Company Needs in Midsize Turbine Aircraft Acquisition - Research Paper Example

Aviation Law The aviation industry is one of the most intensely regulated and supervised in the world. This is due to the fact that the industry comes with extensive security demands, sophisticated technological endowment and high operation efficiency demands. The establishment of an aircraft unit for a medium size company therefore must address the pertinent concerns that the company must address. Moreover, after such a section is established, there are regulatory issues, investments, costs and operational systems that must be implemented and regulated. This paper evaluates both the legal dealings demanded in acquiring various implements to facilitate an aircraft section and the entire wider perspective of industry requirements and obligations pertinent to a medium sized company. Keywords Aircraft acquisition, medium sized company, legal and environmental requirements Aviation Law Introduction and Background For a medium sized business to establish a small aircraft department, it is first useful to determine the specific needs of the company that warrant such an installation. Since aircrafts are expensive and have high operational and maintenance costs, the company must first evaluate its financial position against the project. More precisely, players in the aviation industry require precise legal counsel on a number of strategic issues both at the stage of establishment and for the routine maintenance of services and operations. The process of establishing a small aircraft flight department majorly involve legal contracts appertaining to the acquisition of various facilities and aircrafts to the department. Another requirement is the establishment of the legal basis of the facility including taxation, regulatory, maintenance and oversight obligations. Over and above many ordinary business considerations, the aviation industry has been sharply brought to the spotlight as a result of the recent events of terrorism. The need for the private company to comply with federal and state legislations regarding the transportation of various chemicals or components is a crucial consideration. Furthermore, as a result of accidents and overall secularity concerns, the aviation industry is faced with several regulations (Gander et al, 2011). Pilots and personnel must comply with given personality standards as well as professional dispositions and qualifications. The state criminalizes a number of acts like the landing of an aircraft on a highway or road except when there is an emergency. Recklessness in aircraft operations is also prohibited and operators could land heavy fines whenever found to violate provisions. Moreover, specific case laws must be well interpreted for the company if their use of the aircraft is to be efficient since they contribute immensely in the decision of cases involving aircrafts. Company Needs in Midsize Turbine Aircraft Acquisition Contract law basically cover the needs the company must evaluate in acquiring various facilities to establish the small aircraft flight department. In this regard, selecting the best and appropriate aircraft, its specifications and capacity must be considered. The most important aspect of the negotiations related to aircraft acquisition for a medium size company is to be sure the specific model acquired suits the needs of the company in terms of capacity, convenience and costs (Sampigethaya & Poovendran, 2013). Since there are a wide variety of aircrafts, a company seeking to acquire one must select on the basis of their specific needs. Nevertheless, companies are constrained by federal regulations, employee insurance and use of aircrafts as a company instrument. In this regard, the company must ensure there is effective arrangement to select the best aircraft and establish the stipulated requirements before the department is established. The process of acquisition of the aircraft and other appliances vital to the department is a very delicate one demanding both the observation of regulatory requirements and the balancing of finance and economic advantages. It is vital for the company to collaborate widely wit both the dealers and the regulatory institutions because a failure to meet the specific demands may lead to loss. Moreover, synchronization of the appliances is required. Each and every aircraft comes with designated capabilities and communication gadgetry. The gargets must be assembled to synchronize with the information and communication networks in the specific region where the airline will mostly operate. Cost evaluation and planning for the establishment of the department must be done strategically so that the budgeting phase of the program is accurate. Moreover, there is a lot of financial and legal ramification that must be recognized by a competent valuing agency. For instance, the modalities of the acquisition could vary for a wide variety of aircrafts. The company could sometime want to lease or simply purchase on a cash basis all the needed equipment. The law comes in handy for any acquisition procedure because there are costs involved and binding contractual terms and conditions. Potential Issues Appertaining to Aircraft Acquisition The aviation industry is regulated by the Federal Aviation Administration (FAA) which evaluates and provides regulatory measures for corporate and private institutions operating aircrafts. In addition to the FAA, the Department of Transport (DOT) is another institution charged with the responsibility of regulating and ensuring compliance of any players