Macau opens for lessor business
Macau will garner lessor interest as Air Macau refreshes its brand and start-ups consider leased aircraft. Read More » Lessors should be aware of Macau’s nuances, cautions Hugo Maia Bandeira, a partner at Manuela António, a Macau law firm with a focus on aviation. Macau is not a signatory to the Cape Town Convention, so securities and power of attorneys have to be thorough and in line with Macau formalities.
“From our experience most of the lessors are used to dealing with Cape Town signatories,” Maia Bandeira said. “When they come to Macau they want to bring their Cape Town security.” He has found that the security aspect is usually more challenging than the commercial negotiations.
Lessors were able to quickly recover Viva Macau aircraft since the appropriate securities were in place, Maia Bandeira said. But Viva’s collapse is a reminder of the rights of retention, from local fuel or maintenance costs. One lessor had to pay a local supplier before taking a Viva aircraft. “It was better to calculate the costs and get the aircraft out of Macau than risk having it remaining in Macau and fighting in court,” he said.
Legal cases can be long in Macau and the extended time allows creditor claims for the aircraft or for investors to require the aircraft remain in the event the airline re-launches. The legal tussle over a Jet Airways 777 seized at Amsterdam Schiphol is a reminder of leases going astray in complexities.
Macau is exploring being a leasing hub. Regulations changed in April loosening previously strict laws and also switched lessors from being treated as creditors to classification as financial institutions. An undisclosed portfolio of aircraft was moved from Dublin to Macau in late 2018, before the law ended, Maia Bandeira said. It is a possible test case of Macau’s potential, but he cautions home leasing developments will need to come with a big local financial or political push.
Neighbours Hong Kong and Nansha are developing favourable aircraft leasing environments.