India has been placed on global aviation leasing watchdog’s watchlist, assigning it “negative” outlook following the National Company Law Tribunal’s (NCLT) order restricting bankrupt airline Go First’s lessors from repossessing planes while it is undergoing insolvency process.
A senior DGCA official told The Hindu on Friday, “the deregistration requests from lessors can’t be processed on account of the moratorium order granted by the NCLT on May 10.”
The Aviation Working Group, which oversees implementation of the Cape Town Convention and its Aircraft Protocol - a treaty designed to facilitate financing and leasing of aviation equipment, said its outlook is based on the “DGCA’s failure to process deregistration application for aircraft whose leases were terminated prior to the intimation of the moratorium.”
Lessors have maintained that the court order can’t apply retrospectively, and under the Cape Town Convention (CTC), to which India is a signatory, when an insolvency is initiated, the insolvency administrator or debtor has to give possession of the aircraft to the lessor within 60 days.
The NCLT order preventing recovery of aircraft by lessors “has raised significant concerns among aviation industry lessors and creditors regarding the risks associated with aircraft leasing in India, which could result in higher risk premiums on local airlines, pushing up lease rentals and consequently ticket prices,” says Nilaya Varma, Co-founder & CEO, Primus Partners.
Boeing India’s President Salil Gupte urged the Indian government to push through the draft legislation (Protection and Enforcement of Interests in Aircraft Objects Bill 2022) which will implement CTC in India. “This will provide more comfort to lessors in placing their assets and protect their interests along with those of airline,” Mr. Gupte said at a media event.
