The International Registry for Aircraft, Your Key to Global Transparency and Security in Aircraft Sales

In the dynamic world of aviation, where aircraft operate across borders and transactions often span continents, having a system that uniformly and transparently records financial interests is crucial. This is where the International Registry comes in, forming a cornerstone for certainty and trust in buying, selling, leasing, and financing aircraft.

This article dives deep into the purpose, function, benefits, and practical importance of the International Registry for anyone involved in the aviation industry.

1. What Exactly is the International Registry for Aircraft?

The International Registry (IR), often simply called the ‘International Registry’, is a centralized electronic registration system that records financial interests in aircraft assets. It was established under the Cape Town Convention on International Interests in Mobile Equipment and its accompanying Aircraft Protocol (collectively known as the ‘Cape Town Convention’ or CTC). These international treaties were concluded on November 16, 2001, in Cape Town, South Africa.

The main goal of the CTC and the IR is to create an internationally recognized legal framework that establishes the priority of purchase, lease, and security interests in qualified aircraft, helicopters, and aircraft engines. This framework significantly reduces risk for financiers and lessors in cross-border transactions, ultimately lowering the cost and increasing the availability of financing within the aviation industry.

2. How the International Registry Works

The IR operates on a strict ‘first-to-file’ principle: the interest that is electronically registered first takes priority over any later registrations, regardless of the date of the underlying agreement. This provides unparalleled legal certainty in international transactions.

To register an interest in the IR, specific details are required, such as the manufacturer’s name, model, and serial number of the aircraft object. Registrations are typically made via Authorized Entry Points (AEPs), which are designated entities (often government bodies or specialized firms) in signatory states. Registration itself can be handled in a few ways:

• Direct Registration (Transacting User Entity – TUE): Parties involved in the transaction, such as the lender, buyer, and seller, can become a Transacting User Entity (TUE). This requires obtaining a paid user license for direct access to the IR.
• Via a Professional User Entity (PUE): Alternatively, parties can opt to use a Professional User Entity (PUE). This is often a specialized firm or, as commonly seen in aircraft sales, an Escrow company. The lender, buyer, and seller can all appoint the same PUE to manage all necessary registrations on their behalf. Given that an Escrow company is typically already involved in facilitating aircraft sales (especially for aircraft falling into one of the four eligible categories), handling IR registrations can be an easy and efficient addition to their existing services.

The register is fully searchable, allowing potential buyers, financiers, and lessors to verify any existing interests on an aircraft before entering into a transaction. A ‘priority search certificate’ from the IR provides a comprehensive overview of all registered claims.

The Role of a “Closing Room” in Aircraft Transactions

Some Escrow companies offer a specialized “Closing Room” service, which is a virtual space designed to coordinate complex aircraft transactions. As the central coordinator, the Escrow company ensures that the interests of all parties – the lender, buyer, and seller – are simultaneously met. They meticulously hold all necessary registrations and documentation until they receive final acceptance from everyone involved to proceed in the transaction. Once the Escrow company gets the green light, they release all registrations and officially file the aircraft, significantly lowering the transaction time by enabling simultaneous steps. For aircraft registered with the FAA, they will also handle the required FAA filings.

While the International Registry (IR) should ideally be a common practice in every aircraft transaction, there can be some hurdles. From our experience, the IR system generally works seamlessly for US-registered aircraft. However, for EASA-registered aircraft, we sometimes encounter challenges. Therefore, it’s always highly recommended to independently verify with the Civil Aviation Authority (CAA) of the country where the aircraft is registered whether there are any existing loans or mortgages on the aircraft. This extra step ensures 100% certainty that the deal can proceed smoothly without any undisclosed issues before closing.

3. Benefits of International Registry Registration

Implementing the International Registry has brought significant advantages to all parties in the aviation sector:

• Enhanced Legal Certainty & Priority: The ‘first-to-file’ principle offers robust legal certainty, meaning the first registered interest takes precedence. This protects buyers, sellers, lessors, and financiers against conflicting claims, especially in complex cross-border scenarios.
• Reduced Financing Costs: By increasing certainty for creditors, the IR lowers the risk of default and disputes. This often translates to more favorable financing terms and lower borrowing costs for aircraft acquisition.
• Facilitation of International Transactions: Standardizing the rules for recording interests makes it much easier to trade and finance aircraft internationally, regardless of the nationality of the parties involved or the aircraft’s registration.
• Protection in Insolvency: The IR provides specific protections for registered interests if the debtor becomes insolvent, which is a crucial benefit for financiers and lessors.

4. The Role of the IR in Aircraft Transactions

The International Registry plays a pivotal role in nearly every significant transaction involving an eligible aircraft:

• For Buyers: As a buyer, a diligent check of the International Registry is essential to ensure that no unexpected financial interests are attached to the aircraft. This prevents unwelcome surprises after your purchase.
• For Sellers, Lessors, and Financiers: Registering your interest in the IR is vital to protect your rights and establish your priority over other parties. This is standard best practice in international aviation finance and crucial for safeguarding your investment.

5. What Aircraft Are Eligible for the International Registry?

The International Registry covers specific ‘aircraft objects’ as defined under the Cape Town Convention:

• Aircraft Airframes: These must be type-certified to carry at least eight persons (including crew) or goods exceeding 2,750 kilograms (approximately 6,063 lbs).
• Aircraft Engines: Engines with at least 1,750 pounds of thrust (for jets) or more than 550 horsepower (for turboprops).
• Helicopters: Helicopters capable of carrying at least five persons (including crew) or goods exceeding 450 kilograms (approximately 992 lbs).

Smaller aircraft, such as most single-engine piston planes, typically fall outside the scope of the International Registry.

Next to these qualifications, the buyer/debtor must be based in one of the contractor states. The Cape Town Treaty excludes propellers, avionics and other aircraft/helicopter parts and accessories for registering.

6. International vs. National Registries: Understanding the Difference

It’s important to distinguish between national aviation registries (like the FAA registry in the U.S. or national registries within EASA countries) and the International Registry.

• National Registries: These registries primarily focus on nationality and ownership registration, as well as the operational aspects of an aircraft within a country’s jurisdiction. They confirm which country oversees the aircraft’s airworthiness and operations.
• International Registry (IR): The IR is specifically designed for registering financial interests (such as mortgages, leases, or sales contracts) in mobile aircraft assets. Its purpose is to establish the priority of these interests, independently of the aircraft’s national registration. Therefore, an aircraft can be nationally registered in one country but have various international interests recorded in the IR.

Both registration systems are complementary. National registration is a prerequisite for flight operations, while IR registration is critical for protecting financial and ownership rights in an international context.

Do you have questions about the International Registry or need guidance for buying or selling an aircraft? Contact our experts today for professional advice. You can reach us via sales@faaircraftsales.com.