to offset the enforcement and follow-up
costs as well as protections for owners, operators and financing parties
in connection with any failure to respond to a triennial in a timely
fashion regardless of the cause. Further, if these notices and responses
were transmitted electronically, the costs and environmental impact of
printing, mailing and storing the reports would be eliminated.

In addition to these steps, passing the portion of the proposed rule
that would amend Section 47.15 by adding clause (i)(4) limiting the time
that an aircraft may remain in the "sale reported" or "application
pending" categories, and enforcing the recent final rule amending
Section 47.41(b) to require that hard cards be returned to the FAA
within 21 days of termination of a registration will provide
significantly improved processes at the FAA that will result in a much
more accurate and reliable system. There would be enforcement and
processes that are now lacking that will enhance the triennial as an
effective tool and reduce the risk of loss of registration to the truly
recalcitrant owners who should bear the burden.

# Conclusion

For the reasons stated herein, the proposed rule unfairly burdens
compliant aircraft owners, and has not adequately considered the parties
affected, the significant risks created by the renewal process or the
adjustments that can be made to existing provisions, or can be made over
time, to improve the accuracy of the registry. We believe the proposals
described herein and in other comments submitted to the FAA will reduce
the burden on the compliant owners and on the aviation industry in
general and result in a more efficient and accurate registry..

+-----------------------------------+-----------------------------------+
| Sincerely yours,                  |                                   |
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| ![](media/image2.                 |                                   |
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| Jeffrey Wool                      |                                   |
|                                   |                                   |
| Secretary, AWG                    |                                   |
+-----------------------------------+-----------------------------------+

CC: Claude Brandes (Airbus SAS), Co-Chairman, AWG

Scott Scherer (The Boeing Company), Co-Chairman, AWG

[^1]: Nor is there discussion about potential FAA liability issues that
    might arise in the case of losses occasioned by any such FAA delays.