Obtaining an Air Operator Certificate ('AOC') and a Licence ('AOL')

Our professional legal advisors here at CSB Group, may assist you with obtaining an Air Operator Certificate and an Air Operator Licence through the Transport Malta Civil Aviation Department (‘CAD’), for the provision of air services within the aviation sector. The Air Operator Certificate (‘AOC’), certifies that a particular undertaking has the requisite professional ability and organisational services for the purposes of ensuring the safety of operations as specified therein. The Air Operator Licence is then granted by the CAD as a specific operating licencing, allowing a particular undertaking to provide specific air services. Every holder of an AOC must also obtain an Air Operating Licence (‘AOL’) for the purposes of commencing operations.

The Requirements that Prospective Applicants must Satisfy

The main preliminary requirements which must be satisfied by an applicant when applying for AOCs and AOLs are the following:

• The Applicant must have their principal place of business and registered office situated in Malta;
• The Applicant must satisfy the CAD that they are able to conduct safe operations;
• The CAD would need to examine all safety aspects of the proposed operation and must be granted access to the applicant’s personnel, aircraft, operations, and facilities and associated records for the purposes of certification and continued surveillance. If an operator has aircraft registered in different Member States, appropriate arrangements would need to be made to ensure appropriate safety oversight;
• The Applicant must satisfy the CAD that their organisation and management thereof is suitable and properly matched to the scale and scope of operations that they intend to provide;
• The Applicant must satisfy the CAD that the procedures for supervision of operations have been clearly defined;
• The Applicant would need to appoint an accountable manager; who must maintain an effective management system and ensure that all activities can be financed and carried out in accordance with the applicable requirements;
• The applicant must ensure that its aircraft are equipped and its crews are qualified as required for the area and type of operation; and
• The Applicant must nominate persons responsible for the management and supervision of the: (i) flight operations; (ii) crew training; (iii) ground operations; and (iv) continued airworthiness of aircraft and aeronautical products, parts, and appliances.

The Applicant must also take into account the following facility requirements:

• Any operator must make use of appropriate ground handling facilities to ensure the safe handling of its flights;
• Any operator must arrange operational support facilities at the main operating base, appropriate for the area and type of operation; and
• Any operator must ensure that the available working space at each operating base is sufficient for personnel whose actions may affect the safety of flight operations. Consideration shall be given to the needs of ground crew, personnel concerned with operational control, the storage and display of essential records, and flight planning by crews.

Air Operation Certificate and Air Operation Licence Application Process

The Application Process for the purposes of acquiring an AOC and an AOL involves five phases as follows:

• Pre-application phase
• Formal application phase
• Document evaluation phase
• Inspection and demonstration phase; and
• Certification phase

The application for the initial issue of an AOC should be submitted at least ninety (90) days before the intended start date of operation. The operations manual may be submitted later, but in any case, not later than sixty (60) days before the intended start date of operation.

For your benefit, the application process is described in further detail hereunder:

1. The Pre-Application Phase

The Application Process kicks off with a preliminary meeting with the CAD during which we, together with the prospective applicant, discuss the envisaged operations. During this meeting the CAD will require complete information on the type of operations for which authorisation is sought, the data that will be provided by the applicant, and details of the procedures which will be followed in the processing of the application.

The Applicant must also submit the Prospective Operator’s Preassessment statement (the ‘POPS form’) to establish and show their intent to pursue the issuance of an AOC.

During the pre-application phase, the Applicant will need to conduct a preliminary assessment of the application process and show the CAD a clear understanding of the form, content and documents required for the formal application. During this stage the Applicant must focus on proving to the CAD operating competence with a parallel satisfactory assessment of the financial, economic, and legal status of the applicant and the proposed operation. At this important phase the following aspects will therefore need to be taken into account by the applicant and proven to the CAD:

1. sufficient financial resources;
2. route structure and aircraft appropriate to the proposed operation;
3. an intended level of service that meets a need or demand and is in the public interest;
4. the proposed operation is in accordance with bilateral or multilateral air transport agreements relating to traffic rights, frequencies, capacity, routes, etc., to which the State is a party; and
5. the availability of traffic studies or other data indicating that the proposed operation should be economically successful.

