ISTAT Jetrader - Winter 2019 - 34

The Future of Trading

The current manner in which aircraft equipment is traded is inefficient. The
Global Aircraft Trading System (GATS) provides a secure, live and searchable
electronic ledger that aims to streamline the process for all parties.
by Alexa Schlosser

I

n a world where air travel and the number of
commercial aircraft are on the rise, this means
aircraft leasing - which accounts for more than
45% of commercial aircraft - is also expanding.
Aircraft trading, which used to be a relatively niche
market in the industry, has become a more regular
part of the life of a leased aircraft. Thus, ownership
is changing hands much more often. This increase in
activity has led to a greater focus on inefficiencies in the
process, of which airlines, lessors and financiers have all felt
the consequences.
"The way aircraft trading is done today is very
time consuming and involves far too much paper. It's
unsustainable," says David Swan, chief operating officer of
SMBC Aviation Capital.

Increasing Efficiencies
Swan arranged a gathering of a handful of industry leaders in
January 2017 to discuss a possible solution to the problem.
The group - which included Greg Lee, managing director at
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Goldman Sachs; Drew Fine, partner at Milbank Tweed; Tom
Woods, head of aviation finance and leasing at KPMG; David
Walton, chief operating officer at BOC Aviation; John Ludden,
general counsel of GECAS; and Jeffrey Wool, secretary
general of Aviation Working Group (AWG) - knew there were
easier ways assets were being traded around the world. In
fact, the practice of holding aircraft equipment in trusts was
already a well-established process in the United States and
had also been used in Ireland.
With this in mind, the group came up with the idea of a
Global Aircraft Trading System, or GATS. GATS modernizes
aircraft equipment trading and financing through a fully
electronic and secure ledger that displays the details of
ownership and security interests in GATS trusts.
"This will be a first in our industry," Wool says. "AWG has
been working in this space for a long time; we standardized
novations and other documents. GATS builds on that but
takes the efficiencies to a new level with the move to trust
structures. This embodies a fundamentally different way
to trade aircraft: through electronic transfers of beneficial
interest in trusts rather than document intensive, labor
ISTAT Jetrader - Winter 2019

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