Spain-UK row puts EU aviation industry savings at risk
Spain is blocking European Union ratification of a global treaty that could save the aviation industry $5 billion a year because of its sovereignty dispute with the UK over Gibraltar.
The Cape Town Convention is aimed at reducing risk for aircraft and engine lessors and their financial backers by making it easier for them to repossess assets if operators default on payments. It must be ratified by eight signatories, but all EU members must agree before Europe can implement it.
The UK Society of British Aerospace Companies (SBAC) says that Spain’s move to block EU ratification over the unrelated Gibraltar issue threatens to deny Europe huge potential cost savings and new business opportunities for aircraft manufacturers and their suppliers, airlines and governments.
The SBAC has taken up the issue with UK minister of state for Europe, Douglas Alexander, urging him to push for a resolution during forthcoming talks between Spain and the UK and its dependency, Gibraltar. Meanwhile, the UK has assumed the presidency of the EU, boosting its influence.
“If the European political deadlock continues, it both prevents the benefits from the treaty ensuing and places UK aerospace companies at a competitive disadvantage from the USA,” warns SBAC director general Sally Howes in a letter to Alexander. The Spanish ministry of foreign affairs was unavailable for comment.
The UK Department of Trade and Industry says it “regrets” Spain’s move to block the treaty and is “making every effort to engage with Spain in finding a solution to this problem”.
The Cape Town Convention on International Interests in Mobile Equipment and its Aircraft Protocol establishes a clear legal system that would ensure enforceable rights, including being able to repossess or sell on an aircraft or collect profits resulting from its management in the event of a default on payments.
The treaty includes a register of financial interests in aircraft and engines designed to reduce the risks taken by leasing companies and other institutions that provide financing. The SBAC says the legal certainty the convention would bring would open up new markets that companies are currently unable to supply and allow lenders to cut rates on financing, adding further impetus to the market.
So far Ethiopia, Nigeria, Oman, Pakistan, Panama and the USA have ratified the convention. Two more ratifications are needed.
HELEN MASSY-BERESFORD/LONDON
Source: Flight International
