Humanitarian Flights Not Automatically Granted State Status

1353209In a recent legal opinion, the FAA has refused to extend a provision in the Chicago Convention which deems aircraft used in police and military services as “state aircraft” to include those used for medical services and disaster relief.  Pointing to a draft version of FAA Advisory Circular AC00-1.1A, in which it was recognized that the list of missions undertaken by state aircraft in the Chicago Convention is not comprehensive, a humanitarian relief organization argued that medical and disaster relief flights should be granted state status.  However, the FAA noted that this draft language was not adopted in the final Advisory Circular and that due to increased security measures and shifting regulatory oversight to host nations, extension of the Chicago Convention to automatically include medical and disaster relief flights would be imprudent.  Despite foreclosing an automatic grant of state status to such flights, the FAA left open the option to apply for state status on a flight-by-flight basis by following proper diplomatic channels and securing necessary approvals from both U.S. and foreign authorities.

New York Passes Aviation Tax Reform

downloadThe New York State Legislature recently passed significant tax reform which brings the Empire State’s aviation tax requirements in line with neighboring jurisdictions.  Through its budget process, the State legislature exempted general aviation aircraft from its sales and use tax.  The measure is aimed at attracting aviation-related jobs and business to New York, which has long been devoid of such economic resources.  The State legislature also removed onerous requirements on leasing structures used by aircraft owners and other businesses.

Once signed by the governor, the reforms will exempt general aviation aircraft, machinery and equipment installed on such aircraft from New York sales and use tax, beginning on Sept. 1, 2015.  The exact level of impact on the State’s economy and aircraft owners, as well as the legal implications for aircraft transactions remain to be seen.

Due to the complexity of aircraft transactions, potential buyers and sellers should consult with experienced legal counsel as early as possible in the deal process.