Indian government protects aircraft fleets from unscrupulous lessors

In India, the world's third-largest aviation market, Prime Minister Narendra Modi's government recently decided not to allow lessors and vulture funds to withdraw aircraft, request de-registration and force the export of aircraft.

According to Cirium, a data and advanced analytics solutions provider for the aviation industry, India is one of the world's top large aircraft leasing markets. Up to 75 per cent of aircraft were delivered to India in the form of sales and lease back contracts between 2018 and 2022, much higher than the world average of 35 per cent.

The move by the Indian government comes after Go First Airlines filed for bankruptcy protection, shutting down on May 3. Lessors had requested to deregister and withdraw 54 aircraft from Go First Airlines. Three businesses that lease aircraft to SpiceJet, another Indian airline, also submitted an application to the Civil Aviation Authority of India in early May, requesting the de-registration of four SpiceJet aircraft.

The Indian government has announced that it will not allow the lessors to take operating aircraft out of the country without an agreement with the airlines. The Aviation Working Group (AWG) has downgraded Indian aviation's score from 3.5 to 3.0 but the government and airlines are not maying much attention to this news, indicating that the lessors have already earned too much money from leasing aircraft in this booming market.

The decision by the Indian government reflects the views of regulatory bodies and governments in other countries. It aims to protect their aviation operations and fleets against the 'attacks' of several leasing organisations and vulture funds, regardless of whether airlines wish to continue operating aircraft to restore aviation activities and financial obligations post-pandemic, mutually beneficial cooperation agreements, or the situation of force majeure due to the epidemic.

These signs may affect the recovery of the aviation industry, so governments and regulatory agencies need to take action to protect the fleet and the interests of airlines. This will help eliminate risks and prevent economic organisations and lessors from profiteering.

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