PART 4: AVIATION SECTOR SERIES


An aircraft registration is a unique, identifying set of numbers and letters, which relate specifically to a single aircraft. It is required by international convention to be marked on the exterior of every civil aircraft, just like you would a car registration.

The first few letters and/or numbers of a registration indicate the aircraft’s country of registration. This unique identifier must also appear on its Certificate of Registration, as issued by the relevant national aviation authority.

An aircraft can have only one registration, in one jurisdiction, at any one time; although it is changeable over the lifetime of an aircraft and will often change when the ownership of the aircraft changes.

How do you decide where to register an aircraft?

The large majority of corporate aircraft are registered where their owners are based, as well as in their principal area of operation. However, there are an increasing number of owners that move around the globe, operating internationally, who are keen to look at other jurisdictions which offer other distinct advantages.

The number of jurisdictions which have launched registries, or that are opening up the eligibility criteria for their existing registers, continues to increase. Whilst the registration process in each case is broadly similar, each registry aims to offer a unique selling point and these factors need to be taken into account when making a decision on where to register an aircraft.

Considerations that require thought include:

  • Ease of process
  • Customer service
  • Acceptability by financial institutions
  • Ability to register a mortgage
  • Cost
  • Potential tax advantages
  • Recognition of technical standards
  • Crew licensing
  • Minimum aircraft age/MTOW
  • Neutral registration marks
  • Acceptance of corporate structures
  • Nationality/residence of the owner
  • Geographical location of the register

Choosing a Registry

In the first instance, when deciding where to register, the owner of a business aircraft should consider whether the intended use is purely private, for corporate-private use, or whether it is to be chartered. The answer to this will then decide the registration process they need to follow. For example, the majority of offshore registries, i.e. the Isle of Man, only offer registration for corporate-private use aircraft.

But there are just so many registries we hear you say! So how do you figure out the most suitable one for your needs?

Let’s consider an offshore registry which caters for all three scenarios; take Aruba as an example.

Aruba provides owners with the option to register both private and commercial aircraft. Great, you say! However that’s not it, the next step is to look further and consider other important factors such as Tax.

Aruba has no Income Taxes, no Corporate Taxes, no VAT, no Excise Tax, no Sales Tax, no Import Tax and no Stamp Tax.

But, Aruba’s market is high-end. You cannot register an aircraft more than 30 years old, licensing can cost upwards of USD 15-20,000 per year for an aircraft with a maximum take-off weight of 5,700kg, or in the case of a larger aircraft, the cost can be upwards of USD 65,000 per year.

[Insert shocked face emoji]… Looks like it is going to cost you a lot of money to maintain that registration, even with all of those advantages.

But it doesn’t have to… Let’s keep looking further – Why not consider an EU registry?

Choose Malta

In Malta, aircraft registration fees are one of the lowest in Europe. As a comparison, the registration fees for a large aircraft such as an A320 would be in the region of €10,000; this is significantly lower to the offshore jurisdiction making it well worth considering.

Malta also has some great fiscal incentives for aircraft companies and related service providers, including: a 15% flat rate of tax for aviation employees; low to no income tax through its imputation tax regime; no stamp duty as well as many more incentives.

If you are unsure what jurisdiction would be most suited to your aircraft and requirements, get in touch.

With a comprehensive understanding of the industry as well vast experience in structuring the ownership and registration of a range of aircraft, including business jets and helicopters, we can give you the wings that leave you free to fly in the knowledge that your aircraft is structured, registered in a way that is compliant, effective and makes for efficient operation.

For more information on our aviation services click here.

PART 1: AVIATION SECTOR SERIES


The purchase of an aircraft is a major commitment, and one that should be carefully considered; particularly when buying a used aircraft.

Likewise, when selling an aircraft there is a huge amount of information and documentation that needs to be drafted, reviewed, collated and processed, before any money or an aircraft itself can change hands.

Choosing the right aircraft

The type of aircraft that is most suited to an owner’s needs vs. the type of aircraft an owner would love to own, are often two different things entirely. One of the most common mistakes made in purchasing an aircraft, is that prospective owners do not spend enough time analysing their requirements and being realistic.

