NEW DELHI: Small, financially weak and startup Indian airlines could now find it costlier to lease aircraft, which in turn could mean higher airfares and negatively impact connectivity. Global leasing watchdog Aviation Working Group (AWG) has downgraded India to “negative” from “positive” following lessors’ inability to repossess aircraft stuck with GoAirthat stopped flying on May 2, 2023.As a result, apart from Tata Group airlines and IndiGo other Indian carriers could now see lease rental rise aslessors will factor in the risk in repossessing planes from them in case they go belly up like GoAir.
AWG had downgraded India after GoAir, which had a fleet of 56 all leased planes, went bust. A couple of months later when India issued a notification exempting aircraft and engines from the list of assets that get a moratorium or protection from repossession under insolvency, the global watchdog upgraded India to positive. When this happened, the aviation ministry had said leasing costs for Indian carriers could drop by about $1.3 billion, thanks to the upgrade to positive.
The Directorate General of Civil Aviation (DGCA) had told the Delhi high court that the government circular applied retrospectively — meaning it covers GoAir planes. But the continued inability of GoAir lessors to repossess planes even nine months after the airline went bust and even after the government circular has led to AWG downgrading India again.
“However, hearings at the High Court on lessors’ main writ petitions seeking relief with respect to… de-registration applications remain ongoing with no further judicial action,” AWG said in its notice issued on December 6.
AWG had downgraded India after GoAir, which had a fleet of 56 all leased planes, went bust. A couple of months later when India issued a notification exempting aircraft and engines from the list of assets that get a moratorium or protection from repossession under insolvency, the global watchdog upgraded India to positive. When this happened, the aviation ministry had said leasing costs for Indian carriers could drop by about $1.3 billion, thanks to the upgrade to positive.
The Directorate General of Civil Aviation (DGCA) had told the Delhi high court that the government circular applied retrospectively — meaning it covers GoAir planes. But the continued inability of GoAir lessors to repossess planes even nine months after the airline went bust and even after the government circular has led to AWG downgrading India again.
“However, hearings at the High Court on lessors’ main writ petitions seeking relief with respect to… de-registration applications remain ongoing with no further judicial action,” AWG said in its notice issued on December 6.
