Paddy Burke (Fine Gael)

I welcome the Minister to the House. I also welcome the legislation, the passage of which I will not delay.

The convention arises from the need to acquire and use mobile equipment of high value or economic significance and to facilitate the financing of the acquisition and use of such equipment in an efficient manner. It recognises the advantages of asset-based financing and leasing for this purpose and will facilitate such transactions by establishing clear rules to govern them. The convention is born of the need to ensure interests in such equipment are recognised and protected internationally. It is desirable to provide broad and mutual economic benefits for all interested parties and this is also recognised by the convention. Such rules must reflect the principles underlying asset-based financing and leasing and encourage the autonomy of the parties necessary in such aviation transactions.

The convention seeks to establish a legal framework for international interests in such equipment and attempts to create an international registration system for their protection. It provides for the constitution and effects of an international interest in certain categories of mobile equipment and associated rights in the aviation sector, which is a progressive and much desirable advance in international aviation measures, and I welcome its enactment.

The convention adopts the asset-based financing practices widely used in the United States and weaves them into an international agreement. Specifically, the convention establishes an "international interest", which is a secured credit or leasing interest with defined rights in a piece of equipment. These rights consist primarily of the ability to repossess, sell or lease the equipment in case of default and the holding of a transparent finance priority in the equipment.

Priority will be established when a creditor files, on a first-in-time basis, a notice of its security interest, in a new high-technology international registry. Once an international interest has been filed by a creditor and becomes searchable at the international registry, that creditor's interest will have priority over all subsequent registered interests and all unregistered interests, with a few exceptions. The international registry will be searchable on a 24 hour, seven day a week basis. Fees will be charged for filing a security interest in the international registry and for other services connected to use of the registry.

The rights and enforceable remedies created by the convention and aircraft protocol are designed to reduce the risk assumed by creditors in financing transactions in many parts of the world. In many countries, the risk factor is significant because local laws do not protect lenders in the event of default or bankruptcy or are highly unpredictable. This uncertainty is compounded because aircraft can and do move readily between countries and this drives up the cost of aircraft financing in many countries, which is reflected in the interest rate the financier charges. Measures that reduce the interest rate will reduce the cost of aircraft and, ultimately, the cost of travel, which will be welcome.

The convention seeks to reduce this risk in a number of ways. For example, it provides financiers with a number of key rights with respect to an aircraft financed to an airline of a country that has ratified this convention and protocol. These include the right, upon default of a debtor, to deregister the aircraft and procure its export; to take possession or control of the aircraft, or sell or grant a lease in the aircraft; and to collect or receive income or profits arising from the management or use of the aircraft.

The extent of these rights and the speed with which they can be exercised will be a function of the declarations a country files at the time it deposits its instrument of ratification. These declarations set out which remedies that state will allow and the means by which the remedies can be implemented. It can be expected that the greater the remedies a state chooses to recognize in its declarations, the greater will be its benefits.

These benefits will take the form of lower financing charges and fresh sources of capital for aircraft financing. This will particularly benefit developing countries whose carriers have had to pay high interest rates or who have been unable to access the commercial credit markets at all because of their credit risk. The ability of countries, which have historically financed aircraft acquisitions through sovereign guarantees, to make use of asset-based financing will allow them to use such guarantees for other domestic purposes.

The International Civil Aviation Organisation will supervise the international registry, which will be based at Shannon. I welcome the decision by ICAO to select the Irish company Aviareto to operate the international registry of financial interests in aircraft under the convention. A number of years ago we lobbied for the location of the Irish Aviation Authority at Shannon but we were not successful. The Government decided it should be located in Dublin. I am pleased this body will be located at Shannon.

Aviareto fought off stiff competition from Canada, Singapore and Spain to win this contract. It is good news for the aviation industry. Ireland has a high profile and good reputation in aviation with major maintenance, repair and overhaul and aircraft leasing companies based here, particularly in Shannon. The location of the international registry will add to that reputation and it will allow Ireland to play a more central part in the international aircraft financing business. It is also good news for Shannon, which, unfortunately, could face its own concerns over the future viability of its aviation sector, particularly with the advent of the open skies policy in the near future.

This convention, as an international agreement, could result in significant economic benefits to Ireland and other countries and could help facilitate the modernisation of airline fleets around the world. The convention is likely to help aircraft manufacturers to increase exports. For countries that manufacture aircraft there will likely be increased exports as the number of aircraft orders increases. Increased exports also could mean more jobs for exporter countries such as the Ireland. It also could help developing countries to upgrade their fleets at reduced financing costs. The treaty and airline protocol provide financiers with several key rights concerning an aircraft purchased by a country that has ratified the convention, including the right to seize the aircraft or sell a lease in it. Those guarantees are likely to lead to lower financing charges and the opening of fresh capital sources.

I welcome this convention and I am glad that it will pass swiftly. It will do much to improve the international aviation sector. I hope there will be speedy decisions on the construction of a new terminal at Dublin Airport and on the Aer Lingus question because these issues have been ongoing for too long. The Government is not giving a high enough priority to both those issues. I urge the Minister to make speedy decisions.

I refer to helicopters, which we can all see is very much a growing industry. That their number is on the increase is causing problems regarding landing and planning permission, and I ask the Minister to set policy in that regard. There are two types of helicopter, those owned by private individuals and those run by people who provide a hiring or leasing service to companies and individuals. The issue of where they may land and take off is causing concern in some communities. It is certainly worrying those who own such helicopters. I would like the Minister to arrange a debate on this issue at some stage or draw up guidelines regarding how the area proceeds in future. I welcome the Bill and wish it a speedy passage.