New Delhi: The US aviation giant Boeing Friday said that among the most important steps that India can take to comfort lessors is to push for legislation that will enable the implementation of Cape Town Convention (CTC) which allows lessors to easily repossess their aircraft from airlines defaulting on payments.
The statement comes amid an order by the National Company Law Tribunal (NCLT) earlier this week that admitted Go Airlines’ voluntary insolvency plea and granted it protection under moratorium from financial obligations and adverse actions by lenders and lessors —which essentially meant that lessors will not be able to take possession of the aircraft which are on lease to the airline.
Lessors have raised concerns over the NCLT decision.
Speaking to the media Friday, Boeing India president Salil Gupte said: “One of the things that we know that the Indian government has been evaluating over the last several years is legislation to help remove some confusion in the marketplace around how aviation assets are treated in the NCLT process.”
“There is a protocol, a treaty that India has acceded to, called the Cape Town Convention, which provides more clarity to the courts around that,” he added. “And we would certainly encourage the ministry to continue to progress that legislation.”
Leasing of aircraft is the preferred choice of airlines globally, and this holds more true for Indian air carriers.
As per estimates, about 80 per cent of India’s total commercial fleet is leased, compared to 53 per cent globally.
Talking about the impact of the NCLT decision on leasing rates in India, Ryan Weir, Vice-President of Commercial Sales and Marketing for India, Boeing Commercial Airplanes, said that while it is probably too early to comment on the outcome, Boeing is “concerned about what will happen with lease rates, if the current (NCLT) order stands”.
Terming the Go First insolvency as unfortunate, Weir said Boeing will be working very closely with its customers to identify and discuss any impact of the court’s rulings and “mitigate any impact” to the best of their ability.
Gupte, however, added that while there are challenges “progress will never cease here because the macro trend of the growth for India is very well known and it’s very clear”.
He added that India is the fastest growing civil aviation market and will remain one of the fastest growing economies in the world for the foreseeable future. That, he added, is going to be the ultimate driver of aviation.
Dave Schulte, managing director, regional marketing, Boeing Commercial Airplanes, added that the company is very bullish on the Indian markets and expects it to significantly increase with about 2,300 airplane deliveries expected in the next 20 years.
Also Read: DGCA show-causes cash-strapped Go First, stops sale of air tickets with immediate effect