There is very little evidence of them being a problem for liability.
You won't find much case law because the only scenario where the piercing of the corporate veil would ever get tested is where
Aviation insurance pays out quite reliably, though I am told it quite reliably doesn't pay out if the flight was illegal before it got off the ground (e.g. no license, no medical, no CofA, etc).
But why would one need a liability limitation in the first place. It is for where the owner is not the only pilot. If the owner is the only pilot then there is no structure for the aircraft which would avoid liability, and insurance is all you have.
There are accounting reasons for corporate ownership but HMRC are incredibly aggressive on those. Unless it is a pure-business scenario (which it won't be in most non-jet contexts) it will be a red rag to a bull, and a C.I. company won't make any difference. Been there, done it. HMRC detest anything which involves anything that anybody might enjoy while saving tax. I suppose they get a lot of mick-takers who e.g. set up a company which ostensibly sells model aeroplane parts, so they can get their model flying tax- and VAT-free.
Most private pilots who also fly on business are best off to keep it simple, own the plane in person, and bill the pro-rated % (of their airborne time on business) of their total flying costs, to the company. That is an old established principle (works for cars too) and it works. If the business flying % reaches 100% (which is hugely unlikely) then you bill the lot to the company... simple! If the business is a VAT regd entity it can claim back the VAT on the business % too (subject to some detail).
I cannot see the point of a C.I. registry unless it gives some or all of the following
It appears attractive to avoid the FAA trust (which a lot of people are uncomfortable with) and own the plane directly, while operating under Part 91. That will be worth having even if EASA FCL applies. But the C.I. will never have an ICAO seat so the UK CAA will always have them over a barrel, and let's say you are forced at some point to go back to N-reg. It could be very expensive.
I can see the CAA allowed the IOM to do it because the IOM doesn't accept light stuff (for non residents) so the IOM wasn't really doing anything (in the way of being a thorn in the CAA's side) which e.g. Bermuda wasn't doing already. The IOM offered a very well organised registry; much slicker than Bermuda for example for pilot validations. Also the IOM kicked off with a well connected senior ex CAA man running it.
But if the C.I. allow anything, say a TB20, then potentially the whole of the N-reg scene (perhaps excluding planes owned directly by Americans living outside the USA) would move to Jersey or Guernsey, which makes the scheme a lot more politically vulnerable IMHO. It's not as if the downside was small - registry transfers are a huge hassle and always expensive.
If they do pull this off, it will be brilliant just for doing away with the need for the FAA trust.
But if the C.I. allow anything, say a TB20, then potentially the whole of the N-reg scene (perhaps excluding planes owned directly by Americans living outside the USA) would move to Jersey or Guernsey, which makes the scheme a lot more politically vulnerable IMHO.
If the unbelievable Part M can be avoided, and the better N-register maintenance protocol is approved, I personally cannot see why the owner of any private C of A aircraft in the EU wouldn't switch over, regardless of current register. I suppose the exception might be if the owner is so 'hands off' in the maintenance of their own aircraft they wouldn't realize much saving beyond paperwork fees and taxes.
The best solution for the EU (assuming dual citizenship which I'm fortunate to have) is entering into and out of one country, spending the time in other(s), as an American citizen entering/leaving the EU on an EU passport issued overseas. That's for a stay in Schengen-Land longer than 90 days, otherwise its simpler. Then I think you can fly with US passport in hand, on FAA papers and registry. I might be doing that some day - I have zero interest in EU entanglements.
Just read somewhere that the C.I. registry will after all be only for turboprops and above.
Currently I am trying to get one of the players to post here (or let me have) a statement of what they are currently doing.
I am posting this here with the permission of the author, Charles Strasser:
Information Bulletin on the proposed CI Aircraft Registry.
Prepared for AOPA CI Region by Charles Strasser, Vice President AOPA UK from email information provided by Fons Schaefer, CIAR Project Manager, SGI Aviation Services BV and vetted by Fergus Woods, Director of Civil Aviation, Guernsey and Jersey.
