Avoiding Pitfalls When Exporting Aircraft from the United States

Holland & Knight LLP

Holland & Knight LLP


  • Recent aircraft seizures by U.S. Customs and Border Protection (CBP) and the U.S. Department of Commerce Bureau of Industry and Security (BIS) have highlighted the need to ensure compliance with U.S. export laws.
  • Sellers, buyers, brokers and others involved in the sale or lease of aircraft for operations by foreign parties need to cooperate with each other to ensure exports are done properly and in compliance with U.S. export laws, including making an Electronic Export Information (EEI) filing and complying with any licensing requirements or restricted end-user/end-use limitations under the Export Administration Regulations (EAR).

There are two common types of aircraft exports: 1) permanent exports – where the aircraft is physically exported (i.e., flown) from the U.S. as part of a sale, lease or transfer of possession and control to a foreign person, or is otherwise intended to be based out of the U.S. for one year or more; and 2) temporary exports – where the aircraft will fly under its own power on a temporary sojourn, such as carrying passengers or cargo from the U.S. to Mexico, where it is intended that the aircraft will return to the U.S. within one year and there is no transfer of control. This Holland & Knight alert focuses on permanent export requirements.1

There is considerable confusion as to the requirements under customs and export laws for aircraft being sold or leased to a foreign person and exported from the United States (i.e., being permanently exported from the U.S.). Unlike most goods that move in commerce, when an aircraft is sold or leased to a foreign party, it departs the U.S. as its own conveyance. However, many of the same basic export requirements apply, as if the aircraft had been boxed up and sent as freight to the foreign country. This process is confusing for a number of reasons:

  • Parties may confuse requirements such as deregistration with the Federal Aviation Administration (FAA) and issuance of an export certificate of airworthiness with requirements under U.S. customs and export laws, in particular the need to make an Electronic Export Information (EEI) filing.
  • Even aircraft that remain on the FAA registry may be permanently exported for customs and export control purposes. For example, aircraft owned by U.S. lessors (or a U.S. trustee), where the operator intends to base the aircraft outside the U.S., would still be considered a permanent export under U.S. customs and export laws.
  • U.S. export regulations, dictating the responsibility to determine export requirements and make EEI filings, can be confusing and difficult to apply to certain aircraft export transactions.

What Is an EEI Filing and When Is It Required?

The EEI is an electronic submission of export data filed through the Automated Export System (AES), administered by U.S. Customs and Border Protection (CBP), although the Foreign Trade Regulations (FTR) governing EEI filings are administered by the U.S. Census Bureau.2 The EEI contains details, such as the parties to a transaction and ultimate consignee, the export classification of the item, value and other data that is both for statistical and law enforcement purposes. The EEI is generally filed prior to the permanent physical export of the aircraft from the United States. For example, an EEI would be required where:

  • the aircraft is sold to a foreign buyer and permanently exported from the U.S.
  • an aircraft departs the country with the intent to base it out of the country for one year or more, such as, for example, a lease of an aircraft by a U.S. lessor to a foreign operator

Conversely, an EEI would not be required where the aircraft is temporarily exported and intended to be based out of the U.S. for less than one year or where there is no physical export from the U.S. (for example, if an aircraft is sold domestically to a foreign entity in the U.S. that intends to base the aircraft in the U.S.).

Who Is Responsible for Making the EEI Filing?

Generally, the U.S. Principal Party in Interest (USPPI) is responsible for making the EEI filing, but will often appoint a customs broker as the "authorized agent" to make the filing on its behalf (except where the transaction is a routed export transaction as described below).

The USPPI is the "person or legal entity in the United States that receives the primary benefit, monetary or otherwise, from the export transaction. Generally, that person or entity is the U.S. seller, manufacturer, or order party, or the foreign entity while in the United States when purchasing or obtaining the goods for export."3

  • In an aircraft transaction, the USPPI would typically be the actual seller (the entity that receives the financial benefit from the sale). For example, if a U.S. manufacturer sells an aircraft to a U.S. foreign party, the U.S. manufacturer would be the USPPI.
  • The foreign buyer is typically not the USPPI in aircraft transactions, as the foreign buyer is rarely "physically in the U.S." Even if the foreign buyer's pilots take delivery in the U.S., it is insufficient to make the foreign buyer the USPPI, as the pilots are performing only the ministerial task of ferrying the aircraft out of the U.S. Rather, this would be considered a "routed export transaction."

A "routed export transaction" is an export transaction where the Foreign Principal Party in Interest (FPPI) authorizes a U.S. agent to facilitate the export of an aircraft from the U.S. and make the EEI filing on the FPPI's behalf.

For example, if a foreign buyer accepts delivery of the aircraft in the U.S. and arranges for contract pilots to fly the aircraft from the U.S. to Mexico, the foreign buyer would be the FPPI and would appoint an authorized agent in the U.S. (e.g., a customs broker) to make the EEI filing on its behalf. In this scenario, the seller would be the USPPI and would be responsible for providing information to the FPPI's authorized agent in order to complete the filing. The USPPI would not itself be responsible for filing the EEI, unless it obtained authorization from the FPPI to make the EEI filing. However, many U.S. manufacturers include the latter authorization in their contracts, as it is prudent for them to oversee such EEI filings, rather than rely on the foreign buyer who may be unfamiliar with U.S. export clearance requirements.

