### REGULATORY EVALUATION, REGULATORY FLEXIBILITY DETERMINATION, TRADE IMPACT ASSESSMENT, AND UNFUNDED MANDATES
DETERMINATION

FINAL RULE

RE

- REGISTRATION AND RENEWAL OF AIRCRAFT
REGISTRATION (14 CFR 47)
RIN 2120

- AI89

OFFICE OF AVIATION POLI CY AND PLANS
OPERATIONS REGULATORY ANALYSIS BRANCH
APO

- 310

Nicole Nance and David F. Teitelbaum

January 2010TABLE OF CONTENTS

Executive Summary

________________________________ _____________ i

I. Introduction and Background

________________________________ ___ 1

II. The Final Rule

________________________________ ______________ 3

III. Cost of Compliance

________________________________ __________ 4 A. Assumptions and Basic Data

................................ ................................ ....... 4 B. Synopses of Re

- registration , Renewal, and Error Rates Calculations

........ 8 C. Cost of the Current System and Scenarios

................................ ................ 14

IV. Analysis of Benefits

________________________________ _______ 19

V. Comparison of Costs and Benefits

____________________________ 21

VI. Comments

________________________________ _______________ 23

APPENDIX A

– Unit Cost Data

________________________________ ___ 30

APPENDIX B

– Explanation of Re

- registration and Renewal Calculations

__ 34

APPENDIX C

– Explanation of Error Rate Calcualtions

________________ 50i Executive Summary

Summary Of Costs and Benefits in Millions of 2007 Dollars (over 20 years)

Re

- registration and 3

- Year Renewal (Triennial Eliminated) Cost Present Value
Of Cost Benefit :

$ 29

. 9 $16.3 Reduction in Error Rate by 31%

Th e Federal Aviation Administration (FAA) established a rule to correct deficiencies in the current registration system, which have led to approximately

one

- third of registered aircraft having a questionable registration status. The rule will require all ai rcraft owners to reregister their aircraft over a three

- year period, and thereafter renew registration every three years. It will eliminate the Triennial Aircraft Registration Report Program. The benefits and costs have

been calculated for a 20

- year peri od.

The primary benefit of this rulemaking will be the increased accuracy of the records within the Aircraft Registry. The FAA has concluded that the level of accuracy in the system of records must be significantly improved in order to

better serve the n eeds of the users of the system. We expect the rule will reduce
the current error rate of 36.5% to 5.7%.

The estimated net cost of compliance, after subtracting the current cost of the Triennial Program, is $ 29

. 9 million ($ 16

. 3 million, present value ), wi th an expected error rate of 5.7 %. The net cost includes cost to aircraft owners, processing cost for the Civil Aircraft Registry, and cost savings from the elimination of the Triennial Program. These costs cover the 3 initial years

when all aircraft own ers will be required to re

- register their aircraft, and the subsequent 17 years, when all aircraft owners will be required to renew their aircraft registration on a 3

- year cycle.

The rule is not expected to have: a significant impact on international tra de; a significant impact on a substantial number of small firms; or an unfunded

mandate.I. Introduction and Background

The Civil Aviation Registry (Registry) is tasked with maintaining the Civil Aircraft Reg ister. Entry into this register serves as the initial step toward qualifying an aircraft to operate as a U.S. Civil Aircraft within our airspace and internationally. The Register contains pertinent information identifying each aircraft and its registered

owner. The information in this database is used to support the delivery of airworthiness directives and safety

- related information generated by aircraft

manufacture r s, as well as newer proactive programs that provide information for law

enforcement and h omeland security agencies. However, the information within the Register is not currently as accurate as the FAA wants it or needs it to be.

From March 1970 through January 1978, aircraft certificate holders were required to file an annual report to keep the aircraft register updated and limited to only those aircraft eligible for registration. At that time registration data was relied upon for traditional safety responsibilities such as creating mailing lists for distributing

Airworthiness Directives.

T he requirement for the annual report was withdrawn in 1978 when the Civil Aircraft Register was reasonably current and was expected to remain current through contact

with aircraft owners over the normal course of business. The amendment withdrawing this r equirement did indicate that a reporting requirement might need to be instituted for aircraft registrants from whom no information was received within a reasonable period of time. In 1980, the FAA established such a reporting requirement

with the Triennia l Aircraft Registration Report (Triennial), which prompts aircraft owners to report overlooked changes. The Triennial requires the holder of a registration certificate to report changes on an aircraft , after three year s, unless certain aircraft registratio n activities have taken place during this period. 1 The FAA sends out about 70,000 reminders yearly. An aircraft registration certificate may be suspended or revoked when there is a refusal or failure to submit the report.

The importance of accurate aircr aft registration information increased when the Congress passed the FAA Drug Enforcement Assistance Act of 1988 (DEA Act)

1 T he triennial program requirement has required an owner of a registered aircraft that has had no activity for the past 36 months to receive a triennial aircraft registration report. The program prompts aircraft owner to report overlooked change s in a registered owner ’s information, such as a change in current name, address, aircraft identification, or citizenship status, the owner is required to complete the form and return it to reflect that change. This form has also been used to report the sale, destruction, or other disposition of aircraft. This regulation requires the holder of a registration certificate to submit a report on an aircraft when three years ha ve passed without certain aircraft registration activities having taken place during this period.2 expanding the FAA’s mission to include providing assistance to law enforcement agencies that enforce the laws covering controlled subs tances. It also identified specific shortcomings for the FAA to address so that the aircraft registration system will more effectively serve the needs of buyers and sellers of aircraft, law enforcement officials, and other users of the system.

Since publi cation of the DEA Act, the expanded capabilities of desktop and micro computing has enabled many of the DEA Act requirements to be met through automation and administrative changes rather than rulemaking. Several years ago, the FAA handled requests for re gistration information by telephone, mail, or limited access computer terminals, as well as by providing registration lists on microfilm updated monthly. Today, aircraft registration data and images of aircraft registration documents are increasingly deli vered electronically in real

- time to agencies 24 hours a day allowing for faster and more accurate access to and analysis of the database. However, these improvements do not eliminate inaccuracies in raw data.

Currently, to keep its database up to date, the Registry depends on a number of regulatory requirements for aircraft owners to report changes in a timely manner as well as on the Triennial Program, which prompts overlooked changes to be reported. Unfortunately, of the almost 357,000 aircraft regist ered, about 31.5%, or an estimated 112,400 have questionable registration status, leaving about 244,600 active aircraft. That almost 31.5% of registered aircraft are no longer active is due to many aircraft that have left service, been sold, or the owners have moved without the change of status or address information being reported. Removing ineligible aircraft from the database will eliminate a large pool of U.S. registrations (N

- Numbers) that can facilitate drug, terrorist, or other illegal activities. 2

Moreover, the Registry also lacks accurate information on a portion of the estimated 244,600 active aircraft:

**•** At any point in time, a portion of these active aircraft on the register will reflect inaccurate registration information. This is based on expe rience from the triennial report notices sent annually to registration holders that result in:

o Approximately 9,000 overlooked address changes being reported;

o Approximately 5,000 aircraft with undeliverable addresses identified; and

o An undetermined number o f notices that reach registered owners who choose not to report their aircraft’s sale or destruction.

2 As described in the Background portion of the Preamble, the FAA, in concert with TSA, is evaluating flight plan filings to determine if an aircraft has the proper profile for operation in the National Air Space (NAS). This makes it more difficult for drug dealers or terrorists to use an aircraft because they will need to use one with a valid N

- number to avoid increased scrutiny . For more information, see 70 FR 73323, 12/9/2005.3 **•** The FAA estimates additional registration inaccuracies due to the aircraft that are annually reported as sold but operated by their purchasers without reg istration or temporary ‘pink copy’ authority, as well as aircraft for which an incomplete application for registration has been made but never completed. 3
Given these registration problems, it is clear that the required level of accuracy and currency for a ircraft registration data can not be met with the present system of indefinite duration registration certificates that relies primarily on self

- reporting by aircraft owners. To achieve the required level of registration and data reliability, the

FAA belie ves that modifications to the aircraft registration system must be made to ensure that aircraft registration changes are reported within set intervals.

II. The Final Rule

The Registry seeks to meet curren t and future needs with the least burden and cost to both the aviation community and the government. Based on this final rule, the following will take place:

**•** The expiration of all certificates of aircraft registration for currently registered

aircraft. T he rule outlines the re

- registration requirements for those aircraft that remain eligible for registration. All aircraft owners will have to re

- register their aircraft during a 3

- year period under guidelines to be published;

**•** The periodic expiration of al l aircraft registrations issued after the effective date of the rule. The rule outlines the registration renewal process and then includes a

3

- year renewal cycle;

**•** The elimination of the current Triennial Program in its entirety. 4

**•** The establishment of a time limit where an aircraft may remain in sale reported status (without an application being made for registration) before its N

- Number assignment is canceled.

3 These aircraft will include situations such as:

**•** aircraft purchasers who fly their new aircraft using the (left behind) registration certificate of the former owner;

**•** sellers who report their aircraft sold, the 'Sale Reported' group , but the purchaser operates the aircraft without making an application for registration;

**•** purchasers who apply for registration to whom we respond seeking clarification of their application package, who never reply; and

**•** purchasers, whose aircraft is damage d past repair shortly after purchase, who drop the registration paper work and fail to report that the aircraft is out of service.

4 As mentioned above, while this program provides for the suspension or revocation of an aircraft registration certificate wh en there is a refusal or failure to submit the Triennial Program report, it does not appear that this revocation has been effective in causing all aircraft owners to fill out and submit the reports.4 **•** The establishment of twelve months as the time limit an aircraft may be authorized
to operat e under “Pink Copy” temporary operation authority while the applicant or successive applicants complete the registration process. The rule outlines the process for reserving the aircraft’s N

- Number if the aircraft is not registered

at the end of this time

.

**•** The provision of the timely cancellation of N

- number assignments from aircraft that are no longer registered, including aircraft registered under an expired Dealer’s Aircraft Registration Certificate

.

This rule also includes several housekeeping items to establish consistency and to conform to statute or current registry practices.

III. Cost of Compliance

In this analysis, the FAA estimates future costs for a 20

- year period, from 2010 through 2029. As required by the Office of Management and Budget, the present value of this stream of costs was calculated using a discount factor of 7 percent. All costs in this analysis are in 2007 dollars.

A. Assumptions and Basic Data

The FAA will use the following unit costs ; the bases of the information for b) through f) can be found in Appendix A: a) $5

– fee per aircraft for both re

- registration and renewal b) $37.20

– hourly rate of an aircraft owner’s time c) $9.10

– FAA processing costs for re

- registration per applicant d) $ 5

. 8 2

– FAA processing costs for renewal per applicant e) $1.63

– FAA processing costs for the Triennial Program for each notice sent f) $ 12

. 11

– FAA processing costs for the Triennial Program per reply

Transfer Payments

OMB Circular A

- 4 defines transfer payments as “ monetary payments from one group

to another that do es not affect total resources available to society.” The $5 fee for re

registrations and renewals is a transfer payment fr om aircraft owners to the FAA and

as such does not increase or decrease the cost t o society of this rulemaking. Therefore this fee is not included as a cost of the rule. Although this fee is not considered a cost of the rule, it is a cost to aircraft owners. As such, the FAA has estimated the cost to

aircraft owners and these numbers a re provided below:5 Table 1. Transfer Payments (over 20 years)

Actions Costs Present
value Current System Normal Course of Business Registration Fees ($5 per Action) 917,800 $4,588, 800 $2,327, 100

Re

- registration followed by 3

- Year Renewal ( Triennia l Eliminated ) Normal Course of Business Registration Fees ($5 per Action) 917,800 $4,588,800 $2,327,100

Re

- registration & Renewal Fees ($5 per Action) 1,308,900 $6,544,400 $3,425,600

Total $11,133,200 $5,752,700

Re

- registration followed by 5

- Year Re newal ( Triennial Eliminated ) Normal Course of Business Registration Fees ($5 per Action) 917,800 $4,588,800 $2,327,100

Re

- registration & Renewal Fees ($5 per Action) 699,600 $3,498,300 $1,962,300

Total $8,087,100 $4,289,400

Re

- registration foll owed by 7

- Year Renewal (Triennial Eliminated) Normal Course of Business Registration Fees ($5 per Action) 917,800 $4,588,800 $2,327,100

Re

- registration & Renewal Fees ($5 per Action) 461,500 $2,307,600 $1,405,700

Total $6,896,400 $3,732,800

Norm al Aircraft Course of Business Registration

These costs are common to all 4 scenarios and are not a result of the rule. They are

certificates that would be issued with or without the re

- registration and renewal requirements, and include:

- Newly built ai rcraft;

- Aircraft imported from another country;

- An already registered aircraft, which is sold and a new certificate is issued to the new owner/applicant; and

- Non

- registered aircraft that have been restored and applied for registration

In year 1, the FAA e stimates that there will be almost 35,600 aircraft registrations, which is the sum of the 2007’s normal aircraft registrations, roughly 32,200, plus the annual average growth of aircraft. The FAA estimates that this value will increase annually by about 3 ,400, reflecting the long term average growth for used aircraft registration changes. 5 Over 20 years, about 917,800 U.S. registered aircraft will register through NCB. This number is multiplied by the $5 registration fee to

determine the costs to aircraft owners over 20 years, $4.6 million ($2.3 million present value).

5 This is calculated by multiplying the annual average gr owth of aircraft (3,4 00 ) by 15.76%.6 Re

- registration & Renewal Fees

T he total number of re

- registration and renewal actio ns, as a result of this rule, are expected to occur during the 3 years of re

- registration and the 17 y ears of renewal for

the 3

- year renewal cycle and the 5 and 7

- year alternatives. These actions are multiplied by the re

- registration /renewal fee of $5 to get the additional registration fees paid by aircraft owners over 20 years. For the rule and the alte rnatives, the FAA expects approximately 1.31 million, 699,600, and 461,500 new re

- registration s and

renewals for the 3

- year, 5

- year
, and 7

- year renewal cycles, respectively

. These actions result in fees of $6.5 million ($3.4 million present value) for the 3

- year renewal cycle, $3.5 million ($2.0 million present value) for the 5

- years cycle, and $2.3

m illion ($1.4 million present value ) for the 7

- year cycle

.

The $5 fee is the agenc y’s current charging authority

. A provision in the FAA

Reauthorization bill , if enacted, may authorize the FAA to set the re

- registration and

renewal fee at an amount that recovers both the direct and indirect unit costs of the FAA Registry’s Aircraft Registration Branch

. The re

- registration and renewal fee

based on full cost rec overy is estimated at $45. The FAA currently charges $5 for aircraft registration certificates, a fee which is codified in CFR Part 47, preventing the Agency from recouping most of the costs involved with aircraft registration.

