EXECUTIVE TRAVELLER MACE ISSUE
MALTA AND BUSINESS AVIATION FREE COPY 1 executive traveller  MACE issue PRODUCED BY AVIAPROS.COM/ETM
LUXURY
executive
THE LAP OF
Malta (LMML) VIP Terminal – Advantages for Business Aviation and the Executive Traveller
Situated just off the main aircraft parking area, the VIP Terminal provides travellers with privacy and efficiency. It is situated not far from the main terminal and caters for VIPs, business jet travellers and passengers wishing to travel in style. It has been specifically designed to make ones travel experience as stress-free and exclusive as possible. Complete with own immigration and security to guarantee a swift transition from aircraft to land side and vice-versa. All standard travelling procedures can be processed through the comfort of the VIP Terminal, without the need to queue or wait, allowing passengers to relax at the VIP lounge until aircraft is ready for departure. Average transition time from drop off to plane or vice-versa – 5 to 15 minutes Contact us for more details on ops@executivefbo.com or +356 999 00 747
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The local Business Aviation industry is growing and at a fast rate. A recent study has shown that the sector of business aviation, which provides services for private planes which are used mostly by investors and companies, in 2017 left around €500m in the Maltese economy. Moreover, there are more than 3,000 people working in this field, and around 35 companies which operate in this sector. Malta is ranked fifth among EU countries with the most planes registered in this category, (currently 200), and it needs to invest more to continue sustaining this activity which is very good revenue for the economy. The results published by the European Association for Business Aviation reflect the pace the industry has grown over the past decade. Indeed, over the past ten years, 200 planes who fall under this category have been registered in Malta, and is helping with connectivity so that Malta will be more attractive to investors. Two out of three planes on the Maltese register are private planes, which are in a different category to passenger planes. In 2017, there were around 2,500 business aviation flights which departed from Malta, with one out of six flying towards airports in Libya. While the low tax rate is an incentive, the main tool by means of which Malta attracts a large amount of planes of this type is the efficiency it offers. Indeed, Malta’s edge in the industry is an assurance for the country’s potential to grow further. This special issue seeks to observe Malta’s growth over the past years, what makes it stand out of the crowd and what should we expect from the industry in the years to come. We wish you all a pleasant read! Andrea Trapani Editor and Publisher
/
Omar Vella Editor
THE MAKERS Publishing Editor
Andrea Trapani atrapani@aviapros.com Omar Vella marketing@aviapros.com
Advertising Executive Rebecca Pace adverts@unionprint.com.mt
Design
Stacy Grech design@unionprint.com.mt
Printing
Union Print Co. Ltd. www.unionprint.com.mt
Publisher
Aviapros International Ltd
Contributors
Special thanks for the production of the 12th edition goes to Executive Aviation Malta as the main contributor and sponsor, as well as all other contributor and sponsor, as well as all other contributors for their time and images. We also thank all advertisers for their support to ensure the constant growth of the magazine.
Advertising
For advertising in our next issue, please send an email to Ms Rebecca Pace on marketing@aviapros.com or +356 9944 1432, +356 7948 4888.
Subscription Executive Traveller Magazine is distributed for free to top hotels and venues, and is available at local and international business aviation conventions. The publication is also available online at: www.aviapros.com/ETM Disclaimer: Particular attention has been given to ensure that all the content of this magazine is correct and up to date as on date as issue. The views expressed in the articles and technical papers are those of the authors and are not neccessarily endorsed by the publisher. While every care has been taking during production, the publisher does not accept any liability for errors that may have occurred. Copyright© 2017.
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EXECUTIVE 2
AVIATION MALTA
executive traveller  MACE issue
Dedicated Business Aviation Ground and Flight Support Logisitcs Phone: +356 9990 0747 | +356 9944 1432 Email: ops@executivefbo.com Website: www.executivefbo.com
Driven with pride, aiming for excellence.
“Executive Aviation Malta is the only fully dedicated business jet handler in Malta boasting unique airside facilities, complimented by a fleet of in-house executive vehicles.”
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The Hon.
IAN BORG MINISTER FOR TRANSPORT,
INFRASTRUCTURE AND CAPITAL PROJECTS
MAKING IT HAPPEN 4
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Minister Ian Borg, Malta’s economy is on the forefront on a European and International Level. As Minister for Transport, Infrastructure and Capital Projects, there are several sectors that fall within your portfolio – how do you feel that they intertwine with the success of the economy? A Maltese economy that has grown considerably over these last years, one surplus after the other, multiple benefits and initiatives for various segments of society, considerable investment in many projects, considerable focus on the country’s infrastructure – this is today’s situation in our beloved island thanks to a government that has a clear vision of what it desires for its people, a government that has objectives for each and every sector and is determined to achieve them. As Minister for Transport, Infrastructure and Capital projects, my portfolio as you rightly say is quite wide and holistic – land, sea and air transport, infrastructure – be it roads, maritime or other capital projects, planning, the building and construction sector with several reforms implemented and others in the plan. For us, community projects are amongst the most important sectors which this Ministry contributes towards. Bottom line is that all these aspects directly or indirectly influence the quality of life of the people living on our islands. Take land, sea and air transport for example – here we are talking about those elements that support the logistical arrangements of our country – the movement of people and goods. And if these 3 pillars are not appropriately supported, then the system will fail. This is primarily the reason why we have been investing considerable resources and energy in ensuring that these 3 pillars are given the much needed and necessary attention. If the country has an upgraded network of roads, a maritime and aviation sector that thrive, on the ground projects that the residents can enjoy - this can only lead to a wellfunctioning economy, which in turn will translate into benefits that will automatically elevate the quality of life of our people.
