Guernsey's Aircraft Registry (the "Registry" or "2-REG") fulfils a key role in the global aviation sector by providing an interim register for commercial aircraft transitioning between leases. This guide features input from Sidhant Sharma, Deputy Director of the Registry, and from Walkers' Group Partner Kim Paiva, who leads the firm's Guernsey Asset Finance team advising on aviation generally as well as transitional registrations.
In the Q&As set out below, Sidhant and Kim combine key insights on the use and processes of the Registry from both the legal side and the administrative side, including the benefits offered by 2-REG and the necessary legal and procedural steps in respect of registrations.
Kim Paiva - Group Partner, Walkers
Q: What is 2-REG used for and who tends to use it?
A: 2-REG provides owners, operators and lessors of aircraft with the ability to register aircraft or aircraft engines on the aircraft register or aircraft engine register maintained by 2-REG respectively. Whilst there are some private aircraft on the aircraft register, over the last few years 2-REG has developed a track record as and become a register of choice for temporary or interim registrations for commercial aircraft that are moving on and off lease. As a result, the Guernsey aircraft register has become popular for owners and lessors of commercial aircraft and the financiers of the aircraft.
Q: What are the legal requirements?
A: An aircraft does not have to be physically situated or present in Guernsey to be registered on the aircraft register, however, the aircraft and the owner or lessor of the aircraft needs to meet certain eligibility requirements, which are noted in more detail by Sidhant below. In addition (and perhaps obviously) the aircraft cannot be registered on the register in any other country. Helpfully, as many of the commercial aircraft to be registered on the aircraft register on an interim basis are secured in favour of financiers, the existing aircraft charges do not need to be Guernsey law in order to be registered on the aircraft charges register. Provided the charge over the aircraft to be registered on 2-REG was entered into post 2 November 2015 (when the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment (the "Cape Town Convention") came into effect in Guernsey) the charge can be registered on the Guernsey aircraft charges register and no additional local / Guernsey law charge is required. This saves legal costs and time.
Q: How has the use of the Registry changed over time?
A: The Registry was established not only to provide local Channel Islands' residents with a Guernsey aircraft register for their aircraft but also with an intent to provide support to the financiers and lessors around the world to transition their aircraft swiftly, effectively and safely. In the case of the latter, 2-REG's success is evidenced by the fact that as of October 2021 over 700 aircraft have been registered on the register since its establishment in 2015, out of which over 500 aircraft have been commercial aircraft. In the past 12 months, a total of 116 aircraft have been registered on 2-REG out of which 88 have been commercial aircraft.
Q: Has the use changed due to the impact of the Global Pandemic?
A: No, the Registry remained well placed to provide assistance to lessors and owners of aircraft despite the Global Pandemic and made certain modifications to its processes to continue to do so. One of the key modifications that 2-REG made to its processes was to their ability to perform physical surveys on aircraft that were to transition on 2-REG. Pre-Covid, 2-REG would send its surveyors on-site to perform the aircraft surveys and based on a successful review, could issue the necessary documentation for the aircraft to perform its ferry flight. However, with the Global Pandemic restricting travel worldwide, 2-REG was able to effectively develop safe remote surveys to fulfil its necessary regulatory oversight and continue to assist the lessors and financiers' transitions across the globe.
Q: How widely known is 2-REG – are there key markets?
A: To date most users of 2-REG, whether owners, operators or financiers are based in the UK, Ireland, the USA and Asia. We, together with 2-REG, are keen to share information on 2-REG to those in the industry who have not yet used or considered 2-REG as an interim register option and to answer some frequently asked questions to those considering using 2-REG.
Sidhant Sharma - Deputy Director, 2-REG
Q: Who can register transitional aircraft with the civil authority in the 2-REG?
A: Any legal person residing in one of the countries approved by the States of Guernsey under the applicable regulations can register an aircraft above 5700kg. This includes, for instance, companies incorporated in the UK, EU and USA. For any company incorporated in a country outside the approved list of countries then such registration can also be facilitated by 2-REG subject to the clearance on due diligence by a Guernsey based resident agent. There are a number of these experienced licensees in Guernsey who are able to provide this assistance.
Q: In terms of the aircraft itself, are there any restrictions on what can be registered – in particular the age of the aircraft?
A: In general we accept all kinds of transition aircraft with the exception of vintage and ex-military aircraft.
Q: What documentation is necessary for 2-REG to complete the registration of an aircraft on the register?
A: There is a standard package of due diligence required together with the proof of ownership of the aircraft and notice of deregistration from the previous authority.
Q: Are there any other technical requirements for registration that people should be mindful of?
A: Apart from the due diligence requirements (as stated above), we do not have any further technical requirements. Specifically, we do not require an export CofA from the previous authority which should usually help the lessor/financier in accelerating its de-registration from the previous registry.
Q: Cost is a significant factor – how are the costs determined for transitional registrations?