As discussed earlier these $5 fees are transfers from aircraft owners to the FAA. While the FAA estimated the amount of these fees, as transfers these fees are not

societal costs and are excluded from the costs of the rule.

Costs of the Rule

The FAA estimates that in addition to the fees the owners will also have the following additional costs per aircraft:

- H alf an hour to fill out the form

– this will be performed by the equivalent of a first line supervisor, being paid at a loaded wage of $28.26 per hour. 6

- A quarter of an hour f or legal review by the owner. They will be paid at $70.21 per hour. 7

6 Source: http://www.bls.gov/oes/current/oes_nat.htm#b43

- 0000

. The FAA took the mean hourly salary of a first line supervisor under Office and Admin istrative Support Occupations and multiplied by 1.2345 to account for fringe benefits. All hourly wage rates were increased by 23.45% to account for all fringe benefits in the private sector. This fringe benefits factor was

derived from Table 4

- 5, page 4

- 22, Economic Analysis of Investment and Regulatory Decision

-- A Guide, FAA APO

- 98

- 4, January 1998.7 - H alf an hour for when the owner gets the certificate and sends it to the aircraft operator. These will also be paid at $28.26 per hour. This breaks down as:

o 1 0 minutes to check the sch edule;

o 10 minutes to send ; and

o 10 minutes of communication between the owner and the lessee for every certificate.

- H alf an hour for the operator to receive and install new registration on the

aircraft. This will be done by a mechanic at a n hourly rate of $36.51. 8

In addition, there will be initial cost s , for each o wner , of:

- 24 hours to document the re

- registration and renewal procedures. Th is will be done by a supervisor who will be paid $48.65 per hour. 9

- 8 hours of training for a primary and a backup employee, to support the supervisor. These employees will be trained by the supervisor. The primary and backup employees will be paid $28.26 per hour and the supervisor will be paid $48.65 per hour.

The FAA based projections on a 1.4% annual growth rate fo r aircraft, which is based

on the FAA annual forecast. 10

As discussed above in part II, this final rule mandates:

**•** that all eligible aircraft will be reregistered during a 3 year period under guidelines to be published;

**•** that thereafter all aircraft registra tions will need to be renewed every 3 years; and

**•** the elimination of the present Triennial Program in its entirety.

Based on the NPRM, which proposed a 3

- Year Renewal, the available data, and the public’s calls for alternative options, the FAA will cost ou t the final rule:

7 Source: http://www.bls.gov/oes/current/oes_nat.htm#b23

- 0000

. The FAA took the mea n hourly salary of a lawyer and multiplied by 1.2345 to account for all fringe benefits.

8 Searles, Robert, “ Operations Planning Guide : Salary Survey,” The McGraw

- Hill Companies, Inc., 1999. The FAA used the salary of maintenance technician from the Summa ry Table, and then increased these salaries by 1.2345 to account for all fringe benefits and then divided by 2,080 to obtain the employee’s hourly wage. This wage was increased by the Gross Domestic

Product deflator.

9 Source: http://www.bls.gov/oes/current/oes_nat.htm#b11

- 0000

. The FAA took the mean salary of a transportation manager and multiplied by 1.2345 to account for fringe benefits.

10 1.4% represents an average growth of all ai rcraft calculated from Tables 20, 21, 26, 27 in “FAA Aerospace Forecasts Fiscal Years 200 8

– 201 9 , U. S. Department of Transportation Federal Aviation Administration, Office of Policy & Plans.”8 I. Re

- registration followed by 3

- Year Renewal with the Triennial Program

Eliminated

And two alternatives:

II. Re

- registration followed by 5

- Year Renewal with the Triennial Program

Eliminated

III. Re

- registration followed by 7

- Year Renewal with the Triennial Program

Eliminated

B. Synopses of Re

- registration , Renewal, and Error Rates Calculations

To determine the costs and the expected error rates for these scenarios, the FAA first calculated the expected number of re

- registration and renewal certifi cate actions. A synopsis of these calculations will be presented below. A full explanation for re

registration and renewal calculations can be found in Appendix B, while the write

- up explaining the error rates can be found in Appendix C.

1. Re

- registra tion

The FAA estimates that the approximately 244,600 active aircraft will go through the

re

- registration process, and so will be issued new registration certificates, each with an expiration date, over the first three years of this rule; it is this expir ation date, with the subsequent renewals, that is at the heart of this rulemaking and will help to improve the Registry’s records. Each aircraft will be scheduled to receive its new certificate during a 90

- day period based on the month the current certifi cate was issued. An aircraft could also receive a new certificate through the normal course of business (NCB) process; 11 these are certificates that would be issued to the owner even if this rule didn’t exist. In such a case, its 3

- year renewal cycle will start anew. For instance, if an aircraft was reregistered according to the schedule and was then sold at a later date, the certificate issued after the sale will be an NCB transaction and not a

transaction from the re

- registration schedule. These NCB tr ansactions are not included among the number of aircraft that will receive their registrations via the schedule and therefore are not included in calculating the costs of this rule.

11 These certificates would be issued t o the owner even if the re

- registration and renewal requirements never existed. These include:

- Newly built aircraft;

- Aircraft imported from another country;

- An already registered aircraft, which is sold and a new certificate is issued to the new owner/applicant; and

- Non

- register ed aircraft that have been restored and applied for registration.9 Tables B

- 2 through B

- 4 in Appendix B show how the FAA estimated the numbe r of aircraft that will get their registration certificates due to NCB and the number of aircraft that will get their registration certificates due to the re

- registration requirement. During the first year of the rule, the FAA estimates that about 107,300 aircraft will receive a registration certificate with an expiration date. Of these aircraft, about 75,100 aircraft will reregister via the re

- registration schedule and about 32,200 aircraft will register via NCB.

During the second year of the rule, th e FAA estimates that about 79,400 aircraft will receive a registration certificate with an expiration date. Of these aircraft, about 63,300 aircraft will reregister via the re

- registration schedule and approximately 16,200 aircraft will register via NCB. In the third year, the FAA estimates that about 57,900 aircraft will receive a registration certificate, with an expiration date. Of these 57,900 aircraft, 53,300 aircraft will reregister via the schedule and 4,600 aircraft will register via NCB.

Over t his three

- year period, approximately 191,700 of the 244,600 active aircraft will receive registration certificates due to the re

- registration requirement and 52,900 will receive their registration certificate during NCB. However, as will be described in t he next section, there will be additional registration activity during this time period.

2. Renewal

The calculations for renewal pick up where the three

- year re

- registration period ends; as this analysis examines costs over 20 years, there will be 17 yea rs of calculations of

renewal costs. As with the re

- registration calculations, in the renewal years, the FAA

counts the number of aircraft transactions that result in a new certificate due both to a

NCB action as well as the number of aircraft certificate s issued due to the rulemaking

mandated renewal program. In terms of calculations, while an aircraft that registers due to NCB affects and moves back a future renewal certificate, an aircraft that

renews due to its 3

- year renewal schedule does not affect the occurrence of a future

NCB action.

The calculations during the renewal period depend on the number of aircraft that need to renew by their renewal date. Some of the aircraft operators will renew before their renewal date due to NCB, and others will n ot need to renew until their rulemaking

mandated renewal date. Distinguishing between these two activities and identifying these events in the calculations is important. The bases of the calculations during all of the ‘renewal’ years are the number of ai rcraft registered in each of the three re

registration years.10 The ending numbers of registration certificates, as explained in the ‘Re

- registration’ section above, need to be modified for the renewals calculations in several ways (Table B

- 6 in Appendix B shows these calculations):

 For each of the three re

- registration years, an additional number of aircraft will come on line. These additional aircraft represent the average annual growth in the number of active aircraft; the FAA estimates this annual growt h to be 3,400. 12

 In year 2, the FAA estimates that about 12,800 aircraf t reregistered during year 1 will change registration in NCB and will now have year 2 re

- registration dates, and in year 3, the same number of aircraft from both years 1 and 2 will change registration in NCB, and each of these will now have year 3 re

regi stration dates. These additional aircraft will be issued registration certificates as they enter into the registration system through NCB; these are not counted as part of

the re

- registration process.

 A portion of the aforementioned 3,400 aircraft that registered in years 1 and 2 will change registration in years 2 and/or 3 due to NCB.

At the end of year 3, the total number of aircraft that will be processed by the Registry

will total about 254,800, made up of the approximately 244,600 active aircraft, and an additional 3,400 aircraft coming into the system each year. Approximately 75%, or about 191,700, of these 254,800 aircraft will be reregistered due to the re

- registration requirem ent, and 25%, or 63,200, will receive their certificate during NCB. These 63,200 can be divided between 52,900 from existing aircraft (discussed in the ‘Re

registration’ section above), and 10,300 from the average annual growth in the

number of active air craft.

Assuming a 3

- year re

- registration cycle, with the three sets of changes described above, in year 4, there will be approximately 83,900 aircraft that originally registered in year 1 that will need to renew in year 4, about 82,900 aircraft that origi nally registered in year 2 that will need to renew in year 5, and about 88,100 aircraft that originally registered in year 3 that will need to renew in year 6.

In years 4 through 20, two scenarios will take place ; NCB registrations and renewals

due to t his rulemaking (as a result of their registration expiring). The following explanation describes these two scenarios for year 4: (1) NCB

- related renewals: a) The FAA assumes that each year 15.76% of active aircraft will register due to

NCB. 13

12 The derivation of the actual number, 3,4 00, is explained in Appendix B. These aircra ft will be issued new registrations separate from the

13 This is based on the estimated number of normal aircraft registrations in 2007, 38, 600 , divided by the sum of ai rcraft s expected t o register or reregister, 244, 600 . Dividing the former by the11 registrations issued in years 1, 2, and 3. At the start of year 4, the FAA expects there to be about 254,900 active aircraft; 15.76% of these aircraft, or about 40,200, will be the number of aircraft r egistered due to NCB. b) There will be the additional 3,400 aircraft, due to the annual average growth in the number of active aircraft, which will be required to register. Thus, in year 4, total Registry activity due to NCB sums to about 43,600.

(2) Rulema king

- related renewals: a) Subtracting out for aircraft changing registration in NCB (as shown in (1) a) above) leaves aircraft that are required to renew as part of the rule. As discussed above, there will be approximately 83,900 aircraft that originally

reg istered in year 1 that will need to renew in year 4. With about 13,200 of these aircraft renewing due to NCB (calculation: 15.76% times 83,900), about 70,700 aircraft will need to be renewed in year 6.

The FAA repeated these sets of calculation for years 5 through 20 to calculate the total number of renewals due both to NCB and to the rulemaking in order to calculate the total cost of this rule. The same type of calculations was also performed for the 5

- year and 7

- year renewal cycles. The results can be seen in Tables B

- 7 through B

- 9 in Appendix B.

3. Error Rate

This rulemaking will increase the Registry’s accuracy. The FAA looked at how current and accurate the Registry is today and what improvements can be expected after implementing this rule.

F AA records show, at the end of 2007, almost 357,0 0 0 registered aircraft; the FAA considers that about 241,100 of these aircraft are active aircraft. 13

latter equals 15.76%; the FAA uses this percentage throughout this analysis to compute the share of aircraft registering via NCB annually. The FAA Registry estimates that about 3% of the inactive aircraft will be reregistered. This will leave about 244, 600 as the estimated number of active aircraft; the FAA considers approximately 112,4 00 aircraft, or 31.5% of registered aircraft, inactive with out

- of

date records. This group of inactive aircraft has accumulated since December 1977,

when a lon g

- term program of annually validating aircraft status and registration

address es ended. Dividing 31.5% by 30 years implies that this group of inactive

aircraft has accumulated at an a nnual rate of approximately 1 %. This can also be

13 FAA Administrator’s Fact Book. Apr il 2006, http://www.faa.gov/about/office_org/headquarters_offices/aba/admin_factbook/media/200604.pdf12 thought of as the error rate within the Registry’s records. Thus, the current error rate is 31.5% or approximately 1 % annually.

There are a number of aircraft , 15,600, that have been revoked under the current and
past program s but have been retained in the records for safety r easons. These aircraft

are well documented, very unlikely to re

- register , and can be separated from the

number of in

- question registered aircraft. This leaves 96,900 registered aircraft with

inactive or out

- of

- date records. Dividing 96, 900 by 30 years give s an average of 3,230 active aircraft entering the error group annually. Since aircraft can only enter the error group from the active group, 1.3% (calculation: 3,230 divided by 244, 600 ) of active aircraft enter the error group annually. The FAA refers to this error as the Long Term

Error Rate

.

The FAA has also calculated a Projected Long Term Error 14 (PLTE) . The Registry reports 30,100 aircraft with known bad addresses, roughly 17,000 aircraft in sale s reported status for over six months, and almost 2,200 aircraft in registration pending

status for over one year. These four categories sum to 49,300 inactive aircraft with known errors expected to expire and be canceled under the provisions of this rule

. Isolating these 49,300 aircraft from the aforemention ed 96,900 registered inactive

aircraft or out

- of

- date records leaves about 47,600 unidentified aircraft that are out

- of

date for unknown reasons. These unidentified inactive aircraft have accumulated at an annual rate of 0.65% over this 30 year period. T he FAA expects that these aircraft registrations will continue to go bad annually even after this rulemaking is implemented. This error is known as the Projected Long Term Error (PLTE) . The

PLTE rate will be 2% for a 3

- year renewal cycle

, which is the fin al rule, and 3.3%

, and 4. 6 % in the 5 and 7

- year renewal cycles, respectively.

There is another group of out

- of

- date aircraft that the Registry acknowledges through its experience with the Triennial Program. These are the aircraft with address or

status c hanges that have not been reported by the owner, but the FAA has found are reported when prompted. For the following set of calculations, based on the three

year triennial cycle, the FAA is assuming three distinct groups of aircraft

– those in the first, second, and third years of this cycle. During each year approximately 9,000 changes are reported, which have collected during the previous three years.

This accumulation also happens in the first and second years of the cycle. Those in the second year will have completed two of the three years with no Registry

- related activity. Thus, there will be 3,000 (first year) plus 3,000 (second year) changes unreported, for a total of 6,000 changes. And, there is a third group that is in the first

14 See “APPENDIX C ” for detail s on the Projected Long Term Error.13 year of this cycle and has accumulated 3,000 changes. Adding these 9,000, 6,000 and 3,000 aircraft changes from these three groups sums to 18,000 aircraft with out

- of

date registrations. Since these changes and eventual reports occur continuously, the

FAA concludes t hat at any point in time 18,000 aircraft have experienced a reportable change that will continue to be unreported until the registered owner is prompted to complete and return a triennial report form. The FAA calls this error the Standing Error (SE) , and it equals 7. 4 % of active aircraft 15 and 5 .0 % of registered aircraft. 16

The 3

- year renewal cycle carries an SE of 7. 4 % that the FAA believes is the same as the SE generated from the Triennial , while the 5

- year renewal cycle carries an SE of 18.4%, which is an extrapolation of the 3

- year renewal cycle. Similar calculations can

be made to estimate the SE for the 7

- year renewal cycle; the FAA estimates this cycle
carries an SE of 34.3%.

