Aviation Regulation Comparative Guide – Transport

To print this article, all you need is to be registered or login on Mondaq.com.

1 Legal framework

1.1 Which legislative and regulatory provisions govern the aviation sector in your jurisdiction?

Malta’s proactive development of its national legislation has established the ideal environment to support the growth of the aviation industry, which generates significant economic value for the Maltese islands. The primary legislation sets out the general legal framework, while the subsidiary legislation governs the particularities of specific sectors in support of the primary legislation. The principal laws governing aviation in Malta are:

  • the Civil Aviation (Air Operators’ Certificates) Act (Chapter 218 of the Laws of Malta);
  • the Civil Aviation Act (Chapter 232 of the Laws of Malta);
  • the Airports and Civil Aviation Security Act (Chapter 405 of the Laws of Malta);
  • the Authority for Transport in Malta Act (Chapter 499 of the Laws of Malta, in the parts related to aviation);
  • the Aircraft Registration Act (Chapter 503 of the Laws of Malta); and
  • the Civil Aviation (Security) Act (Chapter 353 of the Laws of Malta)

Malta is a member state of the European Union, meaning that EU regulations are directly applicable.

1.2 Which bilateral and multilateral instruments on aviation have effect in your jurisdiction?

There are several multilateral instruments which establish common international standards on various aspects of aviation. The binding instruments to which Malta is a party are:

  • the Warsaw Convention for the Unification of Certain Rules Relating to International Carriage by Air, which regulates liability for international aircraft carriage of persons, baggage and goods;
  • the Chicago Convention on International Civil Aviation, which coordinates rules on airspace, aircraft registration and safety, security and sustainability;
  • the International Air Services Transit Agreement;
  • the Montreal Convention for the Unification of Certain Rules for International Carriage, which amended some provisions of the Warsaw Convention concerning compensation for the victims of air disasters;
  • the Cape Town Convention on International Interests in Mobile Equipment, which aims to standardise transactions involving moveable property, including aircraft;
  • the Hague Convention for the Suppression of Unlawful Seizure of Aircraft, which is a common agreement on the prohibition and punishment of aircraft hijackers; and
  • the Tokyo Convention on Offences and Certain Other Acts Committed on Board Aircraft, which applies to offences and any acts jeopardising the safety of persons or property on board civilian aircrafts.

In addition, the Transport Malta Civil Aviation Directorate (TMCAD) takes into consideration international and regional guidance reports published by:

  • the International Civil Aviation Organisation (ICAO);
  • the European Civil Aviation Conference;
  • the European Aviation Safety Agency (EASA).

1.3 Which bodies are responsible for enforcing the applicable laws and regulations? What powers do they have?

The TMCAD is the body responsible for enforcing the applicable laws and regulations within the aviation industry in Malta.

The TMCAD controls and monitors aviation businesses and operations in Malta, and has been vested with far-reaching powers to allow it to act as regulator of the aviation industry in Malta, including:

  • the power to register aircraft under the 9H flag;
  • the power to issue licences and certificates;
  • the power to issue codes of conduct for operators; and
  • enforcement powers.

1.4 What is the regulators’ general approach in regulating the aviation sector?

The Maltese government continues to dedicate substantial resources to the aviation industry in order to support its development. This growth is vital for the Maltese islands, considering their beneficial geographical location, which connects Europe with Africa and the Middle East.

To support the growth of the industry, the Maltese government and the TMCAD are continuing their efforts to make Malta a European aviation hub. With this goal in mind, the approach of the TMCAD is active and supportive towards both current and prospective businesses. It always undertakes in-depth due diligence, which is vital to ensure that aircraft registered and operators certified in Malta are safe, sustainable and efficient in providing aviation services.

2 Licensing and market access

2.1 What licences are required to provide aviation services in your jurisdiction? Does this vary depending on route?

In accordance with Regulation (EC) 1008/2008 of the European Parliament and of the Council of 24 September 2008 on common rules for the operation of air services in the Community, undertakings established in the European Union require a licence to provide aviation services within the European Union.

Under Maltese law, an operating licence may be granted by the Transport Malta Civil Aviation Directorate (TMCAD) under certain conditions, including rights of access to specific routes or markets, as may be specified in the licence.

An air transport undertaking providing air transport services must show, to the satisfaction of the TMCAD, that:

  • its principal place of business and, if any, its registered office is located in Malta;
  • its main occupation is air transport, in isolation or combined with any other commercial operation of aircraft or repair and maintenance of aircraft;
  • it is owned and continues to be owned directly or through majority ownership by EU member states or nationals of member states, which must at all times have effective control of the air transport undertaking; and
  • it is in possession of a valid air operator’s certificate (AOC) specifying the activities to be covered in the operating licence.

The Civil Aviation (Air Transport Licensing) Regulations (Subsidiary Legislation 499.28) further require an air transport undertaking to which an operating licence is to be granted to comply with certain financial requirements and have in place the relevant insurance covering liability in case of accidents, among other things.

An operating licence shall remain valid for as long as the air transport undertaking continues to meet the requirements for the issue thereof.

2.2 What nationality requirements must be satisfied to obtain a licence?

Under Maltese law, an applicant must satisfy two criteria:

  • Its principal place of business and, if any, its registered office must be located in Malta; and
  • More than 50% of its shareholding must be owned and effectively controlled by EU member states and/or nationals of member states, whether directly or indirectly through one or more intermediate undertakings.

However, exceptions to these criteria may be provided for in bilateral agreements entered into between the European Union and third countries.

2.3 What financial requirements must be satisfied to obtain a licence?

An undertaking applying for an operating licence must demonstrate to the TMCAD that:

  • it can meet, at any time, its actual and potential obligations established under realistic assumptions, for a period of 24 months from the start of operations; and
  • it can meet its fixed and operational costs incurred by operations, according to its business plan and established under realistic assumptions, for a period of three months from the start of operations, without taking into account any income from its operations.

For the purposes of demonstrating the above, each applicant must submit a business plan, which must also detail the applicant’s financial links with any other commercial activities in which the applicant is engaged, either directly or through related undertakings.

Notably, applicants exclusively engaged in operations with aircraft of less than 10 tonnes maximum take-off weight and/or a capacity of less than 20 seats are exempt from the above financial requirements. Nonetheless, the TMCAD may still require the applicant to satisfy the above financial conditions if it intends to operate scheduled services or if its annual turnover exceeds €3 million.

In order for the TMCAD to be in a position to determine the financial fitness of an applicant, the Civil Aviation (Air Transport Licensing) Regulations require applicants to submit to the TMCAD the following:

  • internal management accounts and, if available, audited accounts for the previous financial year;
  • a projected balance sheet, including profit and loss accounts, for the following two years;
  • the basis for projected expenditure and income figures concerning fuel, fares and rates, salaries, maintenance, depreciation, exchange rate fluctuations, airport charges, insurance, traffic and revenue forecasts;
  • details of start-up costs incurred between submission of the application and the commencement of operations, and a proposal to finance this cost;
  • details of existing and projected sources of finance;
  • details of shareholders (including nationalities and the types of shares to be held) and the articles of association;
  • projected cash-flow statements and liquidity plans for the first two years of operation; and
  • details of the financing of aircraft purchasing and leasing.

