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27 November 2013
As the EU regime governing aircraft leases included in the third liberalisation package(1) had become imprecise and led to different interpretations, EU Regulation 1008/2008(2) was issued in order to harmonise application across the European Union by implementing the fourth liberalisation package, which clarifies the conditions for aircraft leasing.
Regulation 1008/2008 defines a 'wet lease' as "an agreement between air carriers pursuant to which the aircraft is operated under the AOC [air operator's certificate] of the lessor" (Chapter I, Article 2, Point 25).
One of the main principles introduced by the regulation is that an EU air carrier may freely lease aircraft unless this would endanger safety. These provisions are aligned with the principles established in EU Regulation 859/2008, which implements the EU-OPS.(3)
In October 1996 the Belgian Civil Aviation Authority (BCAA) adopted the Circular on the Leasing of Aircraft for Commercial Air Transport (OPS-05), which was based on both the third package (EU Regulation 2407/92) and EU Regulation 3922/91.(4) Unfortunately, the circular was not adapted to accord with the changes made in the aviation sector following the adoption of the fourth liberalisation package. Consequently, the BCAA continued to apply the old principles set forth in Regulation 2407/92, thus creating operational difficulties for Belgian air carriers.
After five years of inconsistencies between Circular OPS-05 and EU Regulation 1008/2008, the BCAA finally adopted the sixth edition of Circular OPS-05, which takes into account the liberalisation requirements.
This update highlights the main amendments to Circular OPS-5.
Within the framework of the fourth package, Regulation 1008/2008 establishes a liberalised principle according to which:
"[EU air carriers] can freely lease aircraft, except where this would lead to endangering safety. The Commission shall ensure that the implementations of such provision is reasonable and proportionate and based on safety considerations."
In other words, no limitations other than those imposed by the regulation can be applied to lease agreements to which an EU air carrier is party. Prior authorisation by national authorities must be given on a proportionate and reasonable basis. A wet lease agreement can be refused only due to safety concerns.
Until April 2013, the BCAA did not comply with these principles, as Circular OPS-05:
These conditions were clearly not linked to safety standards and consequently restricted the operational possibilities of Belgian operators.
Circular OPS-05 as adopted in April 2013 has been brought into line with EU Regulation 1008/2008 and now provides that "according to Regulation 1008/2008... a wet lease-in from a Community Air Carrier can be refused for safety reasons".
Pursuant to Regulation 1008/2008, wet lease-out operations between a Belgian lessor and a non-EU air carrier lessee do not require prior approval from the national authority. This is consistent with the EU-OPS. Notwithstanding these provisions, which are directly applicable under Belgian law, Circular OPS-5 until recently required prior approval of wet lease-out operations by the BCAA. In addition, the circular provided that "[t]he wet lease-out period should normally not exceed 45 days", implying an administrative barrier for Belgian air operators.
The amended Circular OPS-05 now provides that no prior approval is required for wet lease-out operations, regardless of whether the lessee is an EU air carrier. This is in line with Regulation 1008/2008.
However, the wording of the circular remains unclear, as it further provides that "in case of wet lease-out to a CAC [Community air carrier] lessee, a notification replaces the demand". This wording erroneously insinuates that the legal regime for wet lease-out operations would be different depending on whether the lessee is an EU air carrier, which is not in line with Regulation 1008/2008.
The adoption of the sixth edition of Circular OPS-05 is welcomed and finally brings Belgian law into line with the liberalisation regime set out in Regulation 1008/2008. However, some principles remain unclear and it is hoped that the progress made with this sixth edition will be reflected in practice.
For further information on this topic please contact Pierre Frühling at Holman Fenwick Willan LLP by telephone (+32 2 643 34 00), fax (+32 2 643 34 88) or email (email@example.com). The Holman Fenwick Willan website can be accessed at www.hfw.com.
(1) Including EU Regulation 2407/92 on licensing of air carriers, JO August 24 1992, L 240/1.
(2) EU Regulation 1008/2008 on common rules for the operation of air services (recast), JO October 31 2008, L 293/3.
(3) EU Regulation 859/2008 amending EU Regulation 3922/91 regarding common technical requirements and administrative procedures applicable to commercial transportation by aeroplane, JO September 20 2008, L 254/1.
(4) EU Regulation 3922/91 on the harmonisation of technical requirements and administrative procedures in the field of civil aviation, JO December 31 1991, L 373/4.
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Pierre D Frühling