Lowering The Cost Of Cross-Border Transfers.jpg

Lowering The Cost Of Cross-Border Transfers

There are roughly 1,000 cross-border transfers of aircraft per year, of which lease transitions account for more than half.

Global aviation regulation was designed in an era when an aircraft was expected to stay with one owner throughout its life.

Now, however, there are roughly 1,000 cross-border transfers of aircraft per year, of which lease transitions account for more than half.

Each time this occurs, exiting lessees and lessors must ensure an aircraft and its engines are in the appropriate condition for the next operator. Lease return conditions are about ensuring this happens, but costly additional work may still be required to meet the standards of the next airline’s regulatory body.

Consultancy SGI Aviation has estimated that over last two decades more than $7 billion has been spent ensuring that transitioning aircraft meet dissimilar regulatory requirements that are not safety related. This can happen where rules overlap or duplicate another country’s requirements, or where they require out-of-sequence checks and inspections.

“One of the most difficult issues on the regulatory side is where the next lessee’s regulator has its own viewpoint on what it takes to register an aircraft in their jurisdiction and then put an airworthiness certificate on it,” says David Walton, CCO of lessor BOC Aviation, in an interview with Inside MRO.

Challenges often occur, he says, when transferring mid-life aircraft to countries predominantly take new-build equipment, and have structured their regulatory requirements accordingly. These countries may not know what the essential safety items are for older aircraft and over-regulate as a result.

One solution considered by the cross-border transferability working group is to set up regional safety offices, to which countries could delegate the registration of certain incoming aircraft. Other ideas under consideration include standardized transfer documents and greater use of electronic records, as well as common guidance materials to reduce interpretation differences.

The net result will be to reduce costs and enhance safety, since national aviation regulators won’t have to devote scarce resources to the clunky and wasteful bureaucracy of the current cross-border transfer regime.

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