2.4 What other requirements must be satisfied to obtain a licence? Do specific requirements or restrictions apply to foreign operators?

As indicated in question 2.1, to provide air transport operations in or from Malta, an applicant must satisfy the requirements arising under the Civil Aviation (Air Transport Licensing) Regulations and under the Civil Aviation Act. The prerequisites for an operating licence applicant are as follows:

  • Its principal place of business and registered office are located in Malta.
  • It holds a valid AOC issued by the TMCAD.
  • It has one or more aircraft at its disposal through ownership or a dry lease agreement.
  • Its main occupation is to operate air services, in isolation or combined with any other commercial operation of aircraft or the repair and maintenance of aircraft.
  • Its company structure is such as to allow for the proper implementation of Regulation (EC) 1008/2008.
  • More than 50% of its shareholding is owned and effectively controlled by EU member states and/or nationals of member states, whether directly or indirectly through one or more intermediate undertakings, except where provided in an agreement with a third country to which the European Union is a party.
  • It meets financial conditions specified by law.
  • It complies with insurance requirements specified by Regulation (EC) 785/2004 of the European Parliament and of the Council of 21 April 2004 on insurance requirements for air carriers and aircraft operators.
  • It complies with the provisions on good repute.

In accordance with Regulation (EC) 1008/2008, an AOC is necessary for an air transport undertaking to carry out any service within the European Union. Under the Civil Aviation (Air Operators’ Certificates) Act, to obtain an AOC, an applicant must prove to the satisfaction of the TMCAD that it is competent to secure the safe operation of aircraft of the types specified in the certificate on flights of the description and for the purpose so specified, having regard in particular to:

  • previous conduct and experience;
  • equipment;
  • organisation;
  • staffing; and
  • maintenance and other arrangements.

In assessing an applicant’s competence to operate an aircraft, the TMCAD will take into account its capacity to meet the relative safety requirements applicable to the operation of an aircraft. The AOC may be granted subject to such conditions as the TMCAD deems fit.

Subject to the right of the TMCAD to suspend and revoke an AOC in terms of the Civil Aviation (Air Operators’ Certificates) Act, an AOC shall remain in force for a period of one year.

The Civil Aviation (Air Operators’ Certificates) Act shall not apply to a foreign air transport undertaking which operates a Maltese-registered aircraft through a dry lease arrangement (where an aircraft is leased without crew by the registered owner to another person), subject to the director general of the TMCAD being satisfied that a foreign air transport undertaking is competent to ensure the safe operation of the aircraft.

2.5 What is the procedure for obtaining a licence?

The procedure for obtaining an AOC and an operating licence consists of the following phases.

Pre-application phase: Before starting the formal process of applying for an AOC, an initial meeting with the TMCAD is held in order to discuss and agree on the timeline and process to be undertaken. The TMCAD will also undertake a thorough financial, economic and legal status assessment of the proposed operator and, if found to be satisfactory, will proceed with the second phase of the application.

Formal application phase: This phase includes the preparation and submission of all necessary forms and documents relating to the obtainment of an AOC, including the operation and maintenance manuals, as well as manuals associated with quality operations and compliance control.

Document evaluation phase: In this phase, the TMCAD reviews and evaluates the documents submitted by the applicant. At this stage, it is expected that the applicant will have established its organisational set-up.

Demonstration and inspection phase: Once the document evaluation phase has been successfully completed, the TMCAD will perform a physical inspection to evaluate the applicant’s operations.

Final certification phase: Once all levels of security have been achieved to the satisfaction of the TMCAD and all TMCAD requirements have been satisfied, the TMCAD will proceed with the issuance of the AOC.

Once an AOC has been issued, the TMCAD will then issue an operating licence.

3 Safety and maintenance

3.1 What key safety requirements apply to operators in your jurisdiction?

The Transport Malta Civil Aviation Directorate (TMCAD) is responsible for discharging the highest level of public safety in respect of all aspects of aviation activity for which it has regulatory responsibility. In the case of operators to which an air operator’s certificate (AOC) has been issued, the TMCAD exercises its duty to ensure that the operator continues to operate safely through an oversight programme. The function of this oversight programme is to confirm the effectiveness of the operator’s organisational structure and the competence of the management team in discharging their duties in accordance with the legislation. An inspector will be tasked with managing the oversight programme for each AOC holder. In some cases, the inspector may be assisted by one or more inspectors specialising in, for instance, dangerous goods, cabin crew or extended operations, as may be necessary.

Malta has also adopted and implemented a safety legislative framework pursuant to European Aviation Safety Agency (EASA) standards and in accordance with the International Civil Aviation Organisation (ICAO). The ICAO requires EU member states to develop a state safety programme; in Malta, this is known as the TMCAD State Safety Programme (SSP). The TMCAD SSP is an integrated set of regulations and activities aimed at improving safety in aviation. The TMCAD SSP includes safety activities that must be performed by the state, together with regulations and directives declared by the state in order to support its responsibilities concerning safe and efficient delivery of aviation activities.

Additionally, compliance with the safety standards and requirements issued by EASA is monitored.

3.2 What key maintenance requirements apply to operators in your jurisdiction?

Over and above the obtainment and maintenance of an AOC – which remains in force for a period of one year pursuant to the TMCAD’s satisfaction that the operator is capable of safely operating the aircraft, giving significant regard to the maintenance of the aircraft and necessary equipment – an aircraft is not permitted to fly unless the operator has obtained a certificate of airworthiness and an airworthiness review certificate duly issued or rendered valid in Malta. In this regard, an aircraft which has obtained such certificate shall also be prohibited from flying unless the aircraft – including in particular its engines, together with its equipment and radio station – is maintained in accordance with an aircraft maintenance programme (AMP) approved by the director general of the TMCAD in relation to that aircraft.

Pursuant to Commission Regulation (EU) 1321/2014 of 26 November 2014 on the continuing airworthiness of aircraft and aeronautical products, parts and appliances, and on the approval of organisations and personnel involved in these tasks, the AMP must establish compliance with the instructions issued by the competent authority and the instructions for continuing airworthiness. Thus, an AMP must be prepared and organised in compliance with:

  • Commission Regulation (EU) 1321/2014;
  • the Malta Civil Airworthiness Requirements, which set out the requirements that must be satisfied by an aircraft in relation to its maintenance in order to maintain its certificate of airworthiness; and

  • Information and Advisory Notice 03 on Aircraft Maintenance Programme Development and Approval. This was issued to clarify the TMCAD’s interpretation of the maintenance requirements and means of compliance under Regulation (EU) 1321/2014 Annex I (Part-M) M.A.302, to provide further guidance on compliance with requirements when presenting an AMP. Notably:
    • an AMP should contain the details and frequency of all maintenance to be carried out; and
    • every aircraft must be maintained in accordance with the AMP approved by the director general, which must be periodically reviewed and amended accordingly.

