Parliament passes Aircraft Objects Bill to boost lessor protections, streamline leasing process

It empowers aircraft leasing companies to repossess planes if airlines fail to pay lease rentals.

Once enacted, the bill is expected to align Indian law with international aviation standards and provide stronger protections for lessors, improving the investment climate for aircraft leasing in India.

As such, the bill provides greater legal protection to such companies by prioritising the Cape Town Convention over local laws, especially the Insolvency and Bankruptcy Code (IBC) of 2016.

This ensures that, in case of disputes, the international convention takes precedence.

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Key provisions of the Bill

• Reduced moratorium period: The bill reduces the moratorium period for lessors trying to reclaim aircraft during insolvency proceedings to a maximum of 40 days, shorter than the global standard of 60 days.
• Clearing outstanding dues: Lessors recovering their aircraft must clear pending charges like airport fees and oil company dues for up to 60 days.

Urgency after Go First airlines case

The bill's urgency arose after a ruling by the National Company Law Tribunal (NCLT) in the Go First Airlines case.

The NCLT imposed a moratorium that hindered lessors from repossessing their planes, leading to lengthy legal battles. This resulted in increased leasing costs for other airlines and reduced confidence among lessors, who are backed by major banks and financing firms.

Lessors faced difficulties in reclaiming aircraft from Go First, months after the airline filed for insolvency.

The Aviation Working Group