Airline rental prices by airlines in Indonesia have recently sparked public curiosity. Based on SINDOnews’ search, the price of aircraft rental is indeed high. Aircraft rental prices vary depending on the type of aircraft, ranging from IDR 1.7 billion to more than IDR 18 billion per month. Although expensive, aircraft rental is indeed the cheapest option for local airlines to run their operations. Because, if you have to buy, especially in cash, the cost will be very expensive and will certainly burden the airline in terms of capital. Almost all aircraft used by airlines in Indonesia are leased aircraft. So, the airline does not own the aircraft, but only has the right to lease and the right to put a brand on the plane. Several types of aircraft that are often used by Indonesian airlines today include the Boeing 737 900ER; Boeing 777-300ER; Airbus 330-300; ATR 72-600; Airbus 320 NEO and others
Governing law and regulation
- Law No. 1/2009 concerning Aviation as amended by Law No. 11/2020 concerning Job Creation
- Regulation of the Minister of Transportation (Permenhub) No. 97/2015 concerning Guidelines for the Implementation of Ownership and Control of Aircraft
- Presidential Regulation (Perpres) No. 8/2007 concerning Ratification of the Convention On International Interests In Mobile Equipment and the Protocol To The Convention On International Interests In Mobile Equipment On Matters Specific To Aircraft Equipment Moving On Specific Issues In Aircraft Equipment)
- The Convention on International Interests in Mobile Equipment (Cape Town Convention)
Commercial air transport business
Commercial air transport business entities in Indonesia can be in the form of state-owned enterprises, regionally-owned enterprises or Indonesian legal entities in the form of limited liability companies or cooperatives, whose main activities are operating aircraft to transport passengers, cargo and/or post for a fee. Commercial air transportation is divided into scheduled and unscheduled. Scheduled commercial air transportation is commercial air transportation which is carried out on fixed and regular routes and flight schedules, with certain and published rates. Unscheduled commercial air transportation is commercial air transportation which is carried out on non-fixed and irregular routes and flight schedules, with tariffs according to the agreement between service providers and service users and are not published.
Aircraft ownership and control
The holder of a commercial air transportation business license is required to own and control a certain number of aircraft. The specified number of aircraft is determined as follows:
- for scheduled commercial air transportation, having at least 5 (five) units of aircraft and controlling at least 5 (five) units of aircraft of the type that supports business continuity in accordance with the routes served
- for non-scheduled commercial air transportation has at least 1 (one) unit of aircraft and controls at least 2 (two) units of aircraft of the type that supports business continuity in accordance with the operating area served; and
- for commercial air transportation specifically transporting cargo has at least 1 (one) unit of aircraft and controls at least 2 (two) units of aircraft of the type that supports business continuity in accordance with the route or operational area served.
- Aircraft owned and controlled must be aircraft that are airworthy or serviceable and operated to carry out commercial air transportation activities
Aircraft ownership can be in the form of:
- cash purchase (bill of sale) / transfer of title;
- purchase of installments in the form of a sale and purchase agreement with a guarantee of ownership of the bill of sale (financial agreement with warranty bill of sale) legalized by a notary;
- lease of aircraft with an option to purchase (lease to purchase) as evidenced by a guarantee from the owner that the lessee is required to own the aircraft at the end of the lease period which is legalized by a notary;
- grants or gifts as evidenced by valid documents; or
- court decisions that have permanent legal force.
Aircraft control can be in the form of:
- aircraft lease from foreign lessor who is not an air transportation company or flight operator, in the form of a dry lease agreement and registered and listed in the operation specification of the relevant commercial air transportation business entity;
- aircraft leasing from foreign air transportation companies in the form of dry lease agreements, and registered and listed in the operation specification of the national commercial air transportation business entity concerned;
- aircraft lease from a domestic lessor who is not an air transportation company or flight operator in the form of a dry or wet lease agreement and is stated in the operation specification of the relevant commercial air transportation business entity;
- aircraft lease from another national commercial air transportation business entity in the form of a dry lease agreement and stated in the operation specification of the relevant commercial air transportation business entity; and
- lease of aircraft from another national commercial air transportation business entity in the form of a wet lease agreement provided that the aircraft is included in the operation specification and under the control of the relevant commercial air transportation business entity (the lessee), for a period of 12 (twelve months) and not can be extended and must maintain a minimum number of aircraft mastery.
