Govt says committed to reducing risks for aircraft lessors

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allowing aircraft lessors to recover their planes during insolvency proceedings as well. The ministry said that the earlier IBC regime was impacting the agreements between Indian airlines and foreign lessors.

According to the ministry, it is estimated by legal entities dealing with aircraft financing and leasing that Indian carriers spend $1.2-1.3 billion more than earlier in lease rentals because of the impediments in aircraft recovery in India. In the 3 October notification, the corporate affairs ministry said the provisions of Section 14(1) of IBC, which imposes a moratorium upon the admission of an insolvency plea, shall not apply to transactions, arrangements, or agreements related to aircraft, aircraft engines, airframes, and helicopters.

Simultaneously, the roadblocks in the repossession of aircraft for lessors could also result in a reduction in the supply of aircraft on favorable terms to Indian airlines, and thereby, can adversely affect the entire aviation industry, the ministry said. “Further, the cost of higher lease rentals could be passed on to the public causing high fares on all routes.

As such, there would be an overall impact on not only the aviation sector but all sectors dependent on connectivity like tourism, cargo," the ministry added on the possible consequences of the earlier IBC regime which imposed a moratorium on aircraft recovery. The ministry reiterated that the fresh notification is in consonance with the treaties and conventions India is party to with regards to civil aviation, including the Cape Town convention.

The 2001 treaty was designed to smoothen the growth of aviation by protecting the repossession rights of aircraft. The treaty aims to reduce the level of risk for the intending