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Sea and Air transport are imperative for an island like Malta – what is the situation in this regard today? On many occasions I have the opportunity to talk about the unprecedented investment that is being carried out by the government especially in road infrastructure. On the other hand, maritime and aviation are two sectors that one could easily take for granted in the sense that they are not so highly visible to the man on the street. However, it is likewise important to explain and delve into questions like “what has been happening in these 2 industries? Where is the country going? What are the developments?” The maritime shipping industry comes with many big numbers and achievements: 8,370 ships registered with a gross tonnage of over 82.5 million – this means that in this industry we have seen more than a 6% increase in the tonnage when we take last December’s figures, and more than 60% growth over the last 5 years. This industry with more than 23,000 jobs under its cap, is currently contributing more than 12% to the country’s Gross Domestic Product. So here, the government, regulator and industry are working hand in hand to ensure that this momentum is not only maintained but where there is a potential for growth, we keep growing. Aviation is another story – not with respect to
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successes, as even here, this sector is providing us with excellent results. This industry is highly regulated and yet dynamic so the inbuilt proactive yet reachable approach that the Civil Aviation Directorate within Transport Malta adopts has helped to keep in tune with developments in this industry. Here, again, stressing about the importance of maintaining open dialogue with all stakeholders is never enough. In fact the Malta Aviation Conference and Expo will help us do just this – it will provide an ideal platform where we can discuss ways to improve what we already have while finding new horizons to explore or even new opportunities to implement on a wider scale locally, such as aviation leasing. When we speak about aviation, we must also remember the importance of connectivity. A world without connectivity cannot function at its optimum and in a country like ours – an island – connectivity has maximum priority. Even on this aspect, the government and the regulator have been working tirelessly in order to improve Malta’s possible airline connections with other countries. A few weeks ago, together with Transport Malta, I participated in a number of bilateral meetings, where air service agreements specifically with Chile and Columbia were signed. A similar agreement with Brazil was also concluded some months ago. This is expected
to be beneficial for the economy, while also attracting more investment to our country. This is being done with a background of work executed by the Ministry to establish more air routes to South American countries in return for improved connectivity. With regard to the 9H Registry, which is the aviation registry in Malta, we started this year with positive numbers, but this did not keep us from announcing new targets400 aircraft and 40 Air Operator Certificates by the end of this year. We have exceeded the 350 aircraft mark and the 37 AOC mark. There is the certain potential of several other aircraft joining our register and as we speak, I am sure that the Civil Aviation Directorate is in discussion with others interested in applying for an AOC or to register an airplane in our country as such interest is quite high and thus I am convinced that these milestones will be reached. The work that the Ministry and Transport Malta are carrying out does not fall short of exploring new opportunities that can induce foreign companies to continue investing in Malta. Aviation leasing is one of these – our country has huge potential here as well and we are already seeing wide interest in this aspect. When this happens and we will work to make it happen, it will result in more contribution to our Gross Domestic Product by aviation companies who set up shop in Malta.
When we speak about aviation, we must also remember the importance of connectivity. A world without connectivity cannot function at its optimum and in a country like ours – an island – connectivity has maximum priority.
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Minister, we regularly see you in activities announcing small and major road projects – how do you think this is affecting the country?
What do you think drives the success of the aviation industry in Malta? We believe that locally we have an efficient workforce that keeps itself updated with regard to the developments in this industry. The government believes in embracing continuous dialogue with the industry so that more and more aviation operators are attracted towards our island. In recent years, a considerable number of aviation training companies have set up operations in Malta, others have widened their operations to include even research and innovation, and maintenance and servicing companies are also on the rise. Let us not forget that some months ago the international company Ryan Air set up a subsidiary company with the name Malta Air in Malta and relocated the activity it had in 4 other European countries to our island. This will lead more than 50 airplanes to be added to our registry and the creation of employment opportunities within the sector. I must above all take this opportunity to mention and thank the Civil Aviation Directorate within Transport Malta and the regulator itself, whose ambitions for this industry in Malta leads to tireless work by motivated individuals. Most importantly, I would like to commend them on being reachable and efficient with interested stakeholders, a quality that is clearly playing its part.
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Well, as announced again in Budget 2020, the government will keep on investing in road infrastructure, infrastructure that had been left to decay for decades. I am very much open to constructive criticism, but what I truly believe with respect to our road network is that, like any other important contributor to the quality of life of society, it cannot be left idle with no upgrades for years. Till yesterday, we had a road infrastructure of the past, infrastructure that could not possibly cater for today’s needs, neither could it cater for those of tomorrow. However, this Government first gave priority to the country’s economy and from a situation of deficit we are now faced with a booming but sustainable economy. The second step was to direct the surplus generated towards the sectors in most dire need of investment. So apart from coming up with social benefits, today, we are injecting money in our road network. People need to arrive from Point A to Point B in a more efficient way. And so projects being implemented range from small and medium like those in arterial roads, such as Regional Road, to other large scale ones like that of the Marsa Junction. In the latter project, we are investing €70 million to upgrade one of the busiest junctions in Malta, one which sees over 120,000 users on a daily basis. Other projects are being implemented as we speak, like the Santa Lucija Tunnels, with others in our plans, such as the Central Link Project which will take care of the north western link. We are also upgrading all the residential roads in our country – the final aim of all of this is providing more efficient and safer roads to the general public, something that has been lacking for ages.