In calculating the 3

- year renewal cycle and the 5 and 7

- year alternatives , the FAA is extrapolating from its experience with the 3

- year Triennial Program. Given that people are more likely to change addresses as time passes, the likelihood of aircraft owners with multiple address changes will be greater for a 5

- year period tha n a 3

- year period and for a 7

- year period than a 5

- year period. Similarly, there is a greater likelihood of other reportable status changes happening over longer periods of time. The Agency acknowledges, therefore, that these error rates for the 5 and 7

- year renewal cycles are probably high, as these error rates will include aircraft owners who have moved more than one time or had other status changes during the course of these cycles. In particular, the FAA recognizes that the error rate for the 7

- year cycle is probably more in error than the corresponding rate for the 5

- year cycle.

Adding the current LTE ( 31.5% ) rate to the current SE (5 .0 %) rate of registered

aircraft shows that 36.5 % of registered aircraft information is currently incorrect.

Even if the information on these aircraft were all current, the FAA expects that the error rate for the current registration system (which is based on the three

- year Triennial Program) will be the standing error rate of active aircraft, 7. 4 %

, plus the projected l ong term error of 0.65 % per year

, for each year that passes after the

correct ion of the database. Adding the anticipated PLTE rate to the SE rate, the

combined error rate will be 9. 4 % for 3

- years, followed by 21.7% , and 38. 9 % under

the 5 , and 7

- year renewa l cycles, respectively. However, the Registry believes that both recent and anticipated administrative efforts could reduce the Standing Error by

15 This is calculated by dividing 18,000 aircraft with out

- of

- date registrations by 2 44

, 60 0 , the

estimated number of aircraft expected to reregister.

16 This is calculated by dividing 18,000 aircraft with out

- of

- date registrations by 3 57

, 000 , the number of currently registered aircraft.14 half. 17 This will reduce the projected combined error rates to 5.7 %, 12. 5 %, and
21.7% under the 3

, 5 , and 7

- y ear renewal cycles, respectively.

C. Cost of the Current System and Scenarios

Th e final rule will replace the current system with a 3

- year re

- registration program, followed by a 3

- year renewal cycle. In the current system, all registration activity is

NC B registration. Given the rulemaking, the Registry will have different types of

certificate d actions, which, for this analysis, are labeled as NCB aircraft registration,

as well as re

- registration and renewal of registration certificates

.

In the discuss ion below, the FAA will present the costs of the rule, Scenario I, as well

as the alternatives in Scenarios II and III. The FAA will also show the costs of the current system so that they can be contrasted against the final rule and the other

alternatives.

1. Cost of the Current System

The current system is the Triennial Program. Under the current program, the cost over 20 years is estimated to be $8.4 million ($4.4 million, present value). The costs are operating costs as listed in the chart below:

T able 2.

– Cost of the Current System

Actions Costs Present Value

Triennial Program operating costs 1,790,000 $8,361, 100 $4,428, 900

Triennial Program Operating Costs As noted above, if three years pass without certain registration actions taking place that will confirm the status of aircraft, a Triennial Aircraft Registration Report is mailed to the registered owner of the aircraft. FAA records show that approximately 70,000 of these reports are sent out annually, of which approximately 9,000 are

retu rned annually with status updates, while about 5,000 are returned as undeliverable. Over a 20 year period, this equates to 1.4 million reports sent to aircraft owners, 180,000 update replies, and 100,000 bad address returns.

The FAA multiplied these nu mbers by its aforementioned processing costs to send the forms and process bad address returns ($1.63), as well as to process the updates

17 The R egistry believes that the awareness created by the c hange of an expiring certificate, efforts made by the Registry to maintain that new awareness, and the expiry date on the

certificate act as a reminder to help owner/operators remember to send in updates will cut error

rates in half.15 ($12.11). The number of update replies can also be multiplied by the time value expended by aircraft owners to comple te and return the report form. 19 These items summed up gives us the operating costs of the Triennial Notification Program. Over 20 years, the FAA estimates costs of this program to be $8.4 million ($4.4 million, present value). 18

2. Costs of the Differe nt Scenarios

Based on the numbers of re

- registration and renewal transactions as well as projected error rates, the following are the 20

- year costs for the 3 scenarios: 19

I. The Final Rule: Re

- registration followed by 3

- Year Renewal with the Triennial Program Eliminated

- $29.9 million ($16.3 million, present value), which includes $38.3 million ($20.7 million, present value) as the cost of the new program minus $8.4 million ($4.4 million, present value) in cost savings for components of the current system be ing eliminated, with an expected error rate of 5.7%;

II. Alternative I: Re

- registration followed by 5

- Year Renewal with the Triennial Program Eliminated

- $13.8 million ($8.5 million, present value), which includes $22.2 million ($12.9 million, present value) as the cost of the new program minus $8.4 million ($4.4 million, present value) in cost savings for components of the current system being eliminated, with an expected error rate of 12.5%;

III. Alternative II: Re

- registration followed by 7

- Year Renewal with the Triennial Program Eliminated

- $7.5 million ($5.6 million, present value), which includes $15.9 million ($10 million, present value) as the cost of the new program minus $8.4 million ($4.4 million, present value) in cost savings for components of the

curr ent system being eliminated, with an expected error rate of 21.7%;

Tables 3, 4, and 5 show the cost components of Scenarios I, II, and III, respectively:

Table 3 . Re

- registration followed by 3

- Year Renewal

- Triennial Program Eliminated

Actions Cost Present value

19 The FAA estimates t hat 15% of these forms are returned and is using aforementioned $20.82 as the cost for aircraft owners to complete and return these forms. Fifteen percent of 1.4 million reports equal 210,000 forms returned. Of these 210,000 forms, the FAA has found that 180,000 result in an update that has to be processed, while the remaining 30,000 are returns indicating that there has been no change.

18 This is the sum of 1,400,000 forms send out ($ 1 .6 3 per form), 180,000 forms processed ($1 2

. 11 per form), and 210,000 a irmen completing and returning these forms ($18.60 per form).

19 All these scenarios assume error rates with a 50% improvement in the compliance rate of aircraft owners who don’t comply with the current program until prompted (Source: AFS

- 750,

Aircraft Cert ification Branch, Civil Aviation Registry).16 1 New T ime Value Cost to Complete Registration & Renewal
Forms 1,308,900 $24,345,000 $12,743,200

2 New Start

- Up Costs $1,103,100 $1,031,000

3 New Aircraft Owner & Operator Costs 100,500 $4,612,700 $2,383,300

4 New FAA Re

- registration & R enewal Form Processing Cost 1,308,900 $8,246,300 $4,536,300

5 Cost of New Program $38,307,100 $20,693,800

6 Eliminate Triennial Operating costs

- 1,790,000

- $8,361,100

- $4,428,900

7 Net Cost of Rule $29,946,000 $16,264,900

Alternatives:

Table 4 . Re

- r egistration followed by 5

- Year Renewal

- Triennial Program Eliminated

Actions Cost Present value

1 New Time Value Cost to Complete Re

- registration &
Renewal Forms 699,600 $13,013,400 $7,299,600

2 New Start

- Up Costs $1,103,100 $1,031,000

3 New A ircraft Owner & Operator Costs 73,000 $3,350,600 $1,777,000

4 New FAA Re

- registration & Renewal Form Processing Cost 699,600 $4,700,600 $2,834,000

5 Cost of New Program $22,167,700 $12,941,600

6 Eliminate Triennial Operating costs

- 1,790,000

- $8,36 1,100

- $4,428,900

7 Net Cost of Rule $13,806,600 $8,512,700

Table 5 . Re

- registration followed by 7

- Year Renewal

- Triennial Program Eliminated

Actions Cost Present value

1 New Time Value Cost to Complete Re

- registration &
Renewal Forms 461,500 $8, 584,200 $5,229,100

2 New Start

- Up Costs $1,103,100 $1,031,000

3 New Aircraft Owner & Operator Costs 62,300 $2,857,300 $1,546,500

4 New FAA Re

- registration & Renewal Form Processing Cost 461,500 $3,314,600 $2,186,600

5 Cost of New Program $15, 859,200 $9,993,200

6 Eliminate Triennial Operating costs

- 1,790,000

- $8,361,100

- $4,428,900

7 Net Cost of Rule $7,498,100 $5,564,300

Tables 3 through 5 have the same format and each table is comprised of 7 lines; the following explains the cost compon ents contained in each of these lines:

Line 1

- Time Value Cost to Complete Re

- registration and Renewal Forms

This represents the value in dollars of the time spent by aircraft owners or their employees to fill out the new forms required to reregister an d renew their aircraft registrations. The FAA estimates that it will take aircraft owners half an hour to complete these forms. To estimate the wage rate for aircraft owners, as described in Appendix A, the FAA used the value of air travel time, so half an hour will equate to $18.60 per owner per form.

For calculations in the tables above, for the 3, 5 and 7

- year renewal cycles, the approximately 1.31 million, 699,600, and 461,500 new re

- registration s and renewals,17 respectively, will sum to $24.3 million ($12.7 million, present value ), $13.0 million ($7.3 million, present value ), and $8. 6 million ($5.2 million, present value ), respectively.

The costs shown for Lines 4 and 5 represent the fact that in certain cases, as noted above, the owner and the opera tor are two different entities. Many commercial and corporate aircraft are either owned by lessors or are subject to mortgages by lenders who financed the purchase of the aircraft . The owner will get the notice for renewal

and re

- registration as well as the new aircraft certificate and has the responsibility of getting the new certificate to the operator. The FAA does not know the number of aircraft that are owned versus leased among the air carriers and other large corporations. It would be especially difficult to figure this out for the part 135
operat ors as the aircraft are bought and sold frequently and some operators operate a single aircraft alternately under part 135 and other parts. O ut of the approximately 241,100 active aircraft, about 11,500 are listed with 121 or 135 U.S. air carriers. To be conservative and so as not to underestimate costs, the FAA will assume that this is the number of aircraft that are owned and operated by different entities. In addition, as noted above, the FAA does no t know the number of owners; there are 460 air carrier operators, and so the FAA will use this number as a proxy for the number of

aircraft owners.

Line 2

- New Start

- Up Costs This represents the costs that aircraft owners will face in documenting and

est ablishing procedures for preparing the new application. These costs include training employees to handle this system. The FAA assumes that setting up the documentation procedures will take a supervisor, being paid $48.65 an hour, 24 hours.

The FAA further assumes that this supervisor will train two first

- line supervisors, still at a rate of $48.65 an hour, for 8 hours each, totaling 16 hours. Finally, each first

- line supervisor is paid $28.26 an hour for 8 hours of training. Thus, total costs per owner

su ms to about $2,400. Assuming 460 owners, total start

- up costs sum to $1.1 million ($1.0 million, present value ).

Line 3

- Air Carrier Aircraft owner and operator costs This represents the costs that owners will have for each aircraft and is computed by recognizing the following tasks:

- Filling out the renewal/ re

- registration form; 22

22 Given an hourly wage of $28.26, the half hour will cost $14.13. In line 3, however, the FAA assumed the value of air travel time for the average owner, or $37.20, so that the half hour to fill

out the form w ill cost $18.60. The aircraft that are being considered here are a subset of the total number of aircraft that are being renewed and reregistered. So, to avoid double counting, the analysis needs to subtract $18.60 from $14.13, so the analysis cost is

- $ 4.47.18 - Legal review of the renewal/ re

- registration form; 20

- The owner gets the new certificate and sends it to the operator; 21

- The operator installs the new certificate. and

22
The cost p er aircraft is about $46.00. 23 For the 3, 5 and 7

- year cycles, the additional certificate actions, due to NCB, renewal, and re

- registration , sum to approximately 100,500, 73,000, and 62,300, respectively, and will cost $4.6 million ($2.4 million,
present value ), $3. 4 million ($1. 8 million), and $2. 9 million ($1.5 million, present
value ), respectively.

Line 4

- FAA Re

- registration & Renewal Form Processing Costs This represents the expected costs for the FAA to process the additional re

- registration

and r enewal forms. The Registry will provide and process re

- registration and renewal forms as required under the requirement during the 20

- year evaluation period.

In the initial regulatory evaluation, the FAA assumed that half of the renewals would

be filed e lectronically through the web site and would reduce the estimated costs of processing renewals accordingly. Several commenters contended that online re

registration and renewal could cut processing time and costs. The final rule permits online applicatio ns for re

- registration in addition to online applications for renewal when no registration changes are made. These comments plus the Registry's experience with registrations led the FAA to change the assumption to 80% online applications for renewal and t o assume 60% online applications for re

- registration. The convenience of an online process for re

- registration and renewal will entice owners with no registration changes to take advantage of this process.

Line 5

- Cost of the New Program

The costs for t he new registration program, for the rule (3

- years renewal) and the alternatives (5 and 7

- year renewal cycle, respectively), sum to $49.4 million ($26.4 million, present value), $30.3 million ($17.2 million, present value), and $22.8 million ($13.7 million , present value).

Line 6

- Eliminate Triennial Operating Costs

. This was described above in the narrative explaining Table 1 and describes the program where, if three years pass without certain registration actions taking place

that will confirm the st atus of aircraft, a Triennial Aircraft Registration Report is mailed to the registered owner of the aircraft. Over a 20 year period, the FAA, absent

20 Given an hourly wage of $70.21

, the quarter hour of legal review costs $17.55.

21 Given an hourly wage of $28.26, the half hour will cost $14.13. Given $0.42 for mailing, the total cost of this line item is $14.55.

22 Given an hourly wage of $36 .51, the half hour will cost $18.26.

23 The s um of

- $4.47 + $17.55 + $14. 55 + $18.26 = $45. 89

.19 this rule, estimates that 1.8 million reports would be sent to aircraft owners, including 180,000 update r eplies and 100,000 bad address returns. Over 20 years, the FAA estimates cost savings from eliminating this program to be $8. 4 million ($4.4 million, present value ).