There have been a number of Aviation Forums in which various contributors have speculated on what would be in the Channel Islands Aircraft Registry Regulations (the 2-reg) and what would be the advantages and disadvantages of applying for registration. Inevitably this has resulted in misinformation and the verbatim Questions and Answers below should help to correct that position.
First email
1./ It is stated that any size aircraft from any country will be accepted.
Put simply we will register all sizes except EASA Annex II aircraft based in the Channel Islands. For non-CI based aircraft we will be targeting aircraft as defined in our Air Navigation Law as Complex Non-Commercial but to include everything from Single-Engine Turbo-props and above.
Presumably this will be by transfer of the existing registration, with export C of A, from another jurisdiction.
Correct. Export CoA or equivalent.
Will it have to be to a CI company or can it be in the name of an individual with a foreign address?.
This is still under discussion. At the very least we will require non-resident ownership to be through a Guernsey or Jersey administered company, meaning that ownership could be through a foreign company or trust but via a locally licensed Corporate Service Provider. However, the whole issue of eligibility is yet to be finalised.
Will those on the N register be able to dispense with their trusts?
This is partly dependent on the eligibility question above. However, anyone who wants to will be able dispense with their USA Trust arrangement if they wish.
2./ Will the Licences and ratings of any ICAO country be recognised, validated or converted into a CI one?.
Pilot licences and ratings will be based on validations of ICAO licences from Contracting States "acceptable" to the DCA. But generally European and American licences (the majority) will be accepted with minimal formality.
3./ Will the maintenance requirements of any ICAO country be acceptable? For example will one be able to select the CAA, EASA or FAA regulations on maintenance schedules, mods and STC's etc.?
We will in principle only accept maintenance data approved by US, Europe (EASA) or Canada.
4./ Will the proposed EASA regulations for FRA apply?
Currently the EASA focus is on commercial transport operators, but in time their rules will impact on private operations. At that time there will be clear advantages for local resident owner operators to be on the 2-reg.
5./ What will be the advantage, if any, of the thousands of European N registered aircraft changing to the CI register?
Only larger N-reg aircraft or those that are CI based will be allowed on to the 2-reg. So we are not anticipating taking on the many thousands of European based N-reg aircraft
6./ Since neither of the Channel Islands are contracted member States of ICAO will the CI register come under the supervision of the CAA and if so with what powers?
Strictly speaking they will have no jurisdiction. However, as part of our demonstration of compliance with all relevant ICAO SARPS, we will be subject to an initial audit (and subsequent regular oversight) by the CAA on behalf of the UK DfT.
Second email
1./ Am I correct in presuming that an "aircraft based in the Channel Islands" is one owned by a resident individual, resident company or resident trust?
Yes, correct.
2./ Re EASA Annex II, why will for example, a locally based US made Piper Cub, Tripacer or Apache or UK made Auster, Chipmunk or Bulldog be barred from registration?.
In line with the standards that other overseas territories apply (ref. OTARs), we will accept type certificates from the following three jurisdictions: Europe (EASA), USA and Canada. We are still considering whether we could extend the scope to other aircraft, e.g. non-Annex II aircraft having a British Type Certificate or equivalent, but in any case we will not accept permit aircraft, i.e. aircraft holding a national CoA rather than a full ICAO CoA.
3./ Am I correct in presuming that, you accept the standard definition that, a "complex aircraft" means an airplane with retractable landing gear, a controllable speed propeller, and flaps. If so why, for non locally based aircraft, is the starting point a single engine Turbo prop?
No, the reference in the proposed ANL to ‘complex non-commercial’ applies to the following aircraft: (a) any aeroplane having a maximum total weight authorised exceeding 5,700kg,
(b) any aeroplane equipped with one or more turbojet engines
(c) any aeroplane having a maximum approved passenger seating configuration of more than 9,
(d) any helicopter having a maximum total weight authorised exceeding 3,175kg,
(e) any helicopter having a maximum approved passenger seating configuration of more than 5,
(f) any aircraft operation involving the use of aircraft that are operated by pilots employed by the operator for the purpose of flying the aircraft, or
(g) any other general aviation operation as the Director of Civil Aviation shall in the public interest specify
The basis for this is ICAO Annex 6, Part II, Section 3 and refers to those operations where prior operating approval is required.
