Busy ‘off-lease’ market for 2-Reg as a result of pandemic

Officials at 2-Reg said it had been ‘extremely busy’ when it came to the off-lease market, with the registry providing a safe and secure berth.

This market is focused on when a lease on an aircraft concludes with one operator and it moves to another, with the lessor needing to transition and fly its aircraft to its next destination.

Critically, Guernsey benefits from a royalty paid to the island’s government by the registry’s locally-based operator SGI (Guernsey) – whose aviation consultancy parent company is based in Amsterdam – which also foots operational bills.

In addition to the revenues generated by the registry and a number of people employed in Guernsey, there is spin-off work for the finance sector when it comes to structuring aircraft leases, work for the services to support operators, and work for the law firms for legal and tax advice for the owners registering the aircraft in Guernsey. The benefit of this activity was estimated at £1.4m. in 2019.

‘2-Reg has developed a very strong relationship with lessors in managing those transitions. And we’re now dealing with major leasing companies and banks and institutions to support them on those transitions,’ said Sidhant Sharma, deputy director of 2-Reg.

‘That’s something which, over the pandemic, we have done a lot more than other registries as well, purely because of the relationship from a commercial perspective we’ve maintained with the lessors and being able to resource internally, to act proactively on those aspects.’

Any return to pre-pandemic levels of air travel could benefit the registry. During the pandemic, aircraft have been returned to the leasing companies that own them. Several of these aircraft are registered in Guernsey but 2-Reg said the greatest amount of work would be generated when those aircraft were needed by airlines flying again.

‘When the industry is going through its downwards trend we also have a lot of work to do, as we’ve seen in this Covid time, because a lot of airlines are having a tough time. So the leasing industry is taking those aircraft back. And then they need a register like Guernsey to help them with that transition,’ he said.

‘Similarly, when the industry is on its way up, the same trend follows where those aircraft now are going back to the airlines, and the leasing industry and the financial institutions need the support of the register to transition them. So the volume remains very high.’

The more regular business would then return as the world, hopefully, returns to more normal travel patterns.

Aircraft registrar Matt Bisson said 2-Reg was about to pass 700 aircraft that had been registered with it since it was launched in 2013. It currently has about 290 on the registry of which 156 are airline size, including 39 Boeing 737 aircraft. A new 737 costs a minimum of $89m., he added, giving an idea of the scale of the business.

But Mr Bisson stressed it was not just about numbers on the registry.

‘We are a transactional registry. We make our revenues and we benefit from transactions.

‘So we need aircraft to be coming and going off the registry because that’s what drives the revenues, what drives the royalties and drives the work,’ he said.

‘We have a lot of aircraft that we’ve seen multiple times on the registry. They will go from one customer, they’ll come to the registry and they’ll transition to the new customer, and then we see them coming back because we have that great relationship.’

Describing 2-Reg as an ‘unsung success story’, he said that the royalty largely offset Guernsey costs of the registrar, the office of the director of civil aviation – which is responsible for aviation safety locally – and ancillary services.

There are six members of staff in the aircraft registry and the DCA office. Three people locally are also employed by SGI, with another two being hired, with four consultants used when needed, in addition to the SGI team in Amsterdam.