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Key Considerations for Aviation Deals in France

Key Considerations for Aviation Deals in France
Navigating aviation transactions in France demands a comprehensive understanding of the country’s regulatory framework and the prevailing investment environment. Recent market trends reveal a cautious approach to aviation deals, with private equity activity reaching its lowest level since 2021. This decline is largely attributed to a combination of domestic and global uncertainties, prompting investors and market participants to adopt more risk-managed strategies. Notably, add-on deals have become predominant, representing 58% of transactions in the first quarter of the year. Concurrently, the aerospace and defense sector continues to demonstrate robust growth, with Europe experiencing a significant increase in both deal volume and value. This dynamic has led competitors to strategically reposition themselves within the market.
Aircraft Registration Responsibilities
In France, the Direction Générale de l’Aviation Civile (DGAC) functions as the official owner or title registry for aircraft. The obligation to register an aircraft rests solely with the owner, rather than the operator or lessee. Registration is initiated exclusively at the owner’s request, and the DGAC does not recognize the concept of temporary registration. Even the widely used ‘F-W’ registration mark, commonly associated with manufacturers, is treated as a permanent registration. Owners retain the right to request deregistration at any time. Legal practitioners based in Paris frequently assist with the necessary filings related to aircraft registration, leases, subleases, or mortgages with the DGAC, often acting under powers of attorney on behalf of owners or mortgagees.
Deregistration Procedures
The process of deregistering an aircraft in France parallels the registration procedure in that only the registered owner or their authorized representative may initiate it. When a mortgage is registered against the aircraft, the mortgagee’s consent is required to release the encumbrance. Lessees do not possess the authority to block deregistration, nor is their power of attorney required. However, some degree of cooperation from the lessee is necessary, as the original certificate of registration—typically kept onboard the aircraft—must be returned to the DGAC promptly. In instances where a lessor repossesses the aircraft, it is expected that the lessor will retrieve this certificate. Although the DGAC does not accept the filing of a Deregistration Power of Attorney (or IDERA), such documents may be prepared for informational purposes. Additionally, the DGAC may request new powers of attorney at the time of deregistration.
International Conventions
France is a party to several key international aviation conventions. It has ratified the 1944 Chicago Convention and the 1948 Geneva Convention on the International Recognition of Rights in Aircraft. While France has signed the 2001 Cape Town Convention and its Aircraft Equipment Protocol, it has neither ratified these agreements nor indicated any intention to do so. This position contrasts with that of the European Union, which has ratified the Cape Town Convention.
Market Implications
In light of the current investment climate, stakeholders engaged in aviation transactions in France should remain cognizant of the prevailing risk aversion and the strategic realignments occurring within the sector. Although the regulatory framework remains stable, the evolving market conditions—characterized by increased add-on deal activity and heightened competition in aerospace and defense—underscore the necessity for meticulous due diligence and strategic foresight to ensure successful outcomes in aviation deals.

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