Air Astana explains reasons behind registration of aircrafts in Aruba

Registration of Air Astana planes outside Kazakhstan has no effect on the tax payments into the state budget, Tengrinews quotes the Kazakhstan air company as saying. The question was raised after Kazakhstan aviation photographer (spotter) Alimzhan Bissembayev told in an interview to Tengrinews that all 26 aircrafts of Air Astana are registered in Aruba island in the Caribbean. He believes that the company uses this registration to avoid taxes. “Air Astana has 26 aircrafts. 18 of them are leased and the rest have been bought,” Bissembayev said. “All the company’s aircrafts are registered in Aruba island in the Caribbean. This is confirmed by the first two symbols in the plane’s registration number, P4 in this case. Aruba is part of the Netherlands Antilles. This is a well-known offshore zone that allows to decrease tax payments and preserve anonymity of the real owners of the company. There is no necessity to register all planes there, just the 18 leased ones. The aircrafts owned by the company have to be registered in Kazakhstan. At least, it is strange that the company with state participation uses offshore zones for registration of Kazakhstan property. The aircrafts registered in Kazakhstan have to have the numbers between UP-AAA01 to UP-ZZZ99.” A Tengrinews journalist has contacted the press-service of Air Astana to get a comment. The company’s representatives insist that the customs duties do not depend on the aircrafts’ registration. “Otherwise, all yjr Russian airlines, that by the way also register their aircrafts in Bermudas or Ireland, wouldn't by requesting a prolongation of the zero duties period for the aircrafts. The customs duty is zero in the U.S., EU countries, Canada and Brazil,” Air Astana’s public relations manager Tlek Abdrakhimov said. The company assures that registration of the aircrafts outside Kazakhstan has no financial or tax motives behind it. “International leasing of aircrafts is very popular; it is used by major international leasing companies that place orders for hundreds of aircrafts to the producers. In cases of direct purchase of aircrafts by airlines, the international lessors, just like the creditors, are interested in securing the costly asset. That’s why two aspects are extremely important for them: the technical regulation body controls maintenance of the aircraft’s air worthiness and the legal risks of the aircraft’s non-return to the lessor in case the airline defaults,” Abdrakhimov said. Almost all the Kazakhstan airlines are currently on the UE blacklist and are banned from making flights to Europe because of shortages in Kazakhstan's technical control of its aircrafts’ air worthiness. “Air Astana is the only exception from the blacklisted commercial airlines, mostly thanks to the aircrafts’ registration in the jurisdiction that performs the technical control in line with the European standards. In practice this means that Aruba’s inspectors, certified under the European standards, regularly check the technical condition of the aircrafts and performance of the technical maintenance program. That includes use of certified spare parts, properly qualified technical personnel, compliance of the technical maintenance center with the required standards, observance of the maintenance schedule, procedures and trainings,” the speaker said. As for the country risks, he said, Kazakhstan made a big step to ratify the Capetown Convention defining the international warranties for the aircrafts owners. However, the international practice of operational and financial leasing of aircrafts provides for registration of the aircrafts in the registrars of the third countries until performance of the obligations by the lessee or the debtor. According to Abdrakhimov, registration of the aircrafts outside the country has no effect on the tax payments to the state budget. The company has paid the total of 217 million tenge ($1.4 million) in transport taxes over the years of its existence. “The state spent $8.5 million to establish Air Astana in 2002. This is the cost of one airplane engine. In 11 years the airline has not only expanded its fleet to 26 aircrafts (most of them brand-new and received directly from the manufacturers) but has also paid over $297 million in taxes into the state budget. Leasing of the aircrafts is performed fully at the cost of the company's own and loan money, without any involvement of the state budget,” Abdrakhimov stated.