A Bermuda-registered Boeing Business Jet.
Choosing the right registry might not be as difficult as choosing the right aircraft itself, but it can be almost as challenging. It is easy for the process to deliver the wrong outcome. According to operators, financiers, brokers, lawyers and registries, the best way an aircraft owner can avoid that is simple: Open communications early with all potential partners, consult widely and keep talking.
“Our clients ... are all unique, and they’re all challenging, but what they want is tailored advice, and we need to work together to create that advice and be an advocate for them,” said Graham Williamson, managing director of the charter and aircraft management division of Farnborough-headquartered Gama Aviation.
“Also, [we need] to work together to help each other, to bring together the right solutions.”
Williamson was speaking during the opening of a series of panel-based workshops on registration held during Corporate Jet Investor’s (CJI) London conference in February.
Management Firm Equation
The choice of registry may not be all that complicated for an owner who only intends to use the aircraft privately— although even then, there will be pros and cons that will have to be weighed carefully. But as soon as any kind of commercial operation is envisaged, registration becomes a critical consideration, and certain key questions must be asked.
Among those vital questions you will find: “Do you want to charter or only [fly] private? What is your base? How many hours do you fly? Do you want to have your own crew? Which license do they have?” mused Andrea Zanetto, COO at Comlux. “Then we really have to ask questions all together, get all the answers, then combine those elements in order to find the right solution.”
Often these discussions take place in detail for the first time when an owner begins negotiating with an aircraft management firm. But at that stage, certain key decisions may already have been made—not just after the aircraft had been selected, but the crew hired and expectations of any charter income set. Each decision limits the room for an operator or aircraft management company to maneuver for the benefit for the customer.
Management firms can bring an aircraft onto their books in a matter of days if necessary, but if these questions are all left to the last minute, the options available to the customer will be limited. So, in an ideal world, these conversations should begin very early.
“If we have a lot of time and we’re part of the process of the completion and the selection of the aircraft, and the whole building process and the delivery, of course it’s always our preferred way of doing things, because then you can give the best possible service and options for that customer,” said David Van Den Langenbergh, chief industry affairs officer at the Luxaviation Group. “If it’s a drop-in call to operate an aircraft tomorrow, then it starts to limit the options.”
While this kind of forward planning has tended to be relatively uncommon, there are signs things may be changing. Paul Doherty, managing director of the Ireland office of ACASS, said his recent experience is that the important conversations are starting to take place earlier.
“I don’t know whether it’s a change in the times, or just coincidental, but everyone I’ve been speaking to recently is talking about the operation before they even have the aircraft, and it’s just so much easier,” he said. “You’re talking about crew, licensing base, aircraft type for charter, cost forecast—all this stuff that’s really, really important to have that you just can’t do if it’s last minute. Or,” he added, modifying that conclusion, “you can—but not of the same quality.”
Time and Money
A decision to place an aircraft under management may not necessarily affect the choice of registry, although any commercial operation, including aircraft charter, will usually mean that the aircraft must be registered in the same jurisdiction that issued the management firm’s air operator certificate (AOC). For this reason, management companies often have several: ACASS has three (Canada, San Marino and Ireland), while Luxaviation has 13.
Although there are many similarities across different registries and AOCs, and strong linkages between certain registries, each offers points of differentiation which can bring advantages for owners and operators. While long-established national registries may offer services across commercial, business and general aviation, some smaller registries specialize in business aviation and can offer a more bespoke, and often much faster, service.
The Isle of Man Aircraft Registry (IoMAR) was established in 2007 and does not handle commercial operations. “We deal in private/corporate aircraft only, and that’s a deliberate decision,” said the registry’s director of civil aviation, Simon Williams. “We seek to be a credible alternative to the national registers. We set high standards, but those are supported by excellent customer service.”
Williams’ point was backed up in a later panel by Mark Bisset, global head of aviation finance at law firm Clyde & Co.
