Q 1 (A)
Rights of property of aircrafts are well different from other assets, for their complex nature of mortgage, hire purchase transactions, charters, installment and the like. The money to be sent on the security of the mortgage of an aircraft is according to the law of the country of aircraft production. The rights of buyer are well secured when the transaction takes place. Buying and selling of an aircraft is an international concern due to security regulations. The mobile nature of the equipment is the reason behind the cross border claims for a constant risk to the aircraft financers' security as well as owners'.
According to Buttler (1987), the single most problematic aspect of aircraft financing is the extent to which security is guaranteed for the spare parts. The high valued components which are interchangeable for some commercial and technical reasons are incorporated or attached to aircrafts. It is common for the airlines which operate in aircrafts with the components and engines cannibalization time to time.
Qualified aircraft owners in England have the right, under article 28n of the EU Sixth Directive, of free circulation. The various documents required to purchase an aircraft are as follows: 1) Certificate of airworthiness, 2) certificate of Registration, 3) radio station authorization, 4) FCC Restricted Radiotelephony Operator Permit, 5) Pilot Operating Handbook, 6) Weight and Balance schedule, 7) Pilot identification, passport etc, 8) Insurance Certificate that show the appropriate coverage and amount of cover, 9) Pilot's medical certificate and 10) License of Pilot that show the privileges for the aircraft and conditions of the flight.
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The Radio Station Radiotelephony Operator Permit is required for each pilot, so if the aircraft is to be flown by four pilots, each should have this permit.
If aircraft is not based in EU, it is important to get it the right way otherwise you will be forced to pay VAT an only one hope to get it back when you leave EU. You have to fill out a form C108, if your aircraft is not EU based. This document needs to be stamped at the UK port of entry and it should be valid through Europe. Similarly, you have to hand in the document at European port at departure, to complete the process.
Owners of aircraft have liability for owing it. Antom, J.L. (1998), explained the product liability as liability of manufacturer or seller whose product can cause injury to an individual. He mentioned at least four objectives of liability: to compensate accident victims, to deter injuries, to spread risk equitably and to enhance the innovation and safety. Because the state law govern the tort liability laws for aircraft legislation, there is a little variation between jurisdictions in USA. Most of them are agree with it.
According to Clifford (1970), the noise associated with the urban people is a big environmental liability. A large portion of population are affected by this pollution, therefore, make the proper noise management particularly important.
Therefore, it is important to consider this factor while buying or selling aircraft.
Outline the main provision of and aircraft lease.
Large number of people is interested in acquiring aircraft. Aircraft financing has become just like asset based financial structure. The operating lease is common for aircrafts. The liberalization in the markets of Europe has resulted in emergence for new airlines in most of European countries. These new airlines are minimally capitalized and it is difficult to finance a new business. The transactions are global now and no matter where is the customer domiciled; the aircraft can be financed easily. For example, aircraft to be used in Europe can be financed by consortia of Japanese and American institutions, using tax lease. An example of international aircraft financing is the ownership of GPA, whose shareholders are one third Japanese, one third European and one third North American.
The finance leases of England have the following characteristics:
Ø The aircraft is selected by the lessee and it is supplied by manufacturer or dealer
Ø The lesser has ownership
Ø The lessee has to carry the risk of obsolescence and has exclusive rights to fly the aircraft
Ø The term of the lease covers all or a part of the working life of the aircraft
Ø Profits, after the payments of all the expenses will be made by lesser
Ø The agreement may contain provision that lesser carries no loss for the early termination of the lease
For a lease, in the UK, to be able to receive tax allowances, it must not include a lessee purchase option. It is not true, however, in many other countries where there is no tax on leasing and it includes hire purchase and lease purchase. A US capital lease and French finance lease, for example, are leases with built in purchase option.
Distinguish between wet and dry aircraft lease
Wet and Dry leases are common terms of aviation for operating leasing with some service and maintenance according to agreement.
1. Dry Lease The most common arrangement is dry lease, where a lessee is provided aircraft without any crew to operate it. The lessee takes the obligation of maintenance and insurance.
2. Wet Lease The lesser may provide all of het services to operate the aircraft, in this case. These services include flight crew, insurance and maintenance but the lesser has operational control of the aircraft for the full time. The commercial control of the aircraft, such as the right to sell cargo/seat capacity of the aircraft, goes under the control of lessee. Another point to be considered here is that wet leasing occurs generally between the airlines and it is operated by the lesser for lessee and it uses lessee's flight numbers and name.
