The COVID-19 pandemic has severely impacted the aviation industry. With many international borders closed, thousands of aircraft are currently grounded and, even when flying resumes, social distancing measures, international quarantine requirements and a downturn in business and leisure travel will all continue to take their toll. We have already seen a number of airlines enter into bankruptcy protection, and more are likely to follow over the coming months. This leaves financiers and lessors seeking to enforce their rights under lease and loan, or security documentation, with the issue of what to do with aircraft which have been repossessed during any remarketing period until a purchaser or new lessee can be found. Thanks to a relatively new initiative, the Civil Aviation Authority of the Cayman Islands may now be able to offer a solution to those financiers and lessors considering enforcement and repossession action through a temporary registration of the aircraft on the Transition Register.
The Cayman Aircraft Register, maintained by the Civil Aviation Authority of the Cayman Islands (the CAACI), is primarily a private use register, and the majority of the aircraft registered on the Cayman Aircraft Register are private aircraft in private use (i.e. not being used for reward or hire). In recent years, however, the CAACI has been successful in opening up the Cayman Aircraft Register to commercially operated aircraft. In addition to the longstanding Article 83bis arrangement in place between the CAACI and the General Authority of Civil Aviation of Saudi Arabia, enabling registration of a number of Saudi Arabian operated aircraft on the Cayman Aircraft Register, in recent years the CAACI have also issued a small number of Cayman Islands air operators certificates (AOC) to operators wishing to register their Commercial aircraft on the Cayman Aircraft Register. This has been facilitated by the establishment of Cayman Maritime and Aviation City, a collaboration between the CAACI and Cayman Enterprise City, which offers commercial operators a cost effective and streamlined solution to establishing a physical presence in the Cayman Islands in connection with their AOC application.
Lessors with aircraft coming off lease and/or financiers considering enforcing their security and repossessing an aircraft are often faced with the issue of what to do with the aircraft until they can place it on a new lease and/or transfer title to a new owner. It is not always feasible, and may not be desirable, to keep the aircraft in its existing jurisdiction of registration while the aircraft is out of operational service. In response to these concerns, the CAACI is now able to offer a solution in the form of a temporary title registration on the Transition Register.
To continue reading full articles in PDF format:
Cayman Islands Transition Register – A Safe Landing Spot in Turbulent Times