Applying these rules to some aircraft export transactions is difficult, and even experienced customs brokers/government officials can reach different conclusions as to which party should be the USPPI or FPPI and whether a transaction is a routed export transaction or not. However, the aircraft broker receiving a commission only, an owner trustee or a management company providing ferry services generally would not be considered the USPPI or FPPI, as they are not a principal party receiving the primary benefit of the transaction.

Who Is the "Exporter" and What Are the Restrictions on Exporting?

The term "exporter," under the Export Administration Regulations (EAR), is defined as "[t]he person in the United States who has the authority of a principal party in interest to determine and control the sending of items out of the United States."4 The exporter is generally the USPPI and is the party generally responsible for determining licensing authority (i.e., determining whether the aircraft export requires a license, falls under a license exception or qualifies for no license required). The principal exception to the USPPI being the exporter is, in a routed export transaction, if the USPPI obtains written confirmation from the FPPI that the FPPI will be responsible for determining licensing authority. In such case, the authorized agent of the FPPI is the exporter under the EAR.5

The EAR applies to the physical export of civil aircraft from the United States to a foreign country, regardless of whether the aircraft is flying on a temporary basis or for permanent export. However, most civil aircraft do not need a license to export to most countries under the EAR or U.S. economic sanctions. However, exports are generally prohibited to sanctioned countries, such as Cuba, Iran, Syria, Sudan, North Korea and the Crimea region; certain persons on barred entity lists, including the Entity List, Denied Persons List and Specially Designated Nationals (SDN) List; or certain barred end-users/end-uses (such as military end-users/end-uses in Venezuela, Russia and China).

U.S. parties should properly vet the foreign counterparties (including the beneficial owner of the purchaser as well as the end-user) before transferring title to ensure that the aircraft will not be diverted to an unlawful end-user, end-use or destination in violation of the EAR or U.S. economic sanctions. Even if the buyer is not designated on one of the above lists, U.S. parties should be alert for and cautious of any "red flags" of possible illegal activity, such as funds from various sources not associated with the buyer, a buyer who is evasive about disclosing the end-user or a buyer who refuses to provide information about its beneficial ownership.

What Are Some Tips to Ensure Compliance with Export Requirements?

The export clearance process is an inexpensive ministerial process, but failure to follow the procedures can result in fines or even aircraft seizures by the U.S. government. Regardless of your role as seller, buyer, broker, trustee or outside counsel, it is important to collaborate with other parties in the transaction on export clearance in the same way parties work to ensure that deregistration and export certificate of airworthiness issues are properly handled. While not comprehensive, below are some tips for complying with the export clearance process when exporting from the U.S.

  • Confirm that the party responsible for the EEI filing is using a customs broker or other professional experienced in aircraft exports (particularly in routed export transactions). The customs broker or counsel can assist in determining whether a transaction is a routed export transaction and who the USPPI should be (in some cases, in consultation with the Census Bureau).
  • Note that the first page of the airway bill, export shipping instructions or other commercial loading documents (e.g., export manifest) must be annotated with an Internal Transaction Number (ITN), which is the EEI filing identification number automatically generated when the EEI is filed.6
  • The purchase agreement should clearly delineate which party is responsible for arranging and paying for export licensing and clearance, consistent with the restrictions in the regulations (i.e., certain responsibilities may not be contractually disclaimed). In addition, it is recommended that the purchase agreement contain export control language, and a "destination control statement" should be included on the commercial invoice prepared for export purposes.7
  • Be cognizant that an aircraft departing the U.S. (whether for permanent or temporary export) must comply with certain filing requirements, such as pre-filing an electronic manifest. For example, private aircraft must not depart the U.S. to travel to a foreign location until CBP confirms receipt of the appropriate manifest and departure information, and grants electronic clearance via electronic mail or telephone.8 In addition, some foreign countries require filing of advance notice of arrival.
  • In some cases, an aircraft will be loaded with spares or other items that may be considered cargo. If this is the case, check with the customs broker, as such items may need to be separately declared and identified in the EEI for export purposes (and for import into the destination country).
  • Parties should retain records of proper export. Note that the EEI is confidential, and the USPPI and authorized agent generally cannot share the EEI with anyone, including the FPPI.


1 This Holland & Knight alert provides an overview of customs and export control clearance issues when exporting aircraft from the United States. It should not be construed as legal advice with respect to any particular transaction or export. In particular, the specific facts and circumstances of each transaction/export will dictate the responsibility of each party under U.S. law.

2 15 C.F.R. Part 30.

3 15 C.F.R. § 30.1 (defining "U.S. principal party in interest").

4 15 C.F.R. Part 772 (defining "exporter" and also defining a "principal party" as "those persons in a transaction that receive the primary benefit, monetary or otherwise, of the transaction. Generally the principals in a transaction are the seller and the buyer. In most cases the forwarding or other agent is not a principal party in interest."). The term "exporter" or "exporter of record" is not a term used in the FTR governing EEI filings.

5 See 15 C.F.R. § 758.3 (Responsibilities of Parties to the Transaction).

6 See 15 C.F.R. § 30.7.

7 See 15 C.F.R. § 758.6.

8 See 19 C.F.R. § 122.22(c).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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