The Lok Sabha passed the Protection and Enforcement of Interests in Aircraft Objects Bill on Thursday, a move set to significantly boost the country’s appeal to international aircraft leasing companies. The Protection of Interests in Aircraft Objects bill aims to simplify the process for global lessors to repossess jets and engines if airlines default on payments, marking a major win for the aviation sector.
Aviation bill
The bill fully implements the Cape Town Convention and Protocol, an international framework designed to facilitate asset-based financing in aviation. This comes after the 2023 dispute involving SMBC Aviation, which struggled to reclaim aircraft from Go First following the airline’s bankruptcy. At that time, India’s local laws took precedence over global leasing agreements, highlighting the need for regulatory reforms.
With the new law now approved by parliament and awaiting the president’s signature—a formality—the landscape for aircraft leasing in India is expected to change dramatically.
“The legislation will improve lessors’ confidence in the Indian market and may also make it easier for upcoming airlines to lease aircraft,” said Lovejeet Singh, a partner at Chandhiok & Mahajan law firm, specialising in aviation law. He also noted that the bill could reduce leasing costs, potentially leading to cheaper airfares for passengers.
India’s Aviation sector
India’s aviation sector has been on a growth trajectory, with major carriers like IndiGo ordering over 1,300 Boeing and Airbus aircraft since 2022 to meet surging travel demand. The new legislation is seen as a critical step in supporting this growth, with the aviation minister describing it as a “key step in making aircraft leasing cheaper, benefiting airlines and passengers alike.”
Currently, the majority of aircraft operated by Indian carriers are leased, either through simple lease agreements or sale-and-leaseback arrangements. The bill is expected to enhance the stability and growth of the aviation industry in one of the world’s fastest-growing markets.
(With Reuters Inputs)