The Cayman Islands and it’s aircraft industry

The Cayman Islands stand as a preferred
jurisdiction for financial, business and institutional aviation clients

  • The utilisation of the Cayman Islands in
    international aircraft finance can be split into three sectors: 
  • Registration of aircraft with the Civil
    Aviation Authority of the Cayman Islands for use in the private jet sector; 
  • Registration of aircraft with the CAACI
    for use in the public transport category or for parking title while the
    aircraft is grounded; and  
  • The use of “off balance sheet” or “on
    balance sheet” special purposes vehicles to own aircraft which are operated and
    registered outside of the Cayman Islands.  

Maples and Calder’s aviation practice
was developed in early 1980s and advises on a wide range of aircraft financing
transactions. These include aircraft securitisations, aircraft multi-ownership
structures, on and off-balance sheet structures, export credit-agency supported
facilities, pre-delivery payment financings, bilateral and syndicated loans and
operating and finance leases. 

We have worked with the CAACI for over
15 years and we specialise in local aircraft registration and registration of
security over aircraft. Our Dublin and British Virgin Islands offices
complement and enhance the services offered from the Cayman Islands and each
maintain their own expert airfinance practices. MaplesFS (and its Irish
counterpart), our affiliated organisations, provide registered office, company
secretary, share trustee and director, administration and accounting services
as well as off-balance sheet ownership structures for special purpose leasing
and securitisation vehicles. The combined offering of Maples and Calder and
MaplesFS provides a cost-effective and efficient service to our global network
of clients and has established Maples as a firm of choice.

Our extensive experience in aviation has
provided us with a well developed perspective on the aviation industry’s trends
and the use of Cayman SPVs. This article serves to highlight a few of the
factors which have led to the popularity of the Cayman Islands in the areas of
both private and commercial aviation. 

Private aviation

  • There are many advantages of registering
    a private or corporate jet in the Cayman Islands.  
  • For an article dedicated to this subject
    see Five Reasons to Register an Aircraft in the Cayman Islands.  

Five Reasons to Register an Aircraft in the Cayman Islands can be found at summary, aircraft owners and financiers
are attracted to registering aircraft in the Cayman Islands because they are
dealing with both an Aircraft Registry and a jurisdiction that are well
equipped to properly service their needs. Cayman is a ‘friendly flag’, with
expert advisors available to deal with their client’s legal, structural and
other requirements. The CAACI prides itself on its approach to customer
service, including timely responses to queries and regular survey of aircraft
at their home base, and it maintains an excellent reputation in terms of air
safety. Moreover, there is no risk of a rogue government seizing registered
aircraft or a registry failing to cooperate in a default scenario where
security over the aircraft needs to be enforced. 

One of the most attractive features of
Cayman’s Aircraft Register is the dual system for registration of aircraft
mortgages. Registration under Cape Town Convention (discussed below) is
permitted and the Cape Town Law (discussed below) affords a Cayman Entity (as
defined therein) an ‘opt in’ to the Cape Town Convention and integrates the
provisions of the Cape Town Convention to the jurisdiction through domestic
legislation. Alternatively, registration on the Mortgages Register maintained
by the CAACI pursuant to the Mortgaging of Aircraft Regulations 1979 may be
effected. The regulations, among other things, offer a system for obtaining
priority for a security interest and protection from de-registration of an
aircraft without the registered mortgagee’s consent. 

Notable recent developments in Cayman’s
private aviation industry include the CAACI’s willingness to introduce a new
regime, and specialised pricing, to enable applicants to park title for a
“green delivery” on its Aircraft Register. Under this scenario, at the
conclusion of the registration process a Certificate of Registration will be
issued and in lieu of issuing a Certificate of Airworthiness, the CAACI will
issue special flight authorisations as may be needed to transport the aircraft.
The aircraft will remain on the Aircraft Register during the fit out period
subject always to any security interest registered in favour of the designated
financier. This has proved to be a very valuable service for customers who, for
example, require financing before their aircraft is ready for operation. The
aircraft may remain on the Aircraft Register where the intention is to operate
it privately (or where the CAACI has put in place or agrees to put in place the
necessary “Article 83” Bis agreement with the relevant host country to permit
commercial operation of aircraft on the CAACI’s Aircraft Register), or the
aircraft may be transferred to another register for commercial operation.