Final comments... Well, whilst wishing the best for the Malta Aviation Conference and Expo and looking forward to a healthy and fruitful discussion during this event, I reiterate the government’s commitment to continue supporting the work being done in the various industries that are in one way or another supporting our country. It has only been a few days since the announcement of the Budget measures for next year, and we have heard how the surplus being generated will be invested. This is a Government that has a long term plan supported by clear action plans and we will not fall short of our promises but will keep on implementing them one by one for the benefit of our country.
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-MALTA AIRPLANE REGISTER
www.transport.gov.mt
Efficient, Affordable, Dynamic
MINISTRY FOR TRANSPORT, INFRASTRUCTURE AND CAPITAL PROJECTS
Aviation is undoubtedly crucial for an island, especially so for an island like Malta. Without aviation, Malta would be left without important resources and personnel that would take forever to reach us by ship.
Joseph Bugeja Chairman & CEO, Transport Malta
The Civil Aviation Directorate (CAD) within Transport Malta is in charge of regulating every aviation activity and is also in charge of promoting aviation. The regulatory side, is a very important part of Transport Malta’s remit, but is very often taken for granted.
The register now counts close to 350 aircraft and we are on track to reach the coveted milestone of 400 in a few months’ time. This is no mean feat, especially when considering the humble start of the registry and its position up to a few years ago.
There is another side to aviation though, which is very much at heart at Transport Malta, the Airplane Register. We have the largest ship register in Europe, so we know a thing or two about registers, but the Aviation register had been left to its own resources for a long time.
We will not rest on our laurels though. Transport Malta and the Government have recognised the huge potential of the industry and are turning Malta into a formidable aviation cluster and will continue exploring different paths and trying new ventures to reach newer heights. Exciting times are ahead.
For these past six years, through a massive investment in resources, personnel and a sense of strategy, we have managed to achieve an exponential growth.
Capt. Charles Pace Director General for Aviation, Civil Aviation Directorate.
There are various players within the day to day business of aviation, the Malta International Airport, the Malta Air Traffic Services and others. The Civil Aviation Directorate (CAD) within Transport Malta is the regulator on top of them, it is in fact the regulator on top of all things aviation.
We have worked hard on updating our existing legislation and proposing new laws. In fact, a few weeks ago we have held a public consultation on further revisions to the Aircraft Registration Act and to the Air Navigation Order, with the aim to bring them in line with the latest trends and also to cater for new sectors, like drones.
CAD is the Maltese representative of the European Union Aviation Safety Agency (EASA), and is also subject to its scrutiny, ensuring a level playing field within the European Union. Thus, a Maltese licence is equivalent to one issued by Spain, Italy or any other EU country. It is also our duty to promote the aviation industry and we have been working very hard, through the Aircraft Registry and other initiatives to fulfil that aim. Besides having close to 350 aircraft registered in Malta and several others in line, we can boast 37 Air Operator Certificate holders (AOC’s), or airlines, of various sizes. One of the latest that signed up was Malta Air, a subsidiary of Ryan Air. Another three AOC’s are undergoing the process and another seven have shown interest in our jurisdiction. Lately, we have also seen a surge in Air Training Organisations and even training organisations for engineers to become aircraft mechanics.
We always regard aviation and promote it as a whole cluster and seek ways to improve and expand it. For example, we are looking at the increase at opportunities with drones, aircraft financing and aircraft leasing. We are certain that strengthening our cluster will give us handsome rewards. Aviation is not contained within a silo. It has a broad positive economic impact, even through areas one might not even associate with aviation. It provides work for other sectors, hotels, restaurants and taxis for starters and has a spill off effect on countless other industries. We are committed to keep working relentlessly, be more adventurous and continue achieving important milestones, for Malta to become a leader in the Aviation sector.
www.transport.gov.mt
MALTA AND BUSINESS AVIATION HANDLING Interview with
Andrea Trapani, Publisher of the Executive Traveller Magazine and owner of Malta’s most dedicated Business Jet handler - Executive Aviation Malta Ltd
What do you mean when you say that your company, Executive Aviation Malta, is the most dedicated Business Jet Handler in Malta?
Apart from the dedication, one can probably say that my team is great and everyone within the company is treated as family.
In any competitive business, your competitor will tend to use buzz words to try and attract customers and business even if sometimes what you pay is not exactly what you get. By stating that we (Executive Aviation Malta) are the most dedicated business jet handlers in Malta, we are in a way stating that others are not as dedicated. In actual fact, we are not only the most dedicated but can easily say that we are the only dedicated business jet handlers locally for obvious reasons. Executive Aviation Malta’s 100% focus is on handling private jets and nothing else. We are specialized in this business while I can safely say that our main competitors’ main business is aircraft charter since they operate their own fleet of aircraft and provide aircraft maintenance. In my opinion, one cannot focus on both. You’re either on one side as the client or as the service provider. What other advantages are there for the customer when Executive Aviation Malta is selected as their business jet handler in Malta? Well, not many to be very honest. All local players currently use more or less same infrastructure to operate and this does not seem that it will change in the foreseeable future. There is no full and proper FBO here in Malta and options given to a business jet passenger is to either use the main terminal or the VIP terminal for arrival/departure. Apart from the dedication, one can probably say that my team is great and everyone within the company is treated as family. I feel that this translates in happiness and fulfillment at work which in turn breeds excellent service to our customer. As I always say, the employees are what will make or break a specialized service company, and in our case, I’m proud to say that with such a team, chances are we will grow further and stronger in no time.
