International aircraft financing treaty takes effect
An international treaty intended to ease the cross-border financing and leasing of planes, helicopters and aircraft engines took effect March 1.
In November 2005, Malaysia became the eighth country to ratify the Aircraft Equipment Protocol to the Cape Town Treaty, which triggered the entry into force of the protocol four months later.
In January, Senegal became the ninth country to ratify the protocol. Other countries that have ratified the protocol are Ethiopia, Ireland, Nigeria, Oman, Pakistan, Panama and the United States.
The Bush administration urged other countries to ratify the treaty, citing benefits to trade in aircraft equipment.
In a statement, James H. Lambright, acting U.S. Export-Import Bank president and chairman, said the treaty provides “greater predictability for aircraft financiers by significantly reducing the legal risks associated with cross-border, asset-backed aircraft financings.
“Airlines located in countries that have ratified and fully implemented the Cape Town Treaty can anticipate increased availability of commercial aircraft financing, and more attractive aircraft financing terms,” he said.
Since 2003, Ex-Im Bank has offered a one-third reduction of its exposure fee on asset-backed financings of new U.S.-made large commercial planes for buyers in countries that ratify and implement the Cape Town Treaty and the related aircraft protocol. Ex-Im Bank’s offer applies to approvals issued to these buyers through Sept. 30.
The Cape Town Treaty, which was concluded in November 2001, establishes a commercially oriented, comprehensive international legal framework to protect security and leasing interests in aircraft equipment. To date, the treaty has been signed by 28 countries and ratified by nine countries.