Member Article

The Indonesian aviation sector has grown rapidly over the past few years. Due to this, airlines and lessors have been capitalising on the general availability of diverse sources of funding. In particular, aircraft sale-leaseback or lease trans-actions are used more frequently due to competitive pricing and Indonesia has been trying to develop a legal framework to accommodate the financing and leasing of aircraft.

Regulatory position

Indonesia has ratified the Cape Town Convention, which assures lenders protection of their interests in aircraft as it provides international registration for creditors and debtors for their security inter-ests, and provides a set of basic remedies in the event of debtor default.

The Cape Town Convention is further implemented under the Civil Aviation Safety Regulation Part 47, regarding Aircraft Registration (CASR 47) issued by the Directorate General of Civil Aviation (DGCA) of the Ministry of Transportation. CASR 47 regulates approval for the procurement of aircraft, aircraft registration certificates, aircraft dealer and manufacturer registration certificates and the Irrevocable Deregistration and Export Request Authorisation (IDERA).

Registration of aircraft in Indonesia

As a general rule, if an aircraft is to be operated in Indonesia, the aircraft should be registered in Indonesia. Otherwise, the aircraft may only fly between one Indonesian airport and foreign airports. The DGCA maintains the aircraft registry in Indonesia. Under CASR 47, an aircraft must be registered only by and in the legal name of its owner. However, the aircraft registry also includes details of the operator of the aircraft if it is different from the owner and, therefore, registration may also be done by the authorised proxy or operator of the aircraft (lessee).

The Certificate of Registration (COR) issued by the DGCA is not evidence of ownership of an aircraft and the DGCA does not endorse any of the information on the COR. The DGCA issues a COR to the person deemed the owner based on the evidence of ownership submitted, eg the bill of sale, lease agreement between the operator (lessee) and the lessor (owner) or the record in the Civil Aircraft Register. Under CASR 47, a COR is valid for three years as of its registration date. A COR may be revoked (i) upon receipt of an application submitted by the owner of the air-craft or the authorised proxy because, for example, the lease agreement has expired; (ii) at the request of the holder of the IDERA (discussed further below) or (iii) if the operator fails to maintain its worthiness certificate for three consecutive years.

If the aircraft is transferred to a third party, the holder of the latest COR must then apply for the re-registration of the aircraft.

Please click the link below to read the complete advisory.