Commercial aviation

Cayman SPVs are used in a wide variety
of commercial airfinance transactions, ranging from pre-delivery payment
financings to those backed by traditional commercial loans or private equity to
those supported by export credit agencies located in the major aircraft
manufacturing jurisdictions (such as Brazil, Canada, Europe and the USA).

These are typically structured as either
“on balance sheet” SPVs, meaning the shares in the SPV are legally and
beneficially owned by an ascertainable entity from the time of acquisition and
financing of the aircraft (ie the SPV is the subsidiary of another entity), or
“off balance sheet” SPVs, meaning that the shares of the SPV are legally owned
by a trustee on a discretionary charitable trust (ie it is not a subsidiary of
the trustee or anyone else).

The typical structure involves a Cayman
SPV being used as the vehicle to acquire the aircraft, receive the benefit of
the financier’s loans and to lease the aircraft to the designated airline,
operator or leasing company. The financier will usually take security over the
aircraft, over the SPV’s rights as lessor and over the issued share capital of
the SPV itself. The obligations of the SPV will nearly always in an “off
balance sheet” deal and sometimes in an “on balance sheet” deal be structured
so as to be limited in both in amount and recourse to the value of the security
granted by the SPV and as the SPV will grant security over all its material
assets (namely, the aircraft and its rights under the lease), the financier is
not being deprived of recourse against any significant asset. 

Maples and Calder and MaplesFS Cayman
have advised and administered off balance sheet SPV airfinance transactions
since the development of the firm’s asset finance practice. MaplesFS has
participated in over 325 aircraft financing transactions relating to more than
870 aircraft, many of these being original export deliveries direct from the

The Cayman Islands and the Cape Town

The Convention on International
Interests in Mobile Equipment and a protocol to the CIIME specific to aircraft
equipment (the CIIME as modified by the Protocol being the “Cape Town
Convention”) creates international standards for registration of ownership,
security interests (liens), leases and conditional sales contracts and various
legal remedies for default in financing agreements, including repossession and
the effect of particular Contracting State’s (as defined in the Cape Town
Convention) bankruptcy laws.

It is because of the integral role that
the Cayman Islands play in the international airfinance industry that the Cape
Town Convention Law (2009) of the Cayman Islands was passed. The Cayman Islands
continue to lobby for the the Cape Town Convention to be extended to the Cayman
Islands as soon as it is ratified by the United Kingdom.

As a British Overseas Dependent
Territory the Cayman Islands have no ability in their own right to become a
party to the Cape Town Convention. While the United Kingdom has signed the Cape
Town Convention, it has not ratified it, and it is only after ratification by
the United Kingdom that application can be made to have the Cape Town
Convention extended to cover the Cayman Islands as a British Overseas Dependent

In July 2010 the United Kingdom issued a
Call for Evidence with regard to the Cape Town Convention to determine whether
it should move towards ratification or take no further action. In order to
ensure that financiers do not have to make a judgment as to the value of having
SPVs incorporated in contracting states, Maples and Calder together with the
Cayman Islands government and certain other local law firms have supported a
move to ratification and having the Cape Town Convention extended to the Cayman

While the timing of this is outside the
control of the Cayman Islands, the fact that the Cayman Cape Town Law is in
effect, coupled with the inherent structural safeguards built into “off balance
sheet” financings, together with its proven track record for excellence in
airfinance means that the Cayman Islands remain and should remain a
jurisdiction of choice for both commercial and private aviation transactions. 


  1. Five Reasons to Register an Aircraft in the Cayman Islands can be found at
Previous article
Next articleAccessing Capital in the Middle East
Joannah Bodden Small
Joannah Bodden Small advises on corporate, commercial and partnership law. She specialises in asset and acquisition finance, including international aircraft finance and local aircraft and vessel registration in the Cayman Islands, which includes advising lenders of the registration processes available for their security interests under Cayman Islands law.

Joannah Bodden Small
Maples and Calder
PO Box 309, Ugland House
South Church Street
Grand Cayman KY1-1104
Cayman Islands

T: +1 (345) 814 5313
E: [email protected]


Mark Western

Mark Western represents major financial institutions on all aspects of banking law. He specialises in asset and acquisition finance and has worked within the aircraft finance sector. Mark joined Maples and Calder in 2004 after having been a partner at White & Case and Weil Gotshal and Manges, from where he was seconded to GECAS.

Mark Western
Maples and Calder
53rd Floor, The Center
99 Queen’s Road
Central Hong Kong

T. +852 3690 7407
M: +852 9016 0076
E: [email protected]