Aircraft leasing rules face probe into effectiveness

Date: 22/04/1999

By Renée Cordes

The European Commission plans to examine how aviation companies have implemented EU rules governing aircraft leasing which entered into force in 1992, and assess whether the guidelines need any clarification.

An official in the Commission's Directorate-General for transport (DGVII) said the institution had not reviewed how aircraft leasing firms had applied the law in practice since it was adopted. The official added that while the Commission did not intend to make fundamental changes to the directive, its examination might lead to minor modifications.

Acting Transport Commissioner Neil Kinnock will call for the study in a report on aviation which is scheduled to be adopted by the full Commission before the end of this month.

The Commission is also crafting an EU strategy on leasing and other air transport issues for the next round of global trade talks under the auspices of the World Trade Organisation.

Under the EU leasing directive, aircraft leased to airlines must either be registered in the country where the company operates or in another member state where it operates. However, the law also gives airlines the option of applying for a waiver in certain circumstances.

An EU government might, for example, grant an exemption if the airline was only leasing the plane for a short period or if it was forced to stop operating out of a certain country. The Commission official said the institution would look at whether airlines had made use of the provision for exceptions and seek to offer guidelines on how leasing could be best carried out.

A spokesman for one international express company said that although he was not aware of any problems with EU leasing rules, European airlines seeking to lease aircraft in the US sometimes faced hurdles. "There are regular talks between Europe and the US, and bilateral negotiations between the UK and US attempting to simplify leasing requirements," he said. "But the biggest problem seems to be requirements in the US, which are generally based on safety standards."

Industry and government representatives were due to meet in Brussels today (22 April) to discuss common issues and problems. But industry experts say these issues will almost certainly have to be resolved under the auspices of the WTO.

Following this week's informal meeting, which will examine cargo and other air transport issues ahead of the next WTO round, the Commission will draw up an EU strategy for the talks.

One airline analyst said that as European airlines increasingly moved towards forming alliances, that would also make it easier for them to purchase or lease aircraft together. "Of course, ultimately it depends on the individual alliance members whether to lease or buy, but alliances do make it easier in the long term."