Born in the FAA
In these crazy times, a government report into aircraft registration seems like a pleasant distraction.
On Wednesday the US Government Accountability Office (GAO) kindly provided one and it could lead to a major change to aircraft transactions. The GAO was asked to examine fraud and abuse of the Federal Aviation Administration (FAA) aircraft registry.
The GAO has made 14 recommendations. Many of these are focused on things the FAA should do to investigate possible fraud. But some would change all US registrations.
“The Administrator of FAA should collect and record information on individual registrants, initially including name, address, date of birth, and driver’s license or pilot’s license, or both,” recommends the GAO in its report. It would also want more information on companies: “The Administrator of FAA should collect and record information on legal entities not traded publicly—on each individual and entity that owns more than 25% of the aircraft; for individuals: name, date of birth, physical address, and driver’s license or pilot’s license, or both; and for entities: name, physical address, state of residence, and taxpayer identification number.”
This could be a major change but not completely unexpected. “We knew that changes were coming as part of the reauthorisation of the FAA in 2018 and this is one of two audits into the FAA – and the GAO has done an excellent job researching the registry,” says Scott McCreary, attorney and leader of the aviation group, McAfee & Taft in Oklahoma City. “Change is definitely coming and the industry may have issues with privacy. But there is a difference between information being public and information only being accessed by government agencies. As an industry we need to work through these changes.”
As part of its report, the GAO created a list of six case studies demonstrating abuse. One of these covers a broker registering multiple aircraft to defraud a bank (the rest are mainly drug and crash related) and the GAO, also wants dealers to be recorded. It says that; “The Administrator of FAA should verify aircraft registration applicants’ and dealers’ eligibility and information,” and “The Administrator of FAA should develop mechanisms, including regulations if necessary, for dealer suspension and revocation.”
Other suggestions include linking technology so that anyone on a US sanctions list cannot register an aircraft in the US.
It also has an easy way to fund this new technology. The GAO also recommends that: “The Administrator of FAA should increase aircraft registration and dealer fees to ensure the fees are sufficient to cover the costs of FAA efforts to collect and verify applicant information while keeping pace with inflation.” Although the FAA has failed to raise prices recently.
“We respect this report and agree that the FAA needs new technology and systems. It has got to make some changes and be more proactive for the people that access the information – the law firms and title agencies in Oklahoma City. In 2020 we still all have to have staff in the FAA offices accessing information,” says Clay Healy, owner, AIC Title Service. “That is the biggest issue we have right now.”
But nothing is going to happen quickly. “A lot of the recommendations make a lot of sense, but I don’t think we will see any change in the near future,” says David Hernandez, shareholder at Vedder Price.
So that is one thing you don’t need to worry about this week.