Washington Report: NBAA warns members of U.S. ownership rules

 - May 8, 2008, 6:34 AM

Several NBAA member companies have been informed that if they fail the Department of Transportation definition of U.S. citizen, they are restricted by DOT regulations from operating their business aircraft under Part 91 Subpart F even though the aircraft in question may be U.S.-registered.

Pete West, NBAA senior vice president of government and public affairs, said in an e-mail to members that the DOT definition of citizenship relies on four tests, and failure to satisfy any one of these tests results in the company’s U.S.-registered aircraft being considered a foreign aircraft for DOT regulatory purposes.

If a company is considered a non-U.S. citizen for DOT purposes, West wrote, Part 375 is interpreted to prohibit all of the company’s domestic operations for remuneration or hire and subjects its international operations to DOT licensing in the form of a Part 375 permit. This applies to intercompany chargebacks, timeshare and interchange agreements under Part 91 Subpart F.

Regardless of a company’s presence in, and ties to, the U.S., deeming the company as entitled to U.S. citizenship requires that the company must be incorporated in a U.S. jurisdiction; the company’s president must be a U.S. citizen; two-thirds or more of the company’s board of directors and managing officers must be U.S. citizens; and 75 percent or more of the company’s voting stock must be owned and controlled by U.S. citizens.

West reiterated that the DOT restrictions apply even though the company’s aircraft may be validly registered with the FAA and operated in full accordance with Part 91 Subpart F.