12/08/2010

Could Swiss re-register its aircraft in Ireland?

The Italian airline Alitalia is moving the registration of some of its aircraft from Italy to Ireland, probably for economy reasons. Could Swiss do likewise?


When, in January 2009, the Italian low cost airline, Air One, merged with Alitalia, their aircraft also became part of Alitalia. However, these aircraft were actually registered in Ireland (the Irish registrations look like EI.xyz). Alitalia's aircraft, however, were registered in Italy (registrations like I.wxyz).

It appears that very recently Alitalia has decided to unify this disharmony by re-registering aircraft so as to have them all in the same country: this chosen country is Ireland. Thus, many aircraft which had an I- registration, now have an EI- registration. The chosen method seems to be to keep the last three letters of the previous Italian registration, but precede them with the Irish indicator EI. Thus, for example, on the 2nd November the Airbus A320 previously registered as I-BIKU became EI-IKU instead. Probably, fairly soon, the amusing Airbus 320 registration I-BIKE (an aircraft called Franz Liszt) will be transformed to the rather more mundane EI-IKE.

There are already some examples of aircraft of commercial airlines being registered in a different country. The most noteworthy example is perhaps that of Aeroflot, whose aircraft are registered either as VP-Byz or VQ-Byz (both Bermuda). This practice is actually being investigated at the moment!

There is also an equivalent maritime action whereby ships may be registered in countries such as Liberia (known as flags of convenience). Closer to home, car hire companies operating in Geneva airport mostly seem to hire out cars whose number plates start with AI (Appenzell Innerrhoden), a canton famous for its low taxes and for being the last Swiss canton to offer women the right to vote (in 1990).

From these parallel examples, it would seem likely that the choice of the registration company is probably influenced by the taxation system in that country, although not necessarily by any technical regulations imposed, or not imposed, there. Ireland is already well-known for having a very low corporation tax (12.5%), which it is hanging onto despite its economy being in meltdown and it being loaned some very large amounts.

All of this makes me reflect that when a company chooses to go somewhere where it can benefit from lower costs and taxes, someone somewhere else, normally their home country, will actually be losing money. In this case it would be Italy, who are surely thus subsidising Ireland!

Imagine the fuss if the airline Swiss re-registered all its HB-xyz aircraft in Ireland, or the Cayman Islands, or Monaco, or Zimbabwe, in order to make economies?

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