Chopper Overhead: Helicopter Engines A Source Of Confusion In Aviation Financing

The question of how to effectively take security over helicopter engines is one of fundamental importance to creditors. However, despite its importance, this area of aviation financing remains surprisingly unclear.

The confusion surrounding this question stems from the way helicopter engines are defined under the Convention on International Interest in Mobile Equipment (the "Convention") and Protocol Thereto on Matters Specific to Aircraft Equipment (the "Aircraft Protocol"), herein collectively referred to as the "Cape Town Convention".

The Cape Town Convention applies to three categories of "aircraft objects": "airframes"¹, "aircraft engines"² and "helicopters".³ Helicopter engines are not defined in the Cape Town Convention. As a result, the category under which they fall varies depending on whether or not the engine is installed on the "helicopter".⁴