Line 7

- Net Cost As noted above, the net total cost for the 3, 5 and 7

- year renewal cy cles (with the 3

- year renewal cycle being the rule), derived by subtracting line 6 from line 5, sum to $29.9 million ($16.3 million, present value), $13.8 million ($8.5 million, present value), and $7.5 million ($5.6 million, present value), respectively.

The tables above describe the costs associated with the current program , the 3

- year renewal, and two alternatives

, the 5 a nd 7

- year renewal cycles without the Triennial Program. Costs for these Scenarios range from $29.9 million for a 3

- year renewal, to $ 7.5 million for a 7

- year renewal cycle. The Final Rule is Scenario I, which is the 3

- Year Re

- registration, followed by the 3

- Year Renewal with the Triennial Program eliminated ($29.9 million).

IV. Analysis of Benefits

Table. 6 Estimated Inaccurately Reg istered Aircraft

Options Inaccurately Registered Aircraft

Current Program 132,100

Re

- registration and 7

- Year Renewal (Triennial Eliminated) 68,900

Re

- registration and 5

- Year Renewal (Triennial Eliminated) 37,600

Re

- registration and 3

- Year Renewal (Tri ennial Eliminated) 18,80020 The primary benefit of this rulemaking will be benefits gathered from increased accuracy of the records within the Aircraft Registry. As discussed in the Cost section, roughly one third of registered aircraft information is que stionable . Inaccurate records have many negative consequences. For example, FAA uses aircraft records to identify owners of specific aircraft so safety

- related information, such as emergency airworthiness directives (ADs), can be delivered to those owner s but because of data inaccuracies, many safety

- related mailings are undeliverable . Between 2005 and 2009 the FAA mailed 21,000 emergency ADs (roughly 4,000 emergency ADs a year). The FAA estimates that 5% to 10% (an estimated 200 to 400 letters) of those 4,000 ADs are returned undeliverable each year. Although there are alternative methods for aircraft owners to gather information on emergency ADs, mail is the primary method used by the FAA to initially alert owners. Emergency ADs are also time sensitive, and the alternative methods require additional time to accomplish notification to owners who were not properly contacted by mail

. Aircraft manufacturers also use registration

records to mail safety

- related information

. L aw enforcement and security agencie s rely on FAA ’s registration records to accomplish their missions

.

The FAA has concluded that the level of accuracy in the system of records must be significantly improved in order to better serve the needs of the users of the system as

well as streamli ne its own operations. Specifically, benefits will accrue from improving the database as well as improving the data collection process.

The FAA has identified three areas that will benefit based on an overall improvement to the Registry database:

1. Cost savings

– Given a more accurate database, the FAA will realize cost savings when mailing ADs , conducting surveys of aircraft owners, and accomplishing other necessary contacts with aircraft owners, as there will be fewer returned mailings,

fewer follow

- up mailings, and less employee time needed to process both of these. Aircraft manufacturers will realize similar cost savings when mailing safety notices. Vendors that send out useful information regarding aircraft products will benefit from

more accurate aircraft registration information.

2. Better service for aircraft owners

- This improved service will be accomplished through improved databases that will expedite ownership transfers and the reissuance, re

- registration , and renewals of certificates. In addition, there will be increased ease in notifying aircraft owners of enforcement, compliance, and other notice actions. The aforementioned mailings will potentially reach more aircraft owners and eliminate mailings sent to inactive aircraft that will no longer be carried on the Registry. With more owners receiving this information, as well as information21 from aircraft manufacturers, fewer will be at risk due to delayed or undelivered safety

notices.

3. Help with law enforcement

- As mentioned above, th e FAA, in concert with TSA, is evaluating flight plan filings to determine if an aircraft has the proper profile for operation in the National Air Space (NAS). This makes it more difficult for a drug dealer or a terrorist to use an aircraft since they wil l need to use an aircraft with a

valid N

- number to avoid increased scrutiny. Removing ineligible aircraft from the Civil Aircraft Registry will eliminate a large pool of questionable N

- Numbers; with the regulatory changes in the aircraft registration proce ss in place, criminals and terrorists will find it more difficult to use registered aircraft for illicit operations. Aircraft owners will be more likely to have current registration information on file and operators will be less likely to experience delay s when authorities verify an aircraft for operation in the national airspace.

V. Comparison of Costs and Benefits

The FAA, as well as other users in both the private and public sectors, depend s on the Registry’s information for a myriad of purposes, includi ng mailing safety

- related

information to aircraft owners and supporting law enforcement. The FAA has concluded that the level of accuracy in the system of records must be significantly improved in order to better serve the needs of the users of the system as well as streamline its own operations.

The final rule will replace the current system, and will include a system in which all currently registered aircraft owners must reregister their aircraft over a 3

- year time frame, and then renew these registrati ons on a regular 3

- year basis. The FAA also examined other scenarios including 5 and 7

- year renewal cycles without the Triennial Program

.

The table below gives an overview of the error rates and costs associated with the current program and a few altern atives; the 3, 5 and 7

- year renewal cycles without the Triennial Program. The cost of the current program is moderate at $ 8

. 4 million, but has the highest error rate (3 6.5 %). As the renewal intervals shorten, the costs increase

while the error rates decre ase. Re

- registration with a 7

- year renewal costs approximately $7 .5 million with an error rate of about 21.7% compared to re

registration with a 3

- year renewal that costs approximately $ 29

. 9 million, and has an

error rate of about 5.7 %. These processing costs do not include the transfer fees of $11 million for 3 years, $8 million for 5 years, and $7 million for 7 years.22 Table. 7 Estimated Costs and Error Rates for Re

- registration and Renewal (over 20 years)

Options Cost Present
value Cost Error Rate In accurately Registered Aircraft

Current Program $8,361, 100 $4,428, 900 36.5% 132,100

Re

- registration and 7

- Year Renewal (Triennial Eliminated) $7,498,100 $5,564,300 21.7 % 68,900

Re

- registration and 5

- Year Renewal (Triennial Eliminated) $13,806,600 $8,512 ,700 12.5 % 37,600

Re

- registration and 3

- Year Renewal (Triennial Eliminated) $29,946,000 $16,264,900 5.7 % 18,800

The major goal of this rule is to improve data quality to a level that meets the needs of the FAA and other users of the system

. T he rule replace s the current system with a 3

- year re

- registration program and a 3

- year renewal cycle.

The Agency concludes, given the rule’s relatively low cost over 20 years of $ 29.9 million ($ 16

. 3 million, pres ent value ), and the ability to achieve the goal of reducing
the current 36.5% error rate to 5.7 %, that the final rule gives the best balance between

costs and benefits of the different scenarios examined.23 VI. Comments

Of the 92 comm enters, 25 submitted comments on the regulatory evaluation for the NPRM. These included 4 individuals, 1 flight school, 2 from a University, 8 aviation

related companies, and 10 associations (ELFA, Aviation Working Group, NAFA, GAMA, NBAA, AOPA, ATA, HAI, IHST, and NARA)

.

COMMENT: While several commenters agree that the $5 current registration fee is too low and could see the need for a higher fee

, they believe that the Congressionally

- proposed $45 and $130 fees are too high, feeling that an equitable fee would be lower than these proposed fees. Some believe that the $130 would apply every three years, claiming that is too high a burden for them. One commenter saw it as a penalty for those who are late in meeting the deadline for re

- registration

FAA RE SPONSE: It is important to note that the $5 fee is what can be charged under the FAA’s current structure, even though it is less than the actual cost of processing the replies. A proposed provision in the FAA Reauthorization bill would allow aircraft regi stration

fees to increase based on direct and allocable indirect unit costs of the FAA Registry’s Aircraft Registration Branch plus an allowance for FAA overhead . Example fees of $45 re placement certificate and $130 for registering a new aircraft were use d in the

bill.

. However, any increase in fees would simply recoup to the FAA the cost of service. The $130 registration fee would not apply every three years for re

registration and renewal

.

COMMENT:
Two comments were from a University . One thought t hat the passed

- on costs of $130 per aircraft every 3 years might push the cost of learning to fly out of reach for some students. The other sees this registration fee as a tax and that it will push interested individuals who want to learn to fly and obtai n their license away.

FAA RESPONSE: The FAA notes that the amount in question currently is $5. There is legislation pending before Congress that, if enacted as introduced, would provide the authority to increase registration

- related fees. The projected fee of $130 is only for initially registering an aircraft, which is a one

- time fee, and thus would not occur every 3 years. The projected fee for re

- registration and renewal is $45, which would occur

every 3 years under this final rule. However, the FAA does not believe that these higher fees would cause students not to be able to learn to fly. Because this fee would24 be paid by aircraft owners, the costs could be prorated among flight instruction sessions. Costs for each student pilot would then be negl igible. In addition, the registration and renewal fees are not taxes, but are fees to recover the processing costs

to the FAA

.

COMMENT: One commenter proposed a sliding scale for people who have more than one aircraft.

Another mentioned that these fees would affect general aviation proportionately harder than the airlines; this same commenter notes that the registration fee for cars is reduced as the car ages. Another asks if the registration fee could be tied to the aircraft certificated gross weight a nd/or type certification, or operation.

FAA RESPONSE: The fees discussed are the fees that the FAA would need per airplane registration, re

registration , or renewal. These fees are not based on the number of aircraft, or the aircraft type, but are the cos t associated with processing and recording registration applications and supporting documents that are the same for all aircraft. Therefore,

the use of sliding scales, weight age or value of an aircraft to calculate these fees would not be appropriate.

C OMMENT:

Several commenters believed that electronic or on

- line registration or renewal by owners as well as electronic processing by the FAA could cut time and costs. One commenter believed that the time to fill out the forms electronically could be reduc ed

from 30 minutes to 5 minutes.

FAA RESPONSE: The FAA agrees that electronic on

- line Re

- Registration does save the Registry processing time and therefore costs when there are no changes. Accordingly, the rule provides for both online re

- registration and renewal when no changes are required. Generally, on

- line change reporting would be convenient for owners, but the FAA currently is not set up to process such information. Also, address or other changes require review and action by an examiner, so costs savings would be very small if

any.

The FAA used 30 minutes as the estimate that owners would need to complete re

registration or renewal forms in its calculations in the NPRM analysis. While it clearly would take less than that for a form when there a re no changes, the FAA used 30 minutes to be conservative and to potentially overstate costs rather than understate

them.25 COMMENT:
Several commenters believe that the FAA underestimated the costs to the aircraft

owner:

- The Aviation Working Group stated th at “The NPRM underestimates the costs associated with the proposed rule because aircraft registration involves multiple parties and the costs will greatly exceed NPRM estimates: The NPRM seems to assume that each registered owner of an aircraft is the ope rator 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

secu rity interests in favor of lenders who financed the purchase of the aircraft.”

- National Aircraft Resale Association “believes the FAA greatly understates the impact the proposed rule will have on aircraft owners who own multiple aircraft as part of compl ex financing transactions with third parties.” “If the NPRM were adopted as written, such aircraft owners will need to implement internal systems to track and monitor the status of aircraft registrations for re

registration and renewal purposes or, altern atively, hire a third party to track and monitor the registration activity. In addition, such aircraft owners will need to hire additional employees to oversee this process regardless of whether it is conducted internally or externally. The costs of deve loping, implementing and maintaining such systems and providing appropriate personnel will be significant and will increase annually.”

- Federal Express (FedEx) submitted information including start

- up costs, including the time to develop a system to track t he expiration dates of their aircraft, and follow

- on costs for each re

- registration, including the time to fill out the form, updating the tracking system, preparing the shipping documents, and confirm the registration has been installed. The former excee ded 100 hours while the latter summed to 120 minutes. In addition to these, FedEx estimates

an additional 30 minutes for communication with the lessor.

- National Aircraft Finance Association (NAFA) says that “it is fair to say that

most loan and lease co mpanies do not have IT systems or other processes in place with the functionality to monitor the expiration/renewal of aircraft registration for their owned fleets or for the aircraft of their borrowers. Such systems will be necessary so that financiers ca n take remedial action in the

event of non

- compliance. System modifications establishing work flow consume both time and capital to implement.”

- The National Business Aviation Association says “If an aviation professional is involved with the filing of the re

- registration application or renewal forms under the proposed regulations, the aircraft owner will likely incur several hundred dollars in additional fees (for advice, monitoring, preparation and the26 filing of registration documents) in addition to the f ees discussed in the

NPRM.”

- The Equipment Leasing and Finance Association (ELFA) says that “the

substantial costs for owners and financiers are unaccounted for in the NPRM. Although the NPRM briefly addresses the impact on owners, it does not

mention the significant increase in the cost and administrative burdens that financing parties will incur in connection with the proposed changes.”

- The National Business of Aviation Associates (NBAA) “believes the FAA’s analysis drastically underestimates the cost per aircraft owner for re

- registration and renewal. The cost analysis in the NPRM does not account for any time or fees associated with an aviation consultant or professional reviewing the new regulations on behalf of an aircraft owner, the costs associated w ith taking the steps necessary to comply with the regulations, and the costs to implement a monitoring system to maintain compliance with the regulations. A significant number of aircraft owners use title companies, consultants or law firms to assist

with the preparation, review and filing of registration documents.” “Additionally, owners with large fleets and financial institutions with large portfolios will be required to create fairly sophisticated monitoring and reporting systems to ensure that each ai rcraft in its fleet or portfolio remains

valid at all times.”

- The Air Transport Association (ATA) writes, “This estimate does not include time spent by aircraft owners communicating with other parties such as airplane operators, outside legal counsel, an d the FAA. In order to develop a true cost analysis, the FAA will have to determine how many aircraft have separate owners and operators. Once that figure is determined FAA will have to determine how much time each owner and operator will spend communicati ng with each other and the FAA. Many Part 121 operators hire outside legal counsel to assist with aircraft purchase, leasing, and registration transactions. Any cost estimate will have to include outside legal counsel costs. In contrast

to the FAA’s esti mate, we estimate each renewal to be one half

- hour for filling out the form, one hour for communicating with the aircraft operator and one half hour communicating with the FAA to complete the process, based on information provided by our members. Therefore , any cost analysis, at a minimum, should assign a two hour burden for aircraft owners and one hour burden for aircraft operators. The one hour burden for Part 121 operators, and probably many other commercial aircraft operators, should include the cost of outside counsel, a minimum of $350 per hour. These estimates will be for each renewal, estimating between six and seven renewals per twenty

- year period. The FAA also failed to include any cost for actually placing the registration on the airplane. As FAA is aware any change like a new registration must be27 documented and accomplished by an appropriate employee, such as a

mechanic. FAA should account for this time and cost.”

FAA REPONSE: The FAA agrees that for certain aircraft owners, the cost has been un derestimated. As described in the Costs section above, for the aircraft owner and operators, the FAA agrees to the following costs and has included them in the analysis :

- A half an hour to fill out the form

– this will be performed by the equivalent of

a f irst line supervisor.