3.3 Do these requirements differ depending on whether the operator is providing commercial, cargo or private services?

The rules on safety, maintenance and airworthiness are no different for commercial, cargo or private services, as the ordinary safety rules are equally applicable to all aircraft. In effect, to be able to fly, an aircraft must adhere to the same requirements, in accordance with the relevant EASA standards, EU regulations and national legislation. That said, the Air Navigation (Dangerous Goods) Regulations (Subsidiary Legislation 499.44) provide further safeguards in relation to the operation of cargo aircraft in which dangerous goods are carried, including provisions governing:

  • the approval of necessary operations;
  • the production of documents and records;
  • the method of loading and inspection of the dangerous goods; and
  • the training of personnel.

3.4 What are the potential consequences of breach of the safety and maintenance requirements?

The director general, may, if he thinks fit, vary, suspend or revoke an AOC granted to an operator if he believes that the operator has breached the safety and maintenance requirements to secure the safe operations of an aircraft, which had primarily been satisfied on grant of such certificate. Under the Civil Aviation (Air Operator’s Certificates) Act, there are certain circumstances in which certificates may be suspended, revoked or varied; however, notwithstanding the aforementioned, and in the interests of the safety of air navigation, due to the severity of a breach of safety and maintenance requirements affecting the safety of air navigation, the director general may order the revocation, suspension or variation of the certificate, to take effect immediately.

In addition, in line with Commission Regulation (EU) 1321/2014, an independent audit, together with a report on the findings, must be undertaken every year, in order to confirm that the operator and the continuing airworthiness management organisation remain compliant with their maintenance requirements. The independent audit represents an objective overview of the maintenance and airworthiness management-related activities; if it is found that certain requirements have not been satisfied, the report will be sent to the relevant department for enforcement of rectification action by the operator within a set timeframe.

3.5 What best practices in relation to safety and maintenance should operators consider adopting in your jurisdiction?

Operators must ensure that all applicable safety and maintenance obligations deriving from legislation – including airworthiness directives and operational directives impacting on safety and continuing airworthiness – are observed. A number of practices should be implemented by operators in order to comply with safety and maintenance obligations, including:

  • employing well-trained personnel to form part of the continuing airworthiness management organisation, including an accountable manager, a quality manager and appropriately qualified staff for airworthiness management with:
    • extensive experience;
    • practical expertise in the application of aviation safety standards and safe operating practices;
    • a relevant engineering degree; and
    • knowledge of maintenance methods and applicable regulations;

  • ensuring that all defects discovered during scheduled maintenance or reported are corrected;
  • adopting organisation procedures in order to increase efficiency; and
  • managing and archiving all safety procedures and maintenances performed.

4 Consumer protection

4.1 What rights do passengers enjoy in your jurisdiction in relation to: (a) Flight delays or cancellations? (b) Overbooking? (c) Denied boarding for other reasons? (d) Baggage delay, damage or loss? and (e) Disabled access?

(a) Flight delays or cancellations

Regulation (EC) 261/2004 of the European Parliament and of the Council of 11 February 2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights establishes common rules on compensation of and assistance to passengers in the event of denied boarding or cancellation or long delay of flights. Malta’s national enforcement body (NEB), the Malta Competition and Consumer Affairs Authority (MCCAA), is empowered to verify that air transport operators are treating all passengers in accordance with their rights. Passengers who feel that they have not been treated correctly should contact the NEB where the incident took place. In Malta, a complaint form may be accessed from and filed with the MCCAA.

Regulation (EC) 261/2004 applies to:

  • flights within the European Union and operated by either an EU or non-EU airline;
  • flights arriving in the European Union from outside the European Union and operated by an EU airline; and
  • flights departing from the European Union to a non-EU country operated either by an EU or non-EU airline.

Depending on the length of the delay and the distance of the particular flight, passengers may enjoy the following rights:

  • the right to care which includes, among other things, meals and refreshments, hotel accommodation and transport;
  • the right to reimbursement or rerouting; and/or
  • the right to compensation (ranging from €250 to €600).

(b) Overbooking

Under Regulation (EC) 261/2004, where an operating air carrier reasonably expects to deny boarding on a flight, it shall first call for volunteers to surrender their reservations in exchange for benefits under conditions to be agreed between the passengers concerned and the operating air carrier.

In addition to the abovementioned benefits, passengers who agree to surrender their reservation must be offered a choice between:

  • reimbursement within seven days of the full cost of the ticket at the price at which it was bought, for the part or parts of the journey not made, and for the part or parts already made if the flight no longer serves any purpose in relation to the passenger’s original travel plan, together with, where relevant, a return flight to the first point of departure at the earliest opportunity;
  • rerouting, under comparable transport conditions, to their final destination at the earliest opportunity; or
  • rerouting, under comparable transport conditions, to their final destination at a later date at the passenger’s convenience, subject to availability of seats.

If an insufficient number of volunteers come forward to allow the remaining passengers with reservations to board the flight, the operating air carrier may then deny boarding to passengers against their will; those passengers shall be entitled to compensation and to the assistance mentioned in above paragraph.

(c) Denied boarding for other reasons

Regulation (EC) 261/2004 requires air operators to grant passengers who are denied boarding the option to choose between:

  • reimbursement within seven days of the full cost of the ticket at the price at which it was bought, for the part or parts of the journey not made, and for the part or parts already made if the flight no longer serves any purpose in relation to the passenger’s original travel plan, together with, where relevant, a return flight to the first point of departure, at the earliest opportunity; and
  • rerouting, under comparable transport conditions, to their final destination at the earliest opportunity or rerouting, under comparable transport conditions, to their final destination at a later date at the passenger’s convenience, subject to availability of seats.

If rerouting is chosen by a passenger and is to occur the following day, the air operator must also offer the passenger free hotel accommodation and transport between the hotel and the airport. The passenger also has the right to care, which includes the right to two telephone calls, telex or fax messages, or emails free of charge.

(d) Baggage delay, damage or loss

Malta, through the Carriage by Air (International and Non-International Carriage) Order (Subsidiary Legislation 499.24), has implemented both the Montreal Convention and the Warsaw Convention. In case of baggage delay, destruction, loss or damage, the air carrier is liable for up to 1,000 special drawing rights (as defined by the International Monetary Fund), unless the passenger made a special declaration of interest in delivery at destination and paid a supplementary sum where required. In the case of checked baggage, the carrier is liable even if not at fault, unless the baggage was defective. In the case of unchecked baggage, the carrier is liable only if at fault.

(e) Disabled access

Under Regulation (EC) 261/2004, persons with reduced mobility or special needs, as well as persons or certified dogs accompanying them, shall be given priority. In cases of denied boarding, cancellation or delays, passengers are entitled to the right to care and the right compensation. The right to care includes:

  • free meals and refreshments;
  • accommodation for delays longer than one day;
  • airport transfers to residence if appropriate; and
  • two phone calls, text or emails.

Notably, Regulation (EC) 1107/2006 of the European Parliament and of the Council of 5 July 2006 concerning the rights of disabled persons and persons with reduced mobility when travelling by air specifically prohibits air carriers from refusing to accept a reservation for a flight or to board a passenger on the grounds of disability or reduced mobility.

