Monday, March 11, 2019

New rules make it easier for lessors to take back aircraft if airlines default

New Delhi: The Directorate-General of Civil Aviation has issued revised standard operating procedures for export of aircraft which will make it easier for companies which have leased aircraft to airlines in India to take them back in case the airline company defaults on payment of lease.

The notification called ‘Effective implementation of Cape Town Convention- Issuance of revised Standard Operating Procedure for Export of Aircraft’ was issued on Monday.

The Cape Town Convention is a global registry of aircraft. The notification will make it easier for global leasing companies to re-export their aircraft which will allow them to redeploy these assets with other airlines. The comfort provided by the implementation of the new notification will also help bring down the leasing rates that airlines in India have to pay.

“World over the trend is to lease and not own aircraft. Leasing companies decide on how much to charge for leasing an aircraft considering various risk factors, including whether the country is signatory to all global aviation conventions and also the perception about the airline to which the aircraft is being leased. With the latest notification the risk factor comes down as now it will be easier to take out the aircraft,” a former government official, involved with airlines whose aircraft were sought to be taken out of the country, said.
11/03/19 Ashwini Phadnis/Business Line
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