EBACE Convention News

Manx registry claims record membership

 - May 15, 2011, 11:40 PM

Four years after its establishment in May 2007, the Isle of Man aircraft registry has attracted almost 400 aircraft. The exclusive registry is limited to private or company-owned business jets that, crucially, are not permitted to operate commercially. The registry also excludes aircraft with a maximum takeoff weight of less than 5.7 metric tons (12,566 pounds), except those that are owned by the island’s residents.

The new registry has become so popular that one third of the aircraft registrations have been issued in just the past 12 months, leading officials to claim that that it is the fastest growing registry in the world, and the eighth largest in terms of business aircraft numbers. Those recent additions have included Europe’s first Embraer Lineage 1000 and eight Bombardier Global Express jets. Indeed, 20 percent of Manx registrations have been Bombardier aircraft, including one operated by the manufacturer itself. Last month, a further 30 aircraft registration applications were being processed.

As Europe’s only registry dedicated to business aircraft, it aims to offer a “customer-focused service with high international standards and a competitive scheme of charges.” Indeed, Isle of Man officials have maintained that the user-friendliness of the registry is a greater attraction to aircraft owners than the island’s well-documented low tax regime. However, the Isle of Man is now also promoting itself as a conduit to allow aircraft importers to get around recent unfavorable changes to the application of value added tax in the nearby UK.

Manx registration is being highlighted here at the EBACE show by five companies offering assistance to any private or corporate owner considering the jurisdiction: Appleby (Stand 379); Cavendish Aviation (Stand 956); Equiom Trust (Stand 357); Martyn Fiddler Associates (Stand 1470); and OCRA Aerospace (Stand 1567).

High Regulatory Standards

The Isle of Man Civil Aviation Administration (CAA) administers the registry, which has 16 surveyors in Ireland, the Isle of Man, Switzerland, the UK and the U.S. In setting up the registry, the Manx government planned to harness the island’s “international reputation as a tax-efficient, but responsible and cooperative jurisdiction” to attract “high-quality” clients as an additional source of revenue.

Claimed benefits of Manx registration are said to include high regulatory standards, a neutral nationality registration prefix (the letter “M”), a secure mortgage register, no local tax on insurance premiums (compared with a 6-percent rate in the UK), location in a European time zone, a professional infrastructure experienced in aviation finance, Standard & Poor’s and Moody’s AAA-rated jurisdiction, “clear and simple” taxation regime and a stable legal and political environment.

“The global downturn has brought uncertainty and new challenges to the corporate aircraft industry,” Manx civil aviation director Brian Johnson told AIN. Ironically, that uncertainty extends to operators registered in other jurisdictions, especially in the UK, where many have openly voiced doubts about the alleged commercial use being made of some of the aircraft. Although Isle of Man-registered aircraft are explicitly banned from use for hire or reward–ad hoc charters, for example–the registry has garnered an unfortunate and, officials claim, a thoroughly undeserved reputation for lax oversight.

Charter operators have filed complaints about alleged illegal use of Isle of Man aircraft, mainly when they had bid unsuccessfully for the flight bookings only to see an M-registered aircraft apparently handling the job. At a regional forum held by the European Business Aviation Administration in January, EBAA president Brian Humphries openly questioned whether Isle of Man aircraft are straying into illegal charter, and delegates spoke of the use of short-term leases to circumvent Isle of Man rules. But last month Humphries praised the Isle of Man authorities for their cooperation on the issue.

Credibility Issue

Increasingly aware of the damage this could inflict on the registry’s credibility, Johnson told AIN that the Manx CAA had received no hard evidence to support reports of such flights, which were a worldwide problem not restricted to certain locations. A former head of the UK CAA flight operations inspectorate, Johnson cited one report from that authority concerning an alleged charter flight to New York by “a very well-known Farnborough-based operator,” but records showed the Manx-registered aircraft had been in Moscow on the date in question.

“There’s no way we would be a ‘soft touch.’ If we had evidence, we would face [suspected illegal operators, who face] potential imprisonment,” said Johnson. “If anyone has evidence of commercial activity by Manx aircraft, we need to know registration, date of flight [et cetera]–then we can challenge alleged operators. But we just keep hearing stories. We will investigate any evidence and take appropriate action.”

The Manx authorities believe the registry may be the only one that requires owners to sign a form indicating that their aircraft will be operated only privately. Johnson said that because of the rule against aerial work, there are no flight-training organizations on the register. He acknowledged that the local CAA has said little publicly for fear of appearing defensive in the face of what it regards as groundless accusations.

The British Business & General Aviation Association’s (BBGA) chief operating officer, Marc Bailey, sees industry concern about alleged commercial use of private aircraft as a product of “classic rumor-mongering” unsupported by facts.

One charter broker suggested that hiring a crew and renting an aircraft as two separate but coincident arrangements covering the same very short period would allow third-party commercial use that would circumvent Isle of Man rules, but Bailey said a hypothetical case like that would “not stand up in court.” However, it would constitute flying for hire or reward, although the BBGA official agreed that in such a scenario the charterer might not realize the liability or legal obligations involved. In addition, any private aircraft insurance would be invalidated.