In the past two years, a number of German airlines have filed for insolvency proceedings, including Air Berlin, Azur Air, Small Planet Airlines, PrivatAir and Germania. As such, it is important for aircraft lessors and owners to know the requirements for keeping an aircraft in the national aircraft registry, particularly if its lease has been terminated.
The aircraft registry is maintained by the Luftfahrt-Bundesamt (LBA). As a so-called 'owner registry', it records aircraft owners' names and registered addresses. If an aircraft is not operatored by the aircraft's owner, the operator's name and address (as the aircraft operator) is also recorded.
Under lease and sub-lease arrangements, the sub-lessee (and not the lessee) is recorded because the sub-lessee is solely responsible for operating the aircraft under German law.
The LBA's certificate of registration lists only the aircraft's owner, unless it is a so-called 'third-country owner' (ie, not an entity belonging to an EU member state or a state in which EU aviation law applies, such as Switzerland). If an aircraft is registered under the name of a third-country owner, the lessee's (or sub-lessee's, as applicable) name and address is listed on the back of the certificate.
Lease or sub-lease agreements cannot be listed in the aircraft registry; however, copies of dated and signed lease and sub-lease agreements must be submitted to the LBA. Lessees and sub-lessees must prove their entitlement to the quiet enjoyment of an aircraft, through any intermediate lessor, in order to comply with their obligations as aircraft operators (eg, keeping an aircraft in an airworthy condition).
Under Section 3 of the Aviation Act, an aircraft will be registered in the aircraft registry if:
- it is owned by an entity from an EU member state (ie, the majority of its assets or capital are owned by and the actual control thereof lies with persons of EU states and the majority of its representatives or liable persons are from EU member states, or
- the owner has entered into a lease or similar agreement with an entity from Germany or another EU member state and has the right to possess the aircraft for at least six months.
If a third-country aircraft owner terminates the lease of a German airline but wants to keep the aircraft registered in Germany (at least for a certain period after the lease is terminated), it must enter into a new lease or similar agreement with an entity from an EU member state for at least six months. The entity need not be an airline with an operating licence and the agreement may include a clause that entitles each party (or exclusively the lessor) to terminate the agreement prior to the end of the six-month-term.
On the other hand, EU member state owners need not enter into new lease agreements to keep an aircraft registered with the LBA. However, if the owner has not leased the aircraft to another person, the owner will be considered the aircraft operator which is, among other things, responsible for any damage caused to third parties and any passenger damages. They are also responsible for keeping the aircraft in airworthy condition. Hence, if the aircraft owner does not have an active lease or similar agreement with another person, it must:
- enter into a continuing airworthiness management organisation (CAMO) contract; and
- be the insured under the required liability insurances.
MA201(a) of Annex I (Part-M) of EU Regulation 1321/2014 (26 November 2014) on the continuing airworthiness of aircraft and aeronautical products, parts and appliances and on the approval of organisations and personnel involved in these tasks (recast) (as amended) states that aircraft owners are responsible for the continuing airworthiness of their aircraft and must ensure that no flights are made unless:
- their aircraft is kept in an airworthy condition;
- any operational and emergency equipment is correctly installed and serviceable or clearly identified as unserviceable;
- their aircraft's airworthiness certificate remains valid; and
- aircraft maintenance is performed in accordance with the approved maintenance programme as specified in MA302 of Part M.
Such responsibilities are transferred from the owner to the lessee (see MA201(b) of Part-M) only if the aircraft is leased and the lessee is either stipulated in the registration document or detailed in the leasing contract.
If an aircraft is used for commercial air transport by an airline, the airline is responsible for the continuing airworthiness of the aircraft that it operates and must be approved to do so under a CAMO licence, as part of its LBA-issued air operator certificate (MA201(h)(1) of Part-M).
Therefore, if a German commercial airline's lease is terminated and the owner repossesses the aircraft, the tasks associated with continuing airworthiness must be contracted to another approved CAMO in order to keep the aircraft in the German registry. The LBA must receive a copy of the contract between the aircraft owner and the CAMO, and approve the CAMO's aircraft's maintenance programme.
If the aircraft owner does not want to be regarded as the (responsible) operator of the aircraft and has therefore leased the aircraft to a new lessee (which is a requirement for third-country owners), the new lessee must enter into a contract with a CAMO and submit a copy of that contract to the LBA, provided that the new lessee does not have its own CAMO licence.
Depending on whether the aircraft owner will enter into a new lease, either the aircraft owner or the new lessee (in either case, the insured) must submit evidence to the LBA confirming that it maintains (at least) the legally required amounts of liability insurance for the aircraft (both the Aviation Act and EU Regulation 785/2004 (as amended) refer to the same amounts).
Insurance certificates submitted to the LBA must specify liability amounts in special drawing rights as follows:
- per aircraft for third-party legal liability;
- per passenger for bodily injury, delay in carriage, damage and delay of baggage; and
- per kilogram of cargo during commercial flights.
In addition, a declaration from the (lead) insurer must be submitted to the LBA confirming that it is authorised to do business in Germany pursuant to Sections 105 and 106 of the Air Traffic Licensing Regulation. This declaration must be provided to the LBA either with the original signature of the (lead) insurer or emailed directly from the (lead) insurer.
Third-country and EU aircraft owners that have no registered address in Germany must have a German process agent for all communication between them and the LBA. At the beginning of a lease, such owners usually authorise the commercial German airline to which they lease the aircraft to act as their process agent. However, if the lease has been terminated, the owner may want to authorise another person to act as its process agent and must notify the LBA accordingly.
For further information on this topic, please contact Christine Kranich at Arnecke Sibeth Dabelstein by telephone (+49 403 177 9756) or email (email@example.com). The Arnecke Sibeth Dabelstein website can be accessed at www.asd-law.com.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.