Do you believe that this aspect contributed to the growth in business for the past years? Most definitely it did. The world’s major charter operators have chosen us to service their fleet of aircraft and passengers whenever in Malta for many reasons, however, I’m pretty sure that they see us as their obvious choice and take this in consideration. Think about it, if you were a business jet operator chartering a fleet of aircraft, would you trust another aircraft operator with your client details? Would you feel comfortable disclosing confidential information with a potential competitor? I wouldn’t.
So do you see this as your main advantage? I am not saying so, however, this certainly gives us another edge on local competition. Another plus is that we are a relatively small team of professionals and, as already mentioned, our only focus is on business jet handling. I feel that this automatically allows us to provide attention to detail which is imperative in our business. Apart from that, being the relatively small team of dedicated personnel, one can easily sense that warm approach/family-like feeling we provide to our passengers and crew likewise.
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MALTA AND BUSINESS JET HANDLING Dedication is a word you frequently like to mention. What do you mean when you say that your company, Executive Aviation Malta, is the most dedicated Business Jet Handler locally? As with any service company, dedication has to be seen as a BIG word. Within the scenario we operate, a competitor will tend to use buzzwords in order to entice new business, even though, as we know, expectations and buzzwords do not always turn out to necessarily be the reality out there. Having said so, by stating that we, Executive Aviation Malta, are the most dedicated business jet handlers in Malta, we are clearly stating that others are not as dedicated as us. In reality, we can proudly say that Executive Aviation Malta is the only dedicated business jet handler locally for quite some obvious reasons. Executive Aviation Malta’s 100% focus is on providing handling services and logistics for private jets operating in and out of Malta. We have been specializing and refining our services for the past 10 years. On the other hand, our direct competition provide a diversity of services which include operating and maintaining their own fleet of aircraft. Understood, however, do you believe that this aspect has contributed to the growth in your business for the past years? Most definitely it did. The largest internationally renowned business jet operators have chosen us to service their fleet of aircraft and passengers whenever in Malta for many reasons, however, I’m pretty sure that they see us as their obvious choice and take this reality in consideration. Think about it, if you were a business jet operator chartering a small or large fleet of aircraft, would you trust another aircraft operator like you with your crew and client information? Would you feel comfortable disclosing confidential and sensitive business information with a potential competitor in your same field? Call me apprehensive but personally, I don’t think I would.
Executive Aviation Malta’s 100% focus is on providing handling services and logistics for private jets operating in and out of Malta.
So do you see this as your main advantage? I am not saying so, however, this certainly gives us another edge on competition. One other advantage is that we are a relatively small team of professionals and, as already mentioned, our only focus is on business jet handling. I feel that this automatically allows us to provide attention to detail which is imperative in our kind of business. Apart from that, being a relatively small team of dedicated and friendly personnel, one can easily sense that warm, family-like approach we provide to our loyal passengers and crew alike. What other advantages are there for the customer when Executive Aviation Malta is selected as their primary choice in Malta? Well, not many to be very honest. All local players currently use more or less same airport infrastructure to operate and this scenario does not seem that it will change in the very near future. There is currently no full and proper FBO here in Malta and options given to a business jet passenger is to either use the main terminal or the VIP terminal for arrival or departure. Apart from the dedication, one can probably say that I’m proud to have a great team behind me and everyone within the company is treated as family and not a number. I feel that this translates into happiness and fulfillment at work which in turn breeds excellent service to our customers. Employees are what will make or break any service company, and in our case, I’m proud to say that with such a team, chances are, we will go far and grow stronger in no time.
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Aviation Aviationisis today todayone oneof of the thefastest fastest growing growing industries industries in inthe thecountry country
2019 2019 will will most most likely likely gogo down down asas aa transformative transformative year year forfor Malta’s Malta’s aviation aviation sector. sector. Malta’s Malta’s legislative legislative framework framework has has turned turned it it into into aa recognised recognised address address forfor the the registration registration ofof both both private private and and corporate corporate jets, jets, while while maintenance, maintenance, repair repair and and overhaul overhaul (MRO) (MRO) providers, providers, including including Lufthansa Lufthansa Technik Technik and and SRSR Technics, Technics, have have added added toto the the appeal. appeal. AsAs aa government government wewe have have identified identified aircraft aircraft leasing, leasing, finance finance and and chartering chartering asas priority priority areas areas forfor the the next next phase phase ofof the the sector’s sector’s development. development. HON. HON. CHRISTIAN CHRISTIAN CARDONA CARDONA
The The Ministry Ministry forfor Economy, Economy, together together with with Malta Malta Enterprise Enterprise && Malta Malta Industrial Industrial Parks Parks are are committed committed toto providing providing significant significant incentives incentives forfor Malta Malta toto consolidate consolidate itsits gains gains inin the the aviation aviation sector. sector.
MINISTRY MINISTRY FOR FOR THE THE ECONOMY, ECONOMY, INVESTMENT INVESTMENT AND AND SMALL SMALL BUSINESSES BUSINESSES
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Registering an Aircraft in Malta
Since time immemorial, Malta has been regarded to be in a strategic position in the Mediterranean Sea. This can be depicted from the various amounts of colonies and rulers Malta experienced. Essentially, its central position between Europe and Africa yields numerous advantages when registering an aircraft in Malta. In turn, Maltese legislation paves the way for several innovative incentives.
