India’s government will support SpiceJet Ltd. to help the airline retain its aircraft even as lessors battle in court to take possession of their planes, a civil aviation ministry official said.
The government needs to put the interest of its carriers before lessors’ even if it’s a signatory to the Cape Town Convention, said the official, who asked not to be identified as the information isn’t public. India in 2008 acceded to the Cape Town Convention, which defines the rights of aircraft owners or lessors in case of a default on payments, letting them get their equipment back quickly if there is no resolution.
The conflict is reminiscent of events two years ago when lessors including International Lease Finance Corp. struggled to retrieve six Airbus Group NV aircraft formerly operated by Kingfisher Airlines Ltd. Several Indian carriers have posted losses in the past five years as below-cost fares bleed the companies, forcing them to seek extensions to payments due to aircraft-leasing companies and others.
“The SpiceJet situation isn’t comparable to the Kingfisher saga, it’s much worse,” said Bertrand Grabowski, managing director for transport at DVB Bank in Frankfurt. “The leasing and finance community has been working very hard with the Indian Authorities post-Kingfisher to find common ground in a safe application of Cape Town. This is not working and Indian authorities seem to have little idea of the damage caused to their industry.”
17/02/15 Anurag Kotoky/Bloomberg
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The government needs to put the interest of its carriers before lessors’ even if it’s a signatory to the Cape Town Convention, said the official, who asked not to be identified as the information isn’t public. India in 2008 acceded to the Cape Town Convention, which defines the rights of aircraft owners or lessors in case of a default on payments, letting them get their equipment back quickly if there is no resolution.
The conflict is reminiscent of events two years ago when lessors including International Lease Finance Corp. struggled to retrieve six Airbus Group NV aircraft formerly operated by Kingfisher Airlines Ltd. Several Indian carriers have posted losses in the past five years as below-cost fares bleed the companies, forcing them to seek extensions to payments due to aircraft-leasing companies and others.
“The SpiceJet situation isn’t comparable to the Kingfisher saga, it’s much worse,” said Bertrand Grabowski, managing director for transport at DVB Bank in Frankfurt. “The leasing and finance community has been working very hard with the Indian Authorities post-Kingfisher to find common ground in a safe application of Cape Town. This is not working and Indian authorities seem to have little idea of the damage caused to their industry.”
17/02/15 Anurag Kotoky/Bloomberg
