Global Aircraft Trading System (GATS™): key terms and e-documents

By Richard Sharman

05-2019

As with any new system, there is new terminology to get to grips with.  Below is a quick reference guide to the key terms and e-documents.

The Global Aircraft Trading System (GATS™) is a fully electronic system for buying and selling aircraft and engines on lease, created by the Aviation Working Group (AWG).

GATS is intended to simplify and streamline trading, critically removing the need to novate the lease (and associated time and cost overruns) whilst preserving the airline's existing contractual protections in the lease.

GATS takes the existing practice of holding aircraft within owner trusts, and innovatively embeds this within a fully electronic system with e-signature, e-delivery of standard documents and recordation of transactions on an e-ledger. GATS permits the taking of security interests within the platform (and does not stop security interests being taken outside of the platform).

Essentially the lease novation will be replaced with a 3-page standard form transfer certificate between the GATS Trustee, the Existing Beneficiary and the New Beneficiary (note, not the airline) pursuant to which the beneficial interest in the GATS Trust is transferred to the New Beneficiary. Trades are closed by electronically executing this document, after satisfaction of conditions to transfer contained in the lease as confirmed by the airline electronically. There is a similar process for any conditions imposed by a secured party.

By streamlining the trading process, where it can be used GATS should save time and cost and lead to more trades and in turn greater liquidity in the market.

AWG's aim is to launch the GATS Platform by Q1 of 2020. AWG have issued a suite of "exposure drafts" of the main standardised GATS documents for industry review by the end of June 2019.

Click here to view our GATS key terms, key e-documents, transaction timeline and structure charts.