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Air carrier operations
What procedural and documentary requirements must air carriers meet in order to operate in your jurisdiction?
Under EU Regulation 1008/2008 on common rules for the operation of air services, air carriers established in the European Union must obtain an operating licence that permits them to provide intra-EU air services, as stated in the operating licence, unless:
- the services are performed by non-power-driven aircraft or ultralight power-driven aircraft; or
- the air carrier operates only local flights.
In Malta, licences are issued by the Civil Aviation Directorate (CAD) and regulated by the Civil Aviation (Air Transport Licensing) Regulations.
An air carrier will be granted an operating licence only if:
- its principal place of business is in Malta;
- it has a valid air operators certificate from the CAD;
- it owns or holds one or more aircraft through a dry lease;
- its main occupation is operating air services in isolation or combined with another commercial operation of aircraft or the repair and maintenance of aircraft;
- it has a transparent company structure;
- it is majority owned and controlled by EU member states or nationals;
- it complies with the various financial requirements;
- it complies with the various insurance requirements; and
- it is of good repute and has not been declared bankrupt, as proven by documents or a declaration under oath.
Ownership and control
Do any nationality or other requirements or restrictions apply to ownership or control of air carriers operating in your jurisdiction?
Under EU Regulation 1008/2008, for an air carrier to be granted an operating licence, it must be at least 50% owned and effectively controlled by EU member states or nationals, whether directly or indirectly through one or more intermediate undertakings. Agreements with third countries, to which the European Union is a party, may make exceptions to this obligation.
What financial thresholds must air carriers meet to obtain operating authorisation?
Under EU Regulation 1008/2008, first-time applicants must demonstrate to the CAD that they can meet:
- at any time, actual and potential obligations for a 24-month period commencing from the start of operations. In this respect, they must submit a business plan for, at a minimum, their first two years of operation; and
- fixed and operational costs incurred for operations according to their business plan for a three-month period commencing from the start of operations, without taking into account any income from their operations.
Under the Civil Aviation (Air Transport Licensing) Regulations, applicants must submit:
- internal management accounts and, if available, audited accounts for the previous financial year;
- a projected balance sheet, including profit and loss accounts, for the following two years;
- the basis for projected expenditure and income figures concerning fuel, fares and rates, salaries, maintenance, depreciation, exchange rate fluctuations, airport charges, insurance, traffic and revenue forecasts;
- details of start-up costs incurred between the submission of their application to the commencement of operations and a proposal to finance this cost;
- details of existing and projected sources of finance;
- details of shareholders (including nationalities and the types of share to be held) and the articles of association;
- projected cash flow statements and liquidity plans for the first two years of operation; and
- details of the financing of aircraft purchasing and leasing.
What is the required level of insurance coverage for air carrier operations?
EU Regulation 785/2004 includes insurance requirements for air carriers and aircraft operators. The amounts are calculated in special drawing rights (SDRs) – which are a weighted average of various convertible currencies and the International Monetary Fund unit of account – and are as follows:
- Passenger liability – minimum 250,000 SDR per passenger;
- Baggage liability – minimum 1,131 SDR per passenger;
- Cargo liability – minimum 19 SDR per kilogram (kg);
- Third-party liability – this varies according to the aircraft’s maximum take-off mass (MTOM). For aircraft with an MTOM of less than 500 kg, the minimum is 750,000 SDR. For aircraft with an MTOM of 12 to 25 tons (eg, regional jets), the minimum is 80 million SDR. For aircraft with an MTOM of 200 to 500 tons (eg, long-haul jets) the minimum is 500 million SDR.
What safety requirements apply to air carrier operations, including with regard to professional and technical certifications?
EU Regulation 1008/2008 requires air carriers to obtain an air operators certificate (AOC), which is a prerequisite for receipt of an operating licence under the same regulation. An AOC confirms that the operator is sufficiently professional and organised to ensure the safety of operations as specified in the AOC. An AOC must be issued by the CAD and is regulated by the Civil Aviation (Air Operators Certificates) Act.
The CAD will grant an AOC only if it is satisfied that the air carrier is competent, with particular regard being given to its:
- previous conduct and experience;
- maintenance; and
- other arrangements to secure the safe operation of its aircraft.
In determining a carrier’s competency to operate aircraft, the CAD will consider whether it can meet the applicable safety requirements according to law. AOCs are valid for one year. Under the Civil Aviation (Air Operators Certificate) Act, CAD decisions can be appealed before the Aviation Safety Board.
In addition to an AOC, air carriers must obtain an airworthiness certificate, which are issued by the CAD as the Maltese advisory body to the European Aviation Safety Agency (EASA). The main legislation in this regard is the EU Regulation on Initial Airworthiness (748/2012) and the EU Regulation on Continuing Airworthiness (1321/2014).
What environmental obligations apply to air carrier operations?
As Malta is part of the European Union, the regulation of environmental obligations relating to aviation is divided into two categories:
- Aircraft noise – the main legislation in this regard is the EU Balanced Approach Regulation (598/2014), which sets out noise-related operating restrictions at EU airports and tasks the EASA with collecting, verifying and publishing noise performance information concerning aircraft which operate at EU airports. The Assessment and Management of Environment Noise Regulations also transpose EU rules, which require Malta to carry out noise mapping and adopt action plans in order to prevent and reduce exposure to noise. The Air Navigation (Noise Certification and Operation of Aircraft) Order grants the CAD the power to issue noise certificates pursuant to Annex 16 of the Chicago Convention on International Civil Aviation.
- Aircraft emissions – the EU Greenhouse Gas Emissions Trading Scheme for Aviation Regulations transpose EU rules which oblige carriers to participate in the EU Emissions Trading System in relation to flights within EEA airspace. This requires them to monitor their carbon emissions and buy and surrender allowances equivalent to those emissions.
Air traffic control
How are air traffic control services regulated in your jurisdiction?
The CAD regulates air traffic control in accordance with:
- the Air Navigation Order;
- the Civil Aviation (Provision of Air Navigation Services) Order;
- the Civil Aviation (Distribution of Traffic Rights) Regulations; and
- the Civil Aviation (Air Traffic Flow Management) Regulations.
The CAD has the power to, among other things, licence air traffic controllers and restrict or prohibit flights over Malta.
Do any licensing requirements apply to specific routes?
An operating licence obtained under EU Regulation 1008/2008 is valid within the European Union, the European Economic Area and Switzerland. For routes outside these areas, permission is required under a bilateral air services agreement. In the absence of such an agreement, commercial air services may be undertaken on a temporary basis at the CAD’s discretion.
Are any public service obligations in place with respect to remote destinations?
Do any special provisions apply to charter services?
What taxes apply to the provision of air carrier services?
Under the Income Tax Act, income derived from the leasing or operation of aircraft or aircraft engines which are used for or employed in the international transport of passengers or goods is always deemed to have arisen outside Malta irrespective of:
- where the aircraft or aircraft engines are registered; and
- whether the aircraft has called at, or operated from, an airport in Malta.
Therefore, air carriers which are managed and controlled in Malta are taxed on a remittance basis (ie, only on income which is remitted to Malta). However, air carriers incorporated in Malta are taxed on a worldwide basis (ie, they are still taxed on their income at the standard 35% corporate tax rate, even though it is deemed to have arisen outside Malta). Air carriers which are neither incorporated nor managed or controlled in Malta pay no income tax, as their income is deemed to have arisen outside Malta.
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