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Industry insights

Fractional Ownership in Aircrafts

23 May 2023
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The Aircraft Registration Act, Act VIII which came into force in 2010, (hereinafter the ‘Act’) allows the notion of fractional ownership whereby the ownership of an aircraft may be split into one or more shares through co-ownership and through trust structures which may be individually financed by various creditors. The holder of the part share may use the aircraft for a designated amount of time over a specified period, therefore cutting the user cost of business aviation significantly and granting more flexibility.

The Director General shall record certain information on the Maltese-registered Aircraft in the National Aircraft Register. This includes specifically the ownership rights in the aircraft or an engine, when held by a trustee, for a single interest or more, and when held by one or more owners, and when divided into fractional shares or otherwise.

The Aircraft Registration Act lists the conditions of eligibility to fractional ownership as it states:

‘‘Where the application for registration of an aircraft is based on ownership and where interest in an aircraft is vested in more than one person, then at least fifty per cent of the owners of the shares in the aircraft must be eligible as qualified persons, provided that the Minister may by regulations establish different conditions, including different minimum thresholds on ownership participation by qualified persons for the eligibility to register an aircraft when owned by more than one person’’

(The same rule shall apply when the applicant for registration is a trustee.)

‘‘Where the application for registration of an aircraft is based on the operation of such aircraft and where such operation is being carried out by more than one person, then all the operators of the aircraft must be eligible as qualified persons:

Provided that in the case of an aircraft which is not used to provide air services, the Minister may by regulations establish different conditions for the eligibility to register an aircraft when operated by more than one person.’’

The Act defines qualified persons in Section 6.

The Act also recognises the benefits resulting from the engagement of trusts in the ownership of an aircraft and fractional ownership, whereby the provision for coordination and regulation of the beneficiaries’ interests and rights are noted in the trust deed.

The concept seems to be increasing in Malta with individuals seeking to invest and becoming part-owners in aircraft, as a number of operators such as Flexjet and JetClub, have shown an interest in providing a fractional ownership product.

For more information about the above and other aviation related matters, you can contact our office on info@vaialegal.com