On 23 December 2019 a 30% tax on services hired abroad by travel agencies located in Argentina was introduced. The fact that the new tax applied the day after its introduction created chaos for air companies as non-compliance can trigger fines with interest. The Argentine Tax Authority recently introduced a resolution to address the lack of clarity surrounding the collection of the new tax, but it will take time for carriers to implement the measures required to comply with the new regulations.
The Immigration Authority (DNM) repeatedly imposes substantial fines on carriers. Despite the fact that in many cases these fines have been wrongly imposed, airlines must pay any outstanding fines in order to file a judicial complaint against the DNM, so the fines are widely viewed as another cost of operating in Argentina. That said, a number of airlines have recently challenged the DNM's fines and the courts have given a clear sign that, even with the above difficulties, it is worth challenging this legal loophole.
In a recent Federal Civil and Commercial Court 2 case, the plaintiffs filed a complaint for damages for a rescheduled flight after a mandatory mediation hearing ended without a settlement. However, the court found that the change of flight schedule had complied with civil aviation and consumer rules. As a result, it rejected the claim and imposed legal costs on the losing party.
It is not unusual for immigration authorities to pursue airlines for infringements of the passenger documentation requirements which travellers must meet in order to enter a country. Argentina is no exception and the Immigration Authority (DNM) has been incentivised to detect passenger documentation infringements and collect fines from air carriers. However, a number of recent decisions regarding the DNM's imposition of fines in such cases could mark a turning point with regard to this issue.
The Federal Court recently heard a case in which two passengers claimed damages from Aeromexico after they had been ordered to disembark an aircraft for being disruptive. The case provides an insight into the question of whether consumer protection law trumps flight security concerns.
There was much progress in The Bahamas' aviation sector in 2019; in particular, the completion of the runway rehabilitation project at the country's gateway airport and the aircraft registry project. Unfortunately, there were also a few setbacks. This article provides an overview of the main issues that affected the aviation sector in The Bahamas over the past 12 months.
In recent years, there has been significant growth in air traffic to and from The Bahamas. As a result, the government has taken proactive steps to support this growth – notably, with upgrades to several of the country's busiest airports. For example, the Nassau Airport Development Company recently commenced a major rehabilitation project at the Lynden Pindling International Airport. This project will, among other things, include an asphalt upgrade to increase the runway's lifespan.
The Bahamas' flight information region airspace comprises tens of thousands of miles and is subject to significant overflight activity. Moreover, it is one of the most important airspaces and is worth millions in revenue. To further enhance the civil aviation sector, the government is seeking to create a self-funded and sustainable management programme in order to collect overflight fees, while paying the US Federal Aviation Administration a fee for the management of its airspace.
The Bahamian government continues to make progress towards enhancing its aircraft registry and ratifying the Cape Town Convention. For example, the Aviation Steering Committee (ASC) recently presented draft legislation to implement the Cape Town Convention to the Attorney General's Office. The ASC expects this draft legislation to be approved and presented to the Cabinet before the next government budget communication in Summer 2019.
For the first time, The Bahamas has embarked on an ambitious project to develop a national aviation policy to better coordinate and facilitate civil aviation activities to, from and within the country. Further, the ratification of the Cape Town Convention will better position The Bahamas as a key player in the global industry in terms of financing and leasing aircraft and will allow the country to compete in the aviation industry on a global level.
The Council of Ministers recently approved preliminary draft legislation amending the Passenger Data Processing Act. Among other things, the proposed changes concern the protection of individuals with regard to the processing of personal data, data exchanges and the cross-checking of passenger data following the identification of suspicious passengers. The changes aim to bring the act into line with the EU General Data Protection Regulation.
As a result of the Cape Town Convention on International Interests in Mobile Equipment coming into force in Bermuda, leasing companies, owners, lenders and other parties that deal with Bermudian entities participating in aircraft transactions and/or aircraft registered in Bermuda may opt to take the additional steps necessary to obtain the protections conferred by the convention. This article revisits key points concerning the implementation of the convention and declarations relating thereto.
The Federal Government recently issued an executive order with the potential to change the tax treatment of commercial aircraft leasing. Subject to that determination, the executive order sets new rules for commercial aircraft and engine leases. However, the executive order has created considerable confusion and doubts in the aviation sector.
A number of recent aircraft repossession actions have demonstrated that a majority of judges have correctly recognised lessor rights to repossession in the face of apparent lease agreement defaults. However, these decisions have not clearly cited the Cape Town Convention as their basis. The Brazilian judiciary's failure to unify repossession actions against a bankrupt lessee in a single court has meant that some lessors are subject to minority view decisions that can be upheld on appeal.
Following developments earlier in 2019, aircraft repossession has continued to be in the spotlight – yet again with regard to the Oceanair Linhas Aéreas SA (commonly known as 'Avianca Brazil') bankruptcy and, in particular, the experience of lessors that sought repossession of leased aircraft therefrom. In this case, and contrary to Avianca Brazil's pre-bankruptcy experience, a bankruptcy court failed to uphold the express provisions of the Bankruptcy Law 2005 and the Cape Town Convention
In respect of four aircraft that were recently repossessed before Avianca Brazil obtained bankruptcy protection, the Brazilian judiciary and civil aviation agency procedures worked reasonably well and Brazil's overall performance complied with its obligations under the Cape Town Convention. While all four aircraft were exported and de-registered within approximately two weeks, Brazilian customs authorities must still reassess the current export authorisation procedure.
A tax regulation that was promulgated in 2016 has taken effect in ways that are now affecting aircraft lessors and lenders to Brazilian carriers, including by imposing requirements concerning the identification of lessor entities' ultimate beneficial owners and increasing the document disclosure requirements on lessors and lenders in cross-border aircraft finance transactions. While the full impact of the new rules is still unclear, lessors and lenders to Brazilian operators should prepare to comply.