From early next year, Australian airlines will have access to lower cost finance for aircraft purchases, following the passage of legislation in the Parliament today.
The passage of the International Interests in Mobile Equipment (Cape Town Convention) Bill 2013 gives legislative effect to the Cape Town Convention, which I announced Australia would sign up to in October last year.
In practice, the legislation provides access to cheaper finance for Australian airlines of all sizes for purchases of aircraft, jet engines or helicopters.
It is estimated that Australian airlines could save in the order of $2.5 million on the purchase of a new Airbus A380 and airlines operating smaller aircraft could save around $330,000 on the purchase of a new ATR72 aircraft – like those flown by Virgin Australia.
Discount financing will also be available for purchases of second hand aircraft which will help smaller regional airlines and operators upgrade and maintain their fleet.
Ultimately, these changes will help reduce borrowing costs and risk for creditors, give Australian airlines access to a wider variety of sources of finance and provide greater certainty for the aviation industry.
They will also enable airlines to accelerate the move to safer, more fuel efficient and environmentally-friendly fleets.
The Government will now put in place the necessary arrangements to support Australia’s accession to the Cape Town Convention. The Cape Town Convention will come into force in Australia in early 2014.
Airlines seeking further information on the discounts available under the Cape Town Convention should contact export credit agencies or consult financial institutions for further advice.