Importing Aircraft, Part 5: Logistics - Where to Inspect the Plane and Complete Closing?

Coordinating the purchase of a foreign aircraft is like conducting a symphony. Every element must work in concert to avoid chaos. 

From customs and deregistration to airworthiness and taxes, each component we've covered plays a vital role. 

Now it’s time to bring them together and focus on the final piece: how to align all the logistics for a successful inspection and closing.

Where to Inspect the Aircraft?

For a foreign-based plane, there’s always a bit of a tug-of-war when it comes to inspection location. Should it happen overseas, or in the U.S.? For a U.S.-based inspection, you’ll need to account for the cost of the ferry flight. Doubly so in the event that the aircraft is rejected by a purchaser. 

Foreign sellers prefer inspections close to home, so that if the transaction falls apart, they don’t have to retrieve the plane from another continent. A purchaser can assuage the seller’s concerns by promising a nonrefundable deposit (so long as the plane meets the required condition). This lowers the risk that the plane would ever need to return to its former home base.

The chosen inspection facility must be licensed to perform the repairs under the authorization of the plane’s current registration. This can limit the ability of some U.S.-based facilities to perform an inspection. 

As I’ve previously recommended, it's best for the buyer to choose an inspection facility that hasn’t routinely serviced the aircraft. Having fresh eyes helps ensure an unbiased evaluation.

Where to Complete the Closing? 

Keeping in mind that the plane will be a “paperweight” once closing occurs and the plane is deregistered from its former country. Therefore, closing will have to occur at a facility capable of converting the plane for FAA airworthiness. The “n-number” will need to be applied to the aircraft, avionics reprogrammed, and oftentimes a service bulletin will need to be performed that covers such basics as converting things from kilograms to pounds. 

For flexibility and to solve more complicated logistical issues, a mobile mechanic team can be dispatched to complete the conversion. Additionally,it may be possible to obtain a ferry permit for a flight from the closing location to another facility if needed.

Last but not least, choose a closing location where your accountant can effectively manage the tax implications. U.S. tax-friendly states typically involve less paperwork than foreign jurisdictions. Closing in a foreign jurisdiction will often require hiring local tax advisors. Just note: foreign sellers may be reluctant to risk issues arising from a transoceanic delivery flight they’d be responsible for fixing.

Next month, I’ll wrap up this six-part series with a look at the finer points that can make or break a deal in “Contractual Quirks of Foreign Transactions.”

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This article is not intended, nor should it be construed or relied upon, as legal advice. The comments, recommendations, and analysis expressed in this article are those of the individual author, John Farrish, are purely informational. This article does not create an attorney-client relationship between you and the author or his law firm. If specific legal information is needed, each person should retain and consult an attorney with knowledge of the subject matter.

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