See generally the GATS platform
The trading and financing of aircraft equipment subject to leases is an increasingly important part of the aviation industry. In recent years, as the number of trades has significantly increased, inefficiencies have developed. That has resulted in wasted time and resources for airlines, lessors and financiers alike. AWG is addressing these inefficiencies through its development of the Global Aircraft Trading System (GATS), a system designed to modernize aircraft equipment trading and financing.
The main purposes of GATS are to facilitate the trading and financing of aircraft equipment by reducing the burdens on lessees, lessors and financiers and to promote aircraft equipment trading and financing in an efficient, secure and predictable manner which, above all, protects the rights of all parties involved, including and especially the lessee’s rights under the lease. GATS will increase the transparency of and confidence in aircraft trading, and further protect rights, by introducing a secure, live and searchable electronic ledger displaying details of ownership and security interests in GATS.
The rights of lessees will be protected in particular by prohibiting transfers unless agreed conditions in favor of the lessee have been satisfied or waived. GATS further reinforces the ‘no increased obligations’ lease provisions in favor of lessees.
GATS is a fully electronic system, with e-signatures, e-delivery of documents and use of a secure e-ledger to record transactions. It is a voluntary system open to all industry players.
Guidance materials for GATS along with the GATS instruments for each jurisdiction are available on the GATS platform.
The GATS platform contains numerous instructional and education videos.
Cleared trust companies for GATS
A list of trust companies cleared by AWG as trustees for the GATS system can be found here.
The criteria for approval of GATS trustees can be found here.
FAA review of GATS
On 16 March, 2020, the Office of the Aeronautical Center, Central Region Counsel, Federal Aviation Administration, issued an opinion concluding that the GATS initial transitional trust documents complied with applicable federal law, were in due form for filing, and will support aircraft registration in the name of a GATS trustee. In line with the efficiency objectives of GATS, that opinion is a ‘global opinion’, which intends to cover any specific GATS transaction (using the electronic, non-amendable GATS documents), coupled with needed certification.
On 22 May 2020, the Office of the Aeronautical Center, Central Region Counsel Federal Aviation Administration, completed its review of the GATS digital signature format and issued an opinion concluding that the GATS digital signature satisfied the criteria outlined in the FAA’s 13 April 2016 notice of policy clarification for acceptance of documents with digital signatures (policy clarification).
The GATS Platform streamlines document production and execution, in part by leveraging the benefits of digital signature technology. The GATS Platform digital signature technology is:
(a) designed and developed to highest industry standards, and
(b) complies with the policy clarification.
GATS platform legal advisory board
The GATS platform has a legal advisory board (GP-LAB) formed under the auspices of the Aviation Working Group. The GP-LAB functions are:
- to assist and advise AWG on queries related to GATS platform
- to suggest modifications to informational and educational materials on the platform
- to provide general assistance and advice to AWG relating to GATS-related legal matters
All work of the GP-LAB is purely advisory in nature and not transaction-specific. AWG may accept or follow the foregoing or not in its sole discretion.
Members of the GP-LAB are:
The initial administrator of the GP-LAB is Dominic Pearson of WFW.
GATS platform tax advise, AWG tax advisory board
AWG has a tax advisory board (TAB). One of its core functions is to assist and advise AWG on general tax issues related GATS.
The main objective is to have a consistent view on core taxation items relating to GATS, for AWG’s general planning and for the benefit of the industry.
All such work is purely advisory in nature and not transaction specific.
KPMG, PwC, Deloitte, and EY are members of TAB.
The current coordinator of TAB is KPMG (Joe O’Mara).
GATS Platform technology advisory board
The GATS Platform will have a technology advisory board (GP-TECH-AB) formed under the auspices of the Aviation Working Group.
The GP – TECH-AB functions are:
- to assist and advise AWG on general technology issues and topics related to the GATS and its platform, both as contemplated at launch and as may developed over time
- to reply to queries asked by, or offer suggests to, AWG about technological efficiency, functionality, and security of the Platform
All such work is purely advisory in nature and not transaction-specific. AWG may accept or follow the foregoing or not in its sole discretion.