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Michela Galea Seychell mgalea@erremme.com.mt
These factors enable the Director General to determine whether an aircraft may be properly registered as well as the ability to issue a Certificate of Registration. The Director General has at his discretion the possibility to issue guidelines which determine the applicability of rules when an aircraft is partly used for remuneration and or hire. Once the application is received and it qualifies for registration, the Director General must register the aircraft wherever it may be. The following particulars must be included; This process is regulated by the ‘Aircraft Registration Act’ which is found in Chapter 503 of the Laws of Malta. This Act came into force on the 1st of October, 2010 and has recently been amended in 2016 and 2017. It is vital to note that the Capetown Convention is incorporated within the Aircraft Registration Act. This Convention was necessary since it introduced the principle that it is possible for a mortgagee, to take a security interest. The main purpose of the Aircraft Registration Act is to regulate the registration of aircrafts as well as aircraft mortgages. It repeals and reenacts various existing laws relating to this matter. In relation to the registration process, there shall be a written application which must be addressed to the Director General and it shall include particulars relating to the; • Aircraft • Ownership • Acquisition • Chartering • Qualifications of the registrant
- The number of the certificate of registration - The nationality marks of the aircraft and the registration marks assigned to it by the Director General - The name of the constructor of the aircraft plus its designation - The serial number of the aircraft - The manufacturer, serial numbers, physical details of the engines attached to the aircraft and any replacement engines With regards to the nationality and registration marks in Malta, these are characterised by the number followed by the letter H, then followed by 3 capital letters indicating the registration mark of the aircraft. Thus, once an aircraft is registered in Malta, it shall be subject to the laws of Malta and have all the rights and privileges of a Maltese aircraft. It is vital to note that apart from the Aircraft Registration Act, there may be the Civil Aviation Act, the Civil Aviation (Air Operators’ Certificates) Act, Air Navigation Order and any other law applicable to the operation of aircrafts. In addition, an aircraft would be registered in the National Aircraft Register of Malta which is under the responsibility of the Director General.
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Simultaneously, the Aircraft Registration Act lists the individuals qualified to register an aircraft in Malta. In the case of commercial aircraft these are: A. The Government of Malta B. Natural person, who should be: - A Maltese Citizen - An EU/EEA/Swiss Citizen - Has a place of residence or business in Malta, EU, EEA or Switzerland - This includes a person sharing in the ownership of such aircraft by virtue of the community of acquests subsisting between such person. C. An undertaking formed in accordance with the laws of Malta or an EU Member State or of a European Economic Area State or Switzerland. This undertaking has to have its registered office or central administration or its principal place of business within Malta, or the EU, or a European Economic Area state or Switzerland. It should be noted that there has to be a minimum of 50% of the undertaking which is owned and effectively controlled either by the Government of Malta or EU/EEA/Swiss.
Registering an Aircraft in Malta
In the case of international registrants of private aircraft, a resident agent must be appointed. The Director General has to be satisfied that the Resident Agent is a person capable of carrying his functions. In fact, he acts as a link between the Malta and the international registrant. The Resident Agent must be resided habitually in Malta. He cannot be interdicted or incapacitated and is not convicted of any crimes affecting public trust/theft/ fraud/money laundering. Consequentially, one of the prime advantages in registering an aircraft in Malta is that aircrafts are to be treated as exemptions with credit. This benefit is available to those aircrafts used for business motives. This means that a Maltese company has to be established for the purposes of acquiring the aircraft. New guidelines relating to the VAT implications arising out of aircraft leasing arrangements were issued in 2012 by the Malta VAT Department. As a result Malta’s attractiveness as an aviation jurisdiction was enhanced due to the introduction of a simplified VAT treatment as well as the provision of an attractive rate of VAT on lease payments, in respect of the use of such aircraft within EU space.
In the case of private aircraft: D. A natural person who is a citizen of or an undertaking established in an approved jurisdiction, other than the EU, EEA and Switzerland, shall be qualified to register aircraft in construction or one which is not used to provide air services if it: - Enjoys to the satisfaction of the Director General, legal capacity to own or operate an aircraft; - Complies with the requirements of the Aircraft Registration Act.
In addition, there is the possibility of registering an aircraft which is still under construction. Nonetheless, it has to be uniquely identifiable. Simultaneously, Malta is a politically stable EU jurisdiction whereby laws are easily accessible and are written in English. Furthermore Registration of an aircraft and fulfillment of all additional requirements for licence and certification under the Maltese law grants the aircraft rights to fly all intra-Community routes within the EU.
