FAA grounds 700-plus aircraft ruling registrations invalid, Southern Aircraft Consultancy Inc linked to Sala illegal charter tragedy
The FAA has grounded more than 700 US-registered aircraft held in Southern Aircraft Consultancy Inc (SACI) trusts.
The US aviation regulator has declared the registrations of 803 aircraft “invalid” and instructed SACI to surrender all the certificates within 21 days.
“This is a hell of a mess for aircraft owners,” says David Hernandez, a shareholder at law firm Vedder Price and a former FAA prosecutor. “It is unprecedented.”
The single-engine Piper Malibu aircraft that crashed in 2019 killing footballer Emilano Sala and pilot David Ibbotson was registered by a SACI trust.
“SACI registered aircraft for US citizens and foreign nationals using trust agreements,” said the aviation authority in a statement. “To register an aircraft using a trust agreement, the company/trustee must either be a US citizen or a resident alien. The FAA found that SACI violated FAA regulations regarding US citizenship requirements.”
SACI is based in Norfolk, in the east of England.
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“The invalid Certificates of Aircraft Registration will result in the immediate grounding of all aircraft registered to SACI,” said the FAA. “To operate legally, affected aircraft owners must reregister their aircraft either through another country’s aircraft registry or in the US by submitting an Aircraft Registration Application to the FAA, along with evidence of ownership, and paying the registration fee ($5). Aircraft owners will then have temporary authority to operate within the US until the applicant receives a Certificate of Aircraft Registration or until the FAA denies the application.”
Grounded until re-registered
Aircraft owners cannot fly the aircraft until they are re-registered. “All of those aircraft are essentially grounded. Now, all the owners have to find new aircraft registries immediately, and if the aircraft are financed, this action likely triggers a default under the financing documents,” says Hernandez. “The minute they operate their aircraft without a valid US registration, they don’t have any insurance. They also will likely be violating several laws, whether it’s EASA, the UK, or the US.”
Many of the aircraft in trusts are smaller jets, turboprops and piston aircraft. Some may no longer be operable. AMSTAT data reveals 56 jets, turboprops and helicopters held in SACI trusts are for sale.
“The FAA has vetted and approved registering aircraft under trusts for many years now,” says Scott McCreary, attorney at Oklahoma law firm McAfee & Taft. “This includes non-citizen trusts, where aircraft are registered in the name of a US citizen owner trustee holding title for a non-US citizen entity. We do not know for sure what the FAA is questioning in this instance with Southern Aircraft Consultancy Inc, but when the centre of administration for the Owner Trustee entity itself is located outside the United States, it tends to draw more scrutiny from the FAA.”
In 2013 the FAA published a policy clarification covering non-citizen trusts. This set out subjective requirements and said that ultimately any non-citizen trust needed to be under the “actual control” of US citizens.
The FAA said that SACI: “was in violation of US citizenship requirements when it submitted the registration applications.”
McCreary says: “For any non-citizen trust arrangement there could be issues relating to: the citizenship of the entity acting as owner trustee; the independence of the owner trustee from its trustor; or failure to comply with the Policy Clarification.”
Any trust company registering an US N-registered aircraft needs to certify to the FAA that the trustee is a US citizen. “All you have to do is submit an Affidavit of Citizenship to establish that owner trustee is citizen of the US,” says Hernandez.
McCreary says that if the applicant for registration is not a US citizen the registration is invalid or becomes no longer effective. “There is no grace period for an aircraft if the registered owner is not a citizen, or if after it registers the aircraft it longer meets the citizenship tests,” he said. “Aircraft that are not properly registered cannot be operated outside until the parties address the registration issues and the solution may be different for each owner.”
Southern Aircraft Consultancy
SACI did not reply to a request for comment from CJI.
In a statement issued yesterday, SACI said it has reached an agreement with Wyoming-based trust company Valiair.
The statement read: “We are delighted to announce that we have today reached an agreement with Valiair, who will be taking over ownership of Southern Aircraft Consultancy Inc, with the goal of restoring compliance and getting all of your aircraft back in the air as soon as possible.
“Valiair are a well-established and well-respected aircraft trustee, and have a wealth of expertise and experience. This, coupled with their customer-focused approach to looking after clients, means that we feel that they are the best and strongest partner to take over the business.
“We are all conscious that time is of the essence for everyone concerned, and are wholly committed to finalising this change as soon as possible. Please bear with us while we work to finalise the arrangements – and be assured that we will continue to keep you fully informed and updated on progress.“
Southern Aircraft Consultancy Inc is also registered in England under the name Southern Aircraft Consultancy Ltd. It has two directors: Jean Chmura and Faith Rose Chmura, who is also company secretary.
On its website Southern states: “For over 20 years, we have been providing Trust Services to non-US citizens, to enable them to legally register their aircraft on the American N register. We deal with the FAA on a daily basis and are experienced in all aspects of their methods and requirements.”
The website says that the company charges £390 ($525) plus VAT sales tax for a priority Trust Agreement. It will provide a Federal Communications Commission Aircraft Radio Station Authorisation for £143.
It tells potential customers: “Make sure you’re in safe and experienced hands and place your aircraft with us.”
Sala illegal charter tragedy
Southern Aircraft Consultancy came under scrutiny following the crash of the aircraft carrying Sala on January 21st 2019. He was travelling from Nantes Airport in France to Cardiff Airport in Wales as part of a transfer agreement between FC Nantes and Cardiff City. The aircraft was lost from radar and struck the sea northwest of the island of Guernsey.
“I have said for years that this doesn’t make sense,” says Vedder Price’s Hernandez. “How could you have a trust operate in the UK? Sure, you can do it as long as the trustees are US citizens, but you have this many aircraft in the trust, and coupled with a death of very high-profile football player related to an aircraft owned by the trust, so where is the oversight?”
The UK Air Accidents Investigation Branch (AAIB) said that neither the pilot or the aircraft had the required licences or permissions to operate commercially.
“The FAA had to conduct an investigation into Sala’s death because a SACI trust was the registered owner of the aircraft,” says Hernandez. “My question would be, why has it taken nearly seven years to pursue enforcement action? What has the FAA been doing since 2019? Where’s the regulatory oversight?”
While Hernandez does not want to rush to judgment, he believes the FAA must have some credible evidence to take such decisive action in revoking so many aircraft registrations.
“It is a hell of a mess for the owners, not to mention the potential enforcement action against SACI related to the Affidavits of Citizenship filed with the FAA,” says Hernandez.
McCreary advised aircraft owners to learn from the FAA’s action. “It is extremely important to carefully consider what owner trustee to use, and to pick a reputable well vetted entity,” he says. “The good news is there are a number of very reputable and large aircraft trustees in the business that have been approved and vetted many times by the FAA.”
