Pilot Training: Meeting Aviation Insurance Requirements
Pilot training is essential for aviation insurance compliance, but requirements vary by aircraft type and insurer. This article explains how pilots can meet training standards and avoid coverage issues.
Most U.S. aviation insurance policies for turbine and pressurized aircraft require initial or recurrent training for flight crews. In the case of mid-size and large cabin business jets, these requirements are typically straightforward, especially for the PIC and SIC. And, in almost all cases, insurers require completion of formal initial or recurrent training in a full-motion simulator—most commonly conducted by CAE or FlightSafety International.While some insurers allow workarounds for mid-size and large cabin aircraft, they typically apply to the SIC, not the PIC.
For example, accommodations for the SIC may allow them to meet only FAR Part 61.55 qualifications. However, it’s important to understand that FAA regulations and insurance requirements are entirely separate. What is considered "legal" under the FARs may not necessarily meet an insurer’s training requirements for coverage. Always consult with your insurance broker to confirm your planned training is going to be compliant with your insurance policy requirements.
Pilot Training Requirements for Light Aircraft
On the flip side, pilot training requirements for light jets and turbo-props can be less clear-cut. Insurance policies often state that pilots must complete initial or recurrent training with a provider approved by the insurer.
That said, not all training providers are accepted by every underwriting carrier. Currently, more than 20 insurers issue aviation policies in the U.S., each with its own approval criteria.
If you operate a King Air, Pilatus, or light Citation aircraft, always consult your broker before scheduling an in-aircraft training event. This is especially important if you plan to train outside of a simulator-based program.
Not all insurers allow in-aircraft training, as approval depends on several factors. These include pilot experience, the aircraft’s insured value and the liability limits on the policy.
In many cases, insurers may permit in-aircraft training on an alternating-year basis. Some may allow it every year, but this varies by policy and specific underwriting criteria.
Keep in Mind
Aviation insurance policies are not one-size-fits-all, and no two are exactly alike. Always check with your broker before completing policy-required training to ensure compliance with your coverage and pilot warranties.
FAA Registry: New Procedural Changes Impacting Transactions
The FAA Registry recently implemented procedural changes affecting document access and transaction timelines. Learn how these updates impact closings and title work.
Recent FAA Registry changes are causing shifts in the way title/escrow agents are handling aircraft transactions. While some updates enhance efficiency, others create delays.
Here’s what these changes mean for those involved in closings:
Addressing Privacy Concerns
In December 2023, you may recall that the FAA removed access to Ancillary Documents, citing privacy concerns over Personally Identifiable Information (PII). This includes details like Social Security numbers, driver’s licenses, and loan numbers. The change restricted access to critical documents such as LLC Statements, Powers of Attorney, and Trust Agreements. This created challenges for the industry, making it harder to properly vet information for closing documents. Thankfully, escrow companies and law firms stepped in to push for change.
New “Work in Progress” Classification
Fast forward to December 2024, the FAA introduced another procedural change in the name of privacy. Now, any document filed but not yet recorded is classified as “Work in Progress” (WIP). Again, the idea is that the general public should not be able to view documents until an FAA examiner has reviewed the document for PII.
The downside though is that there’s now a delay in being able to see those documents. We all know how quickly aircraft transactions can move, and a key component is running title work. In the past, there was immediate access to these documents which allowed you to plan and run complete title work. As it stands now, we can tell when documents have been filed, but we’re delayed in viewing them.
While the intent is understandable, the delay in document access is impacting closings and transaction efficiency.
New Digital Registration Cards
For all of the negative changes, the FAA is making some positive ones. For example, they’re issuing digital registration cards. We probably get 7-10 emails a week of “I lost my hard card, can you order a new one?” Or “We’re supposed to leave tomorrow morning and we still don’t have our registration card.” In theory, these new digital cards should reduce lost card issues and expedite access for operators needing immediate documentation.
More FAA Examiners
Another positive note is that the FAA has hired more examiners and they’re doing a good job of keeping up with the backlog. I don’t envision us ever seeing the 10-12 backlog that we saw during the COVID years.
Communication
The biggest challenge remains the FAA’s lack of communication. These policy changes, good or bad, are always just rolled out without discussion. The industry is rarely consulted before these changes take effect.
If given the opportunity, aviation professionals could provide insight into the real-world impact of new policies. While we can’t control these shifts, we must remain adaptable as the FAA continues making changes—both good and bad.
Aviation Leaders: Build Trust with Crisis Communications
To be effective, crisis communications must follow some critical guidelines. StepZero’s Dustin Cordier, an experienced aircraft accident investigator, points out the proper path.
Tragically, on January 29th, the business aviation community lost two of our own. Casey Crafton of Guardian Jet and Vikesh Patel of GE Aerospace were among those killed in the American Airlines Flight 5342 crash. Our prayers and support go out to their colleagues and families.
During my service in the U.S. Air Force, I was a formally trained aircraft accident and incident investigator. Fortunately, I never had to respond to a fatality. In the aftermath, it’s the worst call one can ever make.
The issue forces us, as aviation business leaders, to ask ourselves, how well prepared are we to respond to a crisis?
The Role of Leadership Communication
Effective leadership communication is crucial during a crisis. Especially when uncertainty and high stakes demand clarity, trust and decisive action.
Charles Duhigg, the author of the book Supercommunicators, recently presented a keynote at the NBAA Leadership Conference. During his address, he shared that great communicators excel at three things: translating complex information, building trust and bridging different perspectives.
These communication principles are essential in crises (e.g., data breaches, COVID and aviation disasters) where unclear facts and severe consequences require leaders to communicate with precision and empathy.
Translating Complexity into Clarity
One of the key principles in Supercommunicators is the ability to simplify complex information. Let’s not kid ourselves; people will assume the worst, and social media will amplify their fears and confusion.
The great “toilet paper shortage” of 2020 is an example.
Effective leaders can’t afford to surrender to wild imaginings. We must help our teams navigate uncertainty by quickly identifying and assessing the risk and clearly communicating the plan to our teams.
The good news is that we don’t have to do this by ourselves. Our leadership teams will be a tremendous asset if we’ve invested in hiring the right people. With respect to our brave military members, businesses commonly set up “war rooms” when faced with a sudden loss. The purpose of the war room is to gather and sort through relevant information so you can prepare and respond to the threat.
The war room also brings clarity to the situation for the entire team. People respond to leadership and take comfort in knowing that the leadership team is fully invested in mitigating the risk. Sometimes, seeing the team's dedication to addressing a critical issue calms emotions and brings people back to clearer thinking.
Building Trust Through Transparency
Trust is essential during a crisis, and we as leaders must acknowledge the uncertainty while committing to transparency.
Nothing will ruin a team faster than lack of transparency during a crisis. The Boeing 737 MAX crashes in 2018 and 2019 illustrate the dangers of poor communication.
Boeing initially downplayed software issues, eroding trust in both the company and regulatory agencies. When facts emerged, the lack of transparency worsened public perception. This led to prolonged safety concerns and financial damages.
People respect someone telling them how it is, even when the facts make it difficult to do so. If you have an effective war room, you will achieve as much clarity as possible with the information you have. If you’ve hired the right people, you'll be amazed at how they rise to the challenge when they feel that you’ve been honest and transparent with them.
Bridging Perspectives and Fostering Unity
Crisis communication requires addressing different audiences—technical experts, policymakers and the general public—each with unique concerns. Duhigg’s principle of bridging perspectives requires leadership and decisive action.
After extensive consultation with advisors, a leader eventually will have to make the call on how to move forward.
At the recent CJI London conference, I spoke with Mike Dwyer, managing partner and co-founder of Guardian Jet, about losing Casey Crafton. Mike’s leadership team has had many sleepless nights trying to do the right thing for Casey’s family and the entire team. However, Mike and his partners had the courage to make the call and implement a solid communication plan, and the healing process is already in motion.
Ultimately, leadership communication during crises must prioritize clarity, transparency, inclusivity and good judgment. By applying the principles laid out in Supercommunicators, leaders can reduce fear, build trust and guide people through uncertainty.
Aircraft State Taxes: What Every Aircraft Owner Needs to Know
State taxes on aircraft ownership can be complex, with sales, use, and property tax obligations varying by jurisdiction. Angel Houck explains key considerations to help owners stay compliant and avoid costly audits.
So you took delivery of an aircraft in a fly-away state. You’re in the clear, right? Not necessarily. Aircraft are mobile property and can be taxed in multiple jurisdictions. States are becoming more savvy and are starting to enforce compliance.
With increased reporting and information sharing between agencies, we’re seeing a huge influx in state and local audits looking for non-compliance and lost revenue related to aircraft.
There are two main state and local taxes that need to be considered. First, we have sales and use tax which is imposed on the purchase of the aircraft, usually enforced by the state. Second is property tax, which is an annual tax imposed on the value of the aircraft, usually enforced by individual counties.
State Sales Tax Considerations
Sales tax is imposed when a transaction takes place in a state and use tax applies when an aircraft is brought into the state after the transaction. Many deliveries take place in a tax-friendly state to help manage the initial sales tax obligation. But use tax usually applies once the aircraft arrives at its home airport.
Many states have options to defer the tax, or even full exemptions, but there are procedures that must be followed and requirements to be met. Therefore, the plan needs to be in place before the aircraft arrives in the state.
State Property Taxes
Property tax is assessed annually for many states and each jurisdiction has its own set of rules for filing. It’s important to know if you have a property tax obligation and how to file. Keep in mind, it’s the taxpayer’s responsibility to comply. So you’re not off the hook if the state doesn’t contact you.