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Taxation of Aircrafts in Malta Shanice Finch
tax advisor for Erremme Business Advisors Limited sfinch@easl.com.mt
In recent years, Malta has become a pioneer with respect to the field of registration, leasing and maintenance of aircrafts. The Government`s contribution through the update of the local aviation legislation, led to a rapid growth in the registration of Aircrafts with the Civil Aviation Directorate. As at March 2019, the number of registered Aircrafts with the National Aircraft Register has seen an exponential growth of 307 compared to 60 locally registered aircrafts in Malta in the last 10 years. Malta enacted the Aircraft Registration Act (ARA) in 2010 with the main focus of boosting the registry for both commercial and private aircrafts. The 2010 Act also implements provisions on the Aircraft Protocol into Maltese Law and provisions adapted from the Convention on International Interest in Mobile Equipment held on November 2001 in Cape Town. In recent years, Malta has become a leading jurisdiction of choice with respect to Aircraft maintenance contributed mainly by Aviation Cosmetics Limited, Lufthansa Technik Malta and Maleth-Aero AOC Limited. From a taxation point of view, the local legislation includes advantageous refund contributions both on a corporate and also on a personal level. Certain management positions in the field of the Aviation industry can opt to a personal tax rate of just 15%. Moreover, a total tax exemption from Maltese tax is available on fringe benefits received by non-resident employees or officers for making private use of an aircraft and also to companies and partnerships trading in the ownership, leasing or operation of aircraft used in the international transport of passengers or goods. The first tax advantage at company level is the full imputation tax system eliminating economic double taxation in the hands of the individual shareholders at dividends stage. The benefit is that the shareholders will be able to claim back the full tax on dividends paid by the company resulting in no extra tax leakages in the hands of individual shareholders.
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With respect to Aircraft leasing, the Maltese tax system includes diverse advantageous distinguishing between operating and finance leasing. If the company will be trading in operating leasing, the wear and tear deductions will be allowable to the party who will be liable to the higher risks and rewards from the aircraft depending on the agreement between the lessee and the lessor. In the case of a finance lease, the tenant is entitled to avail himself of the wear and tear deductions. In recent years, the minimum number of years over which one can depreciate aircraft assets has been decreased. As a consequence, through the increase in allowable deductions for wear and tear, the company will be taxed on lower chargeable profits as of the year 2018. This advantage on less tax expense will be mostly beneficial in the initial years after assets acquisition and the table below illustrates the minimum years over which these assets can be depreciated for wear and tear basis:
Asset type
Minimum wear and tear deduction period
Aircraft airframes
4 years
Aircraft engines
4 years
Aircraft airframe overhauls
4 years
Aircraft interiors and other parts
4 years
Furthermore, Malta has more than 70 double tax treaties and the largest part of these treaties are based on the OECD Model Tax Convention. Maltese registered and based companies also benefit from domestic unilateral relief mechanisms based on the European Union Tax Directives, including the Parent-Subsidiary Directive and the Interest and Royalties Directive in view of Malta`s membership in the EU. Moreover, Maltese legislation also provides the relief from tax liability where a Maltese resident pays or is liable to tax of a Commonwealth country, excluding the United Kingdom. Non-resident companies generating income from the ownership, leasing or operation of an aircraft engaged in the international transport of passengers or goods, are not taxed in Malta on revenue arising outside of Malta. As a consequence, income generated by these companies arising outside of Malta, will not be taxable in Malta irrespective of the aircraft`s country of registration and whether it operates from Malta.
Alternatively, registered companies outside of Malta which are managed in Malta, will be taxable under Maltese tax rules only if their income is remitted to Malta on the Remittance basis or received in Malta on the Source basis. If double taxation will be triggered on the basis of Residence-Residence conflict or Residence-Source conflict, the double taxation agreements resolve these issues on the premise that any profits from the operation of aircraft in international traffic should be taxable in the jurisdiction where the enterprise is effectively managed. Investment tax credits are also available depending on the services offered in the airline industry. In the case of small companies incorporated in Malta, they can benefit from a 50% tax credit on qualifying expenditure or wage costs for jobs created in Malta. Medium sized companies can benefit from a 40% tax credit while large companies are eligible for a 30% tax credit on the incurred costs. The qualifying expenditure relates to expenses incurred by the company in the year preceding the year of assessment for which the credit would be requested. Eligible companies also have the opportunity to carry forward any tax credits not fully utilized in the year they are granted. Another important fact is that no import duty is payable in respect of civil aircrafts consisting of both passenger and cargo aircrafts excluding military aviation vehicles. Same principle applies with respect to stamp duty which is not charged on these types of assets. Furthermore, one should keep in mind that no tax is chargeable on aircrafts for private use, since there will be no income generated in Malta from this activity. Additionally, airline operations for the international transport of passengers or goods and the supply of services for the modification, maintenance, chartering and hiring of aircrafts are considered as Exempt with Credit for Value Added Tax (VAT) purposes. If so, these airline companies will be in a position to claim back refund on vat paid on operational expenses while being exempt from paying any VAT on their sales. Erremme Business Advisors Limited will be able to assist you in setting up an aviation or aircraft company in Malta, register the Aircraft vehicles with the Civil Aviation Directorate for appropriate licensing and assist the company through taxation advise for full benefit from the available opportunities for company set up in Malta.