in the aviation industry. Whenever a company intends to acquire a used aircraft, the age of the aircraft and mileage is important since different aircrafts have a permissible lifespan and mileage on air. Furthermore, the mileage of the aircraft comes with other aspects. Old aircrafts may demand more in terms of maintenance costs and operational inconveniences. A private company that seeks to establish an aircraft section must weigh all these demands against their costs and revenues and determine the feasibility of the project. Each aircraft comes with different demands on the operations, fuel consumption and passenger capacity. The company must consider the optimal advantages each option of the aircraft types present and the costs of management. Once all these issues are assessed, the acquisition of the aircraft can be implemented. Nonetheless, company must systematically use the acquired aircraft in line with labour and employment regulations that are in application in their specific region or state. Each airplane requires a permanent cabin crew and maintenance personnel. Without these parties, the company will be gravely constrained in the use of the aircraft. The structuring of the aircraft purchase must ensure favourable costs and other litigation safe nets. There naturally occurs disputes and an effective company must plan for dispute resolution. Moreover, when the company has a functional office of a company secretary responsible for various disputes, there is still the need to facilitate such personnel with specialized consultations and affiliation just in case complicated cases may face their flight department. The contractual engagement with various parties must be embraced with utmost good faith as a principle. Without such good faith, disclosure may be hampered and the consequences may be so adverse for the company in future. Other potential issues that may arise are contractual disagreements which may lead to legal action against the company. In the event of a disagreement of such type, the company needs to consult effectively with its lawyers and establish a safe litigation strategy or opt for safer methods of conflict resolution. Aircraft Department: Regulatory, Legal and Operational Issues The FAA stipulates all the regulatory mechanisms that are demanded of aircrafts and air travel facilities. In this regard, the company must seek to solicit registration of their facility, routine and periodic inspections to ensure compliance and as such evade legal costs and penalties. The essential necessity for compliance with regulations is the fact that regulations are meant to improve the general safety of aircraft users and the establishment of modalities of collaboration and association between various parties in the industry. Suffice it to say, the implementation of regulatory statues is a good initiative for any company that ventures into the aviation industry. In collaborating with FAA, the company shall therefore ensure they have backing with regard to a number of stipulated requirements. These include the overall use of the commercial space transport facilities, flight inspection regulations and standards, the facilitation with new aeronautics and aviation technologies whenever they are invented. The cost evaluation and preparation for the institutionalization of the subdivision must be done tactically so that the budgeting phase of the program is correct. Furthermore, there is a lot of financial and legal consequence that must be recognized by an experienced valuing agency. For instance, the modalities of the purchase could vary for a wide assortment of aircrafts. The company could sometime want to lease or simply purchase on a cash basis all the needed equipment. The law comes in practically for any acquisition process because there are costs involved and obligatory contractual terms and conditions. The institutions of regulation also help the company obtain necessary certificates, their validation and verification; the institutions will help the company implement safety standards, especially in strategic collaborations. All these operations might be too costly if the company has to do them all alone. The development of air traffic control measures and installation in various regions, and overall research in avionics and development programs in the industry. Moreover, these institutions help private companies develop systems that help reduce the aircraft noise and other environmental concerns that may impact the industry. Legal connotations in operating the airline department may be elicited at the very beginning of the program or in the daily operations. Nonetheless, as long as the company is effectively regulated and all fees and levies effectively submitted to the relevant institutions, then progress is guaranteed. The laws regulating the labour in the flights department, safety of the crew and important air insurance contracts must be effectively implemented and regulated. Furthermore, it is useful to establish contact with not only a permanent pilot for the department, but a contractual engagement with many pilots employed elsewhere can be the best ideal because the company may not need a fully paid up pilot. Cost effectiveness is therefore a mandatory consideration at the early stages of the establishment of the project. Aircraft Department: Economics, Budgetary and Control Considerations The National Air Transportation Association (NATA) is the oversight agency representing the interests of the players in the aviation industry. The company needs to evaluate and module its affiliation with the agency