Aircraft operators could save around $1 million per aircraft on lease finance costs as more countries ratify the Cape Town Convention on cross-border transfers of airliners and engines.
The US government-backed Ex-Im Bank has reduced the risk premium it charges on financing deals for large commercial aircraft and engines from 3% to 2% for airlines based in countries that have ratified the treaty, in a bid to stimulate further adoption. Late last month the USA became the fifth country to ratify the deal, signed in November 2001 in the South African city, joining Ethiopia, Nigeria, Pakistan and Panama. The US government is urging the remaining 23 signatories, including major developed nations, to ratify the protocol. "By ratifying the Convention, the USA has taken a significant step to encourage other countries to adopt the legal framework that will facilitate large commercial aircraft transactions," says Ex-Im chairman Philip Merrill.
The Cape Town Convention establishes an international legal framework to protect security and leasing interests in large mobile assets, with airframes and aircraft equipment coming under the first adopted protocol of the Convention. The treaty entered into force on 1 April, and will become binding after the ratification of the aircraft protocol by eight countries.
Ex-Im says recent lease deals signed by Copa Airlines, Ethiopian Airlines and Pakistan International Airlines have saved airlines around $10 million over a total of 14 aircraft. "Based on the average value of a Boeing 777 being $100 million, we estimate airlines in developed countries could save around $1 million per aircraft in finance costs, and in multi-aircraft orders, this is significant," says the bank.
JUSTIN WASTNAGE / LONDON
Source: Flight International
