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US Ex-Im Bank has approved a plan to reduce its exposure fee by one-third on financing of US large commercial aircraft for buyers in foreign countries that sign, ratify and implement the Cape Town Convention, an international treaty that will facilitate asset-based financing and leasing of large commercial aircraft. When implemented, Ex-Im Bank’s plan will enable eligible foreign buyers to receive an Ex-Im exposure fee of as low as 2%, a one-third reduction of the current minimum 3% exposure fee on financings of large commercial aircraft.

“With this plan, Ex-Im Bank is working to encourage other countries to adopt the kind of legal framework that will enable their airlines to upgrade and expand their fleets by reducing the risk in cross-border asset-based aircraft financing,” says Ex-Im Bank chairman Philip Merrill. “Adoption of the Cape Town Convention can lead to less aircraft-related debt for governments, lower financing costs and enhanced access to funding for airlines, and ticket price savings for passengers.”

Ex-Im Bank’s reduced exposure fee plan is consistent with one of the recommendations made in the recently released report of the President’s Commission on the Future of the United States Aerospace Industry that recommends that US and multilateral regulations and policies be reformed to facilitate the movement of products and capital across international borders on a fully competitive basis. 

The Cape Town Convention, which was developed by an international diplomatic conference in November 2001, establishes a commercially oriented, comprehensive international legal framework to protect security and leasing interests in aircraft equipment. The treaty has been signed by 24 countries and will be in effect when eight countries ratify it. Ex-Im will offer the one-third reduction of its exposure fee (in connection with approvals issued through

  • September 30, 2004) to buyers in any foreign country that has signed, ratified and implemented the treaty (including certain optional provisions of the treaty).