A: All of our costs are clearly provided in the fee schedule published on our website, 2-reg.com. Furthermore, we provide a clear indication and overview of our costs for every transition to our stakeholders prior to the commencement of the work by 2-REG. This includes a comprehensive overview of the costs associated with registration, airworthiness (such as CofA/Ptf/Export CofA) and flight operations (if applicable).
We have also developed a transition fee calculator which is intended to provide fee estimate based on the requirements of the respective lessor/financier. This is available at www.2-reg.com/transition-fee-calculator/. Furthermore, if there are any additional questions or clarifications necessary on costs, our Customer Support Manager is available to facilitate such requests.
Q: If an applicant is having trouble receiving an export certificate of airworthiness – or if they have one from another authority – is the Registry capable of accepting an aircraft without a certificate of airworthiness for export specifically from 2-REG?
A: There are no pre-requisites from 2-REG on seeking the export CofA or a CofA to admit the aircraft to the aircraft register. Registration is subject to the provision of all relevant documentation as stated above and we issue certificate of airworthiness and/or permit to fly subject to our own survey of the aircraft in accordance with the applicable regulations.
Q: If an applicant needs to repossess soon after, is the Registry required to send an inspector to conduct a physical inspection?
A: In order to facilitate the issuance of a CofA and/or PtF, 2-REG will need to conduct a physical survey of the aircraft (alongside records inspection). In accordance with the COVID procedures as approved by the ODCA, 2-REG presently allows (accurate as of DATE of Publication) the survey to be performed by a 2-REG approved CAMO or a Technical Coordinator. 2-REG has a significant number of approved CAMOs based across the globe to support the industry during the COVID times and facilitate during the tricky repossessions with the respective operators.
Q: Is it possible to complete the registration process online?
A: Yes, all our applications can be done on-line. In a straightforward process available at www.2-reg.com/ application/, the applicant can make all its registration, airworthiness and flight operations application online. All our application forms are available online too at www.2-reg.com/downloads/.
Q: How long will review of the registration application typically take?
A: Typically, it will take 2-REG 1 to 2 business days to review and complete the registration of an aircraft after having received all the required documentation and the de-registration confirmation from the previous registry.
Q: Once registered, can a certificate of airworthiness be issued?
A: Yes, we can issue a certificate of airworthiness for the aircraft. This can be issued within 2-3 business days upon the submission of all relevant documentation by the applicant and the completion of the survey from one of our surveyors.
Depending on the findings of the survey and any overdue maintenance, we can also issue a permit to fly for the aircraft to allow the lessor/financier to ferry the aircraft.
Both the issuance of the CofA and PtF are subject to the provision of the relevant application form(s) available at www.2-reg.com/application/ and the supporting airworthiness documents.
Q: Will an aircraft maintenance programme be required?
A: Yes, an AMP is required under 2-REG and to facilitate the applicant, we are able to provide templates for the AMP that is required for aircraft in order to receive a CofA.
Q: Can you facilitate for noise and radio licences in connection with those flights?
A: Yes, we will provide the noise and radio licences alongside the CofA for the aircraft. The radio licence is provided on 2-REG's behalf by Ofcom. The client is therefore expected to follow up with Ofcom for 2-REG to issue the documents validly with the CofA.
Noise certificates will be issued together with the Certificate of Airworthiness or Permit to Fly. Radio licences are issued by Ofcom upon request of the aircraft owner/ representative.
Q: If an aircraft had to be stored, what arrangements are required re SLAs and how long can an aircraft be in storage?
A: There are no specific limitations for aircraft in storage. We suggest having a maintenance programme in place to avoid the aircraft from leaving the controlled environment.
Q: Rather than release or resale, can an aircraft go to part out? Can the 2-REG registry support that?
A: Yes, for 2-REG, there is no distinction between an aircraft that is subject to a sale, lease or part-out. We follow the same set of principles on the issuance of CofA/PtF (as necessary) and if an aircraft meets such criteria, we facilitate the request for the applicant to support its future activities like part-out.
Q: If a lessor or financier finds themselves with a fleet of aircraft that needs to be in a transition, is this something that the registry can manage?
A: Yes, 2-REG prides itself on supporting a lessor/financier in transitions and facilitating a fleet of aircraft is no different. We always aim to work alongside the lessor from the stage of pre-registration to the issuance of the CofA and in doing so, if there is a fleet of aircraft of similar aircraft types, then we review the strategy with the ODCA offices to process such aircraft together to process them efficiently for the lessor. Recent example of 2-REG's abilities to transition aircraft fleet robustly include the repossession/redelivery of Jet Airways fleet to various lessors across the globe. Similarly, 2-REG is presently committed to support multiple lessor's aircraft fleet in their cargo fleet conversion programmes and issuance of Export CofAs. All of this has been made possible by the coordinated efforts of 2-REG's registry, airworthiness and flight operations team alongside key industry stakeholders such as the associated CAMOs and MROs.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