“I financed an aircraft on Dec. 31 last year,” he said. “At 5:30 in the evening, when the Isle of Man Registry should be closed, they stayed open—to deregister, in this instance. That’s a service level beyond the norm—which, in this industry, dealing with the kind of high-net-worth individuals that we deal with, you need.”
During the panel session focusing on finance and transactions, there was widespread agreement that the choice of registry can play a significant part in a bank’s decision to finance an aircraft. The major factors center around how easy or difficult it may be for the bank to recover its investment should there be a default.
Some registries would insist on auctions rather than private sales in such circumstances, which is “quite funky, to be honest,” said Johan Blitz, head of aviation and yacht finance at UBS, adding that “we prefer private sale.”
But bankers and owners will usually be in alignment on the choice of register, for sound practical and operational reasons.
“When a client buys a private jet, it is a significant amount of money, [so] it is in their interest to choose a good register,” one that understands business aviation, said Marie-Laure Gassier, managing director and head of asset finance at First Abu Dhabi Bank. She said selecting a good registry sets the foundation for the aircraft’s value and operation, so the client and bank need to be aligned on it.
Size and Agility
While the number of registries is small, it is growing. Among the latest additions is the Gibraltar registry, which is “in the start-up phase,” said Neil Williams, the Gibraltar Civil Aviation Authority’s head of airworthiness. (At the time he was speaking at CJI, the registry had not completed its audits; these were expected to take place in March.) The country register will be for privately operated aircraft initially, but its aspiration is to open for AOCs in due course.
“We’re trying to give a credible alternative that fits you [the operator] specifically,” he said. “It’s not about bending the rules—it’s about applying standard rules in the appropriate way.”
Among the freedoms the smaller, specialist registries have is an ability to accept or validate other authorities’ licenses and certificates rather than issue their own. This can help make them much more responsive without compromising safety.
IoMAR’s Williams, describing himself as “a converted member of the anti-bureaucracy league,” pointed out that IoMAR does not require a specific Certificate of Airworthiness for Export, preferring instead to survey the aircraft once registered. This kind of streamlining helps achieve levels of responsiveness that a large national registry will struggle to match.
In IoMAR’s case, this means being able to complete the registration process “probably within a day, as long as you provide us with the relevant information,” he said.
“I’m not a license-issuing state,” IoMAR’s Williams said. “I validate licenses of ICAO-compliant states. So we’ll accept an FAA license or an EASA license—any license-issuing state or authority that is ICAO-compliant, I simply validate it.
“Equally, we have unlocked a whole maintenance facility opportunity for you, because we see no need to approve specific MROs. If an MRO is licensed, then it’s licensed. I’m not going to charge you extra money for them to be able to wave around a certificate to say you’ve been approved by the Isle of Man, because I’m not adding any value.”
The adaptability and flexibility of smaller, newer registries means that some of the longer-established registries, even those with a long track record in business aviation, have had to adapt.
“Aviation is not the same as it was 20, 30 years ago, and that creates room for other entrants to come in and really understand what the market and the stakeholders are looking for,” said Kyle James, business development manager for the Bermuda Civil Aviation Authority’s aircraft registry, established in 1931.
“As an older registry, it’s our responsibility to understand what’s coming up and being able to pivot, and change our offering in ways the industry is asking.”
May Only Be One
Williamson suggested that registration—like aircraft ownership—should be approached via a decision tree, citing the methodology used by London-based The Jet Business founder Steve Varsano, who starts by asking a potential client whether they really need an aircraft. If they do, they whittle the choice down from 150-plus types to the half-dozen specific examples of one particular model currently available for purchase.
So BCA asked him if an owner does all that Williamson and colleagues have been advocating for—starting consultations early; canvassing opinion and advice across operators, financiers, brokers, lawyers and registries; and considering all the options for registries—what will be the decisive factors that will lead to them choosing one over the others?
“If you answer all those major questions, you probably don’t have three choices left,” Williamson said. “There’s probably only one.”
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