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The end of the year means the holiday season fast approaches and there is a need to tie up any loose ends. The end of 2022 brings with it a need to close any aircraft transactions and obtain any new or updated registration.
Before the clock strikes midnight, owners and operators are urged to plan ahead as the backlogs at the FAA Civil Aviation Registry are still causing some delays. There was a high number of transactions in 2022 and this has caused nearly six months of backlogs in processing registration documents. According to the NBAA, the average wait time for expedited registrations requiring temporary certificates or "fly wire" has doubled or even tripled.
With the holiday season fast approaching, the reduction of hours at the registry may cause further issues for any operator hoping to be airborne by the end of 2022. Many operators are hoping to be in service by the end of the year to meet IRS requirements to claim 100% bonus depreciation before the drop to 80% by next year, the NBAA said.RELATED STORY: Changes coming to aircraft bonus depreciation tax in 2023
"The IRS doesn't care if the FAA is behind on its registrations," said David Hernandez, shareholder and business aviation and regulation sub-practice chair at Vedder Price. "You also can't blame the FAA for your tax problem if you claim the aircraft was put in service when it wasn't flyable."
The aviation leader for McAfee andamp; Taft, Scott McCreary, said that operators planning to import, export or operate the aircraft internationally can file for the expedited processing of the fly wire, according to the NBAA.
"That process previously took one or two business days, but we've seen timeframes closer to three business days - and occasionally as many as six - for the FAA to process documents due to the sheer volume of requests," McCreary said.Contact the Aircraft Registration Branch of the FAA to register before the end of the year
Aircraft currently registered and operating within the U.S. may continue operation for up to 90 days, as long as the copy of the aircraft registration application for their paperwork is being processed. McCreary also said that the registry will be granting additional extensions for any delay on their end. Any international operation will still require the fly wire. According to the Aircraft Registration page on the FAA site, they are still processing documents that were received on May 31, 2022. Delays are possible for several reasons and very likely as the nearing of the end of the year brings a larger number of operators requesting new or updated registration, adding to the already large backlog. Aircraft buyers and sellers need to maintain a realistic sense of how long the process could take.
"This year really isn't too different than last year on most of these issues," said Greg Reigel with Shackelford, Bowen, McKinley andamp; Norton, LLP. "Plan ahead and make sure you have everything you need so you're not trying to push anything through last minute. Although it seems obvious, you shouldn't wait until the day of closing and go, ‘wait, we need this.'"
The state of aircraft valuation is changing. 2022 was a standout year for sales and valuation, with aircraft 30%, 40% and in some cases 50% higher than they were pre-pandemic. There is an increased number of buyers and many have never owned an aircraft before. With new buyers, learning the many aspects of maintaining the plane is a long and extensive process. The influx of new buyers that created a large backlog is mixed with the many current and former operators who were already planning on updating their registration.RELATED STORIES: The state of aircraft valuation as we enter the fourth quarter of 2022Everything you need to know about aircraft maintenance when you are buying a plane
"Even an expedited fly wire isn't instantaneous," Hernandez said. "The FAA will likely receive hundreds of fly wire requests over the last two weeks of the year. Send yours in on Dec. 28 and the FAA may not be able to do it."
The NBAA said they will be in communication with the FAA regarding the backlog. The FAA plans to add staff and extend the registration validity period. Rush to obtain your registration before it becomes a resolution for 2023.