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Aircraft Finance in Malta Matiss Liepins
matl@erremme.com.mt
The specific aircraft finance arrangements are one of the many attractive opportunities offered by Malta that put the small island on the map as one of the most aviation-friendly countries. Various options are available in Malta for those entities seeking to directly profit off such financing scheme, as well as those willing to use and/or acquire an aircraft when buying one directly is not a profitable choice or a possibility at all. One of the widely used means of finance is finance lease, which has a special place in Malta tax system. The finance lease arrangement implies that an entity or person purchases or already owns an aircraft, which is further leased out to another entity or person for a specified period of time. At the end of the lease period the aircraft may be acquired at a specific price by the lessee who, thus, becomes a full-fledged owner. The aircraft finance lease is specifically regulated under the Maltese law or, alternatively, treated as a separate tax arrangement under the official guide issued by the Office of the Commissioner for Revenue. Finance lease by regulations Maltese legislation, namely, Finance Leasing Rules (Legal Notice 369 of 2005) provides for a finance leasing scheme for local tax purposes. The Rules provide for the following benefits: • the lessor shall be chargeable to tax on the full of amount of annual lease payments, without affecting any entitlement to deductions. The tax rate for the charge is 35% on the taxable
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income of the lessor; however, tax refund system allows the reduction of the ultimate tax charge to a maximum of 5%. The disposal of the aircraft does not result in any Maltese tax burden; • as the lessor has the burden of wear and tear the lessor may claim capital allowances on the leased asset; • The lessee may deduct from the chargeable amount the full amount of the lease payments, as well as all other applicable deductions. The lessee will be entitled to annual tax depreciation on the value of the aircraft frame and engine in amount of 16.7% and interiors or other parts in amount of 25%. A further deduction is allowed for the finance charge, as well as repair, maintenance and insurance costs. Due to Maltese tax refund system, the effective tax charge for the lessee shall be between 0% and 6.25% on the chargeable income. The lease arrangement falls under the regulation if it satisfies certain criteria. Firstly, the lessor must be a finance leasing company – a financial institution with commercial objects being expressly limited to business of granting finance lease and ancillary activities. A company not of Maltese origin may also act as a lessor in such scheme, if its nature of business is similar. In addition, the period of the lease under this scheme must be at least four years, however, not shorter than the period of the depreciation of the aircraft (and/or engine), namely, six years. And lastly, the parties of the scheme must conclude an agreement and notify it to the Commissioner of Revenue within three months since the agreement is entered into.
Under this scheme the lessee takes on a position comparable to that of the owner by assuming all the risks and rewards, which would normally apply to the owner itself. Finance Lease not falling under Finance Lease regulations The Finance Leasing Rules are somewhat demanding as to what goes under these regulations and the schemes that legally or practically only resemble finance lease shall not enjoy the benefits under this Regulation. It is expressly stated in the Regulation that hire purchase, a lease purchase agreement, an operating lease and similar arrangements, as well as sale and leaseback transactions are not deemed to be finance lease. However, to expand the state offered incentives in cases where the arrangement differs in nature, the Office of the Commissioner for Revenue has provided for an alternative tax treatment solution in the issued Tax Guide to Finance Leasing of Aircraft. Under this alternative tax treatment: • The lessor is charged on the annual finance charge, which is the difference between the total lease payments less the capital element divided by the number of years of the lease; • The lessee may deduct the finance charge; maintenance; repairs; and insurance; • The lessee may subtract capital allowances; the burden of wear and tear may not be shifted onto the lessor; • If and when the lessee purchases the aircraft on the termination of the lease, given that the lessor’s business is not purchase and sale of aircraft, the purchase price received by the lessor shall be considered to be of a capital nature and no tax thereon shall be payable by the lessor. This tax treatment shall be adopted for each year for the duration of the finance lease.
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Aviation and Its People Aviation, along with a number of other sectors aid in keeping us more connected to each other. Until a few decades ago, flying from one country to another was a precious commodity that only few could afford. Nowadays, flying from one country to another has become routine for most of us and usually with multiple options to do so. Apart from an occasional unexpected delay (for various possible reasons), our biggest concerns lie in identifying to most comfortable lounges and having a decent connecting flight amongst other subjective reasons.
Such advancements are only thanks to the brilliant minds of the hardworking men and women that have been serving in aviation over the past years. The first professionals that come to mind when mentioning aviation are the pilots and flight crew. One has to admire the responsibility, attention to detail and the pressure that aircraft pilots go through in performing their duties, not to mention the challenging role of flights attendants in coping with different needs and personalities of travellers while being in an aircraft for multiple hours on repetitive basis. No wonder distress is a very common phenomenon
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within aviation, yet the satisfaction coming out of such roles does indeed outweigh the negatives, if the necessary measures are in place. Although, we indeed acknowledge the hard work of those that are usually on the front line, one needs to remember and keep in mind that there is a whole other operation going behind the scenes. Every wellestablished airport has its fair share for MRO (Maintenance Repair & Overhaul) operators and FBOs (Fixed Base Operators) which are equipped to service the needs of the aircraft to ensure that it is both pleasing from an aesthetic and customer view point as well as from an airworthiness and maintenance perspective. An equipped mix of creative artisans and strongly trained engineers and maintenance professionals along with support staff is necessary to maintain a high level of quality and trust within aviation. Like any other industry, Aviation requires strongly qualified corporate professionals to sustain the industry from a regulatory and operational standpoint. Despite all the above, coping with the ever growing demands of the market and the lack of supply in terms of human resources is a reality that all companies and entities across the board need to deal with. Skills shortage is a world-wide phenomenon that is affecting businesses in each and every sector. Only companies that are willing to open up their horizons,
