Aircraft lessors wary after India’s Go First situation

A Go First aircraft taxis after landing.
Photo Credit: Go First

In a recent turn of events, after a National Company Law Tribunal (NCLT) hearing into embattled airline Go First, global aircraft lessors are viewing the Indian aviation market as a potentially risky jurisdiction.

A recent NCLT hearing approving Go First’s plea for insolvency provided relief to the Indian airline but not to the lessor.

This can mean that an airline is now safeguarded from lessors wanting to take back their aircraft on the grounds of non-payment of lease dues.

According to India Today, the world’s second largest aircraft leasing company SMBC Aviation Capital wrote to the NCLT, saying “lessors and international aircraft owners see India as a risky jurisdiction for aircraft leasing.”

Many aviation experts have predicted that this situation will soon result in higher premiums for Indian airlines who want to lease aircraft.

Soon after the NCLT decision, this week alone almost 5 aircraft belonging to SpiceJet have been requested to be de-registered by their lessors under Irrevocable De-registration and Export Request Authorisations (IDERA) considering the financial status of the airlines.

SpiceJet – no insolvency plans


SpiceJet CMD Mr. Ajay Singh recently assured everyone that the airline has no plan to file for insolvency.  

He intimated that airline in fact has plans to use the $50 million from ECLGS funds and some of their own cash in order to get the airlines grounded aircraft back into operation.

In a statement reported by Times of India, Mr Singh said: “There is absolutely no question of filing for insolvency. Any rumour regarding the same is completely baseless.”

“We are focussed firmly on reviving our grounded fleet and getting more and more planes back into the air. Work on this front has already begun and the company is using the $50 million ECLGS funds and our own cash.”

“We have a great relationship with all our partners. Our lessors have supported us through thick and thin and continue to do so and we are grateful for their support,” Mr Singh said.

Photo Credit: Md Shaifuzzaman Ayon/AviationSource

AWG watchlist notice


Soon after the Go First hearing, Aviation Working Group (AWG) a UK-based non-profit entity which is mainly run by Boeing and Airbus, issued a “Watchlist Notice” to India.

AWG members also include biggest aircraft lessors, manufacturers and financial institutions.

The AWG has warned that the result of this case “would have direct and material impact on future financing and leases to Indian airlines.”

With many Indian airlines now entering into lease and sell back deals this might prove to be a bigger challenge.

The recent NCLT Go First ruling ensured that 45 aircraft which were requested back by the lessor will not be de-registered.

This has sent shock waves and now lessors are trying to safeguard their interest by de-registering their aircraft from any airline which is showing signs of trouble within the industry.

Though many experts in the country also pinpointed the fact that this whole fiasco started with one of their own member P&W did not provide relief according to the ruling of emergency arbitration and this is a direct result of that.

It now remains to be seen what the outcome will be after the hearing of the case filed by AWG in the higher court.

It is also to been seen how DGCA will respond after receiving de-registration requests from lessors for SpiceJet, as once this request is received the aircraft is required to be de-registered within 5 days.

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