As a prospective owner you should be considering matters such as the typical flight load, the distances you will want to travel and the possible flight conditions and topography; now look and compare aircraft options!

If possible and in the first instance, consider chartering the type of aircraft, in which you are interested, to determine how well it meets your requirements. Keep in mind that the biggest expense of owning an aircraft is not necessarily the initial purchase price but the running costs once you own it.

Pre-purchase inspection

This is a crucial step!

Now is your chance to investigate and learn everything there is to know about the history of your proposed new purchase. Does the aircraft meet the required safety standards and does it have all its paperwork in place? Are any Supplemental Type Certificates (‘STC’) duly approved? What about the maintenance programme, paint, interior, flight hours, equipment on-board etc.?…All of this needs to be checked out.

Choosing the right person to carry out your pre-purchase inspection is also important. Make sure you arrange for someone with the correct qualifications and experience to undertake such work; once that aircraft ownership changes hands, it will be very difficult, if not impossible, to go back to the seller to complain or ask for compensation.

Title ownership and background checks

The ownership or title of an aircraft from when it was first manufactured can go through many localities or jurisdictions before it reaches the seller that currently has possession of the aircraft. It may even be the case that the aircraft was part financed or has been used as collateral, so it’s not unusual to find liens or encumbrances attached to the aircraft or engines.

This is why it is really important to thoroughly research and check whether your potential purchase is clear of all of these things, before you hand over any funds or sign any documents.

Documentation

Once you have made the decision to purchase an aircraft, a Letter of Intent (“LOI”) is drawn up between the buyer and the seller, which clearly sets out the details of the intended sale – price, deposit amount, terms of sale, etc.

It should also include an expiration date for the proposed deal, giving you the chance to withdraw if things go wrong or take longer than expected. The details in the LOI will then be carried forward and used as the basis for the final purchase agreement.

You should expect to see an Airworthiness Certificate, which is usually transferred with an aircraft when it is sold. As a buyer, it is your job to make sure the airworthiness certificate is, as the regulations specify, current.

You will need to make sure that all the aircraft manuals are available and ready to be transferred with the aircraft, including the Logbooks for Engine and Airframe, Weight and Balance data, Aircraft Equipment List, Pilot’s Operating Handbook and Aircraft Flight Manual.

Maintenance records should be checked to ensure they are complete, no missing pages, fully signed and all inspections are current.

A Bill of Sale (proof of purchase or sales contract) will need to be drawn up and signed by the buyer and seller. This document will also be required by third parties such as the chosen aircraft registry and customs authorities so it is important that the correct information is shown in the right format.

Final steps and delivery

The final steps to purchasing an aircraft take a lot of co-ordination. There are usually a number of parties involved, including the buyer, seller, lawyers, brokers, bank(s), insurance providers, escrow service provider etc. Title has to be transferred and the aircraft registered to the new owner, money has to move into and out of escrow, the aircraft has to be insured by the new owner, and the aircraft has to be physically handed over.

Purchasing an aircraft is a complicated business with many pitfalls along the way making it all the more important to choose an experienced and knowledgeable service provider.

With a comprehensive understanding of the industry, Sentient has vast experience in structuring the ownership of a range of aircraft including business jets and helicopters. Together with its professional team we are well placed to assist owners and their representatives in understanding the diverse requirements associated with not just ownership, but the registration and operation of private and commercial aircraft, and can work with you through all the necessary steps and procedures to manage the transaction effectively and efficiently.

For more information on our full range of aviation services contact: aviation@sentientinternational.com.

Sentient prides itself on being more than just an average corporate & trust service provider and continually looks to provide added value, not just to our clients but also to our intermediaries and wider business network.

It is with this, that we are delighted to announce that every few months we will be focusing on a specific service sector/industry, producing a range of content which we will be sharing with you, both on our website and across our social media.

Sentient will be attending a number of aviation events over the coming months, including but not limited to: EBACE 2019, the annual meeting place for the European business aviation community which takes place later this month, and the Isle of Man Aviation Conference, which will take place in June.

So,…what better industry to start with for our very first ‘Sector Series’.

Stay tuned because we have lots of interesting and insightful content coming your way very soon … Miss it, Miss out!

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