Indian government protects aircraft fleet from leasing company

The "creditors" appeared in the context of the aviation industry being heavily affected by the pandemic that has spread around the world and required the cancellation of registrations of aircraft being operated by many airlines, causing a significant impact on aviation activities that are beginning to recover in many countries and major aviation markets.

In India, the world's third-largest aviation market, Prime Minister Narendra Modi's government recently decided not to allow lessors and "vulture" funds to repossess aircraft or request deregistration or export of aircraft. According to Cirium, India is one of the world's leading aircraft leasing markets, with up to 75% of aircraft delivered between 2018 and 2022 being sold and leased back, compared to the world average of only 35%.

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The Indian government's move comes after Go First Airlines filed for bankruptcy protection and ceased operations on May 3, 2023. Some of Go First's 54 aircraft have been deregistered and repossessed by creditors. Three companies that lease aircraft to SpiceJet, another Indian airline, also filed a petition with the Civil Aviation Authority of India to deregister four aircraft that the airline is operating in early May. The Indian government has announced that it will not allow lessors to take operating aircraft out of the country without an agreement with the airlines. The AWG organization has reduced the credit rating of Indian airlines by 0.5 points from 3.5 to 3, but it seems that the government and airlines are not very concerned about this, believing that shipowners have earned too much money from leasing and buying aircraft in this booming market.

The Indian government's decision also reflects the views of regulatory agencies and governments of countries to protect their aviation operations and fleets from "attacks" by some ship leasing organizations or vulture funds that have taken advantage of the Covid-19 pandemic to buy cheap debts with collateral being the aircraft of operating airlines. The action of tycoons, especially vulture funds, to repossess aircraft is despite the airlines' willingness to pay for the aircraft, the desire to continue operating the aircraft to restore traffic and financial obligations after the pandemic, or the previously mutually beneficial cooperation agreements in the force majeure situation due to the pandemic.

Faced with signs of impact on the recovery of the aviation industry, the locomotive of economic recovery, the actions of governments and management agencies in protecting the fleet and interests of airlines are expected to reduce risks and avoid situations of profiteering from financial institutions and aircraft leasing.

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