Legislative framework for aircraft registration in Malta

The launch of air carrier Malta Air has continued to cement Malta’s reputation as a jurisdiction of choice for aviation operators

Since 2004 Malta has continued to see steady growth in this sector which has responded to the Government’s strategy to create an aviation-friendly jurisdiction in a bid to attract airline operators to the island.

Over the past decade, the aviation industry in Malta has grown to such extent that the archipelago is steadily positioning itself as a leading service hub in the Mediterranean region, being able to provide services such as aircraft registration, maintenance and repair, back office, and production of components.

The increase in Malta’s popularity is based on a number of factors, including:

• the implementation of the Cape Town Convention on International Interests in Mobile Equipment and its Aircraft Protocol;

• participation in numerous international aviation agreements as well as conventions, including the Chicago Convention;

• mutual recognition of Air Operator’s Certificate (AOC), flight crew licenses and engineer’s licenses;

• the implementation of the Aircraft Registration Act, 2010 intended to encourage growth of the industry and providing for border eligibility rules for registrations of aircraft that are not used for commercial air service and recognition of fractional ownership of aircraft;

• membership in EASA with high reputation for safety standards;

• international mutual recognition of Maintenance Organisation;

• adequate laws assisting parties to seek remedies in various forms including mortgages.

The revision of the local legislative framework has introduced a series of concepts to Malta’s aviation industry.

Benefits of registering an aircraft in Malta

1. Flexible registration: the new legislation has broadened the categories of applicants who can register an aeroplane, which include owners of aircraft under construction, operators of aircraft under temporary titles, and a buyer under a conditional sale or title reservation agreement;

2. Easier access to financing: since engines can now be registered, the possibility exists to request funds for the same;

3. Facilitations for the private aviation sector: private aviation operators do not need to obtain a Maltese operating licence and can now be registered by any aviation entity established in a member state of the Economic Co-operation and Development organization;

4. Fractional ownership: the new legislation allows for co-ownership of aircraft, allowing the holder to use the aircraft for a determined time frame;

5. Use of beneficial trusts: aircraft can also be registered by a trustee, in which case it will be up to the Director General for Civil Aviation to determine the eligibility of the trust;

6. Facilitation of aircraft leasing: thanks to the ratification of the Cape Town Convention, lessees benefit from lower borrowing costs, while lessors enjoy preferential ranking and self-help repossession remedies in case of default. Furthermore, no withholding tax is payable on lease payments where the lessor is not a tax resident;

7. Registration of mortgages: since aircraft can also act as securities on mortgages, the legislator has provided for Maltese-registered aircraft not to be affected by the bankruptcy or insolvency of its mortgagor/owner occurring following the date on which the mortgage was signed;

8. Implementation of the Cape Town Convention: the provisions of the Cape Town Convention on International Interests in Mobile Equipment and its Aircraft Protocol have been implemented in the new Act. Entities involved in cross border secured financing and aviation leasing transactions now benefit from increased predictability and certainty of rights and remedies, through international priority ranking of security interests over national ones. Such measure results in lower interest rates and reduced financing and leasing costs borne by purchasers or operators of vectors registered in Malta.

9. Transparent data: more details can be logged in the aircraft register upon request of the registrant.

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