Aircraft leasing companies will develop a cautious stand towards the Indian market after struggling to repossess their assets from Go First after the airline sought the court’s help in retaining the planes, a top official from Vistara said. Replying to a question from FE on whether the Go First episode has spooked the lessors and make them look at India with apprehension, Vistara CEO Vinod Kannan said, “There was this thinking (sic) and we were all very worried.”
“But what has also happened is those airlines or those groups which have a good credit rating or ranking in the market will not be impacted as much. The fact remains that thanks to the track record we have, thanks to the lineage of Vistara, at least informally we have been informed by the lessors that it should not impact us as some of the others but yes the overall market risk for India will go up slightly,” ”Kannan added.
Kannan also argued that besides the unfolding of the Go First saga, high interest rates and appreciation of US dollar against the Indian rupee is also to be blamed for the cautious stand taken by the lessors. “It is not easy to demarcate that this is because of Go First because the whole market situation is also changing, interest rate have also gone up. So, if you haven’t burnt your bridges with the lessors, then it should not be to the same extent. Yes, they became uncomfortable and they were caught off guard,”Kannan added.
Go First’s grounding has led to suspension in lease rentals to its lessors, forcing them to seek relief from higher courts. So far, their efforts have not yeiled the desired result as they haven’t been allowed to take back their aircraft. More than 50 aircraft of Go First are grounded since May 3. On the integration with Vistara with Air India, Kannan said he is hopefull of getting most of the approvals before the agreed timeline of April 2024.
Approvals for some other regulations may take longer, he added. “The CCI (Competition Commission of India) approval is needed and we are replying to the show-cause notice by the end of this month. The CCI process can take up to 270 days but we are hoping that it will come earlier. There is NCLT approval also needed, which usually takes 9-12 months, we applied for that a few months ago. Then there are the regulatory approvals from the DGCA, MOCA and AOC. All of these are going as per the plan,” Kannan added.
18/07/2023 Swaraj Baggonkar/Financial Express
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