4.2 Are airfares regulated in your jurisdiction? What other requirements apply to the pricing and sale of flights?

The Civil Aviation (Air Fares) Regulations (Subsidiary Legislation 499.27) regulates the pricing of flights by air transport undertakings. In terms of the abovementioned subsidiary legislation, air transport undertakings operating in ‘agreement states’ shall set their own air fares without requiring the approval of the director general of the Transport Malta Civil Aviation Directorate, provided that such air transport undertakings shall inform the general public, on request, of the respective air fares and standard cargo rates. Air transport undertakings must notify the director general of the relative air fares before they come into effect. If the director general considers that a basic air fare is excessively high to the disadvantage of users, it may withdraw the basic fare. The director general may also stop, in a non-discriminatory way, any further decreases in fares which are resulting in widespread losses among all air carriers.

Air transport undertakings of ‘non-agreement states’ must seek prior approval of their air fares from the director general.

‘Agreement states’ are those countries which have entered into an agreement with Malta reciprocally granting to the respective citizens (or their dependants) the right to:

  • enter, remain and reside in and leave the other country;
  • move freely within the other country for such period as may be established in such agreement; and
  • work or establish, provide or receive services in the other country.

‘Non-agreement states’ are those countries which have not entered into any agreement with Malta in respect to the above.

4.3 What other marketing and advertising requirements apply to operators in your jurisdiction?

In Malta, no marketing and advertising requirements are imposed on operators.

4.4 What requirements apply in relation to the retention and protection of passenger data in your jurisdiction?

The Data Protection Act (Chapter 586 of the Laws of Malta) implements the general data protection principles established by the EU General Data Protection Regulation (2016/679). These principles state that personal data must be processed only for the specified and intended purposes, and insofar as is necessary for the performance of a contract.

Reference is also made to Regulation (EC) 80/2009 of the European Parliament and of the Council of 14 January 2009 on a Code of Conduct for computerised reservation systems (CRS), which applies to data processing and data protection in relation to CRS. This has been implemented into Maltese law through the Code of Conduct for Computerised Reservation Systems Act (Chapter 434 of the Laws of Malta). CRS involve the presentation of available fares, flight schedules and other such information from multiple air carriers, with or without offering purchase options.

Furthermore, the Communication of Passenger Data by Air or Sea Carriers Order (Subsidiary Legislation 460.18) establishes the right of a principal immigration officer to request from an air carrier key identity information on every passenger arriving in Malta.

4.5 What other general consumer protection requirements are of relevance for operators in your jurisdiction?

The Consumer Affairs Act (Chapter 378 of the Laws of Malta) provides general protection to consumers in relation to, among other things:

  • unfair terms and conditions;
  • commercial guarantees;
  • consumer grievances;
  • misleading advertisements;
  • sub-standard services; and
  • refusal to abide by terms and conditions.

The act also established the Consumer Claims Tribunal, which is tasked with providing varying levels of protection to consumers.

4.6 How are consumer complaints in relation to aviation services handled in your jurisdiction?

The MCCAA is the first point of contact for any complaints within the scope of Regulation (EC) 261/2004. Complaints should be filed using the standard EU complaint form available from the MCCAA. The Consumer Claims Tribunal will consider and determine the complaints filed.

Another point of contact is the European Consumer Centre (ECC) established in Malta, which is part of the ECC network of the European Union. The principal role of the ECC is to provide assistance and information to consumers with any complaints and disputes, in relation to goods or services offered in EU member states.

5 Accidents and liability

5.1 What is the applicable aviation liability regime in your jurisdiction?

Malta, through the Carriage by Air (International and Non-International Carriage) Order, (Subsidiary Legislation 499.24), has implemented the liability regimes of both the Montreal Convention and the Warsaw Convention. Furthermore, Regulation (EC) 889/2002 of the European Parliament and of the Council of 13 May 2002 amending Council Regulation (EC) 2027/97 on air carrier liability in the event of accidents is directly applicable to Malta, insofar as it applies to intra-EU accidents.

5.2 What insurance requirements apply to operators in your jurisdiction?

The Civil Aviation (Insurance Requirements for Air Carriers and Aircraft Operators) Order (Subsidiary Legislation 499.41) provides that no aircraft shall be flown in Malta without having valid insurance cover which meets either the requirements of Regulation (EC) 785/2004 of the European Parliament and of the Council of 21 April 2004 on insurance requirements for air carriers and aircraft operators or the provisions of the Civil Aviation (Insurance Requirements for Air Carriers and Aircraft Operators) Order, as applicable.

This subsidiary legislation further specifies the minimum insurance covers required, depending on the aircraft in question. In effect, aircraft – including gliders – with a maximum take-off mass of less than 500 kilograms (kg), and microlights which are used for non-commercial purposes or for local flight instruction which does not entail the crossing of international borders, must have a minimum insurance cover of 0.75 million special drawing rights (SDR) per accident in respect of liability for third parties. The minimum insurance cover required for non-commercial operation of aircraft with a maximum take-off mass of less than 2,700kg is 100,000 SDR per passenger.

Notably, the director general of the Transport Malta Civil Aviation Directorate (TMCAD) may request the operator to show evidence of compliance with the abovementioned insurance requirements. If the operator is unable to provide such evidence, the director general may refuse permission for the aircraft to land in Malta, together with the power to detain the aircraft and prohibit take-off until he is satisfied that there is applicable insurance cover in accordance with the Civil Aviation (Insurance Requirements for Air Carriers and Aircraft Operators) Order.

5.3 What body is responsible for investigating accidents in your jurisdiction and what procedure will it follow in doing so?

Under the Civil Aviation (Investigation of Air Accidents and Incidents) Regulations (Subsidiary Legislation 499.22), which implemented Regulation (EU) 996/2010 on the investigation and prevention of accidents and incidents in civil aviation and Annex 13 of the Chicago Convention, the body responsible for all safety investigations necessary in relation to accidents in Malta is the Bureau of Air Accident Investigation.

The bureau, which is established under the Ministry for Civil Aviation, consists of at least one chief inspector and one inspector, and is functionally independent from any other authority in Malta, in order to safeguard its autonomy. The aim of the bureau’s investigations is to prevent future accidents and incidents, rather than to apportion blame or liability.

Notably, the bureau must have operational manuals for both aircraft accident and incident investigations, including all information and instructions needed by investigators to enable them to perform their duties. Once an accident occurs, the investigator in charge shall designate parties to participate in the investigation, who shall be under his or her direction. The extent of investigations and the procedure to be followed in carrying out investigations will be determined by the chief inspector, taking into account:

  • the fact that the purpose of the investigation is to prevent future accidents and incidents, rather than to apportion blame or liability;
  • the lessons expected to be drawn from the accident or incident for the improvement of safety; and
  • the complexity of the investigation.

In light of the above, an investigation will involve:

  • the gathering, recording and analysis of all relevant information on the accident or incident;
  • where appropriate, the issuance of safety recommendations;
  • if possible, the determination of cause; and
  • where appropriate, the final report.