if their air transport interests are to be represented. It is therefore useful for the company to apply for membership and to pay up all the dues necessary. The legal process is not widely separated from the economic conditions operating in a given industry. For instance, the regulation of work process and the disbursement of salaries are controlled by various laws. It is therefore useful for the company to get effective legal guidance at every stage so as to always perform at their optimum. It is useful for a medium sized company to invest in new aircrafts that have low maintenance costs and that will serve the company longer. This will ensure the stability of the department and the entire company during the stages of the establishment of the department. Apart from just mitigating against costs, the problem of aging in old aircrafts may compound certain risks to the company’s employees. Aging aircrafts may develop cracks, loosening adhesion centres which may reduce the prestige and convenience of their usage. According to the Aging Airplane Safety Act of 1991, FAA is mandated to carry out inspection of aircrafts and ensure their airworthiness. After the 2005 ratification of the provision by the FAA, other clauses were introduced to further intensify safety regulation on aircrafts. For instance, widespread fatigue damage that occurs as a result of aging was considered in the legislation. Moreover, airline operators are required by rule never to exceed their operational limits which are set in place by the regulating agency. The company must determine the specific usages to which the aircraft will be engaged because if their needs are not specified, the company may not be in a position to caster for all the requirements demanded by the government and industry regulators. For this reason, each and every detail in the whole project must be stipulated and well understood by all the parties engaged in any negotiations so that the parties can avail the best outcomes in their roles. Furthermore, when the company has a purposeful office of a company secretary responsible for various disputes, there is still the need to assist such personnel with specialized consultation and attachment just in case complicated cases may face their flight department. The contractual engagement with various parties must be embraced with utmost good faith as a principle The internal Revenues Services (IRS) is the agency designated with the collection of taxes. I the company will be taxed based on the department; it is useful to establish the required descriptions and accounting principles to carter for the new department. Moreover, as departments of a business firm grow, their administrative structures tend to change (Rango & Laliberte, 2010). Such internal and external changes must be well articulated in the management of the company. Facilitating the development of the capacity of the business in the light of new development might come with legal challenges because as business expands, its mandate and company articles must embrace such expansion. The company will therefore need legal counsel to do effective expansion both in the short term and the long term outlook. A pre-emptive action that may be useful is the establishment of the department of company secretary. The company should also ensure its operations are well insured and that it pays all due fees to run the department it is also noteworthy that the company can adopt disaster preparedness strategies in preparation for any misshapenness. The contractual rendezvous with various parties must be embraced with utmost good faith as a standard. Without such good faith, disclosure may be weighed down and the penalty may be so adverse for the company in future. Other potential issues that may arise are contractual disagreements which may lead to legal action against the company. In the event of a disagreement of such type, the company needs to consult effectively with its lawyers and establish a safe litigation strategy or opt for safer methods of conflict resolution Conclusion The nature of aviation regulations that prevail today demand that a company willing to establish an aircraft section must pass a lot of environmental, avionic installation regulation requirements and aircraft management requirements. Apart from merely integrating their aircraft security and radar communication systems with the national grid, the company must do a lot of installations requirements and even pay up for a public airport or build their own airstrip. Apart from the challenges of financing, legal requirements come to the fore and arbitration is therefore handy. This document has presented all the legal requirements and uncertainties or problems that may evoke legal action that the company must consider in selecting aircrafts, establishing the department and enjoying the convenience associated with such a development. The need to establish administrative and regulatory compliance with the various institutions in the industry is therefore of a paramount benefit to the company and should be embraced positively. In addition, widespread lateral and vertical associations is the way to go in an industry that is very dynamic and rapidly changing. References Elston, J., Stachura, M., Argrow, B., Frew, E., & Dixon, C. (2011, March). Guidelines and best practices for FAA certificate of authorization applications for small unmanned aircraft. In Proc. AIAA Infotech@ Aerospace Conf. Gander, P., Hartley, L., Powell, D., Cabon, P., Hitchcock, E., Mills, A., & Popkin, S. (2011). 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