The global aviation industry, and more particularly the Irish industry, is constantly evolving and adapting to the diverging needs of its market. However most commentators will I'm sure concur, that 2006 was a period of significant change and evolution for the industry - with the dawn of a groundbreaking form of protection for creditors and the marked increase in the level of corporate aircraft in Ireland.

On 1 March 2006 the 'Cape Town Convention on International Interests in Mobile Equipment and the Protocol to the Convention on Matters Specific to Aircraft Equipment' came into force. Historically investment in aircraft had been frustrated by the application of differing cross-border regimes to security rights in aircraft. The aim of the Convention is to reduce creditor uncertainty by providing for enforceable interests in aircraft, which are recognised by all contracting states to the Convention. To achieve this objective, the Convention introduced the concept of a 24 hour online international registry of financial interests in aircraft (www.internationalregistry.aero). Accordingly, title to and security interests over aircraft and engines can be protected under this priority-based register.

From a procedural perspective, anyone can search the register on the above referenced website. However only an authorised and registered user can effect registration of a security interest on the international registry. Furthermore such registration, and any amendment or discharge thereto, is subject to the prompt electronic consent of all relevant parties. Legal counsel to these parties can provide such consent online (provided the parties have granted their prior electronic consent to do so). It is worth noting, for both legal counsel and members of the industry, that user authorisation and registration takes a number of days to process while the operators carry out identity and other checks.

Ireland's strategic position in the industry was reinforced by the selection of the Irish Shannon-based, company Aviareto to operate the International Registry under the Convention. Aviareto was established with the support of the Irish Department of Transport, Enterprise Ireland, and certain key players in the Irish aviation sector, to bid for and operate the International Registry from Ireland. Aviareto overcame staunch competition from Canadian and Spanish contenders, to be appointed registry host. The Irish Minister for Transport, Mr. Seamus Brennan T.D. welcomed the decision of the International Civil Aviation Organization (ICAO) to award the contract to Aviareto, noting that although 'Ireland already enjoys a very high profile in aviation … the location of the International Registry will enhance that reputation and will become an integral part of the international aircraft financing business'.

The regime introduced under the Convention has led to substantive changes, not merely in the law governing aviation finance, but also in the procedure associated with financing transactions. The industry has gone through and continues to undertake an educational process, in order to develop best practices in applying with the Convention.

Economic growth, the desire to avoid endless traffic queues, and the soaring profits enjoyed by Irish property developers, have lead to an unprecedented demand for privately owned and corporate aircraft. The logistical advantages associated with air transport have secured the helicopter or light aircraft as the ultimate business accessory today. Irish financial institutions are noticing a steady increase in the number of applications for financing of helicopters and light aircraft. As the demand for more efficient and fast-paced service escalates, so too does the myth that light aircraft and helicopters are simply 'toys for rich boys', begin to dissipate. The material in this article is for general information only. Professional legal advice should always be sought in relation to any specific matter.

March 2007.

For further information please contact David Williams.