5.4 What reporting requirements apply to accidents and incidents in your jurisdiction?

In accordance with the Civil Aviation (Investigation of Air Accidents and Incidents) Regulations, where an accident or a serious incident occurs in or over Malta or outside Malta involving an aircraft registered in Malta or an aircraft operated by an operator established in Malta, the pilot in command or, if he or she is incapacitated, the operator of the aircraft – and in the case of an accident or serious incident occurring on or adjacent to an aerodrome, the aerodrome operator – shall, without delay:

  • send notice thereof to the chief inspector of the bureau by the quickest means of communication available;
  • in case of an accident occurring in Malta, notify the police of the accident and of the place where the accident has occurred; and
  • file a mandatory occurrence report with the TMCAD.

Upon receipt of the abovementioned notification, the chief inspector shall, without delay, send notification of the accident or serious incident to:

  • the Air Safety Unit of the European Commission;
  • the European Aviation Safety Agency;
  • the International Civil Aviation Organisation;
  • the state of registry, where the aircraft is not registered in Malta;
  • the state of the operator, where the operator is not licensed in Malta;
  • the state of design, where the aircraft was not designed in Malta; and
  • the state of manufacture or final assembly, where the aircraft was not manufactured or assembled in Malta.

The chief inspector shall immediately initiate a formal investigation into the accident or serious incident, as the case may be. The chief inspector will then present the final report of the investigation of an aircraft accident or incident to the relevant minister within 12 months of the date of the occurrence of the accident or incident; where it is not possible to present the final report, the chief inspector may release interim reports periodically, by no later than each anniversary of the occurrence, detailing the progress of the investigation and any safety issues raised.

6 General operation

6.1 What requirements apply to charter services in your jurisdiction?

In order for an air transport operator to undertake chartering services, it must obtain an operating licence in terms of the Civil Aviation Act and an air operator’s certificate (AOC) in terms of the Civil Aviation (Air Operators’ Certificate) Act. Both the operating licence and the AOC are issued by the Transport Malta Civil Aviation Directorate. The requirements and process involved for the obtainment of an operating licence and an AOC are outlined in question 2.

6.2 What requirements apply to the carriage of cargo in your jurisdiction?

Malta, through the Carriage by Air (International and Non-International Carriage) Order, has implemented both the Montreal Convention and Warsaw Convention for the unification of certain rules for international carriage by air. These conventions provide for the documentation, duties and liability relating to the international carriage of persons, baggage and cargo by air. The carriage of cargo by air not being international carriage is regulated in the Second Schedule to the Carriage by Air (International and Non-International Carriage) Order.

Reference is also made to the Air Navigation Order (Subsidiary Legislation 499.09) and the Air Navigation (Dangerous Goods) Regulations, which regulate the carriage of dangerous goods by aircraft.

In relation to aircraft emissions, the European Union has established the largest multi-country and multi-sector emissions trading scheme, covering large, stationary, greenhouse gas-emitting industrial installations and aviation activities. The EU Emissions Trading System (ETS) is a cornerstone of the EU policy to combat climate change and a key tool for the cost-effective reduction of emissions of carbon dioxide and other greenhouse gases.

Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the European Union sets out the legal framework for the implementation of the EU ETS in member states. The roles and responsibilities of the principal players in the scheme, including competent authorities and operators, are described in the directive, which also provides harmonised rules relating to the main functions of the scheme. Directive 2003/87/EC requires aircraft operators that perform flights which depart from or arrive at an aerodrome situated in the territory of an EU member state to comply with requirements under the EU ETS, unless exempt pursuant to the criteria set out in the aforementioned directive.

In Malta, Directive 2003/87/EC was implemented into domestic law through the European Union Greenhouse Gas Emissions Trading System for Aviation Regulations (Subsidiary Legislation 423.51). In addition, the Malta Resources Authority is set to implement the Carbon Offsetting and Reduction Scheme for International Aviation for emissions from international flights, an initiative of the International Civil Aviation Organisation.

In relation to aircraft noise, Regulation (EU) 598/2014 of the European Parliament and of the Council of 16 April 2014 on the establishment of rules and procedures with regard to the introduction of noise-related operating restrictions at Union airports within a Balanced Approach sets out noise-related operating restrictions at EU airports and tasks the European Aviation Safety Agency with collecting, verifying and publishing noise performance information concerning aircraft which operate at EU airports. The Assessment and Management of Environment Noise Regulations (Subsidiary Legislation 549.37) also transpose EU rules, requiring Malta to carry out noise mapping and adopt action plans in order to prevent and reduce exposure to noise. The Air Navigation (Noise Certification and Operation of Aircraft) Order (Subsidiary Legislation 499.18) grants the director general of the Transport Malta Civil Aviation Directorate (TMCAD) the power to issue noise certificates pursuant to Annex 16 of the Chicago Convention.

6.3 What environmental requirements apply to operators in your jurisdiction?

No answer submitted for this question.

6.4 How are aviation services taxed in your jurisdiction? Do any special tax regimes apply to this sector? What indirect taxes are of relevance to operators?

Income tax: Non-resident air transport undertakings generating income from the ownership, leasing or operation of an aircraft engaged in the international transport of passengers or goods are not taxed in Malta on revenue arising outside of Malta. In terms of the Income Tax Act (Chapter 123 of the Laws of Malta), income from the leasing or operation of aircraft or aircraft engines which are used for or employed in the international transport of passengers or goods is always deemed to have arisen outside Malta, irrespective of where the aircraft or aircraft engines are registered and whether the aircraft has called at or operated from an airport in Malta.

Air transport undertakings that are registered outside Malta but managed in Malta are taxable in Malta on a source and remittance basis; while air transport undertakings that are registered in Malta are taxed on their worldwide income.

The Finance Leasing Rules (Subsidiary Legislation 123.88) set out the allowable deductions and how chargeable income is to be determined with respect to leases that qualify as ‘finance lease’ in terms of the Finance Leasing Rules.

Value added tax: Under the Fifth Schedule of the Value Added Tax Act (Chapter 406 of the Laws of Malta), the following activities are considered exempt with credit activities:

  • the supply of aircraft destined for use by airline operators for reward chiefly for the international transportation of passengers and/or goods;
  • the supply to constructors, owners or operators of such aircraft or equipment incorporated or used therein;
  • the supply of services consisting of the modification, maintenance, chartering and hiring of such aircraft or equipment;
  • the supply to owners or operators of such aircraft of goods for fuelling or provisioning; and
  • the supply of services other than those already referred to, such as towage, pilotage, rescue services, valuation, use of airports, services provided to aircraft operators by their agents acting as such, services necessary for landing, take-off or an airport stay, and assistance provided to passengers or the crew for the account of the airline operators.

Outside these exemptions, the provision of services and supply of goods shall be subject to the general rules of the Value Added Tax Act, unless otherwise exempt under the act.

Personal tax in respect to qualifying employment in aviation: Under the Qualifying Employment in Aviation (Personal Tax) Rules (Subsidiary Legislation 123.168), expatriates that hold an eligible role or office under a qualifying employment contract in the aviation industry in Malta may opt to benefit from a reduced flat rate of tax of 15% on their employment income derived from work or duties carried out in Malta.

6.5 What is the applicable employment regime in your jurisdiction and what specific implications does this have for operators in the aviation sector?

No answer submitted for this question.

7 Ownership, financing and leasing

7.1 What body administers the aircraft register in your jurisdiction?

The National Aircraft Register is administered and maintained by the Transport Malta Civil Aviation Directorate (TMCAD).

