After the bankruptcy protection of airline Go First, a global aviation leasing watchdog placed India on a watchlist with a bad outlook, citing the country’s failure to comply with international aircraft repossession regulations.
As the third largest domestic market in the world prepares for record growth, the Aviation Working Group, based in the UK, may increase lease costs for Indian airlines and damage the confidence of lessors.
In a letter to Go First that was also copied to India’s aviation minister, AWG warned of the “direct and material impact on future financing and leases to Indian airlines” if the forecast holds.
About half of Go Airlines (India) Ltd’s 54 Airbus A320neos have been grounded due to “faulty” Pratt & Whitney engines, and the airline filed for bankruptcy last week. Pratt, a subsidiary of Raytheon Technologies, has stated that these charges are unsubstantiated and serve only to distract from the airline’s financial difficulties.
Even though several lessors had already terminated leases and submitted requests with the aviation regulator to recover more than 40 planes, the Indian panel ordered a hold on Go First’s assets in awarding protection.
AWG warned in a notice that “results in a negative outlook” if the applications weren’t processed before the freeze was enacted.
The Indian government’s aviation ministry and regulator did not respond to requests for comment.
Hundreds of new jets have been purchased by Indian carriers, who rely largely on foreign lessors to finance plane purchases, and this issue comes at a time when air travel in India is increasing.
The 2001 treaty made headlines last year when Russia stopped the repossession of jets in retaliation for sanctions relating to Western Ukraine. Its aim was to ease the rise of aviation by preserving repossession rights.
Even though parliament supports the country’s insolvency and bankruptcy rules, India has not yet passed a bill to address problems with the so-called Cape Town Convention.
According to Syed Tamjeed Ahmad, co-founder of the aviation legal firm Spaviatech legal, “given (this), implementation of the Convention will run into challenges when read with the bankruptcy laws.”
SMBC Aviation, CDB Aviation’s GY Aviation Leasing, Jackson Square Aviation, and BOC Aviation are among lessors that work with Go First. Go First’s court-appointed administrator received a letter from AWG stating the airline has a “obligation” to keep the planes in good condition and at a high value until the lessors and creditors may take custody of them.
Airbus and Boeing serve as co-chairs of the non-profit organisation AWG. Aircastle, BOC Aviation, SMBC Aviation Capital, Deutsche Bank, Goldman Sachs, and Morgan Stanley are just some of the major lessors and financial institutions that are members.
of what it calls the compliance index, which examines whether or not the requirements of the Cape Town Convention are met in practise, AWG has a pessimistic prognosis.
The original 3.5 score for India has been lowered to 3.
Everyone in the country will have to pay more if the planes can’t be repossessed. Richard Aboulafia, managing director at Aerodynamic Advisory, emphasised the existence of a risk premium.
This is the second warning in as many months on Vietnam’s compliance with international norms; in April, AWG issued an alert over Vietnam’s compliance in a dispute involving the seizure of four planes.
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SOURCE :- https://www.wionews.com/business-economy/aviation-watchdog-issues-warning-on-india-over-jet-repo-fight-591810