Lawyer Nitin Sarin, who is managing partner of Sarin & Co, said on SM Wednesday: “The government of India has clarified that the notification dated October 3, 2023, which excluded transactions in relation to aircraft, airframes, engines and helicopters to which the Cape Town Convention and Aircraft Protocol apply, applies retrospectively from the date of notification of the section. That is from the date of notification of the IBC 2016. This means that the notification would also apply to aircraft which were on lease to GoFirst. Thus the aircraft shall be de-registered imminently.”
GoAir had 56 aircraft in its fleet when it got grounded this May and all of them are on operational lease. Lessors of all these aircraft are seeking judicial remedy to repossess their planes as the DGCA can’t de-register the planes till there is clarity on when does the notification come into effect. That may have come now.
The October notification was issued to ensure that lessors do not see India as a high risk country for renting out planes and engines here due to difficulties in repossessing the same when an airline fails — as has happened during Kingfisher time and most recently GoAir. This move was to prevent leasing cost from going through the roof for financially weak or struggling Indian carriers.
The notification issued Wednesday says: “…in exercise of the powers… of the IBC Code… the central government hereby notifies that the provisions of IBC… shall not apply to transactions, arrangements or agreements… relating to aircraft, aircraft engines, airframes and helicopters.”
India is a signatory to the Cape Town Convention whose “primary aim”, according to UN’s aviation arm International Civil Aviation Organisation, is “to resolve the problem of obtaining certain and opposable rights to high-value aviation assets, namely airframes, aircraft engines and helicopters which, by their nature, have no fixed location. This problem arises primarily from the fact that legal systems have different approaches to securities, title retention agreements and lease agreements, which creates uncertainty for lending institutions regarding the efficacy of their rights. This hampers the provision of financing for such aviation assets and increases the borrowing cost.” India had ratified the convention in March 2008.