Bermuda: Ready For Take Off - Bermuda Offshore Aircraft Registration

Last Updated: 3 January 2018
Article by Ernest Morrison and Janice Gutteridge

All aircraft must be registered with a national aviation authority in accordance with the Convention on International Civil Aviation ("ICAO") for the purposes of identifying the nationality assigned to the aircraft, and designated by the registration mark appearing on the aircraft. Careful consideration should be given to the choice of jurisdiction for registration of an aircraft due to a variety of factors, including, but not limited to, political stability, the reliability and flexibility of the legal remedies available, the reputation of the civil aviation authority and its regulatory standards, and financial and tax considerations.

Why register in Bermuda

Bermuda has established itself as a leading jurisdiction in a number of international business sectors, including insurance, reinsurance and aviation and shipping. Bermuda has a history of political stability and an active, business friendly Government, committed to transparency and global compliance standards. The legal system is based on the common law of England & Wales and disputes may be settled by way of arbitration or litigation, having a final right of appeal to the Privy Council in London. Additionally, Bermuda is a tax neutral jurisdiction, with no corporation, profit, or capital gains tax. An exempted undertaking, including one which owns or leases aircraft on the Bermuda register of aircraft (the "Register"), may apply to the Bermuda Government for an undertaking valid until 2035 that, in the event such tax is implemented, it shall not be applicable to the relevant undertaking.

The Bermuda registration marks, VP-B or VQ-B with two subsequent letters, are considered to be a neutral or "low-profile" mark and are accepted internationally. Information pertaining to the registered owner of an aircraft will only appear on the certificate of registration but will not otherwise be made publicly available.

Bermuda is a well-known jurisdiction for aviation financing. Institutional lenders are familiar with a variety of Bermuda special purpose vehicles used in conjunction with aircraft acquisitions and/or fleet renewals. Institutional lenders are confident that Bermuda's strong legislative structure will ensure that the security rights of the lender are recognised and that the Bermuda courts will consistently apply such rights.

The Aircraft Register

The Register was created in 1931 and has established itself as a Class 1 register under the FAA's Flight Standard Service International Aviation Safety Assessment Programme. The Register is currently ranked 10th in size amongst the 191 signatory States to the ICAO. As of September 2016, there are approximately 760 aircraft on the Register, categorised as either public or private. Bermuda presently holds ICAO Article 83 bis agreements ("83 bis Agreements") with the Russian Federation, the Republic of Azerbaijan and the Republic of Uzbekistan.

Regulation and Oversight

Effective from 1 October 2016, the responsibility for aircraft registration and the issue of permissions and validations for aircraft and flight crew was transferred to the Bermuda Civil Aviation Authority (a quango) ("BCAA"). The Board of Directors of the BCAA is responsible for the general administration of its affairs and business under the oversight of the Ministry of Tourism, Transport & Municipalities.

The BCAA was established with a view to making the Register more competitive globally by increasing the autonomy and flexibility of the regulating authority to make decisions on a sound business footing. The BCAA is recognised as a mature civil aviation authority that offers a pragmatic and adaptable approach to its clients.

The BCAA is regulated by the United Kingdom's Department for Transport, with the primary legislation being the Overseas Navigation (Overseas Territories) Order 2013 (the "Order") and the Overseas Territories Aviation Requirements (OTARs). The BCAA requires the operators of all aircraft who fall within the scope of Article 134 of the Order to comply with the safety and other requirements set out therein. Such aircraft are deemed to be operating at a higher safety level and may, therefore, be eligible to negotiate reduced insurance fees with their insurance companies. As a result, air safety regulations in Bermuda are the equivalent of, and in some cases exceed, those of the three main aviation authorities.

Aircraft Registration

The Order sets out the list of "qualified persons" who may register an aircraft in Bermuda. A qualified person is deemed to be:

  • an individual or corporate entity incorporated in Bermuda;
  • an individual or corporate entity incorporated in the Commonwealth; or
  • an individual or corporate entity incorporated in the European Economic Area (an EEA State).