Some states, such as Missouri and Texas, will only allow discounted rates and apportionment for timely filed returns. That means late filed returns can be very costly.
Final Thoughts
As it relates to state taxes, the situation becomes even more complicated for aircraft owners who spend significant time in multiple states. There are many opportunities to manage state and local tax obligations. That is, if you plan early and ask the right questions. Understanding potential liabilities in advance can prevent unexpected tax bills down the road.
2025 Interest Rates: The Knowns and Unknowns
Whether or not the U.S. Federal Reserve should make further interest rate cuts depends on critical economic data. Herein, Mike Smith cites “knowns and unknowns” as key factors in the Fed’s decisions.
As we’ve discussed over the past few months, longer-term interest rates have tended to stay elevated, even when the Federal Reserve was cutting rates. I say “was” because after their most recent meeting on January 30, the Fed opted to push pause on further cuts while they study the incoming data.
What data points are they waiting for, and why does it matter? Going back to a line made famous by former Secretary of Defense Donald Rumsfeld, there are two distinct areas of focus right now by the Fed. The “known unknowns,” and the “unknown unknowns.”
The Fed’s focus in adjusting rates is part of their “dual mandate” of full employment and price stability. The concept of “price stability” is mostly rooted in trying to keep inflation at around 2%. As I’m sure you’ve seen at the grocery store, prices on things keep going up in fits and starts. Unfortunately, the inflation level is still higher than the Fed wants to see, which explains the pause in rate adjustments. The “known unknown” here is that we don’t know when inflation will slow down a bit further to allow the Fed to continue to lower rates.
Another “known unknown” would be impacts of any tariff policy emanating from the new presidential administration. Time will tell exactly what tariffs are put into place, and what sort of economic impact that may have. We did see a preview of what’s to come in early February.
A third “known unknown” is the rising government debt. Fundamentally the Treasury bills and notes fund the government deficits, and some of the increase in the longer-term rates (which impacts things like aircraft loan rates) can be attributed to market concerns about ballooning government deficit spending and subsequent increased debt.
Finally, another unknown unknown would be any geopolitical or other “black swan” event which could impact the U.S. economy. That would change the approach the Fed is taking with interest rate policy.
As the year continues to take shape, keep your eye out for these known unknowns, and always be aware of the unknown unknown that could be lurking around the corner!
Default Clauses: What Happens When a Buyer or Seller Breaches a Contract?
What happens when a deal falls through? John Farrish explains how a well-crafted default clause in aircraft transactions protects both buyers and sellers, providing clarity and preventing costly disputes.
One of the pleasures of working in the legal world of aircraft transactions is that, unlike litigation, the buyer and seller are both willing participants.
It’s safe to assume that the buyer wants to buy and the seller wants to sell. But what happens when a party changes their mind? Or they’re unable to perform their obligations?
Properly drafted default clauses are key to giving the parties certainty over what will happen in the event of a breach of contract. Sometimes more importantly, they explain what won’t happen.
Additionally, a default clause should always include a cure period, allowing each party the opportunity to address and resolve a breach. This is especially important when a party may even be unaware they’re in default. Ideally, the breach is identified, promptly corrected, and the transaction proceeds as planned.
From there, the clauses should specify what remedies each party is entitled to.
Understanding Buyer and Seller Default Remedies
For a purchaser default, the seller is typically entitled to receive the purchaser’s deposit directly from the escrow agent. This is in lieu of collecting other damages from the purchaser, such as costs incurred for the transaction, loss of use of the plane during the attempted transaction.
It also accounts for the loss of value, as the plane would typically be worth slightly less after the transaction started). The purchaser would not owe the seller any other amounts related to the transaction.
For a seller default, the purchaser is typically entitled to receive their deposit back from the escrow agent, but that does not begin to make the purchaser whole. Additionally, purchasers often negotiate the seller default clause to include reimbursement of all purchaser’s out-of-pocket costs incurred for the transaction.
This still doesn’t compensate the purchaser for their loss of bargain, particularly if they must find a replacement aircraft at a higher price. In some cases, the purchaser can negotiate for the seller to pay an amount equal to the deposit.
Why Waiving Specific Performance Matters
Perhaps most importantly, both parties’ clauses should include a waiver of the right to specific performance. This is a party’s right to sue to force the other party to complete the transaction as planned.
However, this could tie up the plane for years in litigation, leaving the “winner” of the lawsuit with a neglected aircraft that has depreciated in value and may require significant maintenance or repairs to return to service.
Nobody wins in this case—both parties endure financial losses, operational setbacks and prolonged uncertainty.
Hopefully, your default clauses will never end up on a judge’s desk, but they do provide guardrails to disincentivize each party from breaching the contract. By establishing clear remedies and limitations, well-crafted default clauses help ensure that disputes are resolved efficiently, allowing both buyers and sellers to move forward with minimal disruption.
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.