The aviation financing industry benefits from documentary standardisation and simplification for certain types of transactions. That is the case only where, from a cost/benefit perspective, the benefits of standardisation and simplification, including reduced negotiating time and related expenses, outweigh the costs of the effort, including production time, risk of an unacceptable effort, and transition to a standardised document. The forms of existing documents, the process by which they are negotiated, and the nature of the transaction are also relevant factors in any decision to standardise.

Short-Term Emergency Engine Lease
 

AWG and the International Air Transport Association (IATA) commenced an exploratory documentary standardisation project in late 2000. In December 2002, it culminated in the release of a form master short term engine lease agreement, designated IATA Document No. 5016-00 ("Short -Term Emergency Engine Lease", or, in short STEEL). STEEL FORM.  It may also be downloaded from the IATA website.

As summarised in the covering note to STEEL, Cover Note, that document was prepared by working parties from IATA and AWG with expertise in short term engine leasing. The document sets out standardised wording on technical and legal matters and clearly identifies commercial areas for commercial decision-making. The object is to streamline the negotiation process on legal aspects, thus reducing transaction costs for both sides. This is particularly important in the context of an emergency engine lease, where negotiating time equates to lost revenues, and, in certain circumstances, passenger inconvenience.

STEEL is a short, concise document, which permits electronic contracting, and, without restricting its general applicability, embodies the leading-edge concepts contained in the Cape Town Convention.

The structure of STEEL is that of a master form - which is not signed - but rather is incorporated by reference in any particular transaction through an individually executed short-form engine "Lease Agreement". The Lease Agreement identifies commercial decisions to be negotiated and agreed. In addition, any amendments the parties wish to make to the master form can be accommodated through an annex to the form.

STEEL is an public document - any transaction parties, whether or not members of IATA or AWG, may utilise the document if and when they deem fit and with whatever amendments they deem appropriate.

The foregoing work is undertaken in accordance with strict compliance guidelines produced by leading international counsel.

STEEL is currently being revised to reflect:

(i) the potential applicability of the Cape Town Convention to a transaction, and 

(ii) experience gained from use of the document since its creation.

AWG is currently updating this document to reflect developments since its publication.  AWG has approached IATA with a view towards joint work in connection with the updating.

Additional Standardised Documents

AWG will provide current information on its work on the standardisation of the four documents listed above: Engine Title Agreement; Warranty Assignment and Consent; Master Used Aircraft Purchase Agreement; and Aircraft Lease Novation Agreement. 

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