Once the CAD has undertaken a thorough assessment of the financial, economic, and legal status of the proposed operator, it will decide on whether to award an Air Operating Licence (AOL) (prior to the issuance of the AOC certificate which comes at a later stage).

2. Formal Application Phase

Upon completion of the assessment concerning the financial, economic, and legal aspects of the application and after any deficiencies have been corrected; a provisional determination would be made by the CAD regarding the general feasibility of the operation. If the operation is found to be provisionally acceptable, and an AOL has been cleared than the second phase of the certification process will commence and the formal application phase can be undertaken. The formal application phase will not commence until all the parameters required and the issuance of the AOL is ensured.

The formal application for the AOC would be aimed to show the method of compliance and is prepared for in-depth evaluation, demonstration and inspection related to the required manuals, training programmes, operational and maintenance facilities, aircraft, support equipment, record keeping, dangerous goods programme, flight crew, and key management personnel, including the functioning of the administrative and operational organisation.

An operator must ensure that the following information is included in the initial application:

1. The official name and business name, telephone, and fax details (including country code), e-mail to be provided if available, address and mailing address of the applicant;
2. A description of the proposed operation including a detailed schedule of events;
3. A description of the management organisation;
4. The name of the Accountable Manager;
5. The names and contact details of the nominated persons, including those responsible for Flight Operations, the Maintenance System, Crew Training and Ground Operations, together with their qualifications and experience (attested on a CV);
6. The Operations Manual.

3. Document Evaluation Phase

During the document evaluation phase, the CAD would conduct a detailed examination of all the documentation and manuals provided by the applicant for the purposes of establishing that every aspect required by the relative regulations is included and adequately covered.

In order to facilitate this phase of the certification process, the applicant must coordinate all aspects of the development of the required documentation with CAD, prior to the submission of the formal application.

4. Inspection and Demonstration Phase

Inspections in this phase will involve base and station facility inspections, inspection of the operational control and supervision facilities and inspection of training programmes and training facilities. Demonstrations will involve demonstration of the operational control system, and flight demonstration.

5. Certification Phase

The certification phase is the conclusion of the certification process when the CAD would have determined that all operational certification requirements have been completed in a satisfactory manner, and that the operator will comply with the applicable regulations and is fully capable of fulfilling its responsibilities and conducting a safe and efficient operation.

The culmination of this phase is the issuance of the AOC and the associated operations specifications under the authority of which the operation will be conducted.

Subsequent to the issuance of an AOC, the CAD will conduct continued surveillance and periodic inspections to ensure the operator’s continued compliance with EU-OPS Regulation and the CAD regulations, authorisations, limitations and provisions of its AOC and operations specifications. These periodic inspections are components of a continuing safety oversight programme.

The certification phase is the conclusion of the certification process when the CAD would have determined that all operational certification requirements have been completed in a satisfactory manner, and that the operator will comply with the applicable regulations and is fully capable of fulfilling its responsibilities and conducting a safe and efficient operation.

The culmination of this phase is the issuance of the AOC and the associated operations specifications under the authority of which the operation will be conducted.

It is important to note that every holder of an AOC is also required to obtain an Air Operator’s Licence (“AOL”) in order to undertake the commercial air transport activities.

Advantages Of Obtaining an Air Operators Certificate in Malta 

The aviation sector in Malta has in recent years experienced significant growth, with the Malta aircraft register listing over 500 aircrafts and the number of AOC holders approaching 70 in number. Some of the factors contributing to this recent growth in the aviation sector are listed hereunder.

Malta is an attractive option for air operators in the international carriage of passengers and goods for reward. The reasons for which commercial operators may opt for a Malta AOC are various:

Tax Incentives

Tax incentives are available to both companies and individuals. At a corporate level, all aircraft parts may be tax depreciated over an accelerated period of four years. No withholding tax is imposed on dividends, interest and royalties, including lease payments irrespective of the residence state of the lessor. A special source rule deems income from international air transport as arising outside of Malta which therefore enables certain entities not to be subject to tax on such income. According to the Qualifying Employment in Aviation (Personal Tax) Rules (SL 123.168), a fifteen per cent (15%) personal tax rate applies to certain expats working in aviation provided that the income amounts to at least forty-five thousand Euro (€45,000) annually. The fifteen per cent (15%) tax rate applies for a consecutive period of five (5) years. Individual income from a qualifying contract of employment qualifies under these rules when it is received by a beneficiary in an eligible office (which include position of inter alia, CEO, COO, CFO etc.).

