AerCap says better India plane reclaim rules to boost investor morale

Jet Airways (India)

19/01/2024 12:21

By Aditi Shah
       HYDERABAD, India, Jan 19 (Reuters) - Foreign investors
would feel more confident about increasing their aircraft
leasing business in India if the country firmed up legislation
on the repossession rights of lessors, a top executive at AerCap
Holdings said.
    Debate over the rights of lessors in India came to the fore
last year when budget carrier GoFirst filed for bankruptcy, a
move that blocked lessors from repossessing their aircraft. 
    This sparked a confidence crisis among lessors who warned of
rising leasing costs in future. Many are still embroiled in a
legal battle to recover their assets.
    India in 2008 ratified the Cape Town Convention, an
international treaty protecting rights of lessors over their
aircraft in case of defaults by airlines, but has yet to pass a
law. 
    "Legislating the Cape Town Convention is going to give the
confidence to the world that India understands what it takes to
manage when foreign investors put mobile assets into a country,"
Suthesh Selvaratnam, vice president, leasing for Asia Pacific at
AerCap told Reuters. 
    India amended its insolvency law in October with an aim to
bring its laws in line with the Cape Town Convention, thereby
helping shore up financing of its airline industry.
    Despite rumours of a pullback from international lessors
after the GoFirst incident, Indian airlines are not short of
financing offers from foreign investors, Selvaratnam said. 
    "But what it does do is it skews the attractiveness for
foreign investors to go into the market and finance the
financially stronger airlines."
    The world's fastest growing aviation market has faced
challenging times with Go First following Kingfisher and Jet
Airways - both of which went bankrupt over the last decade or
more.
    India is a critical market for lessors, in which
sale-and-leaseback deals accounted for 75% of plane deliveries
from 2018 to 2022, compared with a global average of 35%,
according to analytics firm Cirium.
    The country has over 1,000 new planes on order from IndiGo,
Air India and Akasa Air, which placed a fresh order for 150
aircraft on Thursday, is yet to take deliveries of earlier
orders. 

 (Reporting by Aditi Shah
Writing by Tanvi Mehta
Editing by Mark Potter
)
 ((tanvi.mehta@thomsonreuters.com; https://twitter.com/TanviMehta710;))