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The federal government’s move to amend legislation governing the International Interests in Mobile Equipment (aircraft equipment) Act (the IIME Act) has been applauded by Canada’s two largest airlines. Air Canada and WestJet each released statements yesterday welcoming the proposal, related to Canada’s ratification of the Cape Town Convention and Protocol, which is aimed at providing means for airlines to achieve savings on the financing of aircraft.
“We are pleased to see the Canadian government recognize the importance of the Cape Town Convention for the Canadian airline industry,” said Candice Li, WestJet vice-president, treasury. “As an airline with a keen focus on cost, we recognize the savings benefits for the overall Canadian air carrier industry, potentially saving millions of dollars in financing costs over the lifetime of an aircraft.”
The treaty, if passed in Canada, would help to facilitate the financing of commercial aircraft by establishing international standards that ensure greater transparency of aircraft ownership and access by creditors to mobile assets, including aircraft. Financiers are therefore able to reduce risk premiums and offer more favourable lending rates which in turn would result in significant cost savings for the Canadian aviation industry. Established in 2001, the Cape Town Convention is the result of negotiations involving 68 countries, including Canada.
“With ratification, Canada would join the growing ranks of countries benefiting from this important international agreement that will provide Canada’s airlines with access to more competitive aircraft financing and leasing terms on international finance markets, for the benefit of Canada’s airlines and all stakeholders,” said Michael Rousseau, Air Canada’s executive vice president and chief financial officer.
Once passed, the legislation would still require an approval by the Organisation for Economic Co-operation and Development before the benefits of the treaty can be realized.
“We fully support the continued efforts of all parties so that Canadian carriers can experience the same benefits that airlines from many other countries are already enjoying today,” WestJet’s Li said.