Government shutdown holds up STCs, could ground aircraft

Touch labor for PEMCO’s first 737-700 FlexCombi is complete and awaiting an STC from the FAA – a process that cannot happen until the U.S. Federal Government resumes normal operations.

The shutdown of massive sections of the United States federal government and subsequent furlough of hundreds of thousands of federal employees – including 18,000 “non-essential” employees working in the Federal Aviation Administration – has already affected the aviation industry, and will only get worse for all facets of the air cargo equipment industry if it extends much longer. Conversion houses and cargo carriers tell Cargo Facts that passenger-to-freighter conversion programs previously only days away from receiving supplemental type certificates (STCs) are held up indefinitely until the FAA resumes normal operations. The disruptive impact of the shutdown however, extends well beyond STC certification.

PEMCO was in the final stages of certifying its 737-700 passenger-to-FlexCombi program, and an STC was expected in early 2019 – until the government shutdown. Instead, the final paperwork required for the conversion program’s STC is sitting idle at an FAA Regional office in Atlanta. As a result, redelivery of the aircraft to Bahrain-based Chisholm Enterprises, the parent of charter operator Texel Air and the launch customer for the combi aircraft, will be pushed back beyond February.

AEI’s 737-800 passenger-to-freighter conversion program, the first launched for the new generation of aircraft when it was announced in 2014, was also on track to obtain an STC in late 2018 until the shutdown. The first converted aircraft, destined for launch customer GECAS, is apparently ready for redelivery, but is now stalled as the program awaits an STC post-shutdown.

Carriers hoping to add freighter or passenger aircraft to fleets are also facing problems connected to the ability to register new aircraft based in the US, and to obtain legally required inspections. According to an update on its site, the FAA, which is operating at a severely reduced capacity, is currently processing permanent Airmen Certificates for temporary certificates that were issued around 16 November, and aircraft registry documents received around 19 November. A carrier said the current inability to certify pilots and inspectors is a major concern, with “a bunch of people stuck in training and no inspectors available for checkrides.” In some cases, a Designated Airworthiness Representative (DAR) may be able to perform examination, inspection, and testing services necessary to the issuance of certificates, but an MRO with associated DARs said in their understanding, the DAR could not do any work they had not already been approved for prior to the shutdown.

The scope of the shutdown’s impact on already active conversion programs is less clear, as an aircraft ferried during the shutdown to a US-based MRO facility for conversion did not encounter problems, but had also been parked for a short enough period that it did not require a new registration at the time.

One conversion house told Cargo Facts that a number of customers are already seeing the writing on the wall, and – expecting delays – are taking preemptive action. One lessor unable to take redelivery of an aircraft in conversion on time, and subsequently unable to transfer the unit to an operator before the aircraft’s lease expires, was forced to revisit leasing terms for the aircraft.

In addition to ferry permits and STC certification, there is concern that freighter conversions of all types – both those that have previously been converted, and those currently inducted – could be impacted by delays related to Airworthiness Directives (ADs) issued by the FAA. ADs are issued to correct unsafe conditions found in OEM products, and occasionally cover areas modified as per a passenger-to-freighter STC. If an area described in the AD has been modified, the STC-holder must request an Alternative Method of Compliance (AMOC) from the FAA.

New AMOCs are not currently being processed by the FAA, which could have a far-reaching  and even global impact if the government does not return to work shortly. Due to the extreme variance among numerous ADs, it is difficult to estimate the number of aircraft for which maintenance compliance will be delayed – or impossible without a new AMOC. In some cases, converted aircraft in service with carriers outside the United States could also be affected by the FAA shutdown if the relevant authority requires compliance within an FAA-issued ADs.

Even if the government resumes operations tomorrow, the backlog will cause delays to persist for quite some time.

“Across the board, this is affecting everybody – conversion houses, carriers, and lessors,” said an executive at one conversion house.

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