- A h alf an hour for when the owner gets the certificate and sends it to the aircraft operator.

- A quarter of an hour for legal review for the owner. This rule does establish an event where the owner is required to certify 'no change' t o the citizenship status, and it is the legal office that does this type of checking. The FAA does not accept the $350 per hour that the ATA submitted, as the Agency believes that is what a consulting attorney get s paid; instead the FAA will use the cost of a staff attorney at a trust company , at $70 per hour. The operators will not need to do a similar legal check for each new certificate since they only have to receive the new certificate from the owner and place it in the aircraft. If owners

are in co mpliance with existing regulations to keep addresses up to date and keep tabs on their citizenship status and address any change with in the prescribed time, there is no reason for lawyers to do research on each registration certificate. If they are not in compliance with these other rules then their need for any legal review is because of these other existing regulations,

not the re

- registration and renewal.

- A half an hour for the operator to receive and install new registration on the

aircraft. This will be done by a mechanic.

- One time start up costs, for each operator, of:

o 24 hours to document the re

- registration and renewal procedures.

o 8 hours of training for a primary and a backup by the supervisor.

The FAA does not agree with the following cost s:

- No addition al time will be needed for a n aviation consultant or professional reviewing the new regulations on behalf of an aircraft owner or the costs associated with taking the steps necessary to comply with the regulations. The FAA issues regulations on a regular basis and air carriers employ professionals to interpret and make sure that these regulations are complied with.

- No additional time or costs for implementing or modifying a monitoring system to maintain compliance with the regulations. Re

- re gistration is a one time event for each aircraft under this rule, and renewal of that registration will be28 required only once every three years on a known schedule. The rule does not require airline operators to program the renewal or re

- registration date into a computerized tracking system; they will do so only at their own convenience. In addition, many commercial aircraft owners

, operators and financiers already have tracking systems for monthly payments, scheduled maintenance,

airworthiness directives , or flight schedules. If they so choose, adding re

registration and renewal to them should be a relatively nominal task . The FAA has moved the initial reminder from 120 days to 180 days prior to expiration. This allows the designated three month filing window to move forward establishing 60 days between the last assigned filing date and certificate expiration for the processing and delivery of certificates. A courtesy reminder notice will also be sent 60 days before expiry to owners whose aircraft have not yet been reregistered.

- No additional communication is needed between the owner and the FAA. It is not necessary for airlines to contact the Registry regarding registration for re

registration and renewal of aircraft. They are welcome to check if the y think there is an issue, or to change a delivery instruction, but it is not needed for each application, or certificate issuance, so it is not a cost of the rule.

COMMENT: The ATA stated that “it is not clear how this proposal would create a net time s avings for any party, as the cost/benefit analysis claims.”

FAA RESPONSE: The cost/benefit analysis does not claim that there would be a net time savings for any
party.

COMMENT: The ATA wrote that “the NPRM states this proposal would only have a domestic impact and therefore would have no affect on any trade

- sensitive activity. That statement does not appear to be correct given that the Registry website indicates over 45 pages of foreign registrants, not including registrants from Puerto Rico and the US

V irgin Islands. With many foreign registrants, the FAA must review this proposal and provide an analysis of it in light of its impact on foreign airlines and for conformity with other registration requirements and commitments, such as the Cape Town

Conventi on on International Interests in Mobile Equipment.”

FAA RESPONSE: The FAA agrees that all U.S. registered aircraft have to comply with FAA operational as well as foreign operational standards when operated in a foreign jurisdiction. With29 the exception of aircraft registered by and to resident aliens and corporations whose aircraft are “based and primarily used” in the United States, foreign owned aircraft are not eligible on the United States civil aircraft registry. Those aircraft ATA refers to may be air craft owned by U.S. citizens with foreign mailing addresses. Otherwise, those aircraft may have invalid registration certificates under 14 CFR 47.43. This rule has no effect on the Cape Town Convention.30 APPENDIX A

– UNIT COST DATA31 The derivation of the costs shown in the Assumptions and Basic Data section

**•** $37.20

– hourly rate of an aircraft owner’s time: To estimate the wage rate for aircraft owners, the FAA used the value of air travel time, as discussed in Economic Values for Evaluation of Feder al Aviation Administration Investments and Regulatory Programs (Values), FAA. 24

Table 1

- 1 in Values discusses and calculates the time value for three types of activities for both air carriers and general aviation passengers

– these three types of activities are personal, business, and all purposes. Since the majority of aircraft owners are general aviation rather than air carrier pilots and since the ‘all purposes’ category constitutes the broadest measure of passenger time in calculating costs for this analysis, the FAA will use this hourly rate to calculate the time needed to fill out this form. The hourly rate is $37.20 per hour. This measures the value that an individual places on their time spent traveling. Time is a valuable economic resource, which may be devoted to work or leisure activities, and is measured as an opportunity cost equal to the amount of foregone activity. Economic theory postulates that individuals will adjust the amount of time they

devote to work and leisure such that the value of an additional small increment of

either will be valued at the wage rate.

**•** $9.10

– FAA processing costs for re

- registration per applicant: Aircraft owners wanting to re

- register their aircraft may use either an online or paper

version of the Aircraft Re

- Registration Application , AC Form 8050

- 1A. The FAA anticipates that 40% of the applicants are likely to submit the paper form. The remaining 60% of applicants may submit online and as such will incur very low direct

labor or material costs. These online applicants lower the average direct processing cost per applicant. The average cost components per applicant for re

- registration are

listed below:

Unit Cost Supplies and Materials $0.28 Computer Time $2.01 Remittance Processing $0.46
Postage $1.37

L abor 25 $4.98

TOTAL $9.10

Source: AFS

- 750, Aircraft Re

- registration Branch, Civil Aviation Registry.

24 This Final Report is dated October 3 , 200 7.

25 Labor costs are calculated using a combination of an FAA employee, FG

- 10, step 5 and contract employees.32 **•** $5.82

– FAA processing costs for renewal per applicant: Registration Renewal will be accomplished by returning a renewal form with fee by

mail or on

- line through the Registry’s web page. The form should be no more complicated than an application for registration or a triennial form. The Registry predicts that the 60% of applicants that re

- registered online will also renew online.
Plus an additional 20% of the applicants that submitted via paper under re

- registration will elect to renew online as the online process improves. Moreover, the direct cost to online filing is relatively low which is reflected in the low average cost for renewal per applicant. The average cost components for renewal per applicant listed below:

Unit Cost Supplies and Materials $0.22 Computer Time $0.80 Remittance Processing $0.22
Postage $0.94

Labor 26 $3.64

TOTAL $5.82

Source: AFS

- 750, Aircraft Re

- registration Branch, Civil Aviation Registry.

**•** $1.63

– FAA processing costs for the Triennial Program to send notices per applicant:

Unit Cost Supplies and Materials $0.09 Computer Time $0.67 Remittance Processing $0.00
Postage $0.53

Labor $0.33

TOTAL $1.62

Source: AFS

- 750, Aircraft Re

- registration Branch, Civil Aviation Registry.

26 The la bor rates have been adjusted to account for FAA’s expectations that 80% of all renewals

will not report changed registration information and be filed electronically through the Registry

web site. These electronically filed no

- change renewals incur very lo w direct processing costs which lowers the average cost processing all renewal applications. Labor costs are calculated using a combination of an FAA employee, FG

- 10, step 5 and contract employees.33 **•** $12.11

– FAA processing costs for the Triennial Program to process replies per applicant:

Unit Cost Supplies and Materials $0.27 Computer Time $0.62 Remittance Processing $0.00
Postage $0.42

Labor 27 $10.80

TOTAL $12.11

Source: AFS

- 750, Aircraft Re

- registration Branch, Civil Aviation Registry.

27 Labor costs are calculated using a combination of an FA A employee, FG

- 10, step 5 and contract employees. The triennial report forms are supposed to be returned when a change in ownership, address, etc., occurs and these forms must be fully processed. This process includes an FAA Legal Instrumen t Examiner revi ewing the report and the aircraft record. The examiner then updates the aircraft record and the registration database , or sends a letter outlining additional requirements that the owner must make. The numbers shown here reflect that process. Given this p rocess, and the cost to fully process paper forms, the average cost of the Triennial is higher than re

- registration and renewal. Moreover, with re

- registration and renewal the cost to process the paper form is averaged in with the much lower direct costs o f a larger number of

forms filed on

- line which report no changes and incur very low direct processing costs.34 APPENDIX B

– EXPLANATION OF RE

- REGISTRATION AND RENEWAL

CALCULATIONS35 Re

- registration

As of December 31, 2007, the total number of registered aircraft, according to the Aircraft Registry 28 was 357,020, which includes both active and inactive registered

aircraft. The Administrator’s Fact Book 29 and the GAAT Survey shows that there are 241,100 30 active aircraft, leaving 112,442 31 inactive aircraft. Therefore, the FAA estimates that 244,578 aircraft (357,020

– 112,442) will be expected to register either through the re

- registration established via this rule or through their normal course of business (NCB), 32

28 Department of Transportation, Federal Aviation Administration, Flight Standards Service, Civil Aviation Registry, Aircraft Registration Branch, AFS

- 750 which typically occurs through transfers o f ownership. For the purpose of the regulatory evaluation, this calculation was developed on a standard January through December year. See section 47.40 in the final rule for the actual

schedule. Table B

- 1 displays an example re

- registration schedule for these 244,578

aircraft.

29 “Administrator’s Fact Book,” Federal Aviation Administration, November, 2008, pp. 18

- 19.

30 241,100 = 222,100 General Aviation + 9,500 Air Taxi + 7,500 Air Carriers + 2,000 Commuter

Aircraft

31 112,442 = .97 x (357,020

– 241,100). The FAA assume s that 3% of the total inactive aircraft

will reregister as a result of this proposal (Source: AFS

- 750, Aircraft Re

- registration Branch, Civil Aviation Registry). All numbers in this analysis have been rounded to the nearest whole

number.

32 As mentioned i n the main text of this analysis, these are certificates issued that will have been borne by the owner even if the re

- registration and renewal requirements never existed. These

will include:

- Newly built aircraft;

- Aircraft imported from another country;

- If an already registered aircraft is sold and a new certificate is issued to the new owner/applicant; and

- Non

- registered aircraft that have been restored and applied for registration.36 The FAA estimates that 81,526 (244,578/3) aircraft will reregister during the first year

of the three

- year schedule detailed in Figure 1. The Registry estimates that 38,547

aircraft 33 will register ann ually through the NCB, typically due to a transfer of ownership; this estimate is based on 2007 fiscal year data. This number of NCB registrations is 15.76% of the number of active aircraft (calculation: 38,547 divided by 244,578); the FAA uses this perce ntage throughout this analysis to compute the share of aircraft annually applying for a new registration via NCB.

For calculation purposes, the FAA allocated the 38,547 aircraft that will be registered via NCB to each of the 144 eligible working months, 34

33 This was the number of aircraft reported by the Registry to have registe red after transfers

between US owners. or 268 (38,547/144)

34 All of the matrices are 12 by 12 matrices and have 144 eligible work months for when an aircraft can be registered. For example, if an aircraft was previously registered in January, theoretically, it can apply for a new registration in any other month, in any year. This gives each aircraft registered in January, twelve other months during which it could be registered again. This is also true for any aircraft registered in any other calendar month. If Aircraft Was Registered

In... If Aircraft Was Registered

In...

Year 3
Then It Can Be ReRegistered During... Then It Can Be ReRegistered During...(horizontal months in

Tables B2

- B4) If Aircraft Was Registered

In...(vertical months in

Tables B2

- B4)

Then It Can Be ReRegistered During... Year 2

September

October

November

December May

June July August January February

March

April

May

- July August

- October

November

- January Year 1

May

- July August

- October

November

- January

February

- April February

- April May

- July August

- Octobe r
November

- January

February

- April Table B

- 1. Example Re

- registration Schedule37 registrations per eligible work month through NCB, which is shown in Table B

- 2 below, in accordance with the schedule displayed above in Table B

- 1. The boxes marked with an “X” are for aircraft that have been registered in the previous months.

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

1st Year Jan 134 134 134 X X X X X X X X X

Feb 268 268 268 134 134 134 X X X X X X Re-Reg Mar 268 268 268 268 268 268 134 134 134 X X X

Schedule Apr 268 268 268 268 268 268 268 268 268 134 134 134
May 268 268 268 268 268 268 268 268 268 268 268 268

Jun 268 268 268 268 268 268 268 268 268 268 268 268

Jul 268 268 268 268 268 268 268 268 268 268 268 268 Aug 268 268 268 268 268 268 268 268 268 268 268 268 Sep 268 268 268 268 268 268 268 268 268 268 268 268

Oct 268 268 268 268 268 268 268 268 268 268 268 268

Nov 268 268 268 268 268 268 268 268 268 268 268 268

Dec 268 268 268 268 268 268 268 268 268 268 268 268 Table B-2. Year 1 Registrations Via NCB

The FAA assumes that in each working month of the first year of the registration schedule, shown in Table B

- 1 above, 50% of these 268 aircraft, or 134 aircraft, will register through the re

- registration schedule and the remaining 50% will regi ster through NCB. Therefore, 32,160 (calculation: (268 x 114) + (134 x 12)) aircraft will obtain a registration certificate, with an expiration date, through NCB, of which, 6,432 (calculation: (12 x 134) + (18 x 268)) of these certificates will be issued during the twelve working months of the re

- registration schedule and are subtracted from the

number of scheduled re

- registrations.

As noted above, the FAA estimates that 81,526 aircraft will be scheduled to be reregistered in the year 1 and receive a ce rtificate with an expiration date. After subtracting out the 6,432 aircraft that were issued certificates with expiration dates during NCB, there will be 75,094 (calculation: 81,526

– 6,432) aircraft reregistered through the schedule during year 1. In to tal, 107,254 (calculation: 75,094 + 32,160) aircraft will receive, in year 1, a certificate with an expiration date.

This leaves 137,324 (calculation: 244,578

– 107,254) aircraft scheduled for re

registration in years 2 and 3. For simplicity, the FAA a ssumes that one

- half, or 68,662, of these aircraft will be scheduled for re

- registration in year 2 of the schedule

in Table B

- 1.

Also, the FAA estimates that 21,642 (calculation: 137,324 x 15.76%) aircraft will register via NCB during the second year of the schedule. These 21,642 aircraft will38 be distributed throughout the 96 (calculation: 144

– 48) 35 eligible work months, which equals 225 (calculation: 21,642 ÷ 96) aircraft per month. The distribution of these 21,642 aircraft through NCB during year 2 is shown in Table B

- 3.

