2019 will most likely go down as a transformative year for Malta’s aviation sector. The country’s aviation registry is expanding like never before and quickly approaching 400 aircraft. Malta’s legislative framework has turned it into a recognised address for the registration of both private and corporate jets, while maintenance, repair and overhaul (MRO) providers, including Lufthansa Technik and SR Technics, have added to the appeal. Vistajet, one of Europe’s largest private jet operators, is headquartered on the island, while Ryanair recently launched a subsidiary airline called Malta Air and announced it will be registering some 60 planes on Malta’s aircraft register. Aviation is today one of the fastest growing industries in the country, and the government has identified aircraft leasing, finance and chartering as priority areas for the next phase of the sector’s development.
There is no doubt that Malta’s expanding aviation register is a key driver behind the growth of the industry, which today contributes 2.5% to Malta’s GDP and accounts for more than 3,200 jobs. There are currently some 320 aircraft flying the 9H country prefix, ranging from small private jets to the gigantic Airbus A380 double-decker. Spectacular growth in Malta’s business aviation has elevated the country to eighth place in world rankings, based on the number of aircraft registered. Corporate charter airlines such as Comlux, Orion Malta and Air X Charter, as well as charter and wet lease operator HiFly, have not only registered aircraft but also opened subsidiaries in the country. In total, 37 airlines today operate with a Maltese licence.
The reason for Malta’s attractiveness is its Aircraft Registration Act, which strives to do away with unnecessary red tape, while maintaining the added protection of being fully recognised by EU law. The legislation provides a lot of flexibility, allowing the registration of an aircraft while it is still under construction, the recognition of fractional ownership and the regulation of trust agreements in the holding of aircraft assets. The regulator, Transport Malta, offers fees that are amongst the most competitive in the EU, as well as streamlined regulations that are in full compliance with the international safety standards set out by the European Aviation Safety Association (EASA).
A Focus on Finance
Malta is also seeking to position itself at the forefront of aircraft finance transactions. The country has long ratified the Cape Town Convention, which is widely recognised as the market standard in aircraft finance. The Convention provides certainty to investors in the event of debtor defaults and details procedures that should be undertaken if this happens, such as taking possession or control of the aircraft, selling or granting a lease on the aircraft, and collecting or receiving any income or profits arising from the management or use of the aircraft. Malta is also well placed for the structuring of air finance deals through various methods, such as syndicated loans and securitisation. A wide variety of asset classes can be securitised under Malta’s Securitisation Act, including lease/charter payments for aircraft. In addition, the regulator has developed a procedure for aircraft leasing which makes the purchase and subsequent lease of an aircraft more attractive, whereby VAT becomes due only for the time an aircraft operates in the European Union. With 40% of the world’s aircraft being leased today, this sector could offer tremendous future opportunities for Malta.
Safi Aviation Park
A Sustainable ecosystem
Malta’s modest cost-base and highly competitive fiscal framework are key to its success in growing the aviation sector, and like all industrial growth in the country, improvements in physical infrastructure underpin development. Malta’s cluster of aviation support companies has seen extensive investment by government in order to facilitate their operations. This investment has been mostly centred on the 240,000 sqm Safi Aviation Park, a specialised industrial area providing secure, airside facilities for the industry, particularly within the MRO sector. However, there is a clear desire to attract more private jet operators and repair facilities.
Legal and accountancy firms in Malta are increasingly focusing on advising owners and operators, as well as financiers, lessors and lessees, on all aspects of the global aviation business. Added to its very supportive environment, Malta has taken strides to attract an even greater share of top-tier talent and world-class firms by extending tax-friendly policies, originally drawn up for the finance industry, to the aviation sector. Aircraft managers from overseas benefit from reduced income tax rates - one of the many incentives that bring foreign talent to the sun-drenched island and EU member state.
Corporate charter airline Comlux has registered aircraft in Malta
Growth on the Radar
There are many indicators that suggest Malta’s aviation sector will continue its remarkable expansion over the next two years and more. With a growing aircraft register, its competition-beating regulatory services, and a government committed to providing significant incentives, Malta is in a strong position to consolidate its gains in the sector. The government has also announced its intention to make further enhancements to the registration act and introduce other innovative incentives that will improve what Malta has to offer in order to retain its competitiveness on a global scale. Although the global aviation industry is being challenged for profitability, growth for the years ahead seems to be assured by an increasing demand for safe and efficient transport in nearly every corner of the world. The watchword for Malta’s success story in aviation has been ‘efficiency’ and continuing to engineer the conditions to sustain its efficiency will be key to the sector flying even higher.
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Photo Credits (Malta International Airport): Alex Turnbull