Aircraft Repossession in India - Turbulence Ahead, Buckle Up!

Airline operators in India generally fly and operate leased aircraft. Leasing companies and financiers have been facing hurdles in deregistration and repossession of aircraft leased to Kingfisher Airlines, which is on its way to bankruptcy. The aviation regulator, Directorate General of Civil Aviation, in the recent past, has refused deregistration and removal of these aircraft from the India's fleet registry, due to the outstanding amounts payable by Kingfisher Airlines to various governmental and airport authorities. Such denial being violative of India's obligations under the Cape Town Convention, has prompted the Indian Government to appoint a consultant group from Europe to frame rules that will make it easier for international aircraft leasing companies to repossess planes, and prevent further pandemonium in the aviation industry. This article examines the corporate insolvency regime in India, and analyses how winding-up of the Indian lessee airline operator could have adverse repercussions on, and would add to the existing stumbling blocks in the lessor's efforts of repossession. It studies the impact of such winding-up proceedings on the existing aircraft leasing arrangements; specifically finance leases, which give vested ownership rights to lessees