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Jan U U U U U U U U U U U U

Feb U U U U U U U U U U U U

Mar U U U U U U U U U U U U Apr U U U U U U U U U U U U

2nd Year May 113 113 113 X X X X X X X X X

Jun 225 225 225 113 113 113 X X X X X X Re-Reg Jul 225 225 225 225 225 225 113 113 113 X X X

Schedule Aug 225 225 225 225 225 225 225 225 225 113 113 113
Sep 225 225 225 225 225 225 225 225 225 225 225 225

Oct 225 225 225 225 225 225 225 225 225 225 225 225

Nov 225 225 225 225 225 225 225 225 225 225 225 225

Dec 225 225 225 225 225 225 225 225 225 225 225 225 Table B-3. Year 2 Registrations Via NCB

Again, the FAA assumes that in each working month of the second year of the re

registration schedule, shown in Table B

- 1 above, 50% of these 225 aircraft, or 113 aircraft, will be reregistered through the re

- registration sche dule and the remaining 50% will be registered through NCB. In total, 16,206 (calculation: (225 x 66) + (113 x 12)) aircraft will obtain a registration certificate, with an expiration date, through NCB in year 2. Of these 16,206 certificates, 5,406 (calcu lation: (12 x 113) + (18 x 225)) will be issued during the twelve working months of the re

- registration schedule

and need to be subtracted from the number of scheduled re

- registrations.

As noted above, the FAA estimated that 68,662 aircraft will be schedu led to be reregistered in the year 2 and receive a certificate with an expiration date. After subtracting out the 5,406 aircraft that will be issued certificates with expiration dates because of NCB, there will be 63,256 (calculation: 68,662

– 5,406) airc raft reregistered through the schedule during year 2. Therefore, a total of 79,462 (calculation: 63,256 + 16,206) aircraft will be issued, in year 2, a new certificate with an expiration date.

Through years 1 and 2, a total of 186,716 (calculation: 107,2 54 + 79,462) aircraft will have received registration certificates with expiration dates. This leaves 57,862 (calculation: 244,578

– 186,716) aircraft that have not yet received a certificate with an expiration date to be reregistered during year 3. As i n years 1 and 2, the FAA assumes that 15.76%, or 9,119 (calculation: 57,862 x 15.76%), of these 57,862

35 48 represen ts the ineligible work months for year 2 because they were used in estimating the affected population in year 1 and are denoted by a “U” in table B

- 3 and needs to be subtracted from the 144 total available work months. This leaves 96 eligible work months for year 2.39 aircraft will be registered because of NCB. The distribution of these 9,119 aircraft among the working months of year 3 is shown in table B

- 4.

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Jan U U U U U U U U U U U U

Feb U U U U U U U U U U U U

Mar U U U U U U U U U U U U
Apr U U U U U U U U U U U U
May U U U U U U U U U U U U

Jun U U U U U U U U U U U U

Jul U U U U U U U U U U U U
Aug U U U U U U U U U U U U

3rd Year Sep 95 95 95 X X X X X X X X X

Oct 190 190 190 95 95 95 X X X X X X Re-Reg Nov 190 190 190 190 190 190 95 95 95 X X X

Schedule Dec 190 190 190 190 190 190 190 190 190 95 95 95 Table B-4. Year 3 Registrations Via NCB

The F AA estimates that 190 (calculation: 9,119/48) 36 aircraft will be registered because of NCB in each working month of year 3. The FAA also assumes that in each working month of the third year of the re

- registration schedule, shown in Table B

- 4,
50% of these 190 aircraft, or 95 aircraft, will be reregistered through the re

registration schedule and the remaining 50% will be registered through NCB. In summary, the FAA estimates that 4,560 (calculation: (190 x 18) + (12 x 95)) aircraft

will receive a certificat e with an expiration date in year 3 through NCB.

As noted above, the FAA estimates that 57,862 aircraft will be scheduled to be reregistered in year 3 and receive a certificate with an expiration date. After subtracting out the 4,560 aircraft that will b e issued certificates with expiration dates during NCB, there will be 53,302 (calculation: 57,862

– 4,560) aircraft reregistered through the schedule during year 3. Therefore, a total of 57,862 (calculation: 53,302 + 4,560) aircraft will be issued, in yea r 3, a new certificate with an expiration date.

In total, 244,578 (calculation: 107,254 + 79,462 + 57,862) active aircraft will receive certificates with expiration dates in years 1, 2 and 3. Of these 244,578 re

registrations, 191,652 (calculation: 75,0 94 + 63,256 +53,302) will be from the re

registration schedule and the remaining 52,296 (calculation: 32,160 +16,206 + 4,560) will be issued through NCB.

Renewal

Renewal begins with the end of re

- registration . All aircraft that are registered at the

en d of the re

- registration period will be required to renew their registrations, as per

36 48 represents the remaining eligible work months, of the original 144, as all of the other 96 eligible work months, denoted with a “U,” have been used in previous years.40 this rulemaking, on a 3

- year cycle ; the FAA also examined 5

- and 7

- year renewal cycles . However some of these aircraft will be sold and issued new registrations

before t heir next renewal is due, and, thus will renew due to NCB. As noted in the

write

- up for Re

- registration above , the number of normal aircraft registrations in 2007 was 38,547, while the number of NCB registrations is 15.76% of the number of act ive

aircraft

.

The FAA added the following factors to get the number of aircraft issued registrations

in each of the three re

- registration years:

- the number of aircraft registering under NCB,

- the number of aircraft issued certificates in each of the three re

- registra tion years, and

- an additional 3,424 aircraft each year to adjust for average annual projected growth. 37

These calculations and the resultant number of aircraft that will be issued registrations

in the three re

- registration years can be seen in Table B

- 5; the numbers in lines 1 through 3 correspond with the numbers described in the Re

- registration section above.

Table B

- 5

1 st Year 2 nd Year 3 rd Year

1 Aircraft issued certificates with expiration date by normal registration

– NCB 32,160 16,206 4,560

2 Aircraft reregistered as scheduled 75,094 63,256 53,302

3 Total aircraft issued certificates with expiration dates 107,254 79,462 57,862

4 Average annual projected growth 3,424 3,424 3,424

5 Number of aircraft issued registrations

in the three re

- regis tration years 110,678 82,886 61,286

The total number of registrations for the first three years of this rulemaking is 254,850, the sum of the numbers in line 5. This is the estimated number of active aircraft at the start of year four, the renewal start s at the end of the 3

- year cycle. Renewal activity for the 3

- year cycle will be described first, given the detail involved

37 As noted in the main text, the FAA based projections on the annual gr owth rate for aircraft

– 1.4%. Given 244,578 active aircraft, an annual increase of 1.4% would mean that the projected long

- term annual growth is 3,424 (calculation: 244,578 x 1.4%). Given the number of variables involved in this analysis, the FAA decide d, 3,424, for each year in this analysis, rather than multiply the increasing number of active aircraft each year by 1.4%.41 in this cycle from additional renewals, and will be followed by calculations for the 5

- and 7

- year cycles, respectively.

3

- year cyc le

A 3

- year renewal cycle means that certificates issued in year 1 come due in year 4, those issued in year 2 come due in year 5, etc. Because the calculations for years 1 through 3 are based on re

- registration and the calculations for years 4 through 20 are based on renewal, this analysis will show both renewal calculations for years 4 through 6, which are based on aircraft registered under the re

- registration years (years 1 through 3) as well as renewal calculations for year 7, which are based on aircra ft registered in a renewal year (year 4). Calculations for year 8 through 20, which are based on aircraft registered in renewal years, will be similar to those for year 7.

Activity for each year can be broken into two categories

– (1) NCB

- related registr ations and (2) rulemaking

- related renewals. In each case, as will be discussed below, there are two sources for both of these categories.

A. For year 4: (1) NCB

- related registrations: a) NCB registrations on existing airplanes: As noted above, the FAA estimated that each year 15.76% of all aircraft will register through NCB. Given that there will be 254,850 registered aircraft at the end of year 3, 40,164 aircraft will register through NCB (calculation: 254,850 times 15.76%) in year

4. These aircraft completed re

- registration during years 1 through 3.

b) New aircraft: As noted above, the FAA assumes 3,424 additional new aircraft each year. Since one of the components of NCB registration is new aircraft, these 3,424 aircraft will register under NCB

.

Thus, the FAA estimates that 43,588 aircraft will register under NCB in year 4 (calculation: 40,164 plus 3,424).

(2) Rulemaking

- related renewals: a) Normal registration Subtracting the number of NCB aircraft for year 4 from the total number of aircraft registered in years 1 through 3 equals the number of registered aircraft remaining that were originally reregistered in years 1, 2, or 3. Since aircraft that had reregistered in year 1 have registrations that are three years old, those that don’t registe r through42 NCB by their renewal date will have to renew their certificates and are counted as renewals due to this rulemaking.

As shown in Table B

- 5, 110,678 will register in year 1. By year 4, however, a smaller number will need to renew, as a certain am ount have registered due to NCB. These adjustments can be seen in Table B

- 6.

Table B

- 6

1 st Year 2 nd Year 3 rd Year

1 Totals from Table B

- 5 110,678 82,866 61,286

2 Year 2 adjustment are the aircraft from year 1

that register due to NCB after the initial re

registration

- 12,849 12,849

3 Adjusted Total 97,823 95,735 61,286

4 Year 3 adjustment are the aircraft, from years 1

and 2 that register due to NCB after the initial re

registration 38

- 12,283

- 12,283 25,689

5 Adjusted Total 84,980 82,886 8 6,984

6 Adjustment, from year 1, of annual growth by

share of NCB transfer (15.76% x 3,424)

- 540 540

7 Adjusted Total 84,440 83,426

8 Adjustment, from years 1 and 2, of annual

growth by share of NCB transfer

- 540

- 540 1,080

9 Adjusted Total 83,900 82,886 88,064

As noted above, the number of registrations in 2007 was 38,547. Over the course of years 2 and 3, the FAA assumes that the same number of aircraft, 38,547, will not go through the normal re

- registration, but will get new certificates thro ugh NCB. These are the NCB actions that will take place after initial conversion of the aircraft to new registrations during years 2 and 3, respectively, and they correspond to the blocks

marked as 'U' in Tables B

- 2 and B

- 3. The FAA estimates that 1/3 wi ll happen in year 2, when 12,849 (1/3 of 38,547) that renewed in the year 1 will register due to NCB in year 2 (as shown on line 2 of Table B

- 6), and 2/3 will happen in year 3, when 12,849 that renewed in year 1 will register due to NCB in year 3 and when 12,849 that renewed in year 2 will register due to NCB in year 3 (as shown on line 4 of Table B

6). These NCB registrations can be seen in lines 2 and 4 of Table B

- 6, while line 5 shows the adjusted totals, of 84,980, 82,886, and 86,984 aircraft in years 1, 2, and 3, respectively.

38 The numbers in this line have been adjusted to account for rounding.43 As discussed above, the FAA assumes 3,424 new aircraft will register each year. Since these are new aircraft and not subject to the years 1 through 3 re

- registration process, 15.76% of these new aircraft will register through N CB rather than the renewal cycle. These adjustments can be seen on lines 6 through 9 of Table B

- 6. Multiplying 15.76% times 3,424 new aircraft equals 540 aircraft; this is the amount that will register under NCB. Line 6 shows the amount that registered in year 1 and will register due to NCB in year 2; these will be counted as part of the number of aircraft whose renewal cycles will start in year 2. 39 Line 8 shows the amount that originally registered in years 1 and 2 and will register due to NCB in year 3; these will be counted as part of the number of aircraft whose renewal cycles will start in year 3. Thus, after all the adjustments shown in Tables B

- 5 and B

- 6, the 254,580 aircraft 40
will have registered and/or renewed (in the case of NCB registration) will total 83,900, 82,886, and 88,064 in years 1, 2, and 3, respectively.

In a 3

- year renewal cycle, the aforementioned 83,900 aircraft in year 1 will need to renew in year 4. However, 15.76% of these 83,900 aircraft, or 13,222, will be the

number of air craft registering due to NCB during year 4 and these need to be subtracted from 83,900, leaving 70,677 aircraft; this is the number of aircraft that must be renewed in year 4.

In year 4, there will be 114,265 aircraft registration actions

– 43,588 (40,164 + 3,424) through NCB and 70,677 through rulemaking renewals.

B. Year 5: (1) NCB

- related registrations: Given that 15.76% of all aircraft registered will register through NCB, with 258,274 aircraft at the end of year 4 (254,850 from year 3 plus the 3,42 4 new aircraft introduced into the system in year 4), 40,407 aircraft will register through NCB (258,274 times 15.76%). These aircraft come from the aircraft reregistered during the previous three years. Given 3,424 additional new aircraft coming into th e system in year 5, the FAA estimates that 44,128 aircraft will register under NCB in year 5 (calculation: 40,704 plus 3,424).

(2) Rulemaking

- related renewals:

As shown in Table B

- 6, due to registrations from NCB taking place on aircraft reregistered in y ears 1 and 2, as well as registrations from NCB taking place on the

39 In year 1, the fleet grew by 3,424 aircraft. During year 2, 516 aircraft (3,424 from year 1 x 15.76%) will need to renew due to NCB actions, so this 540 is added in year 2’s totals and

subtracted from year 1’s totals.

40 This is the sum of 244,578, the total number of registered aircraft, plus three years worth of growth of 3,424 new aircraft per year.44 new aircraft added in years 1 and 2, 82,886 aircraft will have registered and/or

renewed.

These 82,886 aircraft will need to renew no later than year 5. However, not all of

these will re new in year 5; a percentage will register before their scheduled renewal

date due to NCB: 41

- 15.76% of 82,886, or 13,063, will be the aircraft registrations under NCB during year 4; these will be subtracted from 82,886, leaving 69,823 aircraft as the numbe r registered in year 2 after year 4 NCB

- related calculations.

- 15.76% of 69,823, or 11,004, will be the aircraft registrations under NCB during year 5, leaving 58,819 aircraft, the number of aircraft registered in year 2 after year 5

NCB

- related calculati ons. This is the number of aircraft that must be renewed in year

5.

In year 5, there will be 102,947 aircraft registration actions

– 44,128 through NCB and 58,819 through rulemaking renewals.

C. Year 6: (1) NCB

- related registrations:
Given that 15.76% o f all aircraft registered will register through NCB, with 261,698 aircraft at the end of year 5 (258,274 from year 4 plus the 3,424 new aircraft introduced into the system in year 5), 41,244 aircraft will register through NCB (261,698 times 15.76%). These aircraft come from the aircraft registered during the previous three years. Given 3,424 additional new aircraft coming into the system in year 6, the FAA estimates that 44,668 aircraft will register under NCB in year 6 (calculation: 41,244 plus 3,424).

