How often do we review the leases, sale agreements and other documents we work with to make sure they’ve been tuned up to the latest changes in the industry? Click HERE to read the full article in Jetrader. 

Road warriors rejoice! Unbundled airfares have made travel simpler and cheaper. Now you pay only for what you want. If that’s just a seat and the clothes on your back for a weeklong business trip, you should be happy. Indeed, the most unbundled carrier in the U.S. should have the happiest travelers. According to a recent report by the U.S. Public Interest Research Group (PIRG) Education Fund, it doesn’t.[1] The airline’s response is that an uneducated consumer is their worst customer. They intend to teach their customers just how to fly them.[2] Bloomberg Businessweek reported that the airline declared 2014… Read more

Delta Air Lines won its appeal of a judgment granted to the Export-Import Bank of the United States (Ex-Im Bank) in its suit challenging Ex-Im credit support of Air India aircraft purchases. While this battle is over, the war is not yet decided. In September 2011, the Ex-Im Bank committed $3.4 billion in export credit financing support to Air India for the sale of 30 Boeing aircraft. Many of the aircraft were for international service, including service to the U.S. In response, the Air Transport Association (ATA) detailed in a letter to Ex-Im Bank’s president the harms caused to U.S…. Read more

Ancillary fees are the gold rush of the decade.  They have been a major contributor to the return of financial health to many airlines.  In September 2012, Delta reported a third quarter profit of US$1.05 Billion. While US$440 Million of that amount was due to gains on fuel hedges, ancillary fee revenue was undoubtedly a big part of the balance.  The Amadeus Worldwide Estimate of Ancillary Revenue projects that US domestic airline ancillary revenue will reach nearly US$12.4 billion in 2012.  Exact figures remain uncertain because airline reporting of ancillary fee revenue is opaque.  For that and other reasons they… Read more

The Federal Aviation Administration (FAA) is currently proposing changes to its policy on treatment of non-citizen trusts (NCTs). These are trust vehicles employed to obtain U.S. registration of aircraft owned beneficially by parties otherwise not meeting the citizenship criteria required under U.S. law. The FAA’s proposals involve substantial changes to existing industry practices and relationships in the use of such trusts. Comments to the FAA from the public on the proposed policy changes are due no later than August 17, 2012. NCT Structure Early in the 20th century, Congress began imposing a citizenship test for eligibility of aircraft owners to… Read more

Much has and will continue to be written about the April decision in ACG Acquisition XX LLC vs. Olympic Airlines which will impact aircraft finance transactions for the foreseeable future. The judgment is one of first impression under English law concerning delivery conditions and their effect following an industry standard aircraft lease delivery. The U.S. is generally recognized as the birthplace of aircraft leasing being the home to International Air Leases and ILFC. Because of this, together with the majority of early aircraft finance lawyers having been located in New York, New York law became the preferred choice to govern… Read more

Parties to aviation equipment transactions often require that the aircraft be delivered, returned or maintained in “airworthy” condition. They insist that engines and other parts be in “serviceable” condition. Each willingly draft these words into their contracts, but is it clear what they mean? What happens when it comes time to test them? Enforceability demands specificity. This is especially true when dealing with a fundamental aspect of condition. While the statement, “clean by commercial aircraft standards,” is also vague, it is arguably at least objectively measurable. A cabin littered with garbage is not “clean” by any measure. Yet airworthy and… Read more

Ancillary revenue1 is big business for the airlines. The U.S. Bureau of Transportation Statistics (BTS) reported that for the 1st quarter of 2010 ancillary revenue was an average of 6.2% of total operating revenue for U.S. airlines. Industry consultant Robert Mann of R.W. Mann & Co. says airlines generate, on average, between $12 and $15 in ancillary revenue from each passenger not accounting for fees waived for elite fliers. Baggage fees make up the largest portion of ancillary fee revenue. For the same quarter, American Airlines checked in $128.5 million in bag fees according to BTS, with US Airways and… Read more

In a feat of gymnastics not seen since Nadia Comăneci scored perfect 10’s at the 1976 Summer Olympic games, the Florida Supreme Court engaged in astounding legal gymnastics when it further diluted liability protections given passive aircraft owners and financiers under 42 U.S.C. §441121. In its July 2011 opinion issued in Vreeland v. Ferrer, the court found that a state law claim brought against an aircraft lessor under Florida’s “dangerous instrumentality” doctrine for the death of the leased aircraft’s passenger was not preempted by 42 U.S.C. §44112 because the passenger was killed while in the plane and not while on… Read more

FAA Steps Up Oversight of HAMAT Shipments by Air If you ship packages, any packages, then this affects you. The FAA wants to fine FedEx nearly $700,000 for alleged violations of hazardous materials (HAZMAT) regulations for shipments by air. The FAA is proposing to fine the Massachusetts Institute of Technology $175,000 for allegedly shipping HAZMAT by air that included devices powered by undeclared lithium batteries which caught fire in transit. These are two of numerous recent cases where the FAA, in cooperation with the TSA, has gotten more aggressive with the enforcement of HAZMAT shipping regulations following the addition of… Read more