offer a degree of flexibility and create valuable experiences to their respective employees stand a chance of gaining a competitive edge. Companies are nowadays recruiting individuals from different countries in many cases from different continents. Globalisation does indeed help to fill vacant positions at the workplace, but in such cases companies need to be prepared for various cultural differences between those with different ethnicities, religious beliefs and values. If cultural differences are not taken into account, serious repercussions may follow. Flexibility is nowadays also essential in creating long lasting relationships with employees. Although we tend to classify people in certain categories, we must not forget that every specific person has his own set of needs. Understanding those needs and providing a degree of flexibility whilst meeting organi sational goals usually pays back in loyalty and commitment towards the organisation. Certain categories of high achieving employees are also interested in creating valuable experiences within their respective organisations. These kinds of employees want to be involved in things that matter
and are usually willing to go that extra mile to reach their objectives. It is important for firms to align such employee’s objectives with the organisation’s overall goals. It is beyond the scope of this article to go into further detail into staff retention and motivation, but organisational culture sends a clear and direct message to prospective job applicants. Employees are indeed the firm’s ambassadors, how they are treated is reflected accordingly to outside world. In view of all the above, irrespective of which role your firm is seeking to recruit, do not forget to think about the image being created within the organisation. Erremme Business Advisors is a one stop shop consultancy firm currently working with various stakeholders contributing to our vibrant aviation industry in Malta. Our client HR department specializes in Human Resources Consultancy (including assessment of employee satisfaction and commitment), recruitment and HR administration services. Contact Stefan on smicallef@erremme.com.mt
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THE GENERAL DATA PROTECTION IMPLICATIONS WITHIN THE AVI
Passenger data is the nucleus of commercial aviation operations. The passenger-experience commences on the booking of flights, with the collection of primary data. The processing and collection of data extends throughout
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Ylenia Busuttil ybusuttil@erremme.com.mt www.erremme.com.mt
Adherence to the new legal obligations is decisive due to the resulting reputational and monetary ramifications. This is especially relevant in aviation due to the high concentration of data processing. Reflecting this, the highest recorded GDPR administrative fine is attributed to British Airways, holding one of the widest clientele of international passengers in the global airline industry. The 183 million Sterling fine was imposed by the British Information Commissioner Office for lack of security afforded to consumerdata. This led to an attack through which payment details of consumers was diverted to a fraudulent site, subjecting customer data of half a million victims to financial attacks. British Airways was found responsible for facilitating the fraud through insufficient safeguards implemented, being in breach of the General Data Protection Regulation.
REGULATION AND ATION INDUSTRY
the experience, for instance through in-plane purchases. Consequently, the revolutionary developments brought about by the General Data Protection Regulation have prompted numerous implications within the data-centric sector.
Data ordinarily collected ranges from passport data to contact information and payment details, inflicting risks of financial or identity fraud. However, such companies also process data contained within the Special Category of Data, such as an individual’s physical assistance requests, biometric passport details, medical information and meal choices which are linked to sensitive areas of health or religious identity. To enforce the transparency principle, airlines must present consumers with very detailed information notices in line with the General Data Protection Regulation, highlighting retention, purpose and grounds for processing amongst other information. Such notices and privacy policies must be bestowed in a non-legalese format. Other plausible methods of enforcing the transparency principle include sending informative privacy notifications through email once a sale is made. Due to this sensitive data and the magnitude of necessary data operations, airlines are bound by more restrictive grounds for processing. For instance, when passengers are minors, lawfully the airline would be required to collect explicit,
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ďƒœ
Representing four decades of Successful Operation as an all-round Aviation Service Provider.
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Ground Handling Services Aircraft Charter Operations
CAMO PART 145
MRO Facility
PART 21J
Design Engineering
Flight Operational Support Aircraft Management
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clear and informed consent from the parent. Similarly, such consent may be relied on for processing of other data, namely sensitive data. Where consent is not relied on, generally an airline is still lawfully entitled to process most personal data required based on grounds of necessity to execute a contract. This is because the interaction with the consumer assumes the form of pre-contractual relations leading to the contract of sale of a flight ticket and ancillary services. Therefore, the airline is bound to process the data to provide the bought service. Similarly, legitimate interest is widely relied on.
deleted within 5 years, the General Data Protection Regulation otherwise allows controllers to choose a retention period for identifiable data as long as for that duration, the data is necessary for the purpose for which data is processed. The travel ecosystem demands that data passes between different collaborators, including the airline, airports, vendors and travel agents. This is one of the major weaknesses within the aviation data chain, since in transfer, especially to non-EEA stakeholders, data is put at risk of interception and breach. This is why an airline is bound by the General Data Protection Regulation to review the other party’s privacy regimes and vendor agreements, as well as those of their outsourcing resources. If the breach occurs whilst data is entrusted to such third parties, non-adherence with compliance checks and lack of information provided to data subjects will render the controller responsible. The General Data Protection Regulation is especially onerous to aviation finance companies and airlines alike due to the framework’s extra-territorial reach. Data controllers based within European Economic Area are bound to generically apply the General Data Protection Regulation, whilst controllers external to the European Economic Area must apply the GDPR to protect data of any European Economic Area resident.
Legal necessity is also an intrinsic grounds. Relevant to this, the Passenger Name Record Directive, in an effort to avert the spreading of crime and terrorism, demands that an airline passes certain records of passengers on International flights incoming and outgoing across the non-EU borders to be transferred to each member state’s Passenger Information Unit. However, this has to be done whilst following the GDPR’s imposed principles and obligations, including proportionality and data minimization. Whilst data collected for this purpose needs to be anonymized after 6 months and
As thoroughly highlighted, airlines and aviation companies have been faced by an imposition of vastly increased data protection obligations, which may mutually benefit the airline and the consumer if met. As highlighted by the European Data Protection Board, ‘’the General Data Protection Regulation makes it clear that organisations must be accountable for the personal data they hold’’, and this is what is expected from aviation companies which process a large quantity of data of a sensitive quality.
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Agenzija ghas-Servizzi tal-Qrati Court Services Agency
MINISTRY FOR JUSTICE, CULTURE & LOCAL GOVERNMENT
eCourts
.gov.mt
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