Numbers game

At the height of presidential primary season last spring, the New York Times reported that Donald Trump had been flying around “in his sleek Cessna jet” (a Citation X) even though its FAA registration had expired almost three months earlier.

Though it’s illegal to fly an unregistered airplane, the candidate seems to have come through unscathed. No large fines have been reported (each flight being a separate violation) and no one has gone to jail (a possible outcome for a knowing violation). Lapse of an aircraft’s registration would also likely represent a default under a lease, loan agreement, or insurance policy, but I’ve found no evidence that the Citation X was leased or financed or that its insurer did anything but sigh with relief when the issue was resolved. How was it possible for Trump to get into this mess and then get out of it so easily?

Registration numbers assume an unlikely importance for jet owners. Most want to select their own tail number, often with a hidden or not-so-hidden meaning. Aircraft in the PlaneSense PC-12 fractional program, for example, all end in “AF” for “Alpha Flying,” the company’s original name. On the other hand, the “AF” in the tail number of one aircraft, I was told, stands for “always and forever.” Other owners might select numbers that represent their birth or wedding dates.

Aircraft buyers are frequently disappointed to learn that a desired tail number isn’t available because it’s either already in use or reserved by someone else. The FAA, which recently ventured into the 21st century by allowing digital signatures on aircraft registration applications, thought it could help with this predicament. In 2010, the agency introduced a rule requiring all airplane owners to re-register them then and every three years thereafter. Given the FAA’s estimate at the time that nearly one-third of U.S.-registered civil aircraft were no longer eligible for registration, this was supposed to free up over 100,000 “N” numbers.

The penalties that the FAA imposes for failing to re-register seem bizarre: the cancelled number goes into a kind of purgatory for five years before becoming available again. The number on Trump’s Citation X (N725DT) was headed for that very purgatory, but his advisors found a way to save it: the owner, DJT Operations CX LLC, quickly filed to transfer and re-register the Citation X to another Trump entity. The new LLC then filed a request for expedited registration (called a Declaration of International Operations) for a flight to Montreal, and the FAA  processed the paperwork, resurrecting N725DT for another three years. Since lying on a Declaration  can send you to jail, the Citation X had to actually make the trip, spending a reported 20 minutes on the ground in Canada.

If Trump had followed good advice when he acquired the Citation X, he might have avoided the problem. The FAA’s registration form requires that you list the address of the aircraft’s registered owner. A common but misguided strategy is to use the address of the owner’s corporate service company acting as registered agent. This is the address the FAA will use to provide, among other things, notice of the need to re-register, the significance of which may easily be missed by the service company. Better to use the address of someone who is certain to know about aircraft registrations, like your flight department director.

So why use the address of a corporate service company? Since the FAA registration application is a public document, one reason is to help preserve the anonymity of the aircraft owner. As you might expect, in Trump’s case this was hardly a concern: Trump himself boldly signed the application, listing his title as president (though that was apparently later changed to “sole member”) of the registered owner, the name of which bears his initials, as does the tail number itself. No anonymity required.

Another common objective of using the address of a corporate service company, however, is to avoid sales and use tax. Many aircraft (like Trump’s Citation X)  are owned by Delaware companies served by Delaware-registered agents. That’s not only because of the state’s advanced body of business law but because it assesses no aircraft sales or use tax. Some states that tax aircraft sales and use are rumored to monitor FAA registration application filings for buyers with an address in their states from whom they can try (without further inquiry) to collect the tax. A Delaware-registered agent address gives these states nothing to go on.

For reasons noted earlier, registration numbers on business jets can be the subject of serious negotiations between buyers and sellers, and when owners go to sell an aircraft, they often don’t want their special number to go with it. Buyers are generally happy to be accommodating—as long as the seller pays for replacing the number, which in some cases can cost $20,000 or more. The buyer, after all, usually wants to paint on his own coveted number. Trump was lucky when he bought his Citation X; he purchased it from Cessna, which delivered it with the “DT” registration number he selected. (FAA regulations permit only two suffix letters, making a “DJT” tail number impossible.)

Changing a registration number is often a major headache, especially if it’s on an aircraft you’re selling. Let’s say you own a Falcon 2000, which you’re replacing with a Falcon 900. The registration number on the old aircraft, N51RW, has sentimental value to you because it refers to the May 1 birthday of your son, so you want to keep it. What to do? First, you need to request permission from the FAA registry to put a new tail number on the F2000. As of this writing, the registry is taking at least four weeks to process such requests, and even Donald Trump couldn’t make it happen any faster.

To make the switch as easy as possible, you can try to find an available registration number, such as N51RM, that can be painted on the F2000 with a minimum of changes. When you finally receive the FAA Form 8050-64 authorizing the change, you can make the necessary modifications to the aircraft, including putting on the new number (paint or decals) and restrapping transponders, reserving N51RW for the F900. You will also need to obtain a new airworthiness certificate for the F2000 that reflects the new number.

Then, once you own the F900, you get to do the whole thing all over again, filing for permission to put N51RW on the new aircraft and waiting four more weeks. It’s all part of a slow and expensive numbers game.

Jeff Wieand ([email protected]) is a senior vice president at Boston JetSearch and a member of the National Business Aviation Association’s Tax Committee.