Industry missing outdue to government’s failure to ratify Cape Town agreement regulating cross-border financing
The UK aerospace industry is being “left out in the cold” because of the government’s failure to ratify the Cape Town treaty, which regulates cross-border aircraft financing deals, the Society of British Aerospace Companies (SBAC) says.
The treaty is set to come into force on 1 March 2006 following its long-awaited ratification by the eighth country needed for it to go ahead – Malaysia – at the beginning of November.
However, the UK aerospace industry stands to lose out competitively if the government continues to delay its own ratification of the treaty, says the SBAC. “The Cape Town convention holds out enormous benefits to the UK aerospace industry by opening up markets that were in the past deemed too risky by financiers.
“The terms of the treaty give certainty to financiers who would find it much easier to recover aircraft as assets, if there are defaults on payments, if a country has ratified the Cape Town treaty. The aims of the treaty are of benefit to both the aerospace sector and emerging airlines who might otherwise find it difficult to raise capital for new aircraft.”
Ratification at EU level had been held up by a “Gibraltar hold” put in place by Spain, but Ireland’s decision to ratify the treaty in its own right earlier this year clears the way for other member states to do the same, says the SBAC.
“We had understood that the delay at EU level was because Spain was blocking the ratification over issues related to Gibraltar, but the Irish decision to ratify would suggest that individual states could ratify the treaty. We are seeking to clarify the situation with ministers, and if this is the case, we would want the UK government to push ahead with ratification.” The DTI was unavailable for comment.
The SBAC adds: “The countdown has begun. We now have a date for when the treaty comes into force. The UK aerospace industry wants to be able to benefit from the terms of the Cape Town treaty. We are a highly globalised and competitive industry, ratification is a must and we need to see some movement from the UK government.”
Companies from countries that have not yet ratified the treaty will be able to benefit from sharing information on aircraft financing through the registry that forms part of the treaty, although they will not be protected by the convention when it comes to aircraft financing deals.
HELEN MASSY-BERESFORD/LONDON
Source: Flight International
