Content area
Abstract
For airlines, one of the most significant challenges in the 1990's will be to finance the enormous fleet replacement and expansion activities they have undertaken. Because airline earnings tend to by cyclical and industry returns on capital investment have traditionally been poor, lenders have come to rely increasingly on asset based methods to finance aircraft acquisitions.
On account of the prevalence of asset based financing, the underlying legal structures must be able to reassure the lender, to a reasonable extent, that its interests in the aircraft will be protected and recognized.
In Canada, the legal structures for taking security on aircraft are complex, as such interests are governed by the diverse provincial laws regarding security on moveable property generally. Moreover, rights in aircraft are not registered in one central location, but must be filed in accordance with the legislation of each province where the aircraft is likely to be used.
The establishment of a central registry for security interests in aircraft would assuredly contribute to the future development of Canadian civil aviation. It would do away with multiple provincial registration of rights in aircraft and thereby add a considerable measure of certainty in the field of asset based aircraft financing.
