Isle of Man: The British Crown Dependencies - Ready For Take Off!

Last Updated: 15 July 2014
Article by Brian Johnson

The British Crown Dependencies are self-governing possessions of the British Crown and distinct from the UK Overseas Territories. There are three Crown Dependencies, the Bailiwicks of Jersey and Guernsey in the English Channel and the Isle of Man in the Irish Sea.

All are independently governed jurisdictions, with their own currencies, and none forms part of the UK, the Commonwealth of Nations or the European Union (EU). Although not a Member State of the EU, uniquely the Isle of Man forms a common area with the UK for Value Added Tax and customs purposes. The Crown Dependencies, together with Great Britain are known collectively as the British Isles.

Corporate aircraft have traditionally been registered in the home state of the owner. Alternatively, before May 2007, there were also three offshore aircraft registers in the Caribbean region, Aruba, Bermuda and the Cayman Islands. There are now over 190 private aircraft registered in the Cayman Islands, and more than 300 registered in Bermuda in both the public and private categories, many of which are owned by multinational companies or high net worth individuals.

Operating a business jet makes practical business sense for a successful international corporation. Two-day airline ordeals can be turned into an efficient one-day in and out journey, enabling business travellers to go direct to international markets quicker and more frequently. Business jet travellers regularly benefit from time-saving, schedule flexibility, efficiency and security.

The world's largest register of business aircraft is the USA, currently there are nearly 12,000 business jets on their register and whilst the majority are owned by US Corporations and US Nationals, a large percentage are owned by non-nationals through US Trusts. The number of aircraft foreign owned through trusts technically makes the US the largest global offshore register.

The Isle of Man Registry

In May 2007, the Isle of Man established an aircraft registry purely for private/corporate aircraft. As the Island could never be a contracting state to the International Civil Aviation Organisation (ICAO) it needed the UK as the contracting state to accept international responsibility for the register. The Isle of Man was the ninth aircraft register for which the UK accepts responsibility, the others being the Overseas Territories of Anguilla, Bermuda, British Virgin Islands, Cayman Islands, Falkland Islands, Montserrat, Turks and Caicos and of course the UK's own register administered by the CAA. The UK's register has the nationality prefix 'G' followed by four characters, to provide a unique aircraft registration mark.

The UK had also been allocated a number of registration prefixes for potential future use by its Territories when ICAO was formed in 1944. Among these was the prefix 'M' which, at the beginning of the aviation industry, had originally been chosen by Spain, presumably with deference to its capital city Madrid. In 1931, Spain changed its civil aircraft register prefix to 'EC' for España Civil and 'M' remained in the UK allocation until it eventually became the perfect prefix for the Isle of Man.

The start of the Isle of Man register in 2007 could not have been better timed, with the economy still rapidly expanding, orders for some business jet models were sold out for up to five years ahead. Pre-owned jets were trading at a premium and changing hands above their value because buyers were willing to pay more to take delivery sooner, rather than endure years waiting for their new aircraft. Unlike other aircraft registers the Isle of Man was dedicated only to the registration of high quality private/corporate business jets and twin-turbine engine helicopters and does not register aircraft for commercial air transport. From day one it recognised that for successful global businesses, corporate aircraft are essential business tools and to

operate efficiently they need the support of a service driven, pragmatic regulator which sets high safety standards.

Uniquely for a Crown Dependency, the Isle of Man offers a distinct advantage for aircraft owning structures with its business-oriented customs division allowing for the speedy processing of VAT registration applications. Its small but efficient airport is a popular entry point for the importation of aircraft into the EU.

Registry in the Channel Islands

Hoping to emulate the success of the Isle of Man, in 2013 the Channel Islands of Guernsey and Jersey considered establishing a joint Channel Islands aircraft register. However, it was decided that a joint register could not meet the separate operational and commercial interests of both Islands and it was agreed that each jurisdiction would move ahead with separate plans for two new aircraft registers. In December 2013, Guernsey launched its new aircraft registry, choosing '2' as its nationality prefix followed by four characters.

In the third quarter of 2014, the third Crown Dependency Jersey plans to launch its new aircraft registry. Jersey is the largest of the British Channel Islands and is located 85 miles from the South coast of England and 14 miles from France. The financial services and legal sectors account for around two-fifths of the total economic activity. Jersey will soon announce its registration prefix and aims to establish a professional, well-resourced and efficient register to complement its well-regulated financial services sector.

Advantages to Registering

There are many advantages to registering an aircraft offshore. Firstly high regulatory standards, privacy, the identity of the aircraft owner can remain undisclosed, the flexibility to validate different nationalities of pilot's licences, the ability to transfer your personal registration marks to a new aircraft, a politically neutral registration mark when flying in sensitive parts of the world, a secure mortgage register for financial institutions, favourable company tax and high international service standards as all offshore jurisdictions are regularly dealing with global organisations in different time zones. All three Crown Dependencies accept (or will accept) the same qualifying owners as the UK including Commonwealth and EEA citizens and companies. The Isle of Man is also adding Switzerland as a qualifying country.

The Future Looks Bright for Business Aviation

Following the credit crunch of 2008, the business jet market took a huge battering, with some manufacturers reporting order numbers dropping by two-thirds between 2008 and 2010. Chief Executives with jets on order quickly cancelled for fear of shareholder revolt, and the market for small and mid-size entry-level jets has still not recovered. Despite larger high quality intercontinental jets continuing to be sold, 2013 saw the first rise of 0.9% in business jet deliveries since 2008. Honeywell's annual Business Aviation Outlook forecast, in late 2013, estimates up to 9,250 deliveries of new business jets valued at over $250 billion through 2023, which indicates a reassuring busy decade lies ahead for business aviation.

Offshore aircraft registers will soon have doubled in number during the last seven years and the three independent Crown Dependency registers, geographically convenient to Europe, within the same time-zone and familiar with servicing global clients, will probably attract a large number of traditionally 'home' registered corporate jets 'offshore' in the future.

This article first appeared in the Legal Week Offshore Feature in April 2014.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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