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Registering an Aircraft as “Based & Primarily Used” – An Alternative to the Owner Trust

By April 17, 2018 September 5th, 2018 No Comments
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What do you do if a non-US citizen (at least according to the FAA’s definition of US Citizen) wants to register an Aircraft in the US?  Sometimes owners unexpectedly fall into this category, such as when your corporation has a president who is not a US citizen, or your corporation is owned by individuals or entities who do not meet the FAA’s definition of US citizen.  Maybe you are a publicly traded corporation with no control over who owns your company.  In any of these events, you may find yourself in a situation where the FAA says you cannot register an aircraft in the US, at least not in the traditional sense.  One alternative route to registration often utilized is the “owner trust” whereby another entity serves as trustee for registration purposes, with the actual owner being the trustor and beneficiary of the trust.  For some, another alternative (Based and Primarily Used) may provide a path to US aircraft registration.

Overview of BAPU

The FAA regulations contain an exception to the prohibition of non-US citizens registering an Aircraft in the US commonly known as “BAPU”, or “based and primarily used”.  An aircraft is considered based and primarily used in the US for purposes of registration if the flight hours accumulated within the US amount to at least 60 percent of the total flight hours of the aircraft during the period consisting in the remainder of the registration month and the succeeding 6 calendar months and each 6-calendar month period thereafter.  Only those flight hours accumulated during non-stop (except for stops in emergencies or for purposes of refueling) flight between two points in the US, even if the aircraft is outside of the US during part of the flight, are considered flight hours accumulated within the US.  If you may be close to the 60% limit you will want to check your flight hours at months four and five to enable you to alter your flights to ensure compliance with the based and primarily used registration requirements.

Limitations on BAPU

There are limitations within this type of registration.  First, based and primarily used registration is only available to a corporation and not to an LLC or partnership.   At least 60% of the total flight hours each 6 months must be within the US.  File an accurate, timely report with the FAA every 6 months in order to maintain the BAPU registration.   If you fail to timely file the report or you discover at the last minute that at least 60% of the aircraft’s flights were not within the US, your aircraft’s registration will lapse, leaving you with an unregistered aircraft.  A lapsed registration may violate your insurance and any loan which is secured by the aircraft.

Federal Aviation Regulation 47.9 – Based and Primarily Used

The regulatory details of the “based and primarily used” registration are in FAR 47.9.  A corporation applying for aircraft registration under based and primarily must submit to the FAA Registry the Aircraft Registration Application (AC Form 8050-1) with subsection (b) checked under the “Certification” section & the blanks completed for the status under which the non-citizen corporation is organized and doing business and the location of the flight records.   You also must submit a certified copy of the certificate of incorporation for the corporation.

You must maintain, and make available for inspection by the FAA upon request, records containing the total flight hours in the US of the aircraft for three calendar years after the year in which the flight hours were accumulated.

The FAA requires that, at the end of each 6-month period, you send either (1) a signed report containing (i) the total time in service of the airframe accumulated during that period; and (ii) the total flight hours in the US of the aircraft accumulated during that period; or (2) A signed statement that the total flight hours of the aircraft, while registered in the US during that period, have been exclusively within the US.

Determining whether BAPU registration is right for you can be difficult, like many business aviation issues.  Many factors will affect the decision as to how you register, own, and operate an aircraft.  The use of an attorney experienced in corporate aviation can help reduce costs and help to ensure a positive aircraft ownership experience.

 

Michelle M. Wade is a Partner with the aviation law firm of Jetstream Aviation Law, P.A. and counsel clients on the acquisition, financing and operation of corporate jets operated under Part 91 and Part 135 of the US Federal Aviation Regulations. Jetstream Aviation Law can be found at www.JetstreamLaw.com. Michelle Wade (mwade@jetstreamlaw.com)

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