Printed headline: Bilateral or Bust?
“To reduce compliance costs, improve access to foreign customers, and make oversight more efficient, Congress should encourage the FAA to enter into more Bilateral Aviation Safety Agreements [BASAs] and should refrain from enacting legislation that disrupts current international aviation accords.”
That statement, or something like it, has been included among ARSA’s legislative priorities every year in recent memory. We represent a global industry, and the association supports intergovernment agreements that make oversight and compliance more efficient. BASAs make it easier for companies in one country to obtain the approval necessary to work on aviation products registered in another. ARSA encourages legislators, regulators and anyone else who will listen to recognize and reinforce “the important economic benefits of bilateral agreements.”
Those talking points are all sensible, but in the spirit of continuous improvement and to ensure our policy objectives are aligned with industry needs, ARSA’s team regularly reevaluates our positions. So are bilateral agreements really working for the benefit of industry?
The economic data suggests they are. BASAs allow regulators to rely on each other’s findings when issuing or renewing approvals so, for example, rather than undergoing a full-blown certification process when applying for an approval from a foreign civil aviation authority (CAA), a U.S. company can use its FAA certificate and compliance with FAA regulations as the basis for the other country’s certificate. That saves both companies and regulators resources—time, after all, is money.
A 2011 ARSA study found that the cost for a U.S. repair station to be approved by the Civil Aviation Administration of China (with which the U.S. does not have a bilateral agreement) was almost three times the cost of gaining approval by the European Aviation Safety Agency (EASA) under the U.S.-European Union bilateral. The study reinforced the notion that small businesses benefit disproportionately from BASAs because big companies have more business activity over which to amortize certification costs. Thanks to the streamlined application and oversight process established by the U.S.-EU BASA, more than one-third of U.S. repair stations now hold EASA certificates and are serving a transatlantic customer base.
But certifications based on BASAs also have their limitations. A foreign certificate doesn’t allow your facility to work on every aviation product registered in that country. Because the certification from the domestic CAA serves as the basis for the foreign certificate, the domestic compliance obligations and ratings carry over to the foreign certificate. So, for example, if an aviation product registered in Europe doesn’t have a U.S. type certificate, it is regulatorily impossible for a U.S. repair station to work on it.
Another problem became evident to EASA-approval holders in the U.S. earlier this year. During the government shutdown, FAA employees responsible for forwarding certificate renewal requests to EASA were furloughed. The result? Many U.S. companies faced the risk that their EASA certification would expire. The situation was ultimately resolved but not before causing a lot of headaches for U.S. repair stations and both civil aviation authorities.
In the absence of a BASA, or to work beyond the scope of the domestic ratings and limitations, one must apply for a “full-blown” certificate from that CAA. While doing so can provide more certainty and flexibility in the long run, there will be additional costs. Aside from the investment associated with the certification—application fees, paying for foreign regulators to travel to inspect your facility, etc.—MRO providers will incur significant internal costs. Those will include creating a new system to comply separately with foreign rules (that are inconsistent with U.S. regulations) and dealing with rules written in a language other than English.
In the final analysis, the current system of BASAs has made it easier for maintenance organizations to gain the approvals necessary to serve most foreign customers. That, in turn, contributes to the industry’s growth and has yielded compliance cost savings. We’re also mindful of the oversight efficiencies BASAs create. The challenge for regulators is how to oversee a growing, global industry without proportionate increases in their budgets. Relying on trusted foreign government partners is clearly part of the solution. But there’s plenty of room for improvement. The U.S.-Canada bilateral agreement, which allows certificated maintenance facilities on both sides of the border to work on products registered in the other country without obtaining additional certification, is a model that must be embraced more widely.
ARSA stands by its commitment to BASAs but, as always, welcomes input.
Sarah MacLeod is a managing member of Obadal, Filler, MacLeod & Klein, PLC, and a founder and executive director of the Aeronautical Repair Station Association.
Christian A. Klein is a managing member of Obadal, Filler, MacLeod & Klein, PLC, overseeing the firm’s policy advocacy practice. He is executive vice president of the Aeronautical Repair Station Association.