The New Global Aircraft Trading System – Update on GATS
29 July 2020
The original launch date for the new Global Aircraft Trading System (GATS) was 31 March 2020, though due to some delays, the Aviation Working Group (AWG) announced that the GATS system would ‘go live’ on 1 June 2020. The AWG decided on this extension due to disruptions caused by the spread of COVID-19 and the need to ensure that both the system and the wider user community are fully prepared for the use of GATS. The GATS system is now operational.
On the 16 March 2020, the Federal Aviation Administration (FAA) released an opinion that concludes that the GATS transitional trust documents comply with any applicable federal law, that they are in due form for filing, and that the FAA will support aircraft registration in the name of a GATS trustee. This opinion is a ‘global opinion’ which intends to cover any specific GATS transaction.
In light of the delayed start to 1 June 2020, the simulated transaction period was also extended a further two months until the 31 May 2020. The simulated transaction period allowed lessors, financiers, airlines, trustees and others the chance to become acquainted with the online platform, to be able to train employees on how to use the online platform, and to prepare for the trading of aircraft through the online platform. During this period, AWG also commenced the process of approving law firms as professional user entities to operate the system. We are happy to confirm that we are an approved professional user entity.
In our last update we commented that while it was unclear as to what the overall level of participation and engagement by lessors, lessees and financiers in the GATS system in 2020 would be, the early signs were promising. This was before the global pandemic and without taking into account the economic impact of COVID-19 on the aviation industry and particularly aircraft lessors who are currently dealing with requests for abatement, deferrals and payment restructurings.
In general, the volume of aircraft trading is not expected to increase and during 2020 and it is likely that aircraft owners and lessors may not be in a position to trade or deal in large portfolios of aircraft which GATS intends to service to achieve transactional efficiency. While we expect to see some transactions on GATS platform before the end of 2020, there is the possibility that there may be a muted take up of the service initially. We will continue to monitor this as the year progresses.
For more information on how we can assist you in related matters, contact a member of our Aviation & International Asset Finance team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.