The world of aviation can seem exciting and full of opportunity. For those looking to invest, the chance to "buy an aircraft IP" or "buy a company and a Type Certificate" might sound like a golden ticket. However, my years of experience in aircraft design, certification, and manufacturing have taught me a crucial lesson: this is a business where ignorance can cost you a fortune. The reality is far more complex than simply acquiring a design or a factory.
The most important concept to understand is the Type Certificate (TC). Unlike a simple commercial product, an aircraft cannot be produced and sold just because someone has its Intellectual Property (IP). An aircraft must be certified as airworthy by a National Airworthiness Authority (NAA). This certification is granted in the form of a Type Certificate. Think of the TC not as a simple patent, but as the master key that proves the aircraft's design meets every safety and performance standard set by international aviation bodies, i.e the International Civil Aviation Organization (ICAO). This rigorous process ensures the aircraft is safe to fly. The company that holds this certificate is the Type Certificate Holder (TCH), and they are fully and legally responsible for the aircraft design.
This is why simply buying a design or a factory is a risky move. You can't just take a certified design and start building it in a new country without following proper procedures. The aircraft's country of origin is known as the State of Design and has authority over that design. Any new manufacturing location in another country must be approved and overseen by the State of Design's airworthiness authority. A new country cannot simply acquire a design and start fresh; they must work in close cooperation with the original authority to get approval. An excellent example of this is when Airbus, which is a European company, manufactures parts of its aircraft in China—a process that is fully approved and overseen by the European Aviation Safety Agency (EASA).
Similarly, a new company cannot simply buy an aircraft's IP and assume the TC comes with it, or that they can apply for a new one easily. A new certification process is a lengthy and expensive endeavor, and even if a company buys the design and the people who worked on it, they still have to start from square one. All the original design reports become little more than research and development notes, and the new company must undertake a full certification effort with their own country’s airworthiness authority, who then becomes the new State of Design. Even if the TC is officially transferred from one country to another, like the Eagle aircraft from Australia to Malaysia, it's a formal and meticulous process that requires cooperation between the two nations' authorities.
For investors considering buying aircraft from a foreign country for local use, there's another hurdle: TC Validation. This is a process where the local airworthiness authority validates the foreign Type Certificate to ensure it meets their own standards. During this review, the authority might discover Special Emphasis Items (SEIs), which could become a Special Condition that requires further testing or design changes. This can add significant cost and complexity to the project, which is often not factored into the initial business plan.
Finally, there's a critical business lesson that is often overlooked: an aircraft must be designed for production. A great design that is too expensive to manufacture will not generate enough profit to be a viable long-term business. The entire process—from design to certification to manufacturing—must be planned and executed with cost-effectiveness in mind.
It is important to note that these strict rules don't apply to every type of aircraft. Small sport aircraft, which do not require a Certificate of Airworthiness (C of A), are an exception. However, for any aircraft intended for commercial use, the process is incredibly strict and unforgiving.
For those approached with seemingly simple deals, it's crucial to be aware of these complex and mandatory processes. Without a deep understanding of what you are actually buying—a Type Certificate, the authority to manufacture, and the proper approvals—a promising investment can quickly turn into a costly mistake.
Abu Hanifah Haji Abdullah, PEgPC
Ikmal Hakimi Ismail
Dato’ Sri Azharuddin Abdul Rahman
