Jetrader - July/August 2012 - 18

LEGAL

Is it‘airworthy’ plus Worthy? Defining
ICAO vs. the Volcano
By Don Mitchell, Partner, Smith, Gambrell & Russell, LLP 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 serviceable, words having the potential to swing a deal from proﬁt to loss, are oftentimes left in lowercase and undeﬁned for the parties to argue about later. While this could be beneﬁcial strategy for some, it can be a huge and potentially costly trap for the unwary. The ATA Common Support Dictionary contains no fewer than three deﬁnitions for airworthy. The U.S. Federal Aviation Regulations (FAR’s) deﬁne airworthy with respect to aircraft as, “…conform[ing] to its original type design and…in a condition for safe operation.”1 The phrase “safe operation” is not deﬁned. The common thread among most deﬁnitions generally available is some concept of conforming to type design and in a condition “ﬁt” or “safe” for ﬂight. What remains unclear is whether “ﬁt” or “safe” is measured at a point in time (at delivery, for example) or for a period beyond that time. Indeed, airworthy does not mean that the aircraft is without defect. We know broken aircraft can ﬂy safely because aviation authorities issue ferry ﬂight permits for them all the time. Aircraft in commercial service ﬂy with engines having undiscovered missing or damaged blades, and continue to do so unless they show abnormal trends. Yet, if the engine were borescoped, the aircraft would be grounded as being “unairworthy” until the “unserviceable” engine were removed and replaced. Corrosion is another example—if it’s not seen, it doesn’t exist. But the mere existence of corrosion doesn’t mean the aircraft is not “airworthy” or ﬁt for ﬂight—it’s a matter of degree. Certainly if an aircraft has an airworthiness certiﬁcate, it must be airworthy, right? Not necessarily. An aircraft in storage may have an airworthiness certiﬁcate, even if it has timed out on maintenance or has ﬂat tires. While it may be airworthy in the strictest sense (it conforms to its type certiﬁcate), it may not be capable of ﬂight or be safe to ﬂy. The word “serviceable” is also without clear deﬁnition. While the parties might intend it to mean simply that the item works in accordance with its intended function, some might expect more. An APU can start an engine with gusto or chug it to life only with some moderate coaxing. In each case the APU is serviceable, but in the second example, it is barely functional. Since these terms are so difﬁcult to deﬁne and measure, it may be best not to use them and instead fashion objectively measurable conditions which can be veriﬁed through inspections. Using them also comes with the risk of implied post-delivery liability. If you must use them, why not say what you mean? Rather than leave it to chance, develop effective and objectively measurable deﬁnitions that clearly state the parties’ intent. For example, the U.S. FAR’s deﬁnition could be adopted and supplemented to deﬁne airworthy to mean, “…that the aircraft conforms to its type design and that such aircraft is in a condition for safe operation and certiﬁed by the [operator, etc.] for return to service in accordance with aviation authority, manufacturer and maintenance program requirements as the same are applicable to such aircraft.” Similarly, serviceable, with respect to a part, could mean, “…suitable for installation and commercial use on [the aircraft] in accordance with the maintenance program and applicable aviation authority and certiﬁcating authority regulations and certiﬁed by [the operator, etc.] as being ‘serviceable’ by afﬁxing to the same an FAA Form 8130-3 or EASA Form One serviceable tag without exceptions or limitations.” These are sample deﬁnitions only and still may be too subjective. But, they are undoubtedly a better start than leaving the terms undeﬁned. Aviation isn’t Vegas—why gamble when you can put the odds strongly in your favor and just say what you mean. Eyjafjallajökull Update: In the July/August 2010 issue of Jetrader, I wrote how this Iceland volcano wreaked havoc across western and northern Europe when the EU closed this airspace to travel. There was widespread industry concern that the EU acted too aggressively in closing airspace when a more measured approach could have been taken. On 5 March 2012, the ICAO announced the publication “Flight Safety and Volcanic Ash,” a manual aimed at providing a scientiﬁc basis for decision-making in light of potential future volcanic eruptions. According to ICAO’s press release, the manual, “may recommend to aircraft operators when there is forecast volcanic ash contamination, placing responsibility for such operations on the operator, under the oversight of the State regulatory authority.” The manual is based primarily on the work of the ICAO International Volcanic Ash Task Force and is available in English at www.icao.int/ publications/Pages/doc-series.aspx. Don Mitchell is a partner with the law ﬁrm of Smith, Gambrell & Russell, LLP and concentrates his practice in U.S. and cross-border aviation equipment ﬁnance transactions and litigation. Please e-mail any questions, comments or suggestions for future topics to: dbmitchell@sgrlaw.com. ©2012 Donald B. Mitchell Endnote 1. 14 C.F.R. 3.5(a).

18 The ofﬁcial publication of the International Society of Transport Aircraft Trading

http://www.icao.int/publication/Pages/doc-series.aspx http://www.naylornetwork.com/ist-nxt

Jetrader - July/August 2012

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