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A Rose by Any Other Name: Non-Incident vs. Clearance Statements

The use of non-incident statements in lease agreements is on its way out.

The long-standing custom of including non-incident statements (NIS) in lease agreements is on its way out. The contractual provision utilized by leasing companies to ascertain whether equipment has been involved in an incident while in the hands of the lessee, suggests by its very name that a history of “incidents” has a determining effect on the aircraft’s airworthiness. What’s more, varying definitions of “incident” and “accident,” as provided for by the International Civil Aviation Organization (ICAO) and national aviation authorities, create challenges for those saddled with executing the agreement.

The International Air Transport Association (IATA)’s Aircraft Leasing Advisory Group (ALAG), a collaboration between airlines and lessors represented by the Aviation Working Group (AWG), is finalizing the fourth edition of the group’s Guidance Material and Best Practices for Aircraft Leases, scheduled for release the second quarter. In 2015, the publication dropped its usage of the NIS in favor of the more pragmatic incident/accident clearance statement (ICS), which refocuses on the goal of airworthiness.

“Previous NIS language required confirmation that there had been no incident or accident, which, given broad definitions of the term, could require reporting of, for example, crew member injury,” explains IATA’s Safety & Flight Operations Operational Cost Management Head Chris Markou, “while not saying much about the current condition of the equipment.”

Recognizing the challenge and seeing the need for standard language, the group created the ICS template, which states that even if an incident/accident occurred, the aircraft or the engine are cleared of any defects, as provided for in the maintenance manual. Through IATA and the AWG, airlines and lessors are promoting the ICS template as the preferred industry standard; over the past few years it has found wide-spread acceptance.

It begs reminder that the ICS and NIS are commercial documents, and not based on any regulatory requirement. Proper consideration should be made during lessee/lessor contract negotiations.

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