An individual may benefit from the fifteen per cent (15%) tax rate if the person satisfies all of the following conditions:

• s/he is an individual who derives income subject to tax under article 4(1)(b) of the Act, being emoluments payable under a qualifying contract of employment, and received in respect of work or duties carried out in Malta, or in respect of any period spent outside Malta in connection with such work or duties, or on leave during the carrying out of such work or duties;
• s/he is protected as an employee under Maltese law, irrespective of the legal relationship, for the purpose of exercising genuine and effective work for, or under the direction of, someone else, is paid, and has the required adequate and specific competence, as proven to the satisfaction of the competent authority;
• s/he proves to the satisfaction of the competent authority that s/he is in possession of professional qualifications or experience;
• s/he fully discloses for tax purposes and declares emoluments received in respect of income from a qualifying contract of employment and all income received from a person related to his/her employer paying out income from a qualifying contract as chargeable to tax in Malta;
• s/he proves to the satisfaction of the competent authority that s/he performs activities of an eligible office; and
• s/he proves to the satisfaction of the competent authority that:
• s/he is in receipt of stable and regular resources which are sufficient to maintain himself and the members of his family without recourse to the social assistance system in Malta;
• s/he resides in accommodation regarded as normal for a comparable family in Malta and which meets the general health and safety standards in force in Malta;
• s/he is in possession of a valid travel documentation;
• s/he is in possession of sickness insurance in respect of all risks normally covered for Maltese nationals for himself and the members of his family; and
• s/he is not domiciled in Malta.

Ratification of the Cape Town Convention

The Cape Town Convention (‘CTC’) established a centralised system for the registration of aircraft ownership, liens, leases and contracts, thus permitting financiers of Malta-registered aircraft ease of enforcement of their registered security rights in each jurisdiction signatory to the CTC. The CTC also establishes the right of owners of aircraft to grant an Irrevocable De-Registration and Export Request Authorisation (‘IDERA’) to a secured party;

A robust Aircraft Registration Act

The Aircraft Registration Act (‘ARA’) introduced rules facilitating the registration of aircraft, and provides for a creditor-friendly body of laws meant to allow owners the possibility to grant mortgages and register international interests over aircrafts and engines (prevailing over Maltese-registered mortgages), IDERAs to be filed, and for owner and lessor interests to be registered in the National Aircraft Register;

Costs for obtaining a Maltese AOC are highly competitive but not at the detriment of the quality offered by the Maltese authorities and local service providers that may be assisting;

Malta being a member of the EU, Maltese AOC holders enjoy access to the single aviation market, as well as all open skies arrangements between the EU and other countries;

Obtaining a Maltese AOC is a structured process, split into well-defined stages. The Transport Malta Civil Aviation Directorate (‘CAD’) maintains a 24-hour service, and an AOC can be obtained within approximately 3-6 months, provided all documentation is in order.

Maltese AOCs are issued in accordance with all EASA regulations and standards. Costs for acquiring premises as well as employing personnel in Malta, as may be required for the operation, are relatively low;

There are various existing services providers and professional advisors to meet the need of air operators;

English is an official language of Malta.

Conclusion

Subsequent to the issuance of an AOC, the CAD will conduct continued surveillance and periodic inspections to ensure the operator’s continued compliance with EU-OPS Regulation and the CAD regulations, authorisations, limitations and provisions of its AOC and operations specifications. These periodic inspections are components of a continuing safety oversight programme.

About the Authors

This update has been authored by Dr Rachel Pecorella Genovese, Shipping, IP, and Commercial Manager and by Dr Edward Meli, Lead Corporate Services Advisor. For additional information kindly contact us on [email protected].