We will however accept other aircraft that are not locally based, but essentially this will be from single engine turboprop and up. The rationale for this is that the CIAR is both a registry for local residents and an off-shore, commercial registry.
4./ Since neither Jersey nor Guernsey are ICAO "Contracting States", it is interesting to note that you insist on that status to recognise Licences and Ratings issued only by them. Presumably based on that you would not recognise licences and ratings for pilots holding licences, for example, from the Netherland Antilles (Aruba) or Bermuda?
Although indeed both Jersey and Guernsey are not contracting states by themselves, they do have a legal commitment to be ICAO compliant in all aspects of aviation. It is the basis on which the contracting State, the UK, has granted us independence in managing our own aviation affairs. It is also the only basis on which we could anticipate success as an off-shore registry provider. Our clients need to know that they are dealing with a fully compliant jurisdiction to ensure their freedom of movement through and into international airspace. Hence, our policy to validate licences from ICAO compliant jurisdictions acceptable to the DCA. The same applies to the other territories you mention. We do not preclude at this stage to accept licences from those territories.
5./ What is the definition of "larger N registered " aircraft, as mentioned in your answer to paragraph 5./?
See the answer to point 3.
6./ Is the fee for the CAA initial audit and subsequent oversight included in your fee or is it an additional overhead and if so has a price for this been fixed?
It is an overhead cost for us and will be included in our fees. Regular audits by the CAA on behalf of the UK DfT is part and parcel of our commitment to ICAO compliance generally, in terms of our self-management of our aviation affairs. Even without an aircraft registry we can expect regular audit activity to demonstrate our compliance with ICAO SARPs on aerodromes and air traffic service provision.
Third email
1./ It would be appreciated if you could email me a copy of the application form(s) for putting an aircraft on the CI register, or draft thereof.
We are currently developing our procedures and forms, but they are not yet at a stage that I could share them with you.
Further information will be published as and when it becomes available in the public domain.
If the Channel Islands are not ICAO members, how would a CI-reg allow me to fly my plane worldwide?
The CI and the IOM use UK CAA's ICAO seat.
As I believe do some other UK colonies - Bermuda?
Jersey has just put this release out.
It appears as expected i.e. big hardware only.
Brian Johnson is ex UK CAA and he set up the IOM registry some years ago.
When the Isle of Man registry was set up one of the attractions was the fact that the Isle of Man is in the UK Vat “common purse” enabling companies so registered to reclaim back the VAT on their aircraft. How this will work in Jersey, who are not in the common purse remains to be seen. However, Brian Johnson is a very clever man and now with his connections with Appleby I can see Jersey getting access to the Isle of Man VAT status via some clever arrangement sorting their VAT issue in one go.
After the bust up between Jersey and Guernsey over a joint register recently it will be interesting to see how this will all pan out. It’s looking more like Jersey will try to replicate the Isle of Man register and Guernsey may try to opt for the smaller aircraft.
The trouble is they are all likely to suffer because they cannot adopt FAA maintenance standards, the Isle of Man being stopped early on.
All three registers do offer RESIDENTS a big advantage though. Residents of any of these island are NOT EU residents therefore they will still be able to fly N reg aircraft, IFR in European airspace on their FAA IR licences after April 2015. Now that is an asset.
I think the advantage of M-reg (over N-reg) is that
There is no maintenance flexibility anymore. It’s EASA PART M AFAIK.
There may be some advantages when it comes to confidentiality, because the FAA now doesn’t want trusts which conceal the true owner’s identity. Admittedly the FAA doesn’t publish the beneficial owner’s details, but one day they might… which could be bad PR for a “green” corporation especially one which has just bought a $50M jet while screwing its suppliers for 120 days’ credit.
I thought that operators could adopt a variety of maintain including FAA. It had to be approved. Certainly the earlier releases implied this.