Members of the GP-TECH-AB will be announced shortly.
GATS business aircraft group
GATS business aircraft group has been formed to assist on assessment and analysis of GATS. McAfee & Taft will coordinate that group.
While created at AWG’s request, this group does not operate under the auspices of AWG.
Other historic documentary projects on facilitating aircraft transfers and standardization of aircraft financing documents
The aviation industry benefits from documentary standardization and simplification for certain types of transactions. Prior to the development of GATS, AWG, in consultation with others in the industry, produced standardized and template documents to facilitate the process related to such transfers.
These historic documentation projects are:
- Standardized novation/assignment and assumption agreements
These documents are designed to (1) have minimal impact on aircraft lessees, (2) not to increase an airline’s obligations, and (3) be equally acceptable to buyers and sellers of aircraft subject to existing leases. - Aircraft purchase agreement, warranty assignments and engine title recognition agreement
- Short term engine lease
Standardized novation/assignment and assumption agreements
Each standardized document is designated as a template document and is intended to be used as a framework for efficient negotiations. Transaction parties may modify or deviate from the terms of the standardized documents as they deem fit.
These documents include: a template lease novation (English law) and assignment and assumption (New York law). Financing related notices of assignment are included. Any transaction parties, whether or not members of AWG, may utilize these standardized documents.
In November 2017, AWG produced the following:
A novation/assignment and assumption agreements guiding principles document has been prepared to:
- set out underlying principles (minimum impact on lessees, no increased obligations, and intended acceptability to buyers and sellers)
- give practical procedural guidance relating to the novation-transfer process
English law:
New York law:
- Aircraft lease assignment, assumption, and amendment Agreement [PDF] [Word doc]
- NY law notice of assignment [PDF] [Word doc]
Aircraft purchase agreement, warranty assignments and engine title recognition agreement
AWG and IATA produced several standardized and template documents for use in English law governed and New York law governed aviation transactions. Any transaction parties, may utilize these standardized documents. Each standardized document is designated as a template document and is intended to be used as a framework for efficient negotiations. Transaction parties may modify or deviate from the terms of the standardized documents as they deem fit.
User guides and commentaries have been prepared for use in connection with such documents. The purpose of each user guide is to provide technical assistance to transaction parties by providing practical guidance on the terms of the relevant standardized document.
All work on documentary standardization was undertaken in accordance with strict compliance guidelines produced by leading international counsel.
The AWG and IATA standardized templates for each of the following documents are:
English law
- Master used aircraft purchase agreement [PDF] [Word doc]
- Master aircraft lease novation agreement [PDF] [Word doc]
- Warranty assignment and consent (variant 1) for use in simple one tier structures [PDF] [Word doc]
- Warranty assignment and consent (variant 2) for use in two or more tier structures [PDF] [Word doc
- Engine title recognition agreement [PDF] [Word doc]
New York law
- Master used aircraft purchase agreement [PDF] [Word doc]
- Master aircraft assignment, assumption and amendment agreement [PDF] [Word doc]
- Warranty assignment and consent (variant 1) for use in simple one tier structures [PDF] [Word doc]
- Warranty assignment and consent (variant 2) for use in two or more tier structures [PDF] [Word doc
- Engine title recognition agreement [PDF] [Word doc]
For the relevant user guides and commentaries, each as prepared, agreed and approved jointly by AWG and IATA, please follow the links below:
- Master used aircraft purchase agreement
- Master aircraft lease novation agreement and assignment, assumption and amendment agreement
- Warranty assignment and consent (variant 1)
- Warranty assignment and consent (variant 2)
Short-term emergency engine lease
AWG and IATA finalized and released a form master short-term engine lease agreement (Short-Term Emergency Engine Lease, or, in short, STEEL). The STEEL was updated in 2012, mainly to reflect the entry into force of the Cape Town Convention (CTC). IATA has designated the revised STEEL as IATA document no. 5016-01. A user guide and commentary is also available for use in connection with the STEEL.