UAE signs Cape Town Convention as Air Finance Sector Feels the Pressure

Aviareto has confirmed the first registration of interest pertaining to an United Arab Emirates (UAE) aircraft on the International Registry of Mobile Assets, following the UAE’s signing of the Cape Town Convention effective 1 August 2008.

The UAE’s accession to the Cape Town Convention means that one of the world’s most buoyant aviation markets can benefit from access to lower cost debt for aircraft financing. The UAE has some of the fastest air traffic growth rates in the world with six international airports, the busiest being Dubai which aims to serve 30 million passengers a year by 2010, four national airlines and a growing number of low-cost carriers.

Airlines registered in the UAE are now eligible for improved financing as a result of financiers, leasing companies, and manufacturers reducing their risk by having access to the International Registry of Mobile Assets, the global database established under the Cape Town Convention which records security interests and their legal priority. The International Registry is based in Dublin, an aviation finance centre of excellence, and is managed by Aviareto Limited, a joint venture between the Irish Government and SITA, under the supervision of the International Civil Aviation Organization (ICAO).

The UAE, through its General Civil Aviation Authority opted for the use of a central organisation as a Direct Entry Point (DEP) to the International Registry. This means that all registrations of interests pertaining to UAE registered aircraft are entered in the International Registry, not by the parties to the deal themselves, but by the DEP. The parties are however still required to approve the registration digitally and therefore will require an account on the International Registry. Details of how registrations can be entered into the International Registry through the DEP are available on the International Registry Website, FAQ section.

A Dubai-based international airline has recently raised US$265 million for the financing of two new Boeing 777–300ER aircraft. The transaction involves long-term leases for a period of 12 years.

Rob Cowan, Managing Director of Aviareto, said, “We are very pleased this significant and growing aviation country has ratified the Convention. In order to serve the needs of the international aviation community better, including the UAE, we will be making a significant upgrade to the International Registry. Beginning in October, key documents, including the Regulations and Procedure of the International Registry, will be made available progressively in the six official ICAO languages, which include Arabic. Our goal is to make the Registry as accessible and easy to use as possible.”

To date, 23 countries have ratified the treaty: Afghanistan, Albania, Angola, Cape Verde, Colombia, Ethiopia, India, Indonesia, Ireland, Kenya, Luxembourg, Malaysia, Mexico, Mongolia, Nigeria, Oman, Pakistan, Panama, Saudi Arabia, Senegal, South Africa, UAE and USA.

Over 150,000 registrations have been made online while 43 manufacturers supply over a quarter of a million serial numbers for airframes, engines and helicopters to the Registry.

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