7.2 What are the formal and documentary requirements for registration?

Under Maltese law, the process for registration of an aircraft is governed by the Aircraft Registration Act (Chapter 503 of the Laws of Malta). Under this act, an aircraft may be registered in the National Aircraft Register by the following persons:

  • the government of Malta;
  • a citizen of Malta or a citizen of a member state of the European Union or the European Economic Area (EEA), or Switzerland, who has a place of residence or business in Malta, the European Union, the EEA or Switzerland, including a person sharing in the ownership of such aircraft by virtue of the community of acquests subsisting between such person and a citizen, as described above, in whose name the aircraft is registered; or
  • an undertaking formed and existing in accordance with the laws of Malta, of an EU or EEA member state or of Switzerland, which has its registered office, central administration and principal place of business within Malta, the European Union, the EEA or Switzerland, where not less than 50% of the undertaking is owned and effectively controlled by the government of Malta, or by any EU member state, or by persons referred to in the second point above, whether directly or indirectly through one or more intermediate undertakings.

Moreover, a natural person who is a citizen of, or an undertaking established in, an approved jurisdiction, other than those mentioned in the second or third points above, may register an aircraft in construction or which is not used to provide air services, subject to the satisfaction of a number of criteria stipulated in the Aircraft Registration Act.

Furthermore, qualifying registrants may register an aircraft in Malta in any one of the following capacities:

  • as an owner operating an aircraft;
  • as an owner of an aircraft under construction or temporarily not being operated or managed;
  • as an operator of an aircraft under a temporary title; or
  • as a buyer of an aircraft under a conditional sale or title reservation agreement authorised to operate the aircraft.

Subject to the satisfaction of certain conditions, fractional ownership of an aircraft and ownership by a trustee are also permitted under the Aircraft Registration Act. The director general of the TMCAD shall pay regard to the beneficiaries of the relevant trust to determine the eligibility of the trustee to register the aircraft; no regard shall be paid to the nationality of the trustee itself. In the case of registrations by owners, at least 50% of the owners of the shares or beneficiaries of the trust, as applicable, must be eligible to register the relevant type of aircraft, as indicated in the previous table. If an aircraft is being registered by aircraft operators and will be operated by more than one person, all operators must be eligible to register such aircraft. Every ownership interest or share in an aircraft may be annotated in the National Aircraft Register by the director general.

The applicant must submit an application for the registration of an aircraft in writing on the prescribed form. This must include or be accompanied by particulars and evidence relating to the ownership, acquisition, chartering and operation of the aircraft, together with such qualifications of the registrant as may be prescribed, to enable the director general to determine whether the aircraft may properly be registered.

In order to register an aircraft in the National Aircraft Register, the director general shall record the following details:

  • the physical details of the aircraft;
  • the physical details of the engines attached to the aircraft and any replacement engines owned by the registrant;
  • the name and address of the registrant and the capacity in which the registrant is registering the aircraft;
  • the ownership rights in the aircraft or engines;
  • the details of any mortgages registered on the aircraft; and
  • the details of any irrevocable de-registration and export authorisation.

7.3 What is the process for registration?

The first step in the registration process is the filing by the prospective registrant of an application in the prescribed form, together with all necessary documentation and evidence as mentioned in question 7.2. This is done in order to enable the director general of the TMCAD to:

  • determine whether the aircraft may be registered under the Aircraft Registration Act;
  • issue a certificate of registration; and
  • determine the classification of the aircraft for the purpose of the Aircraft Registration Act.

During the registration process, the registrant must also submit documentation to substantiate the information included in the application. This documentation will normally include the following:

  • a bill of sale or other proof of ownership of the aircraft (if this was signed outside Malta, it must be notarised and legalised by apostille);
  • a copy of the lease or operating agreement, if the aircraft is leased;
  • a de-registration certificate or formal notification by the civil aviation authority of the previous state of registration, if the aircraft was previously registered in another state;
  • a statement on registered mortgages or similar encumbrances, as the case may be; and
  • a power of attorney, company resolution or evidence of authority for the signatories of the application form.

Following receipt of a duly completed application, and if satisfied that the aircraft may be registered under the Aircraft Registration Act, the director general will register the aircraft, wherever it may be, and issue a non-transferable certificate of registration.

7.4 Is registration of real estate rights, transactions and encumbrances mandatory? What are the consequences of failure to register?

A registered aircraft or a share therein may be used as security for any debt or other obligation by means of a mortgage executed by the mortgagor in favour of the mortgagee in the prescribed form, which shall be recorded by the director general of the TMCAD in the National Aircraft Register in the order in which it is executed. The transfer or mortgage of a registered aircraft or share therein, and the transfer of a registered mortgage, shall have no effect with regard to the aircraft or share, or against any person other than the transferor or mortgagor, unless it has been registered under and in accordance with the Aircraft Registration Act.

Malta has also ratified the Cape Town Convention, which provides for the registration of international interests in the international register. Registration in the international register is the only means of establishing the priority of a right or interest in an aircraft object. A registered interest has priority over any other interest that is subsequently registered and over an unregistered interest.

7.5 What operational requirements are of relevance for aircraft lessors and financiers in your jurisdiction?

In terms of the Aircraft Registration Act, in the event of default of any term or condition of a registered mortgage, or of any document or agreement referred to therein, and upon giving notice in writing to the debtor, the mortgagee shall:

  • be entitled to take possession of the aircraft or share therein in respect of which it is registered. However, except so far as may be necessary to make a secured aircraft or share available as security for the secured debt, the mortgagee shall not, by reason of the mortgage, be deemed to be the owner of the aircraft or share; nor shall the mortgagor be deemed to have ceased to be the owner thereof;
  • have the power to sell the aircraft or share in respect of which it is registered. However, where there is more than one person registered as a mortgagee of the same aircraft or share therein, a subsequent mortgagee shall not, except under order of a competent court, sell the aircraft or share therein without the concurrence of every prior mortgagee; and if the proceeds of sale, after discharging the secured debt, yield a surplus, the mortgagee must hold this under trust or deposit for the benefit of other creditors and the mortgagor debtor;
  • have the power to apply for extensions, pay fees, obtain certificates and generally do all such things in the name of the owner or registrant as may be required in order to maintain the status and validity of the registration of the aircraft;
  • have the power to lease the aircraft so as to generate income therefrom; and
  • have the power to receive any payment of the price, lease payments and any other income which may be generated from the management of the aircraft.

7.6 What rules govern the detention and seizure of aircraft

In accordance with the Code of Organisation and Civil Procedure (Chapter 12 of the Laws of Malta), the arrest of an aircraft can take place either:

  • as a precautionary measure, through the issuance of a precautionary warrant of arrest; or
  • as an enforcement measure, through the issue of an executive warrant of arrest.

A precautionary warrant of arrest may be filed if the applicant proves that the departure of the aircraft may frustrate its claim for debts over the aircraft. The warrant will provide for the seizure of the aircraft and put it under the supervision of the TMCAD in Malta, and the applicant will be given a period in which to institute a lawsuit.

