Cape Town convention on horizon: India aims to transform aircraft leasing

The Cape Town Convention that mainly pertains to leasing of aircraft will soon get legal backing in the country with the Union Cabinet recently approving a bill in this regard, according to a senior official.

Growth of India's Civil Aviation Market

India is one of the world's fastest growing civil aviation markets and domestic carriers have placed orders for more than 1,200 planes.

The bill to ratify the Cape Town Convention to promote the leasing business of aircraft has been approved by the Union Cabinet, Civil Aviation Secretary Vumlunmang Vualnam said on Tuesday and added that it will go to the Parliament for approval.

Legal Framework for Aircraft Leasing

"We are hopeful that sooner than later Cape Town Convention will have the legal backing in India and become enforceable greatly supporting leasing and acquiring of aircraft," he said at a conference in Greater Noida. He was speaking at the International Conference on Air Mobility organised by industry body CII along with the civil aviation ministry.

Protection and Enforcement of Interests 

Last week, the Cabinet cleared the Protection and Enforcement of Interests in Aircraft Objects Bill. It seeks to enforce the provisions of the Convention on International Interests in Mobile Equipment (Cape Town Convention), and Protocol on Matters Specific to Aircraft Equipment (Cape Town Protocol).

Under the Cape Town Convention, lessors can take back the possession of aircraft leased to airlines. When Go First was undergoing an insolvency resolution process, there was a moratorium and lessors were not able to take back their aircraft leased to the airline.

Go First Insolvency Case

Later, an ad hoc arrangement was put in place allowing the lessors concerned to take their leased planes from Go First. India is a signatory of the Cape Town Convention but is yet to ratify the convention. On Monday, the National Company Law Tribunal (NCLT) ordered the liquidation of Go First. Meanwhile, the Bharatiya Vayuyan Adhiniyam, 2024 -- which replaces the 90-year-old Aircraft Act -- came into force on January 1.

The legislation seeks to facilitate designing and manufacturing of aircraft in India as well as facilitate the ease of doing business in the aviation space. 

(Except for the headline, nothing has been changed by All India News Network in the PTI copy.)