Controversial CitationShares petition close to resolution

Washington DC
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The window for public comment on a controversial request by Cessna fractional provider, CitationShares, to waive some of the fundamental tenets of how the business currently operates came to a close last week.

At issue was a January request by CitationShares, published in the Federal Register in March, asking the US Federal Aviation Administration to allow the company to set up a fractional programme as a trust structure.

Under the proposal, participating fractional owners would not hold legal title to a fractional share in the aircraft, as is the case with current FAA rules for fractional participation. Instead, a Delaware statutory trust would hold legal title to the entire aircraft, and fractional ownership participants would be "beneficial owners of a series in the trust".

CitationShares is also asking for a waiver of rules requiring fractional owners to share a dry lease on all aircraft in the programme. Rather, the company would hold a lease to programme aircraft entered into the statutory trust, and fractional owners would have access to all of the programme aircraft without crew, on an as-needed basis through a sublease directly from CitationShares Management.

The tweaks drew the ire of NetJets, whose chairman Richard Santulli created the fractional aircraft ownership concept in 1986. "This request raises numerous issues of law and public policy, both domestically and internationally, that call for careful consideration and should not be rushed," wrote NetJets president James Christiansen in a request to the FAA to extend the public comment period for an extra three months from mid-March.

The agency ultimately decided to extend the comment period for 40 days, closing on 26 May. As part of its research into CitationShares effort, which has been ongoing for about two years, NetJets has also requested copies of CitationShares filings and correspondence with FAA legal experts through the Freedom of Information Act.

Christiansen notes that the proposed changes could have far-reaching implications, impacting aircraft ownership, aircraft registration, US citizenship issues, taxes, business liability and even financing.

CitationShares countered NetJets' request by pointing out that it is not asking for a rule change, but rather relief from current regulations "that would be limited" to its fractional program, fractional owners and its relationship with the FAA aircraft registry.