LABACE Convention News

Legal Framework for Fractional Shares Coming in Brazil

 - August 13, 2019, 7:43 AM

Fractional shares of business aircraft are a growing market in Brazil, despite or perhaps because of the difficult economy, because they allow buyers to fly a larger aircraft with a smaller capital investment. One factor hindering the market is the lack of specific regulation, similar to the FAA’s FAR Part 91K. To address this issue, ANAC is asking for public comments on proposed regulation of shared-ownership aircraft operations in Brazil. The agency announced the request on August 8, with a goal of collecting comments by September 6, “for the elaboration of a specific general aviation standard, aiming to establish clear requirements and limits for the administrators of aircraft sharing programs and to stimulate the development of the country’s private air services market.”

The proposal provides for a Subpart K in the current Brazilian Aeronautical Approval Regulation (RBHA) 91, with its successor RBAC 91 now in development. According to ANAC, the “subpart will provide a set of organizational and operational requirements to be met in order to obtain Administrative Specifications (authorization) by those interested in providing aircraft sharing services. Transactions must be covered by a multi-annual agreement that details the acquisition of quotas, management services, and the exchange of aircraft between the quota holders.” Current arrangements won’t be upset, according to ANAC, and the new Subpart K will be less restrictive than operations under RBACs No. 119 and No. 135, which would also be amended by the proposed regulation.

“General aviation operators are currently not barred from conducting shared-ownership programs,” the release states. “However, there is a need for adequate requirements to mitigate information asymmetry between those responsible for operations and quota holders of the sharing program. One of the central points of the proposal is precisely the identification of the shareholders of the shared-ownership program, enabling the identification of those responsible and ensuring greater legal certainty for administrators and greater operational security for users.”

The Brazilian Aeronautical Registry (RAB) will list the shared-ownership program administrator, who will have the technical control of the operation, be responsible for contracting insurance, and will be charged for any infractions related to the use of the aircraft.