Monday, May 08, 2017

For much-needed investment into the aviation sector, India needs to respect global norms

A prosperous country is a connected country, one in which people and goods can get to where they need to quickly and easily. With this in mind, the government is pushing to expand its regional aircraft routes. Under the Ude Desh Ka Aam Nagrik (UDAN) scheme, airlines are being offered subsidies and a waiver of airport charges to operate from smaller cities.
But financial incentives are only part of the story. Regulation matters too. In particular, measures that will attract the foreign capital that airlines need to expand and to equip themselves with the smaller, regional aircraft that can operate from smaller airfields in smaller communities. The latest moves — refinement of amendments made in 2015 to the Aircraft Rules 1937, which came into effect in March — are welcome.
But they also leave the aviation community thirsting for more. The basic problem is one of uncertainty. Foreign aircraft lessors and financiers want to know that, in the event of an airline operator running into money trouble, their assets will be safe.
In many parts of the world, such confidence now comes from a country having signed and implemented the Convention on International Interests in Mobile Equipment signed in Cape Town, South Africa, in 2001 and its related Aircraft Protocol (Capetown Town Convention, CTC). This treaty was designed to facilitate asset-based financing and leasing of aircraft by reducing a creditor’s risk and by enhancing legal predictability in the event of an aircraft operator’s insolvency or other default.
07/05/17 Mitri Najjar & Emma Pond/The Economic Times