(2) Rulemaking

- related renewals:

As shown in Table B

- 6 due to NCB registrations taking place on aircraft registered in years 1 and 2, as well as NCB registrations taking place on the new aircraft in years 1 and 2, 88,064 aircraft will have renewed and/or r eregistered in year 3.

These 88,064 aircraft will need to renew no later than year 6. However, not all of these will renew in year 6; as described above, a percentage will register before their

scheduled renewal date due to NCB:

- 15.76% of 88,064, or 1 3,879, will be aircraft registrations under NCB during year 4; these will be subtracted from 88,064, leaving 74,185 aircraft as the number registered in year 3 after year 4 NCB

- related calculations.

41 All renewals due to NCB in years 1 through 3 are reflected in Table B

- 6. Thus, the

calculations fo r rulemaking

- related renewals start with calculations in year 4.45 - 15.76% of 74,185, or 11,692, will be aircraft registrat ions under NCB during year 5; these will be subtracted from 74,185, leaving 62,493 aircraft as the number registered in year 3 after year 5 NCB

- related calculations.

- 15.76% of 62,439, or 9,849, will be aircraft registrations under NCB during year 6,

leav ing 52,590 aircraft, the number of aircraft registered in year 3 after year 6 NCB

related calculations. This is the number of aircraft that must be renewed in year 6.

In year 6, there will be 97,312 aircraft registration actions

– 44,668 through NCB and 52,644 through rulemaking renewals.

D. Year 7: (1) NCB

- related registrations: Given that 15.76% of all registered aircraft will register through NCB, with 265,122 aircraft at the end of year 6 (261,698 from year 5 plus the 3,424 new aircraft

introduced in to the system in year 6), 41,783 aircraft will register through NCB (265,122 times 15.76%). Given 3,424 additional new aircraft coming into the system in year 7, the FAA estimates that 45,207 aircraft will register under NCB in year 7 (calculation: 41,783 plus 3,424).

(2) Rulemaking

- related renewals: As discussed above in the discussion for Year 4, 114,265 aircraft were registered in year 4. However, not all of these will renew in year 7; as described above, a percentage will register before their schedu led renewal date due to NCB:

- 15.76% of 114,265, or 18,008, will be aircraft registrations under NCB during year 5; these will be subtracted from 114,265, leaving 96,258 aircraft as the number registered in year 4 after year 5 NCB

- related calculations.

- 15.76% of 96,258, or 15,170, will be aircraft registrations under NCB during year 5; these will be subtracted from 96,258, leaving 81,088 aircraft as the number registered in year 4 after year 6 NCB

- related calculations.

- 15.76% of 81,088, or 12,779, will be aircraft registrations under NCB during year 6, leaving 68,309 aircraft, the number of aircraft registered in year 4 after year 7 NCB

related calculations. This is the number of aircraft that must be renewed in year 7.

In year 7, there will be 113,51 6 aircraft registration actions

– 45,207 through NCB and 68,309 through rulemaking renewals.

The FAA continued this process, of calculating the number of aircraft registrations and renewal in a given year, through NCB registrations and through the 3

- year renewal cycle. The projected 20 year totals are shown in Table B

- 7:46 Table B

- 7

NCB Program Total Initial 3 years 42 63,198 191,652 254,580

% of total 24.80% 75.20% 100.00% Subsequent 17 years 43 841,391 1,117,221 1,931,612

% of total 42.16% 57.84% 10 0.00%

20 Year Total 877,589 1,308,873 2,186,462

% of total 40.15% 59.86% 100.00%

The same techniques are used for the 5 and 7

- year renewal cycles. The 5 and 7

- year renewal scenarios have a slight variation. These renewals do not start until the 6 th an d

8 th years, respectively. So for the years past the initial re

- registration and before the renewal cycle begins, the only activity will be the posting of NCB registrations for that year. When the renewals start, the same algorithms as were used in the 3

- year renewal cycles, of annually subtracting a percentage of aircraft that had been registered in previous years to account for NCB, are used in the 5 and 7

- year renewal cycles.

5

- year cycle

For the 5

- year renewal cycle, renewals will not start until year 6. The only activity in years 4 and 5 will be registrations due to NCB. The amount of aircraft registrations under NCB will be the same across all cycles, the 3, 5 and 7

- year cycle; it is a percentage (15.76%) of the total aircraft registered. Since the total number of aircraft registered increases by 3,424 aircraft per year regardless of the scenario, the number of NCB renewals will be 40,164 and 40,704, for years 4 and 5, respectively.

As in the 3

- year renewal cycle, for year 6, there will be regi strations due to NCB and renewals due to the rulemaking

- mandate:

(1) NCB

- related registrations: The calculations for year 6 will be the same as described for year 6 in the 3

- year renewal cycle, resulting in 41,244 aircraft registering under NCB.

42 The 254,850 for the initial 3 year period include s the 244,578 current active aircraft that will need to reregister, plus the additional 10,272 aircraft (3 years times 3,424), reflecting average annual projected growth that will need to register.

43 Almost all of these registrations will be renewals, with the remainder being additional new

aircraft that will need to register for the first time.47 (2) Rule making

- related renewals: a) Normal registrations

As shown in Table B

- 6 above and as discussed in the discussion for year 4 renewals in

the 3

- year cycle, there will be 83,900 aircraft registered in year 1; this figure takes

into account all NCB

- related regi strations in years 2 and 3. However, not all of these will renew in year 6 as described above; a percentage will renew before their

scheduled renewal date due to NCB:

- 15.76% of 83,900, or 13,223, will be the aircraft registrations under NCB during

year 4; these will be subtracted from 83,900, leaving 70,677 aircraft as the number registered in year 1 after year 4 NCB

- related calculations.

- 15.76% of 70,677, or 11,139, will be the aircraft registrations under NCB during year 5; these will be subtracted f rom 70,677, leaving 59,538 aircraft as the number registered in year 1 after year 5 NCB

- related calculations.

- 15.76% of 59,538, or 9,383, will be the aircraft registrations under NCB during year 6, leaving 50,155 aircraft, the number of aircraft register ed in year 1 after year 6

NCB

- related calculations. This is the number of aircraft that must be renewed in year

6.

In year 6, there will be 94,823 aircraft registration actions

– 44,668 through NCB and 50,155 through rulemaking renewals.

The FAA continu ed this process of applying these same algorithms to both NCB

related renewals and rulemaking

- related renewals for the remaining years of the 5

- year cycle. The projected 20 year totals are shown in Table B

- 8:

Table B

- 8

NCB 44 Program Total

Initial 3 years 63,198 191,652 254,850

% of total 24.80% 75.20% 100.00% Subsequent 17 years 814,391 507,995 1,322,386

% of total 61.58% 38.42% 100.00%

20 Year Total 877,589 699,647 1,577,236

% of total 55.64% 44.36% 100.00%

7

- year cycle

44 As in Table B

- 7, the ‘Initial 3 years’ includes current active aircraft that will need to reregister plus additional new aircraft that will need to register, whil e the ‘Subsequent 17 years’ is made up almost exclusively of renewal registrations, with the balance being additional new aircraft that

will need to register for the first time.48 For the 7

- year renewa l cycle, since renewals will not start until year 8, the only activity in years 4 through 7 will be registrations due to NCB. As with the 3 and 5

- year cycles, the amount of aircraft registrations under NCB will be the same as these other two cycles. Sinc e the total number of aircraft registered increases by 3,424 aircraft per year regardless of the scenario, the number of NCB registrations will be 40,164, 40,704, 41,244, and 41,783 for years 4, 5, 6, and 7, respectively.

As in the 3

- year and 5

- year renew al cycles, for year 8, there will be registrations due to NCB and renewals due to the rulemaking

- mandate:

(1) NCB

- related registration: At the beginning of year 8, there will be 268,546 aircraft; 15.76% of 268,546 aircraft equals 42,323 aircraft. This wi ll be added to the additional 3,424 new aircraft coming into the system in year 8; the FAA estimates that 45,747 aircraft will register under NCB in year 8 (calculation: 42,323 plus 3,424). This is the same number of aircraft registered under NCB in year 8 in the 3 and 5

- year cycles.

(2) Rulemaking

- related renewals: a) Normal registration

As shown in Table B

- 6 above and as discussed in the discussion for year 4 renewals in

the 3

- year cycle and year 6 renewals in the 5

- year cycle, there will be 83,900 airc raft registered in year 1; this figure takes into account all NCB

- related registrations in years 2 and 3. However, not all of these will renew in year 8; as described above, a percentage will register before their scheduled renewal date due to NCB:

- 15.7 6% of 83,900, or 13,223, will be aircraft registrations under NCB during year 4; these will be subtracted from 83,900, leaving 70,677 aircraft as the number registered in year 1 after year 4 NCB

- related calculations.

- 15.76% of 70,677, or 11,139, will be aircraft registrations under NCB during year 5; these will be subtracted from 70,677, leaving 59,538 aircraft as the number registered in year 1 after year 5 NCB

- related calculations.

- 15.76% of 59,538, or 9,383, will be aircraft registrations under NCB d uring year 6; these will be subtracted from 59,538, leaving 50,155 aircraft as the number registered in year 1 after year 6 NCB

- related calculations.

- 15.76% of 50,155, or 7,904, will be aircraft registrations under NCB during year 7;

these will be subtra cted from 50,155, leaving 42,251 aircraft as the number registered in year 1 after year 7 NCB

- related calculations.

- 15.76% of 42,251, or 6,659, will be aircraft registrations under NCB during year 8, leaving 35,592 aircraft, the number of aircraft regist ered in year 1 after year 8 NCB

related calculations. This is the number of aircraft that must be renewed in year 8.49 In year 8, there will be 81,339 aircraft registration actions

– 45,747 through NCB and 35,592 through rulemaking renewals.

The FAA con tinued this process of applying these same algorithms to both NCB

related renewals and rulemaking

- related renewals for the remaining years of the 7

- year cycle. The projected 20 year totals are shown in Table B

- 9:

Table B

- 9

NCB 45 Program Total

Initial 3 years 63,198 191,652 254,850

% of total 24.80% 75.20% 100.00% Subsequent 17 years 814,391 269,864 1,084,255

% of total 75.11% 24.89% 100.00%

20 Year Total 877,589 461,516 1,339,105

% of total 65.54% 34.46% 100.00%

It is important to note that for all three Scenarios, as shown in Tables B

- 7, B

- 8, and B

9:

- the totals for the first three years the same, as all scenarios assume a 3

- year re

registration period;

- the NCB registration numbers are the same for the 17

- year renewal period, reflecting the fa ct that the amount of aircraft registrations under NCB are always the same percentage of the total aircraft registered; and

- the only difference is the number of rulemaking

- related renewals, occurring in years 4 through 20. These numbers can be seen in ea ch of these tables by looking at the ‘Program’ total for the 17

- years of renewal.

45 As in Table B

- 7, the ‘Initial 3 years’ includes current active aircraft that will need to reregister plus additional new aircraft that will need to register, while the ‘Subsequent 17 years’ is made up almost exclusively of renewal registrations, with the balance being additional new aircraft that

will need to register for the firs t time.50 APPENDIX C

– EXPLANATION OF ERROR RATES CALCULATIONS51 Improving the accuracy of the Civil Aircraft Register is the major reason for this rulemaking. Government agenci es, including the FAA, those providing national defense and security, and those providing law enforcement, as well as the aviation industry should be able to determine key information from the registration listing with a reasonable certainty that that info rmation is accurate. This key information includes the registration status of an aircraft and the name and address of that registered aircraft’s owner. However, the current error rate of the Registry casts doubt on the principle that this key information is accurate. The discussion below will quantify the present accuracy rate and the probable accuracy rates for the scenarios discussed in

the main text.

A long

- term program of annually validating aircraft status and registration addresses

ended at the en d of 1977. Since then, under the Triennial Aircraft Registration Report, notices have been sent to aircraft owners when three years have passed without these owners fulfilling certain registration actions. Approximately 70,000

triennial notices are sent annually, and these result in 9,000 registration updates being returned to the Registry.

The record for an aircraft is considered to be in error if:

- it is in a transitional status such as ‘sale reported’ or ‘registration pending’ for an excessive period o f time (six months and one year, respectively),

- the associated registration address is incorrect, or

- the aircraft has left service permanently, but the owner has not requested cancellation of registration. This situation is often unreported to the FAA a nd therefore unknown to the Registry.

Long Term Error Rate Calculations

The following table, Table C

- 1, shows the data that the FAA used to calculate the current error rate, the Current Long Term Error (CLTE) rate, and the Projected Long Term Error (PLTE ) rate:52 Table C

- 1

1 Total registered aircraft 357,020

2 Estimated active aircraft 46 241,100

3 Difference (line 1 minus line 2) 115,920

4 Aircraft not expected to reregister (line 3 x 97%) 47 112,442

5 Aircraft expected to reregister (line 1 minus line 4) 244,578

6 Aircraft with records in error through 1977 15,563

7 Aircraft with records in error since 1977 (line 4 minus line 6) 96,879

8 Aircraft with known bad addresses 30,090

9 Sale reported aircraft over 6 months old 17,000

10 Registration pen ding aircraft over 12 months old 2,200

11 Total to be eliminated as a result of rulemaking (sum of lines 8 through 10) 49,290

12 Unidentified inactive aircraft (line 7 minus line 11) 47,589

Dividing line 4 by line 1 equals 31.5% , which represents, wit hin the Registry’s records, incorrect aircraft information based on the total number of registered aircraft; this can also be thought of as the error rate within the Registry’s records. Thus, the

current error rate is 31.5%

.

These errors have collected s ince at least 1977. Their percentage as a portion of registered aircraft is referred to as the CLTE rate. To determine how fast this group of aircraft grown, the FAA first subtracted those aircraft that were identified as being in error by the end of 197 7, 15,563, when the last verification program ended (line 6). Subtracting 15,563 from 112,442 leaves 96,879 aircraft whose records have migrated to the ‘in error’ group since 1978; 30 years ago (line 7). Dividing 96,879 by 30 years gives an average of 3, 229 AC entering the error group annually. Since aircraft can only enter the error group from the active group, 1. 3 % (calculation: 3, 229 divided by 244,578) active aircraft enter the error group annually. Given a 3

- year renewal cycle,

4 % of active aircraf t will enter this error group. Similarly, given 5

- year and 7

- year renewal cycles, 6.6 % and 9.2 % of active aircraft will enter this error group, respectively.