It performs the commercial purpose as it were lessee's flight. It is important here to distinguish the wet leasing from charter arrangement, where in the later the operator manage flights for a non-airline third party.
Governments worldwide are greatly concerned about the protection of passengers, crew, cargo, aircraft and aviation as a whole. The National Aviation Security Program (NASP) of UK has led the way and many governments are regarding it as a model to follow. The aviation security program is very important for every country. For example, the European Union and the US have the strongest and most progressive aviation control programs in the world. United States has more control over the operations of its air carriers than the EU has over it territory.
According to the Civil Aviation Safety Regulations of 1981 section 4 (1), the Chief Civil Aviation Safety is responsible for a comprehensive safety plan. The authority for security must require the operators to provide service from state to implement the security program.
The enormous scale and industry's economic importance
Fiorita (1993) has used the old phrase 'necessity is the mother of invention; to emphasize the reason for aviation security. He argued that security in aviation has been progressing in leaps and bounds than the other modes of transportation. In spite of increased security measures, there have been acts of violence, such as hijacking, bomb explosion and mass murders in aircrafts. This violence, he informed, is the main reason for powerful security measures. After the Air India Flight incident of 1985, the violence was considered to be a world problem and the need for security measures was increased.
Dempsey (2003) argued the need for Aviation Security as the commercial aviation has been the specific target of terrorist attack. The tragic moments of September 11, 2001 in USA has refocused the attention of all the world community to the problem of aerial terrorism.
The aviation industry is complex and huge and a tempting target for the criminals. It is international terrorism that has brought the importance to aviation security. The basic international agreement on the aviation security is ICAO Annex 17 to Chicago Convention, according to Innes (2005). Following the attacks of September 1, on USA, the EU passed a regulation that has the objective of establishment of common rules for the Civil Aviation Security. The key legislation of this field, in UK, are as follows: 1) Aviation Security act 1982, 2) Aviation and Maritime Security Act 1990, 3) Anti-terrorism \, crime an security Act 2001 and 4)Terrorism Act 2000. The Department for Transpiration in UK is responsible for aviation security. The department is appropriate authority under the international legislation. It is responsible for setting, monitoring and enforcing the NASP. Airport operators and UK airlines are requires t comply with NASP. Airport operators have an important role to play that requires much time and money. The BBA, for example, operates seven airports of UK, including Heathrow airport, spends more than £170m per year for t purpose of airports security and one third of its employees work as security guards, security duty managers or supervisors.
Security is founded on the basis of establishment of a secure area, generally known as ht restricted zone. The security systems are designed to detect and prevent any unauthorized material to enter in the restricted zone. This material may involve the use of technology like X-ray machine, image capture, explosive detection techniques, biometrics and many others. Other methods for the tight security of passengers is staff screening, profiling, training personal an baggage searches and police an military deployments. The cargo must be screened as well to ensure that there is no prohibited article.
The Aviation Security requirements are the part of Heightened Security Measures Direction 1/05. These measures are under review most of times.
Apart from MATRA, there are a number of initiatives that include the 100% hold baggage screening; the existing staff of UK airports has been extended to for the control of authority staff. Criminal record checks are introduced to people who are working on airport. A straightforward regime for the validation of the security of air cargo operations is in place now. A patrolling regime was launched with the agreement of police, in December 2003. Flight check security is another big issue. The standard of ICAO requires the installation of the intrusion-resistant flight deck doors. Capability to deploy covert armed Police is in place. The industry is agreed for a tailored security regime for the lighter and smaller aircrafts.
The department for Transportation and the EU has machinery for monitoring the placemats of the arrangements for aviation and airports are inspected regularly. All this provides the feeling within the aviation industry to counter terrorism there is an appetite for the designation arrangements to catch up according to the requirements. Some people believe that this designation system requires some more payment that they are already funding throughout the business rate. The distinction between designated and non-designated airports is facing lack of credibility. There is an appetite within industry and part of the police, also recognized by the Department for Transportation for the arrangements of designation for the development of the UK airports and the airline sectors.
The national aviation Safety Plan is made to provide the following:
- The establishment of a control center to establish communication with the air carriers and the management of the airport.
- Matters of Civil Aviation Security should be agreed upon.
- The concerning Aviation matters of government departments should be clear and agreed upon.
- There is needed to make sure that the airport management and air careers are involved in eh process of Civil Aviation Security.
- Efficient methods of communication among all the bodies that have responsibility of Civil Aviation Security.
- There is also need for the integration of safety plan to be drawn by the management of the airports with a comprehensive plane.
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