Potential applicants that are qualified persons are not required to incorporate a Bermuda exempted company for the purposes of acting as the registered owner of the aircraft.

Registration of aircraft in Bermuda commences by filing a preliminary application for approval in principle and a subsequent formal application. We can provide a copy of the guidance issued by the BCAA in connection with the application process upon request.

The Application Process

The preliminary application for approval in principle is submitted online via the Aircraft Information and Records System by an authorised user (such as CHW). Once approval in principle has been granted, a designated registration mark and the Mode S Codes (the transponder codes used for detection and reporting purposes) will be assigned to the aircraft.

Following approval in principle, the BCAA will assign an airworthiness inspector to inspect the aircraft (either in person or by delegating an approved airworthiness inspector in the physical location where the aircraft is located) and circulate an invoice for the initial certificate of airworthiness. Fees for a certificate of airworthiness are calculated according to the weight of the aircraft and are renewed annually. The BCAA's current fee schedule can be found in the Air Navigation (Fees for Certificates and Services) Order 2012.

The formal application will be satisfied on receipt of the information listed in the Detailed Requirements. Responsibility for submission of the application is usually split between the Continuing Air Maintenance Officer and Bermuda counsel, who attend to Section A – corporate documentation requirements, Section B – registration requirements and Section E – miscellaneous general requirements.

Further information as to the registration, airworthiness and flight operations is available on the BCAA's website at http://www.bcaa.bm.

An application for a Class Six Radio licence must also be made to the Regulatory Authority of Bermuda ("RAB"). This may be submitted in advance of registration, along with the fee. The RAB will issue the requested radio licence on receipt of a copy of the certificate of registration in respect of the aircraft from the BCAA.

On completion, the BCAA will enter the aircraft onto the Register.

Aircraft Mortgages and Security

As part of the aircraft financing arrangements, lenders usually require that their interests in the aircraft and aircraft engines to be secured by way of legal or equitable mortgage. Currently, aircraft mortgages granted over an aircraft and aircraft engines are registered in the mortgage registry at the Department of Civil Aviation (the "Mortgage Registry") pursuant to the Mortgaging of Aircraft and Aircraft Engines Act 1999.

Prior to entering into an aircraft mortgage, both parties should give consideration to the effects of Blue Sky One Limited & Others v Mahan Air & Another [2010] EWHC 631 (Comm) in which the English court held that the law of the jurisdiction of the physical location of an aircraft at the time the mortgage is entered into would determine if a mortgage has been validly created. The effect of this ruling (which is likely to be followed in Bermuda) has resulted in lenders insisting that the aircraft must be physically located in the airspace of the jurisdiction of the choice of law of the mortgage as at the time and date that the mortgage is entered into.

Following ratification by the United Kingdom of the Convention on International Interests in Mobile Equipment and the related Protocol regarding Aircraft Equipment (the "Cape Town Convention"), Bermuda has enacted legislation to ensure that the Cape Town Convention can be extended by the United Kingdom to Bermuda. The Bermuda International Interests in Mobile Equipment (Cape Town Convention) Act 2016 received final approval from the Senate on 25 July 2016 and it is expected that the Cape Town Convention will be extended to Bermuda in late 2016/early 2017. The Cape Town Convention is expected to strengthen Bermuda's appeal as a jurisdiction of choice for aviation asset-backed securitisations and to facilitate the new purchase of aircraft by airlines operating in jurisdictions with existing 83 bis Agreements.

CHW was an active participant of the Aviation Working Group led by the BCAA in connection with the adoption of the Cape Town Convention and are members of the Bermuda Business Development Agency's Aviation Focus Group in Bermuda. As one of Bermuda's leading commercial law firms, we pride ourselves on offering top-tier corporate services with an efficient team of attorneys.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

    Disclaimer

    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

    Registration

    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

    Cookies

    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

    Links

    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

    Mail-A-Friend

    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

    Emails

    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

    Security

    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions