The Legal Problem of Aircraft Mortgage in Indonesia

ABSTRACT

This article aims to analyze the urgency of aircraft mortgage regulation to provide an alternative solution for airlines that requires a loan to maintain their cash flow sufficiently by placing their aircraft as debt collateral. Since the issuance of Law Number 1 of 2009 on Aviation, the provisions regarding aircraft mortgage as debt collateral was removed from the previous Aviation Law Number 15 of 1992. Article 12 Paragraph (1) of Law Number 15 of 1992, governed that aircraft could be subject to mortgages, however, this provision was abolished by the new Aviation Law Number 1 of 2009. Article 465 of the new Aviation Law explicitly states that all provisions in Law Number 15 of 1992 are no longer valid, meanwhile, Law Number 1 of 2009 on Aviation, in no way regulates aircraft mortgages. In practice, this legal vacuum has become a problem for airline companies to place their registered aircraft as collateral in form of a mortgage. Particularly in the Covid 19 pandemic, which until the end of 2021 has not ended yet, it has caused severe damages to the financial balances of many airlines due to the absence of passengers and restrictions to fly by the Government. The aircraft can be used as collateral or security interest for, for example, a working capital loan. This research is a normative study that will discuss and analyze the types of collateral over aircraft that are most likely to be carried out by airlines in Indonesia amid the unavailability of aircraft mortgage regulation. This article also attempts to find possibilities that may be engaged to solve the problem.