To get the PLTE rate, the FAA first calculated the error group that will be eliminated

as a resu lt of this rulemaking. As shown in Table C

- 1, on lines 8 through 10, these include aircraft with bad addresses, sale reported aircraft over 6 months old, and

46 As explained in Appendix B, this is based on data from the 2008 FAA Administrator’s Fact

Book. These estimates are compared to the number of registered aircraft (line 1) to determine the estimated number of aircraft that are no longer active.

47 Based on experience, the Registry expects 97% of the difference in line 3 not to reregister.53 registration pending aircraft over one year old. Line 11 shows that the FAA expects 47,589 aircr aft will be eliminated from the error group as a result of this rulemaking.

As shown on line 12 (subtracting 47,589 from 97,742), the FAA expects that there will be 49,290 unidentified inactive aircraft; while these aircraft will be eliminated during the initial re

- registration , they represent a group of aircraft that have historically entered the ‘in error’ group without being reported in any way. The FAA acknowledges that nothing in this rule will keep this phenomenon from reoccurring in

the future. So the FAA expects that unidentified inactive aircraft will accumulate at a similar rate during each renewal cycle. Dividing 49,290 unidentified inactive aircraft by 30 years and then that result by the number of active aircraft (244,578) yiel ds a

PLTE rate of 0 .65 % per year. Given 3

- year, 5

- year, and 7

- year renewal cycles, 2 %,
3. 3 %, and 4. 6 % of active aircraft will enter this error group, respectively.

Standing Error Calculations

There is another group of aircraft with bad registration information that t he FAA knows about from experience through the Triennial Program. These are the aircraft with address or status changes that have not been reported by the owner, but the FAA believes will be reported when prompted. For the following set of calculations, for a

three

- year triennial cycle, the FAA is assuming three distinct groups of aircrafts

– those in the first, second, and third years of this cycle.

The FAA sends out 70,000 Triennial Program mailings annually. Over a year’s time, about 9,000 notices wi th record update information are returned to the Registry, which

have accumulated over a 3

- year period because the Triennial Program notices are not sent until three years after an aircraft registration action was last processed. Thus, for

aircraft in the third year of this cycle, there will be about 9,000 with address changes The FAA estimates that 3,000 notices accumulate during each of the three years.

However, this is also happening to aircraft in both the first and second years of this cycle. For those in the second year, they will have completed two of the three years with no Registry

- related activity. Thus, there will be 3,000 (first year) plus 3,000 (second year) changes unreported, or a total of 6,000, that have not been reported. And, there is a third group that is in the first year of this cycle and has accumulated 3,000 changes. Adding these 9,000, 6,000 and 3,000 aircraft changes from these three groups sum to 18,000 aircraft with out

- of

- date registrations.

Because the Registry operates this program on a continuous basis with monthly mailings, the FAA surmises that this level of 18,000 out

- of

- date aircraft records is fairly constant under a three

- year notice cycle. Thus, at any time, 7. 4 % of active54 aircraft (calculation: 18,000 divided b y 244,578 active aircraft) are in error, and the FAA refers to these errors as the Standing Error rate. To the aircraft

- owning public, a requirement to reregister every three years should have the same effectiveness as a Triennial Program notice in prompt ing reports of registration changes, so the FAA assumes that the Standing Error rate will be the same under the three

- year renewal scenario as it is for the Triennial Program.

Projected Error Calculations

The FAA added the current error rate with the c urrent standing error rate to equal the total current error of 36.5% (calculation: 31.5% plus 5%), thus, the need for this rulemaking. The FAA further added the projected long

- term error rate and the projected standing error rate to yield a projected erro r 9.4% (calculation: 2% plus 7.4%). However, the FAA assumes that the rule and two other FAA programs 48 will elicit a 50% improvement in on

- time status change report filings. This gives a projected error rate of 5.7% (calculation: 2% plus 7.4%/2) for a 3

- y ear renewal cycle.

The FAA then applied this methodology to estimating the standing errors for the 5

- and 7

- year scenarios, by assuming that 3,000 notices are returned each year.

As described above, for the 3

- year renewal cycle, there will be three group s with notices coming in: a) one group where 9,000 notices are returned in the Registry, with 3,000 changes occurring in the first year of this 3

- year cycle, 3,000 during the second year, and 3,000 the third year. b) a second group, that had completed two year s of its 3 year cycle, which will have accumulated 6,000 unreported changes, and c) a third group, which had completed one year of its 3

- year cycle, which will have 3,000 unreported changes.

48 These programs include:

- The registry's ‘general awareness initiative’ for aircraft owners to keep their addresses up to date. In May 2004, the FAA put out a p ress release, which can be referenced at http://www.faa.gov/news/press_releases/news_story.cfm?newsId=6402 . This press release stresses that, starting June 1, 2004, U.S. airc raft owners risk having their aircraft registrations cancelled because the addresses they have on file with the FAA are of out

- of

- date.

- As described in footnote 2, the FAA, in concert with TSA, is evaluating flight plan filings to

determine if an aircraf t has the proper profile for operation in the National Air Space (NAS).55 This sequence can be seen in Table C

- 3:

Table C

- 3

Year of statu s change not reported 3 2 1 Completed years of the cycle:

3 3,000 3,000 3,000

2 3,000 3,000

1 3,000

Total 9,000 6,000 3,000

For the 5

- year renewal cycle, there will be 5 groups, as shown in Table C

- 4:

Table C

- 4 Year of status change no t reported 5 4 3 2 1 Completed years of the cycle:

5 3,000 3,000 3,000 3,000 3,000

4 3,000 3,000 3,000 3,000

3 3,000 3,000 3,000

2 3,000 3,000

1 3,000

Total 15,000 12,000 9,000 6,000 3,000

Summing the bottom row of Table C

- 4 equ als 45,000 remaining bad addresses; dividing 45,000 by 244,578, the number of active aircraft, yields a standing error rate
of 18.40%.

The FAA added the projected long

- term error rate and the projected standing error rate to yield a projected error 21. 7 % (calculation: 3.3 % plus 18.4%). However, as above, the FAA assumes a 50% improvement in on

- time status change report filings, yielding a projected error rate of 12. 5 % (calculation: 3.3 % plus 18.4%/2) for a 5

- year renewal cycle.56 For the 7

- year renewal cyc le, there will be 7 groups, as shown in Table C

- 6:

Table C

- 5 Year of status change not reported 7 6 5 4 3 2 1 Completed years of the cycle:

7 3,000 3,000 3,000 3,000 3,000 3,000 3,000

6 3,000 3,000 3,000 3,000 3,000 3,000

5 3,000 3,000 3,000 3,000 3,000

4 3,000 3,000 3,000 3,000

3 3,000 3,000 3,000

2 3,000 3,000

1 3,000

Total 21,000 18,000 15,000 12,000 9,000 6,000 3,000

Summing the bottom row of Table C

- 5 equals 84,000 remaining bad addresses; dividing 8 4,000 by 244,578, the number of active aircraft, yields a standing error rate
of 34.3%. This can be contrasted to the 18.4% for the 5

- year cycle, again, showing the increase in the error rate by extending the renewal cycle by an additional two

years.

The FAA added the projected long

- term error rate and the projected standing error rate to yield a projected error 3 8

. 9 % (calculation: 4. 6 % plus 34.3%). However, as above, the FAA assumes a 50% improvement in on

- time status change report filings, yielding a p rojected error rate of 2 1 .7% (calculation: 4.6 % plus 34.3%/2) for a 7

- year renewal cycle.

In these calculations for the 5 and 7

- year renewal cycles, the FAA is extrapolating from its experience from the 3

- year Triennial Program. Given that people are mor e likely to change addresses as time passes, the likelihood of aircraft owners with multiple address changes will be greater for a 5

- year period than a 3

- year period and

for a 7

- year period than a 5

- year period. Similarly, there is a greater likelihood of other reportable status changes happening over longer period of times. The Agency acknowledges, therefore, that these error rates for the 5 and 7

- year renewal cycles maybe too high, as these error rates will include aircraft owners who have moved

more th an one time or had other status changes during the course of these cycles. In particular, the FAA recognizes that the error rate for the 7

- year cycle is probably more in error than the corresponding rate for the 5

- year cycle.

In the following tables, Tab le C

- 6 summarizes the current error rates, while Tables C

7 summarizes the projected error rates for a 50% improvement in compliance.57 Table C

- 6

- Projected Error Rate

Based on the Current System Table C

- 7

- Expected Error Rate

– 50% Improved Complianc e
Yrs Standing Long Term Total

- EST Yrs Standing Long Term Total

- EST

3 7. 4 % 2 % 9.4 % 3 3. 7 % 2 % 5.7 %

5 18.4% 3.3 % 21. 7 % 5 9.2% 3.3 % 12. 5 %

7 34.3% 4.6 % 38. 9 % 7 17. 2 % 4.6 % 21.7%58 Regulatory Evaluation Preamble Summary Regulatory Evaluation, Regulatory Flexibility Determination, International Trade Impact Assessment, and Unfunded Mandates Assessment

Changes to Federal regulations must undergo several economic analyses. First,

Executive Order 12866 directs that each Federal agency shall propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs. Second, the Regulatory Flexibility Act of 1980 (Public

Law 96

- 354) requires agencies to analyze the economic impact of regulatory changes on small entities. Third, the Trade Agreements Act (Public Law 96

- 39) prohibits agencies from setting standards that create unnecessary obstacles to the foreign commerce of the United States. In developing U.S. stand ards, this Trade Act requires agencies to consider international standards and, where appropriate, that they be the basis of U.S. standards. Fourth, the Unfunded Mandates Reform Act of 1995 (Public

Law 104

- 4) requires agencies to prepare a written assessm ent of the costs, benefits, and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of $100 million or more annually (adjusted for inflation with base year of 1995). This portion of the preamble summarizes the FAA’s analysis of the economic impacts of this final rule. We suggest readers seeking greater detail read the full regulatory evaluation, a copy of which we hav e placed in the docket for this rulemaking.

In conducting these analyses, FAA has determined that this rule: (1) has benefits that justify its costs, (2) is not an “ economically significant regulatory action” but is a “significant regulatory action” f or other reasons as defined in section 3(f) of Executive Order 12866, (3) is “significant” as defined in DOT's Regulatory Policies and Procedures; (4) will not have a significant economic impact on a substantial number of small entities; (5) will not creat e unnecessary obstacles to the foreign commerce of the United States; and (6) will not impose an unfunded mandate on state, local, or tribal governments, or on the private sector by exceeding the threshold identified above. These analyses are summarized b elow.

Summary Total Costs and Benefits of this Rulemaking

Summary Of Costs and Benefits in Millions of 2007 Dollars

Re

- registration and 3

- Year Renewal (Triennial Eliminated) Cost Present Value Benefit :
$ 29

. 9 $16.3 Reduction in Error Rate by 31%59 Thi s rule will mandate that all aircraft owners reregister their aircraft over a 3

- year period, and then renew these registrations on a 3

- year basis. Total estimated costs, over 20 years is $29.9 million ($16.3 million, present value). These costs include b oth the costs to aircraft owners as well as processing costs for the Civil Aircraft Registry and include costs savings from the elimination of the Triennial Program.

The primary benefit of this rulemaking will be the increased accuracy of the records

with in the Aircraft Registry. Currently, approximately one third of registered aircraft information is incorrect. The FAA has concluded that the level of accuracy in the system of records must be significantly improved in order to better serve the needs of

t he users of the system as well as support its own operations. Benefits will accrue from improving the database as well as improving the data collection process.

Who is Potentially Affected by this Rulemaking

Private Sector There are currently about 357, 000 registered aircraft, of which about 241,000 are active aircraft. The FAA expects about 245,000 aircraft to reregister and then, every 3 years, renew their certificate. The FAA also expects between an additional 3,424 new aircraft to register each yea r.

Government This rule will increase the workload on the Civil Aviation Registry, which will have to process an additional 1.3 million renewal and registration certificates over a 20

- year period. However, this additional work will be partially offset by the elimination of the Triennial Aircraft Registration Program.

Our Cost Assumptions and Sources of Information

**•** Discount rate

– 7%;

**•** Period of analysis

– 2010 through 2029;

**•** All monetary values are expressed in 2007 dollars;

**•** The FAA based projections on a 1.4% annual growth rate

**•** The FAA will use the following unit costs: g) $5

– fee per aircraft for both re

- registration and renewal h) $37.20

– hourly rate of an aircraft owner’s time i) $9.10

– FAA processing costs for re

- registration per applicant j) $5.82

– FAA proce ssing costs for renewal per applicant k) $1.63

– FAA processing costs for the Triennial Program for each notice sent l) $16.80

– FAA processing costs for the Triennial Program per reply

Benefits of this Rulemaking60 The primary benefit of this rulemaking will be the increased accuracy of the records within the Aircraft Registry. Currently, over one third of registered aircraft information is incorrect. Inaccurate records have many negative consequences. For example, FAA uses aircraft records to identify owners of specific aircraft so that safety related information, such as airworthiness directives (ADs), can be delivered to those owners, but because of inaccuracies, many safety

- related mailings are returned without delivery. Aircraft manufacturers also use ai rcraft records for the same reasons, to send out safety

- related information. Law enforcement and security agencies rely upon FAA’s aircraft records to identify and locate owners of aircraft.

The FAA has concluded that the level of accuracy in the syste m of records must be significantly improved in order to better serve the needs of the users of the system as well as support its own operations. Specifically, benefits will accrue from improving the database as well as improving the data collection proces s. The benefits from improving the Registry database include cost savings, better service for aircraft owners, and help with law enforcement. The benefits to be realized by improving the data collection process also include cost savings as well as a more accurate response

rate.

Costs of this Rulemaking

This rulemaking requires that all aircraft owners will have to re

- register their aircraft during a 3

- year period, that all aircraft registrations will need to be renewed every 3 years, and that the presen t Triennial Program is eliminated in its entirety.

The FAA estimates that approximately 244,600 aircraft will each go through the re

registration process, and so will be issued a new registration certificates

. Following re

registration aircraft will renew their registration every 3 years. In calculating the costs

of the rule , the FAA counts the number of aircraft transactions that result from either

re

- registration or renewal

. Moreover , FAA did not include the cost of normal course of business registratio ns and the $5 fee because the fee is an economic transfer. These costs are recognized in a separate section in the rule but are not included in the total

cost of the rule.

The FAA estimates that over 20 years the Registry will process 1.3 million certifi cate actions, composed of re

- registration and renewal. However, the Registry will achieve cost savings with the elimination of the Triennial Program. Over 20 years, the rule replaces the current system with a 3

- year re

- registration program, followed by a 3

- year renewal cycle that is estimated to cost $29.9 million ($16.3 million, present

value ).