When an aircraft changes operator — not exactly a rare occurrence even in boom times for aviation, and even less rare in the time of COVID-19 — it brings with it a substantial amount of paperwork, including around managing Supplemental Type Certificates (STCs). With more and more modifications involving ongoing service provision, though, the Independent Aircraft Modifier Alliance is pushing forwards with an initiative to ensure that the next operator of an aircraft doesn’t run into any intellectual property issues with the holder of any STCs onboard. We sat down with managing director Nicole Noack and lessor advocate Kimberly Miller to understand more about the problem, and how IAMA is planning to solve it.
[intro links: managing supplemental type certificates (STCs) | holder of any STCs onboard]
At its core, the issue is the FAA considers that STCs are a kind of intellectual property. This confers a number of rights on the STC holder — in other words, the company or person whose IP it is — but also a number of responsibilities, particularly around instructions and documentation.
“In doubt, however, is the commercial right to use” for the next owner and operator of the aircraft, Noack says, specifically: “the authorisation of the use of the installation and maintenance data for operation, how the authorisation is written, where the authorisation is held, and ease of maintaining the authorisation.”
In essence, Commercial Right To Use ensures that STC holders will undertake to allow new operators to use the STC, for example following a lease transfer to a new airline, which wouldn’t have been party to the original agreement.
This is especially important for any STC that involves provisions of a service and not just a physical modification — inflight connectivity or flight tracking, for example.
“While many owners are heavily aware of those pain points,” Noack says, “airlines might not have faced it within their own fleet yet and therewith do not keep an eye on those commercial risks as lessors do. This is where IAMA steps in to issue educational material to raise awareness — and to provide solutions.”
The commercial right to use, as envisaged by IAMA, “ensures future operators have access to all the data needed: for example, to update their manual,” says Noack. “With an operator or owner demanding an IAMA-endorsed STC, the IAMA Member — the STC Holder — is obliged to provide the Commercial Right to Use.”
IAMA’s plans include ensuring that the right to use statement is addressed to the legal operator or owner of the aircaft, including a statement of automatic transferability to any future or subsequent operator or owner of the aircraft, ensuring a full list of documents covered under the specific right to use statement is provided, and adding a duplicate location of the right to use statement within documentation packages.
“These few steps enable transfer planning in advance, without the requirement of assignment or further documentation gathering, and support the enhancement of the value to the asset and free use for future operators,” Noack explains. “The goal is to have clear contractual status between the future operator and STC holder. It is meant to assure the new operator that already installed modifications may continue to be used and operated when the contracting partner was the prior owner or operator.”
A significant driver behind this initiative is the growing importance of the lease market.
“With the increasing number of leased aircraft, this challenge became more significant to aircraft owners and operators, explains Kimberly Miller, IAMA’s lessor advocate. “There have always been legal intellectual property aspects associated with authorising the commercial right to use data.”
The regulations balance STC holders’ rights and obligations: first, the rights to own the intellectual property and to maintain and service it, and second the obligation to carry out that maintenance and servicing.
“It would be a simpler world if the operator that contracted the modification operated the aircraft throughout its life cycle,” Miller notes. “Still, as this is not often the case, clear and concise rules and guidelines are needed to reduce friction in aircraft transfers. With a standardised Commercial Right to Use Letter, the Independent Aircraft Modifier Alliance helps owners and operators to take care of future transfers commercially.”
The Commercial Right to Use Letter is essentially intended to counter any perception — or reality — of retrospective data (and indeed money) grab by STC holders, with IAMA members making commitments to support ongoing use.
IAMA also has improvements to the current system of documentation sharing squarely in its sights. Digitalisation of the systems, Noack notes, “will support the transfer of documents from one operator to another when tied properly to unique aircraft. Providing connections to future aircraft owners and operators and the STC holder would definitely be an improvement.”
Published: 28th October 2021
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