By Forum Gandhi
Copyright indiatimes
ReutersLessors fear that the proposals if implemented could delay the recovery of aircraft and raise financing risks for all concerned
MUMBAI: Global aircraft lessors and financiers have raised concerns over India’s new draft rules on aircraft repossession, warning that the proposals, if finalised, could slow recovery of planes from defaulting airlines and raise financing risks.The civil aviation ministry last week put out the draft Protection of Interests in Aircraft Objects Rules, 2025 for public consultation, giving stakeholders 30 days to respond.The draft, which seeks to implement the Cape Town Convention (CTC), makes it mandatory for creditors-through the Irrevocable De-registration and Export Request Authorisation (IDERA) holder-to clear a wide set of dues before exporting aircraft from the country. This includes unpaid employee wages and provident fund, airport operator fees, navigation charges, fuel bills, and GST on leases or financing.Aircraft cannot be taken out of the country until these obligations are settled. The draft also removes an aviation regulator rule from 2018 that had capped airport and navigation charges at three months from the date of deregistration notice.Industry executives say the move, meant to protect local stakeholders, marks a sharp shift from international practice. “Clearing every local charge before repossession adds layers of complexity and risk. Even a small dispute could hold up an aircraft for weeks,” said a senior lessor executive, requesting anonymity.Live EventsAviation lawyer Nitin Sarin, managing partner at Sarin & Co, said the draft imposes liabilities that do not always belong to lessors. “You cannot blanketly put everything on the aircraft lessor. Dues payable to employees, for instance, have no direct connection to an aircraft,” he said.He added that the broader Act as passed by Parliament was sound but that the rules “leave a lot that remain wanted. There’s a lot more that could have been done.”Sarin stressed that the goal of financiers was not repossession itself. “Banks and leasing companies make money off a successful airline-they have no interest in taking back aircraft unjustly. The real need is to give lessors comfort so that financing costs come down. That’s what the industry requires right now.”Lessors’ formal submissions to the ministry point to two main concerns-the inclusion of employee salaries, provident fund and tax dues, and the removal of the three-month cap on airport and navigation charges. Industry watchers warn this could encourage delays in settlements and give airlines leverage to stall repossessions.The AWG has placed India on its CTC Compliance Watchlist from September 22, assigning the country a medium-risk score of 71.5. It flagged the draft rules for introducing non-CTC liens, omitting provisions on insolvency primacy, and delaying effective non-judicial remedies. With nearly 80% of India’s fleet leased, lessors say the final version of the rules will play a key role in shaping financing costs and global investor sentiment towards Indian aviation.Add as a Reliable and Trusted News Source Add Now!
(You can now subscribe to our Economic Times WhatsApp channel)
Read More News onglobal aircraft financiersaircraft repossessioncivil aviation ministryideraindian aviation
(Catch all the Business News, Breaking News, Budget 2025 Events and Latest News Updates on The Economic Times.) Subscribe to The Economic Times Prime and read the ET ePaper online….moreless
(You can now subscribe to our Economic Times WhatsApp channel)Read More News onglobal aircraft financiersaircraft repossessioncivil aviation ministryideraindian aviation(Catch all the Business News, Breaking News, Budget 2025 Events and Latest News Updates on The Economic Times.) Subscribe to The Economic Times Prime and read the ET ePaper online….moreless