An executive warrant of arrest may be filed by a creditor that has an executive title against the aircraft or the company owning or operating the aircraft. Pursuant to this warrant, the aircraft will be seized and the TMCAD in Malta will assume supervision thereof. Once this warrant has been filed, the Maltese courts will specify a period for payment of the debt. If the debt remains unpaid after this period, the courts will order the sale of the aircraft by judicial auction or through an approved private sale.

8 Airports

8.1 How are airports owned and regulated in your jurisdiction?

Due to Malta’s relatively small size, it has only one airport, which until 2002 was owned and operated by the government. The airport is now owned by a public limited liability company, with the government being one of the shareholders. There is another small heliport in Gozo, which is licensed only for limited helicopter activities.

The Air Navigation Order establishes the licensing requirements for the operation of an airport and is complemented by the Civil Aviation (Aerodrome Licensing) Regulations (Subsidiary Legislation 499.29), which set out the conditions for grant of an airport licence.

8.2 What requirements must be satisfied to obtain airport authorisation in your jurisdiction? What is the procedure for obtaining authorisation?

The Civil Aviation (Aerodrome Licensing) Regulations requires the airport operator to obtain an aerodrome licence. A prospective airport operator may obtain a licence by submitting an aerodrome manual for the approval of the director general of the Transport Malta Civil Aviation Directorate. The manual shall contain information specified in Appendix I to International Civil Aviation Organisation (ICAO) Document 9774, and must:

  • be typewritten or printed and signed by airport operator;
  • be in a format that is easy to revise;
  • have a system for recording the currency of pages and amendments thereto, including a page for logging revisions; and
  • be organised in a manner that facilities the preparation, review and approval process.

Appendix I to the ICAO document relates to all information about aerodrome operations, such as:

  • structural information of the aerodrome;
  • traffic control within the airport space;
  • management of personnel;
  • safety procedures; and
  • other miscellaneous aspects.

8.3 What key safety and maintenance requirements apply to airports in your jurisdiction?

The Civil Aviation (Aerodrome Licensing) Regulations makes direct reference to safety and maintenance requirements to be fulfilled by airport operators. The operator of an aerodrome used for public transport purposes must comply with the ICAO Standards and Recommended Practices set out in Annex 14 of the Chicago Convention, with Volume 1 listing design and operations specifications for airports and Volume 2 listing design specifications for heliports.

Moreover, the regulations also require the operator to:

  • comply with the ICAO Standards and Recommended Practices set out in Volumes I and 2 and Annex 14 to the Convention on International Civil Aviation;
  • employ an adequate number of qualified and skilled operational and maintenance personnel;
  • ensure regular and efficient maintenance of aircraft and airport facilities;
  • establish efficient safety management systems;
  • arrange for internal safety audits and maintain regular safety reports;
  • allow authorised personnel to access the airport, to carry out safety inspections and tests as necessary;
  • notify and report to the director general, air traffic services and pilots any matters affecting the safe operation of the airport;
  • remove any hazardous obstructions from the aerodrome surface; and
  • provide warning notices of any hazards exposed to the public or vehicular traffic in proximity to airport operations.

8.4 What requirements can airports impose on operators that use their facilities?

The Airport Charges Regulatory Board, established under the Airport Economic Regulations (Subsidiary Legislation 499.19), is responsible for the quality of services provided by airport operators to airport users. The board seeks to promote the interests of airport users and the Maltese economy, and the efficient, economic and profitable operation of the airport and the aerodrome. In considering the interests of users and of the Maltese economy, the board may impose charges and requirements on operators in order to ensure that the airport operator invests in airport facilities to meet demand and achieves the service standards applicable internationally in the industry.

8.5 How are the following regulated in your jurisdiction: (a) Airport charges? (b) Slot allocation? (c) Air traffic control? and (d) Ground handling?

(a) Airport charges

The Airport Economic Regulations govern the procedure through which an airport operator may modify or revise airport charges. In order for an airport operator to adjust airport charges or modify the system or structure of airport charges, it must first present a reasoned proposal to the Airport Users’ Committee (which represents airport users) for consultation. Unless there are exceptional circumstances which must be justified to airport users, this proposal must be presented to the Airport Users’ Committee at least four months before such changes become effective. Following presentation of the proposal to the Airport Users’ Committee, the airport operator must submit its proposal to the Airport Charges Regulatory Board, taking into account – insofar as is reasonably possible – any view put forward by the Airport Users’ Committee. The board was established under Article 3 of the Airport Economic Regulations and is responsible for reviewing and regulating airport charges. The board must issue its decision within three months of submission of the proposal.

(b) Slot allocation

The Allocation of Slots at Airport Regulations (Subsidiary Legislation 499.20) caters for the appointment of a scheduling coordinator who is responsible for allocating slots. The scheduling coordinator is nominated by the airport operator and approved by the director general of the Transport Malta Civil Aviation Directorate.

(c) Air traffic control

Air traffic control is regulated by:

  • the Air Navigation Order;
  • the Civil Aviation (Provision of Air Navigation Services) Order (Subsidiary Legislation 499.45);
  • the Civil Aviation (Distribution of Traffic Rights) Regulations (Subsidiary Legislation 499.47); and
  • the Civil Aviation (Air Traffic Flow Management) Regulations (Subsidiary Legislation 499.63).

(d) Ground handling

Ground handling services are governed by the Airport (Ground Handling Services) Regulation (Subsidiary Legislation 499.25). The regulation implements Council Directive 96/67/EC of 15 October 1996 on access to the ground handling market at European Community airports, which requires airports located in the territory of member states to provide – subject to certain conditions – free market access in relation to ground handling services to third parties.

9 Competition

9.1 What specific challenges or concerns does the aviation sector present from a competition perspective? Are there any pro-competition measures that are targeted specifically at operators?

One of the most important and relevant challenges from a competition point of view is maintaining a balanced market in which operators can compete in a healthy manner and passengers are protected. Under the Chicago Convention, every signatory state must guarantee that international civil aviation can develop in a safe and orderly manner, on the basis of equality of opportunities and sound and economical operations.

Operators in today’s highly competitive market must organise their business sustainably while ensuring profitability. There have been numerous instances in which operators have cooperated in order to share operational and financial risks, to cope with the demands of international markets and to cope with consumer demand for global networks. That said, anti-competitive agreements and arrangements, abuse of a dominant market position, mergers and acquisitions and state aid are prohibited if they lead to a distortion in the market and consequently cause detriment towards consumers.

Notably, under the Competition Act (Chapter 379 of the Laws of Malta), there are no specific pro-competition measures targeting air transport operators.

9.2 How are forms of industry cooperation such as pooling, code-sharing, alliances and joint ventures treated from a competition perspective?

Industry cooperation through practices such as pooling, code sharing, alliances and joint ventures are not explicitly forbidden under Maltese law. Therefore, aviation companies may enter into such cooperative practices in order to strengthen their position in the industry. However, this must be undertaken in accordance with the provisions of the Competition Act and in accordance with European treaties and regulations, such as the Treaty on the Functioning of the European Union (TFEU), which aim to hinder detrimental practices leading to unfair competition in EU markets.

9.3 Does the aviation sector in your jurisdiction benefit from state aid? What forms does this typically take and what rules apply in this regard?

