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Bermuda: “Air Force One” In The Offshore World

August 2009 Updated on 28 April 2010 Julie E. McLean

When it comes to offshore aircraft finance and aircraft registration, Bermuda flies high.

When an airline decides it needs to add one or more aircraft to its fleet it usually looks to financiers or a leasing company. They will discuss with such financiers or leasing company the most cost efficient way to structure the transaction. At this stage legal counsel for such entities will often suggest the use of offshore vehicles. Operating in a tax neutral jurisdiction like Bermuda, such vehicles add benefit to the finance/lease structure.

If a private or corporate aircraft is to be purchased by a foreign operator using finance supplied by an international lender, or leased from an international lessor, the foreign operator may understandably wish to register the aircraft in its own jurisdiction where the aircraft will be based and operated, using its own pilots who are licensed by the aviation authority of that jurisdiction. This assumes that the operator’s aviation authority will be of a standard acceptable to the financiers and/or lessors in relation to war risk, insurrection, forced requisitioning and bureaucratic difficulties in relation to registration and deregistration, lease term recovery and repossession upon default. If the home register and the laws of its jurisdiction do not meet the acceptable minimum risk standards of the financiers and lessors, a practical option is to use an offshore jurisdiction like Bermuda which is usually viewed as neutral by all parties and as providing an acceptable and clearly understood standard of legal rights. In addition, the Bermuda Department of Civil Aviation (“BDCA”) is internationally respected as a safe and solid regulator.

 

To continue reading full articles in PDF format:
Bermuda: “Air Force One” In The Offshore World

 


Julie E. McLean
Director, Global Head of Aviation Finance Practice

Bermuda   +1 441 299 4925


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Articles

Bermuda: “Air Force One” In The Offshore World

30 August 2009 Updated on 28 April 2010 Julie E. McLean

When it comes to offshore aircraft finance and aircraft registration, Bermuda flies high.

When an airline decides it needs to add one or more aircraft to its fleet it usually looks to financiers or a leasing company. They will discuss with such financiers or leasing company the most cost efficient way to structure the transaction. At this stage legal counsel for such entities will often suggest the use of offshore vehicles. Operating in a tax neutral jurisdiction like Bermuda, such vehicles add benefit to the finance/lease structure.

If a private or corporate aircraft is to be purchased by a foreign operator using finance supplied by an international lender, or leased from an international lessor, the foreign operator may understandably wish to register the aircraft in its own jurisdiction where the aircraft will be based and operated, using its own pilots who are licensed by the aviation authority of that jurisdiction. This assumes that the operator’s aviation authority will be of a standard acceptable to the financiers and/or lessors in relation to war risk, insurrection, forced requisitioning and bureaucratic difficulties in relation to registration and deregistration, lease term recovery and repossession upon default. If the home register and the laws of its jurisdiction do not meet the acceptable minimum risk standards of the financiers and lessors, a practical option is to use an offshore jurisdiction like Bermuda which is usually viewed as neutral by all parties and as providing an acceptable and clearly understood standard of legal rights. In addition, the Bermuda Department of Civil Aviation (“BDCA”) is internationally respected as a safe and solid regulator.

 

To continue reading full articles in PDF format:
Bermuda: “Air Force One” In The Offshore World

 


Julie E. McLean
Director, Global Head of Aviation Finance Practice

Bermuda   +1 441 299 4925


 

expertise

Aviation


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Bermuda