The operation of the aircraft acquired on the basis of control can only be carried out if the lessor is given the right by the aircraft owner to perform a sub-leased (dry lease). The right to sub-lease is stated in the lease agreement between the lessor and the aircraft owner. The use of the aircraft on the basis of mastery must use a call name (call sign), namely the name of the company on the fuselage by the lessee (lessee).
Aircraft registration under the Cape Town Convention
Indonesia has ratified the Cape Town Convention through Perpres No. 8/2007, which guarantees the protection of lenders for their interests on board as it provides international registration for creditors and debtors in the interest of their security, and provides a series of basic solutions in the event of debtor default. The Cape Town Convention is further implemented under the Civil Aviation Safety Regulation Section 47, on Aircraft Registration (CASR 47) issued by the Directorate General of Civil Aviation (DGCA) of the Ministry of Transportation. CASR 47 regulates aircraft procurement approvals, aircraft registration certificates, aircraft dealer and manufacturer registration certificates, as well as Irrevocable Deregistration and Export Request Authorization (IDERA).
In general, if the aircraft is to be operated in Indonesia, the aircraft must be registered in Indonesia. Otherwise, the aircraft can only fly between one Indonesian airport and a foreign airport. The Directorate General of Civil Aviation organizes aircraft registration in Indonesia. Under CASR 47, aircraft must be registered only by and on behalf of the rightful owner. However, aircraft registration also includes details of the aircraft operator if it is different from the owner so that the registration can also be carried out by the authorized proxy or operator of the aircraft (lessee). The Certificate of Registration (COR) issued by the Directorate General of Civil Aviation is not proof of aircraft ownership and the Directorate General of Civil Aviation does not support any information regarding COR. The Directorate General of Civil Aviation issues COR to people who are considered owners based on the submitted evidence of ownership, for example sales invoices, lease agreements between operators (lessee) and lessors (owners) or records in the Civil Aircraft Register. Under CASR 47, the COR is valid for three years from the date of its registration. COR can be revoked:
- upon receipt of the application submitted by the aircraft owner or the competent authority because, for example, the lease agreement has expired;
- at the request of the IDERA holder; or
- if the operator fails to maintain its certificate of eligibility for three consecutive years.
If the aircraft is transferred to a third party, the latest COR holder must apply for re-registration of the aircraft.
Irrevocable Deregistration and Export Request Authorisation (IDERA) as a guarantee
One of the legal instruments, whose development is caused by changes in the form of transactions in the aerospace business, is Irrevocable Deregistration and Export Request Authorization (IDERA). IDERA is actually a form of “guarantee” given on the basis of international interest – such as a creditor guarantee (Inaya Thahit, 2010), which allows a creditor to execute or withdraw on board the aircraft, which in addition to being used by the debtor is also a ‘guarantee’ for the transaction. among them.
Under CASR 47, the registered operator (or lessee) or owner may issue IDERA for the benefit of the creditor as the competent authority if the aircraft has obtained the Indonesian Registration Certificate (COR). These creditors include:
- Collectors under a guarantee agreement;
- conditional seller under a title reservation agreement; or
- the lessor under the lease agreement (the Authority).
The Directorate General of Civil Aviation is aware of and will record IDERA as long as IDERA is submitted using the specified and correctly filled out form. Only one IDERA can be issued and registered with the Directorate General of Civil Aviation for each aircraft. In addition, IDERA can only be revoked at the request of the Authorized Party or a designated person, and IDERA records will then be deleted. Therefore, the rights of creditors as Authorized Parties will be protected because only they can apply for revocation of aircraft registration in Indonesia and the issuance of aircraft outside Indonesia.