Currently, no direct financial support is being given by the government in the aviation sector. However, the aviation sector in Malta has benefited from state aid in the past, as follows:

  • the Route Development Scheme for Malta in 2006; and
  • the Air Malta recovery plan in 2012.

The Route Development Scheme was a scheme put in place by the government of Malta with the aim of providing ‘start-up’ aid for the creation of new air routes which were underserved or not served at all, linking Malta International Airport with various other airports across the European Union. This financial aid facilitated access to the air transport services needed for Malta’s social and economic development.

In 2012 the Maltese government also requested financial assistance for Malta’s main airline carrier, Air Malta, in order to save it from going bankrupt. The request was accepted by the European Commission, given the negative impacts that the demise of Air Malta would have on business and tourism on the island. In lieu of the ‘one time, last time’ principle, in 2016 a second request for further funding for Air Malta was rejected, as the principle stipulates that a beneficiary of state aid may not receive any additional rescue or restructuring aid for a uniform period of 10 years, in order to prevent the repeated granting of rescue or restructuring aid that keeps firms artificially in business.

In deciding whether to approve the grant of financial support, the European Commission will undertake an assessment based on the principles deriving from the TFEU and from the applicable guidelines released by the commission, such as the Guidelines on State Aid to Airports and Airlines, which were released in 2014. However, no notification to or approval by the commission is required if:

  • it is considered that the financial assistance to be afforded will have no impact on trade and competition in the domestic market;
  • measures fall within the de minimis exception, which allows overall state aid of under €200,000 over three fiscal years; and
  • measures fall within the General Block Exemption Regulation, which specifies 26 measures which may be used to grant aid without any need for approval.

9.4 Are there any applicable obligations or incentives to ensure service on routes that are socially desirable, but not commercially viable (eg, to remote areas)?

As mentioned in question 9.3, state aid provided in order to encourage the development of new air links and connectivity to the rest of Europe may be regarded, to a certain extent, as an incentive provided by the government to ensure service on certain routes.

Given that Malta’s geographical location necessitates the existence of appropriate air links not only with mainland Europe, but also with countries beyond the continent, the Maltese government has made various efforts both to maintain existing routes and to increase the number of routes offered. As a significant proportion of Malta’s economy is dependent on people travelling to and from the island for business and tourism purposes, various operational agreements have been established to incentivise the opening of new routes, aiding the creation of new business opportunities.

10 Disputes

10.1 In which forums are aviation disputes typically heard in your jurisdiction?

The First Hall of the Civil Court typically deals with aviation disputes, unless the value of the dispute is:

  • less than €15,000, in which case it will be heard by the Court of Magistrates; or
  • less than €5,000, in which case it will be heard by the Small Claims Tribunal.

A decision of the First Hall of the Civil Court may be lodged before the Court of Appeal (Superior Jurisdiction), presided over by the chief justice and two other senior judges. A decision of the Court of Magistrates or the Smalls Claims Tribunal may be lodged before the Court of Appeal (Inferior Jurisdiction), presided over by one judge.

10.2 What issues do such disputes typically involve? How are they typically resolved?

Most disputes lodged before the civil courts of Malta are business-to-business disputes. With regard to unpaid charges, an interim remedy may be procured by means of a precautionary warrant. It normally takes only a few hours to obtain the provisional issue of a precautionary warrant. If the interim remedy sought is a precautionary warrant of arrest, the court will typically schedule a hearing and decide definitively within a matter of days. In such case the plaintiff will need to institute court proceedings on the merits within 20 days of the definitive issue of the precautionary warrant. Unless the plaintiff holds a mortgage, an international interest or security interest registered in accordance with the Aircraft Registration Act, there are limitations relating to the value of the claim which must be considered before suing for a warrant of arrest. These concern whether the aircraft in question is used for public air transport of passengers or goods. An arrest also be directed against the engine of an aircraft, in which case the limitations on the value of the claim are less onerous.

10.3 Have there been any recent cases of note?

Maltese jurisprudence in relation to aircraft disputes is very limited, as the arrest of aircraft is quite a novel concept which was introduced with the implementation of the Aircraft Registration Act in 2010. Prior to the introduction of this act, Maltese law restricted arrest to vessels. The first aircraft arrest by order of the Maltese courts through the issue of a precautionary warrant took place in 2012. That said, Malta has rich jurisprudence relating to the arrest of vessels and marine litigation, which should serve as a guideline for the Maltese courts when faced with aviation litigation and requests for arrest.

11 Trends and predictions

11.1 How would you describe the current aviation landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

Malta has done its utmost to position itself at the forefront of the aviation industry by creating an environment which is attractive for aircraft owners and operators. Over the last few years, these efforts have evidently yielded positive results, given the increase in the number of industry players choosing Malta as a jurisdiction in which to register aircraft and obtain air operator’s certificates. Among others, one of Europe’s largest airline groups has established a base in Malta, with aircraft flying the Maltese flag operating over 60 routes from Malta.

The number of aircraft registered in Malta is expected to increase in the coming years, as the jurisdiction cements its status as a genuine and viable option as a primary base within the European Union.

This growth has been fuelled by various factors, but chief among them is the Civil Aviation Directorate’s commitment to keeping abreast of international industry developments. A number of innovative amendments in the pipeline reflect this proactive, dynamic approach, including the following:

  • the personalisation of 9H registration marks, allowing an aircraft owner or operator to select up to five characters;
  • the introduction of a definition of ‘unmanned aircraft’, in light of the increased usage and relevance of drones; and
  • the introduction of implementing legislation relating to irrevocable de-registration and export request authorisations, including the possibility to appoint a designee.

The regulator is also seeking to update the provisions governing aircraft leasing and has thus proposed:

  • the introduction of cell companies in the aviation sector;
  • the introduction of facilitation measures relating to the import of non-exempt aircraft;
  • the introduction of facilitation measures relating to the import of exempt aircraft; and
  • the introduction of new fiscal incentives.

These proposals aim to make Malta an aircraft leasing hub.

12 Tips and traps

12.1 What are your top tips for operators in your jurisdiction and what potential sticking points would you highlight?

Respect for the legal framework is of paramount importance in the aviation industry. Carriers operating from Malta must always conduct activities in conformity with the Air Navigation Order, which regulates good practice standards and operational conditions.

The Air Navigation Order includes rules on, among other things:

  • the registration of aircraft;
  • airworthiness certificates;
  • organisation of operating manuals;
  • air personnel licences; and
  • other important aspects of air operations.

An operator that fails to follow the applicable rules as set out in this subsidiary legislation shall be held liable and, as per the relevant provisions and the Schedule to the Air Navigation Order, may be fined accordingly by the Transport Malta Civil Aviation Directorate (TMCAD).

An important standard to consider with regard to safety and compliance of operational measures concerns the employment of personnel. It is vital to employ appropriately qualified and well-trained personnel to ensure compliance with safety and maintenance obligations. Breach of the safety and maintenance requirements may lead to the suspension or revocation of the air operator’s certificate by the director general of the TMCAD.

Thus, operators that are considering establishing operations in Malta should have well-defined, well-organised business and strategic plans, with clear references to the safety measures to be implemented, in compliance with the regulations relevant to their operations.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.